PTD 2024 Judgments - Pakistan Legal Archive

Courts in this Volume

Customs Appellate Tribunal Karachi
Customs Appellate Tribunal Lahore
Federal Tax Ombudsman Pakistan
Inland Revenue Appellate Tribunal Of Pakistan
Islamabad
Karachi High Court Sindh
Lahore High Court Lahore
Peshawar High Court
Quetta High Court Balochistan
Supreme Court

Customs Appellate Tribunal Karachi

PTD 2024 CUSTOMS APPELLATE TRIBUNAL KARACHI 94 #

2024 P T D (Trib.) 94

[Customs Appellate Tribunal (Karachi Bench-III)]

Before Shakil Ahmed Abbasi, Member Judicial-III

FAZAL QADEER

Versus

The ADDITIONAL COLLECTOR OF CUSTOMS (ADJUDICATION) QUETTA CAMP OFFICE @ HYDERABAD and 2 others

Customs Appeal No.H-7255 of 2021, decided on 10th April, 2023.

Customs Act (IV of 1969)---

----Ss.2(s), 16, 89, 168 & 156(1), Cls. 8 & 89---Imports and Export of (Control) Act (XXXIX of 1950), S. 3---SRO 566(I)/2005, dated 06-6-2005---Smuggling----Seizure and confiscation---Locally manufactured goods alleged to be foreign origin goods---Non-payment of duty and taxes---Customs Department intercepted a container, checking of which resulted into recovery of cloth---Customs Department confiscated the subject goods alleging the same as foreign origin/smuggled cloth---Claim of the appellant/owner was that the seized cloth was locally manufactured---Validity---Local commission was duly appointed on the request of appellant to independently verify the factual position of goods as to whether the confiscated goods were locally manufactured or not---Local Commission Report as well as photographs of the producing manufacturer and certificate of Chamber of Commerce furnished by the appellant/claimant had verified that the seized goods were locally manufactured and were not of foreign origin---Respondent/Department had failed to prove the allegation of foreign origin/ smuggled cloth as leveled in Show-Cause Notice and impugned order---Customs Appellate Tribunal set-aside impugned order-in-original and directed the Respondent/Department to release the impugned cloth to the appellant---Appeal was allowed.

Muhammad Iqbal Riaz for Appellant.

Nemo for Respondents.

PTD 2024 CUSTOMS APPELLATE TRIBUNAL KARACHI 133 #

2024 P T D (Trib.) 133

[Customs Appellate Tribunal (Karachi Bench-I)]

Before Mazhar Ali Ghallu, Member Judicial-II and Abdul Basit Chaudhry, Member Technical-I

Messrs ESSA STEEL and another

Versus

The COLLECTOR OF CUSTOMS (ADJUDICATION-II), CUSTOM HOUSE, KARACHI and another

Customs Appeal No.K-96 of 2022, decided on 25th May, 2023.

(a) Customs Act (IV of 1969)---

----Ss. 79, 80, 19, 32(1), 32(2), 32-A, 104 & 156(1), clauses (10-A), (14) & (14-A)---SRO 655(I)/2006 dated 05-06-2006---Mis-declaration---In-Bond Goods, description of---Fiscal fraud---Inadmissible exemption---Scope---Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles---Importer assailed order-in-original passed by Collector of Customs (Adjudication) following actions taken by Directorate General of Intelligence and Investigation-Customs ('Directorate')---Allegation against the appellant/importer was that sizes of the imported steel sheets coils mentioned in its Goods Declaration ('GD') did not match with the sizes allowed by the Engineering Development Board (' EDB ')to the importer as an input material---Submission of the reporting Directorate was that the importer had declared the raw material consumption of 7.99 kgs per unit whereas prevalent per unit consumption was 4.01 kgs---Validity---In the case of In-Bond GD, the goods are warehoused after checking and the goods are cleared after payment of duty / taxes, if any, through Ex-Bond GD being filed under section 104 of the Customs Act, 1969 ('the Act, 1969')---Particulars of an invoice, packing list, Bill of lading ('B/L') etc., are merged into GD and to check the "declaration" of an importer, the GD' s particulars are to be considered for the purpose of charging a person for mis-declaration within the meaning of S. 32 of the Act, 1969---Further, for charging a person for the violation of S.32-A of the Act, 1969, the Department has to prove the submission of some fake or manipulated or fabricated documents by the declared importer , which is missing in the present case, thus it is neither a case of " mis-declaration" nor a case of " fiscal fraud" within the meaning of Ss. 32 & 32-A of the Act, 1969 , rather, prima facie, it is just a case of S. 19 of the Act, 1969 which needs to be examined as per conditions of the SRO 655(I)/2006 dated 05-06-2006---Submission of the respondents impliedly confirms that, instead of sizes, the weight-wise consumption of the imported material / steel-sheets matters for determination of the lawful consumption for exemption ; thus, in case of any variation in sizes, the appellant / importer could not be charged for evasion of duties / taxes in availing inadmissible exemption---EDB had also pointed out the consumption of excessive material, not the sizes, and had asked the Department for recovery of duties / taxes, if any, on misuse of quota after chain audit---Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction---Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)---Appeal filed by the taxpayer was allowed, in circumstances.

(b) Customs Act (IV of 1969)---

----Ss. 79, 80, 19, 32(1), 32(2), 32-A, 104 & 156(1), Cls (10-A), (14) & (14-A)---SRO 655(I)/2006 dated 05-06-2006---Mis-declaration---In-Bond Goods, description of---Fiscal fraud---In-admissible exemption---Scope---Importer-cum-manufacturer getting goods manufactured through another sub-manufacturer---Scope---Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles---Directorate, through contravention report, alleged that importer had shown some other unit as theirs because on their (Directorate) team's visit it was found that importer's unit did not exist, rather there was a small industrial unit (with a name other than name of unit given by the importer) employing 810 workers---Validity---Though there was discrepancy of the changed name, but no denial to the fact that the manufacturing facilities of the output goods were available, operational with 810 employees, on the given address of the unit---SRO 655(I)/2006 dated 05-06-2006 ('SRO 655(I)/2006') had allowed an importer-cum-manufacturer, like appellant, to get the goods manufactured through another manufacturer (sub-vendor)---Considering the spirit of availing exemption under the SRO 655(I), allegation against the appellant was immaterial, particularly against the imported raw material which had been consumed in manufacturing---Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction---Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)---Appeal filed by the taxpayer was allowed, in circumstances.

----Ss. 79, 80, 19, 32(1), 32(2), 32-A, 104 & 156(1), Cls. (10-A), (14) & (14-A)---SRO 655(I)/2006 dated 05-06-2006---SRO 486(I)/2007 dated 09-06-2007---Mis-declaration---In-Bond Goods, description of---Fiscal fraud---In-admissible exemption---Scope---Issuance of "Flying Invoices" for sale of output goods, allegation of---Jurisdiction---Scope---Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles---Importer assailed order-in-original passed by Collector of Customs (Adjudication) following actions taken by Directorate General of Intelligence & Investigation-Customs ('Directorate')---Validity---Matter of issuance of "Flying Invoices" related to "supply" and for that I.R.S authorities had exclusive jurisdiction---Even otherwise, as per the conditions of the SRO 655(I)/2006 the complete round for availing exemption completes on communication to the concerned Collectorate of Customs (Imports), in writing , about the consumption of the input raw material in manufacturing of the specified output article, in term of condition (ix) of the SRO 655 (I)/2006 , which had been complied with by the appellant / tax-payer---According to the condition (x) of the SRO 655 (I)/2006, even if there was an information about evasion of duty / taxes through an in-admissible exemption in that case too , the matter was ought to be communicated to the Collector of Customs, having jurisdiction, who allowed input raw materials' release---Collector of Customs was to initiate proceedings for the recovery of duty / taxes, if any, due to non-consumption or mis-appropriation of the imported input goods by an importer---Even an "audit" or "investigation" could only be undertaken by the specific person or agency duly designated by the EDB and FBR---Respondents Directorate had failed to produce any " authorization" in terms of condition (x) of the SRO 655 (I)/2006, thus the actions of the respondents / Directorate were without jurisdiction---Considering Notification SRO 486(I)/2007 dated 09-06-2007 issued under S.3E of the Customs Act, 1969, the officers of Directorate General of Intelligence and Investigation-Customs had no jurisdiction to investigate the matters relating to S.19 of the Customs Act, 1969---Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction---Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)---Appeal filed by the taxpayer was allowed, in circumstances.

Saeed Shahzad for Appellants.

Saddurddin, Assistant Manager, present for Engineering Development Board (EDB) and Umair Mustafa, A.O. for Respondent.

PTD 2024 CUSTOMS APPELLATE TRIBUNAL KARACHI 191 #

2024 P T D (Trib.) 191

[Customs Appellate Tribunal (Karachi Bench-III)]

Before Shakil Ahmed Abbasi, Member Judicial-III

Messrs FAF ENTERPRISES, KARACHI

Versus

The PRINCIPAL APPRAISER, MCC OF APPRAISEMENT-JIAP, KARACHI and another

Customs Appeal No.K-1898 of 2022, decided on 22nd March, 2023.

Federal Excise Act (VII of 2005)---

----Ss. 14(1) & 14(2)---Customs Act (IV of 1969), S.80---Federal Excise Duty, determination of---Penalty for evading Federal Excise Duty---Customs Authorities, powers of---Scope---Customs Authorities issued show cause notice to importer that the subject good (E-Liquid) were subject to Federal Excise Duty---Contention of appellant/importer was that Customs Authorities had not been delegated powers to recover any taxes other than customs duty---Held, that the powers given under Ss.14(1) & 14(2) of the Federal Excise Act, 2005, had been vested with the Officer of Inland Revenue who would issue Show-Cause Notice and determine Federal Excise Duty evaded and could impose penalty---However, Customs authorities had no powers in said regard---Impugned Show-Cause Notice was issued without powers and jurisdiction vested under Ss. 14(1) and 14(2) of Federal Excise Act, 2005---Order-in-Original, being illegal and ultra vires, was set-aside---Appeal was accepted.

C.P. D-5482 of 2017 ref.

Obaydullah Mirza for Appellant.

Sultan, AO for Respondent No.1.

PTD 2024 CUSTOMS APPELLATE TRIBUNAL KARACHI 705 #

2024 P T D (Trib.) 705

[Customs Appellate Tribunal]

Before Abdul Jabbar Qureshi, Member Judicial-I and Abdul Basit Chaudhary, Member Technical-I, TAJ MUHAMMAD AFRIDI and others

Versus

The COLLECTOR OF CUSTOMS (ADJUDICATION-II), CUSTOM HOUSE KARACHI and others

Customs Appeals Nos.K-99, K-142 of 2021, decided on 12th March, 2022.

(a) Customs Act (IV of 1969)---

----Ss. 32 & 32-A---Mis-declaration---Fiscal fraud---Limitation---Scope---Importer was accused of intentionally concealing the true price of a vehicle and re-exporting it with the intention of re-importing it at a lower declared value, thereby depriving the government of its legitimate revenue---Validity of these allegations was called into question based on the relevant date defined in subsection (5) of S. 32, which specified a five-year time limit from the date of goods clearance---In the particular case, the manual goods declaration was filed in 2013, while the show-cause notice was issued in 2020, more than seven years after the goods declaration was filed---As a result, the show cause notice lacked legal merit and was issued beyond the stipulated time period mentioned in Ss.32(1) & 32(2) of the Customs Act, 1969---Furthermore, S. 32-A(2) clearly states that a show-cause notice must be issued within 180 days of detection---However, in this case, the show-cause notice was issued after one year and seven months, making it time-barred---Department had not provided any explanation for this significant delay---Appeal filed by the importer was allowed, and the department's appeal was dismissed, in circumstances.

2007 PTD 117; Messrs Super Asia Muhammad Din & Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala 2008 PTD 60; 2017 PTD 1756; Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881; Honorable Sindh High Court's case 2007 PTD 117; Adamjee Jute Mills v. Province of East Pakistan PLD 1959 SC 272; Gouranga Mohan Sikdar v. Controller PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173; Muhammad Ibrahim Khan v. Secretary 1984 SCMR 1014; Messer Mujahid Soap and Chemical Industries (Pvt.) Ltd. v. Customs Appellate Tribunal Bench-I, Islamabad and others 2019 SCMR 1735 = 2019 PTD 1961 and Collector of Sales Tax v. Super Asia Mohammad Din and Sons 2017 SCMR 1427 ref.

(b) Customs Act (IV of 1969)---

----S. 32---Mis-declaration---Scope---Penalty cannot be imposed without establishing an act of the importer which knowingly violates the law and indulges in mens rea.

Messrs Humayun Ltd. v. Federation of Pakistan PLD 1991 SC 963; Ministry of Finance v. Har Castle PLD 1967 SC 1 and Commissioner Income Tax v. Habib Bank 2007 PTD 901 rel.

M. Afzal Bhatti for Appellant (in Customs Appeal No.K-99 of 2021).

Zeeshan, A.O. for Respondent (in Customs Appeal No.K-99 of 2021).

Zeeshan, A.O. for Appellant (in Customs Appeal No.K-142 of 2021).

M. Afzal Bhatti, A.O. for Respondents (in Customs Appeal No.K-142 of 2021).

PTD 2024 CUSTOMS APPELLATE TRIBUNAL LAHORE 503 #

----Ss. 2(s), 16, 17, 156(1)(8), 156(1)(89), 157(1), 157(2) & 181---SRO 499(I)/2009 dated 13-06-2009---Smuggling of petroleum products---Confiscation of vehicle carrying such product---Redemption---Scope---Respondent's vehicle was confiscated for carrying Diesel Oil under the cover of Liquefied Petroleum Gas (LPG)---Appellant / Collectorate filed appeal before the Tribunal to modify the order of Collector Adjudication whereby an option had been given to the owners under S. 181 of the Customs Act, 1969 to redeem the vehicle confiscated under S.157(1) & (2) of the Customs Act, 1969, carrying smuggled goods on payment of redemption fine along with personal penalty---Validity---Seizing Officer had failed to bring the case of the respondent within clause (b) of the SRO 499(I)/2009 dated 13-06-2009---Even the Appellant / Collectorate failed to produce any fresh evidence before the Tribunal necessitating interference with the impugned order---In view of the above, Tribunal maintained the impugned order passed by the Adjudication Officer---Appeal was dismissed, in circumstances.

Faiz Muhammad v. F.O.P and others (Civil Petition No.4580 of 2021) ref.

Nemo for Appellant/Department.

Muhammad Usman Malik for Respondent.

PTD 2024 CUSTOMS APPELLATE TRIBUNAL LAHORE 1526 #

2024 P T D (Trib) 1526

[Customs Appellate Tribunal]

Before Shakil Ahmed Abbasi, Member Judicial-III

The COLLECTORATE OF CUSTOMS HYDERABAD through Deputy Collector, Customs (Preventive) Larkana/Sukkur

Versus

The COLLECTOR OF CUSTOMS (ADJUDICATION) QUETTA CAMP OFFICE AT HYDERABAD and another

Customs Appeal No.H-1694 of 2023, decided on 13th December, 2023.

(a) Customs Act (IV of 1969)---

----Ss. 2(s), 16, 156(1)(8), 156(1)(89), 157(1), 157(2) & 181---Imports and Exports (Control) Act (XXXIX of 1950), S.3(1)---SRO 499(I)/2009 dated 13-06-2009---SRO 566 (I)/2005 dated 06/06/2005---Smuggling, allegation of---Vehicle, confiscation of---Release of vehicle---Redemption fine /penalty, payment of---Appellant/Collectorate filed appeal before the Customs Appellate Tribunal to modify the order of the Collector Adjudication whereby option had been given to the owners under S. 181 of the Customs Act, 1969, to get the confiscated vehicle released on payment of redemption fine along with penalty---Validity---Neither record revealed any proof regarding earlier use of the impugned vehicle in smuggling activities nor any secret cavities to conceal the smuggled goods had been reported / discovered as per information available---Appellant /Collectorate even failed to produce any fresh evidence before the Tribunal necessitating interference with the impugned orders---Appeal filed by the Collectorate was dismissed, in circumstances.

(b) Customs Act (IV of 1969)---

----Preamble, Ss.2(s), 16, 156(1)(8), 156(1)(89), 157(1), 157(2) & 181---Imports and Exports (Control) Act (XXXIX of 1950), S. 3(1)---SRO 499(I)/2009 dated 13-06-2009---SRO 566 (I)/2005 dated 06/06/2005---Smuggling, allegation of---Confiscated vehicle, release of---Redemption fine /penalty, imposition of---Powers---Imposition of penalty vis-à-vis any offence committed under the Customs Act, 1969, is beyond competence and jurisdiction of the Adjudication Authority---No provision of the Customs Act, 1969, can, other than the Special Judge, Customs and Taxation confer this provision and jurisdiction upon any other Authority or Tribunal.

Hamayun Naseer, Inspector, present for Appellant/Department.

Saifullah Brohi for Respondent No.2.

Federal Tax Ombudsman Pakistan

PTD 2024 FEDERAL TAX OMBUDSMAN PAKISTAN 86 #

2024 P T D 86

[Federal Tax Ombudsman]

Before Dr. Asif Mahmood Jah, Federal Tax Ombudsman

The SECRETARY, REVENUE DIVISION, ISLAMABAD: In the matter of

0008/OM/2022, decided on 19th May, 2022.

Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 2(3)(i)(a), 2(3)(i)(b), 2(3)(i)(c), 2(3)(ii), 9 & 10---Sales Tax Act (VII of 1990), S. 13 & Sixth Sched. Serial No.46 (as omitted through Finance (Supplementary) Act, 2022)---FBR's U.O No. 4/I-STB/2022, dated 4th February, 2022-Maladministration---Scope---Imports by diplomats, diplomatic missions and other privileged persons were rendered taxable through Finance (Supplementary) Act, 2022, by omitting relevant Serial No.46 to the 6th Schedule of the Sales Tax, 1990, but FBR unilaterally rendered the said omission inapplicable vide U.O No. 4/I-STB/2022, dated 4th February, 2022 ('UO')---Reservations of the Ministry of Foreign Affairs ('MOFA') were that the said omission could trigger an adverse reaction from other foreign states and international organizations---Validity---Plain reading of UO in question revealed that FBR, on its own, had assumed the review jurisdiction of an Act of Parliament and unilaterally undid the omission and once again granted exemption from the tax levied by the Legislature---While doing so, the FBR had trespassed its legal domain, and issuance of UO, containing an oblique clue to FBR's volta-face, tantamounted to maladministration in terms of Ss. 2(3)(i)(a), 2(3)(i)(b),2(3)(i)(c) & 2(3)(ii)Federal Tax Ombudsman Ordinance, 2000, as the omission-in-question having hurriedly been enacted through Finance(Supplementary) Act, 2022 was perverse, arbitrary or unreasonable, unjust, discriminatory and was based on irrelevant grounds---Subsequent unilateral withdrawal through UO was contrary to law ;and even delay and ineptitude was shown by the FBR because summary for Federal Cabinet was moved after about 24 days of raising of alarm by the MOFA and that too at the intervention of Federal Tax Ombudsman ('Ombudsman')---Ombudsman directed the FBR to identify the officer responsible for said faux pas , resulting in an embarrassing position for MOFA and that proper legal cover be arranged in place of FBR's U.O No. 4/I-STB / 2022, dated 4th February, 2022---Own Motion was disposed of accordingly.

Muhammad Tanvir Akhtar, Advisor Dealing Officer.

2024 P T D (Trib.) 253

[Inland Revenue Appellate Tribunal]

Before Aeysha Fazil Qazi, Judicial Member and Dr. Shahid Siddiq, Accountant Member

Messrs REHMANI DAWAKHANA, MAIN BAZAR GANDAM MANDI, KASUR

Versus

COMMISSIONER INLAND REVENUE, RTO, LAHORE

S.T.A. No.1922/LB of 2023, decided on 24th November, 2023.

Sales Tax Act (VII of 1990)---

----S. 11---Assessment Order passed beyond Show-Cause Notice---Effect---Record revealed that taxpayer was not confronted with any invoice or allegation---Show-Cause Notice, was totally silent and had not mentioned any allegation which had been mentioned in the Assessment Order---Commissioner Appeals (though partially accepted appeal of the taxpayer yet) also noticed the said illegality and mentioned (the same) on relevant page of his order, and wrote letter to seek opinion of the Department in said regard, however, no one appeared on the behalf of the Department---Thus, the proceedings were initiated and consequently finalized under S.11(2) of Sales Tax Act, 1990---Proceedings initiated on the basis of illegal notices and superstructure constructed thereon in the shape of amended order under S.11(2) was nullity in law---Impugned order passed by the Assessing Officer, for having been passed beyond the Show-Cause Notice, was not sustainable in the eyes of law---Tribunal vacated both the orders passed by the both the Authorities below---Appeal filed by the taxpayer was allowed, in circumstances.

2022 PTD 1153; 2013 PTD 1001; 2010 PTD 451; 2011 PTD 1883 and 2011 PTD 2538 ref.

Muhammad Hamza for Appellant.

Talat Mehmood Bosaal, DR for Respondent.

PTD 2024 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN 270 #

2024 P T D (Trib.) 270

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Muhammad Tahir, Accountant Member

Messrs URBAN DEVELOPERS

Versus

COMMISSIONER INLAND REVENUE, RTO-II, LAHORE

F.E.A. No.08/LB of 2018, decided on 20th November, 2023.

Income Tax Ordinance (XLIX of 2001)---

----S.221---Rectification application---Maintainability---Matter sub-judice---Effect---While the Reference Application filed by the taxpayer (company/developers) was pending before the High Court, rectification application was moved by the taxpayer before the Assessing Officer purportedly on a new/different ground ; previous order-in-original was rectified, yet not satisfied with the rectification done, appeal was filed whereby the Commissioner Appeals passed certain directions to the Officer Inland Revenue regarding rectification order---Taxpayer, still discontented, preferred appeal before the Appellate Tribunal Inland Revenue ('the Tribunal')---Held, that both the Authorities had passed the orders in complete oblivion of law as once the Appellate Authority had decided the appeal, the order of the lower Authority would have merged into the appellate order---In the present case, not only the Commissioner (Appeals) but the Appellate Tribunal also had finalized the appeal against order-in-original by the Assessing officer and , admittedly, Reference Application was pending before the High Court against the order of the Appellate Tribunal---After exercising original jurisdiction, the Officer Inland Revenue became functuous officio with little window of rectification and that too could be against a mistake apparent and floating on the surface of such order---But after decision of the Appellate Forum, the order-in-original had merged into the order of the Appellate Authority and there remained no authority with the Officer Inland Revenue to rectify his own order---Present case was a clear example of capriciousness on the part of the Taxation Officer as despite the matter having been decided by the Appellate Forums and being pending before the High Court in continuation of the Assessment Order, the Officer Inland Revenue proceeded to rectify the very order-in-original---Further, in doing so, the Officer Inland Revenue had changed the same (order-in-original)---By rectifying order-in-original, the Officer Inland Revenue had nullified all the proceedings / orders having been conducted /passed by the Appellate Forums---Such proceedings carried out by the Officer Inland Revenue should have been dealt strictly by the Commissioner (Appeals), which was not done by him rather he, after examining the merits once again, annulled the order with certain directions to the Officer Inland Revenue and he had indirectly contributed in the error that had been committed by the Assessing Officer in rectification proceedings and completely over sighted the fact that while Reference Application was pending , at that subsequent stage the Officer Inland Revenue had no authority to rectify his order---Thus, passing directions by Commissioner amounted to justifying rectification made by the Assessing Officer---Record revealed that the High Court on Reference Application, had suspended the assessment order subject to deposit of certain amount against charge of Federal Excise Duty ('FED') and the Officer Inland Revenue, in rectification, had even re-calculated the payable FED---Both the Authorities below had transgressed their jurisdiction by passing rectification orders in application and appeal which were not sustainable in the eye of law---Tribunal set aside both orders passed in rectification proceedings as being illegal and void ab-initio---Appeal filed by the taxpayer, against certain directions given by the Commissioner Appeals in rectification proceedings was dismissed, in circumstances.

Ikram ul Haq, ITP for Appellant.

Muhammad Sarim Bhatti, DR for Respondent.

PTD 2024 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN 277 #

2024 P T D (Trib.) 277

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Muhammad Tahir, Accountant Member

Messrs CRESCENT FIBRES LTD.

Versus

COMMISSIONER INLAND REVENUE LTO, LAHORE

S.T.A. No.1559/LB of 2023, decided on 2nd November, 2023.

(a) Sales Tax Act (VII of 1990)---

----Ss. 3 & 11---Delay in furnishing Sales tax payments---Penalty under S.11 of the Sales Tax Act, 1990, imposition/recovery of---Scope---Department imposed penalty on the registered person for not depositing sales tax for a period of one and half years---Contention of the appellant (registered person) was that the penalty could not be recovered under S. 11 of the Sales Tax Act, 1990---Validity---Commissioner (Appeals) had rightly turned down the said contention / objection as "sales tax" included "penalty" which could only be assessed and recovered under S. 11 of the Sales Tax Act, 1990---However, Tribunal reduced the penalty to 10% of amount imposed by Authorities below as penalty---Appeal filed by the registered person against imposition of penalty for late payment of sales tax was disposed of accordingly.

Shahbaz Hussain v. Federation of Pakistan 2023 PTD 30 and Messrs Fiza Noor Creations (Pvt.) Ltd. v. CIR, RTO Faisalabad S.T.A. No.1021/LB of 2021 ref.

(b) Sales Tax Act (VII of 1990)---

----Ss. 3 &11---Late payment of sales tax---Penalty, imposition/recovery of---Scope---Mens rea of taxpayer, absence of---Willful default---Department imposed penalty on the registered person for not depositing sales tax for a period of one and half years---Contention of the appellant (registered person) was that imposition of penalty in absence of proving any mens rea was not tenable---Held, that the default ,in the present case, in making sales tax payments was for tax periods spanning almost one and half year and for a prudent mind it was not hard to understand that appellant committed willful default---Intention of the party was wholly irrelevant since there was a clear violation of the statutory provisions repetitively---Appellant had willfully violated statutory provisions with impunity---However, the Tribunal reduced the penalty to 10% of amount imposed by Authorities below as penalty---Appeal filed by the registered person against imposition of penalty for late payment of sales tax was disposed of accordingly.

----Ss.3 & 11---Delay in furnishing Sales tax payments---Willful default---Penalty, quantum of---Scope---Department imposed penalty on the registered person for not depositing sales tax for a period of one and half years---Validity---Penalty had to be imposed in compliance with the provisions of law and the quantum must be proportionate to the gravity of default committed by the taxpayer---Once the contravention was established, then the penalty had to follow and only the quantum was discretionary---Penalty provisions had been provided in the statute to ensure compliance , which had never been regarded as a tool to generate revenue---Penalties should be levied after consideration of relevant circumstances and discretion to decide the quantum of penalty should be exercised judiciously---Levy of extreme amount of penalty was not justified in the present case, thus, the Tribunal reduced the penalty to 10% of amount imposed by Authorities below as penalty---Appeal filed by the registered person against imposition of penalty for late payment of sales tax was disposed of accordingly.

2017 PTD 1579 ref.

Muhammad Khalid Younas for Appellant.

Ghulam Hussain Yasir, DR for Respondent.

PTD 2024 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN 358 #

2024 P T D (Trib.) 358

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Muhammad Tahir, Accountant Member COMMISSIONER INLAND REVENUE, LTU, LAHORE

Versus

Messrs WORLD CALL TELECOM LTD.

I.T.A. No.1318/LB of 2016, decided on 16th November, 2023.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss.113, 120 & 122(5A)---Turnover---Sale of assets and scrap---Scope---Company deriving income from telecom and broadband services---Minimum tax, charging of---Scope---Officer Inland Revenue charged the taxpayer/company minimum tax on sale of assets and scrap which charge was deleted by the Commissioner---Department assailed later order before the Appellate Tribunal Inland Revenue ('Tribunal')---Stance of the OIR was that the sale of any item with view to earn profit qualified for inclusion of the same in the turnover and sale of fixed assets was also part and parcel of taxpayer's business activity---Validity---Scrap was generated, which was sold, only to reduce the cost of material consumed in the manufacturing process; further, scrap churned out in the process of the assesse's manufacturing activities did not form part of the trading goods or stock-in-trade of the assesse; hence, the scrap sales could not be taken as part of turnover of the business carried out by the assesse---Assesse/company was not engaged in the business of sale of scrap---Turnover meant the value of goods purchased/ sold in the course of carrying of business---Thus, scrap by the assesse/company did not have element of turnover in the present case---Tribunal viewed that the scrap sales could not be taken as a part of turnover for the purpose of deduction---Commissioner (Appeals) had rightly deleted the charge of minimum tax on sale of scrap---Appeal filed by the Department was dismissed, in circumstances.

2009 PTD 1187 ref.

(b) Income Tax Ordinance ( XLIX of 2001)---

----Ss.113(3)(a), 120 & 122(5A)---Turnover---Sale of assets and scrap---Scope---Company deriving income from telecom and broadband services---Minimum tax, charging of---Officer Inland Revenue charged the taxpayer/ company minimum tax on sale of assets and scrap holding that the assesse was in receipt of fixed assets which was included in total turnover as according to the OIR tax was to be computed on ' turnover from all sources'---Said charge was deleted by the Commissioner, and Department assailed later order before the Appellate Tribunal Inland Revenue ('Tribunal')---Validity---Section 113(3)(a) of the Income Tax Ordinance, 2001, envisaged that the term 'turnover' meant gross sales or gross receipts exclusive of sales tax and federal excise duty or trade discount and any deemed income assessed as final discharge of tax liability---Undisputedly, the assesse was in receipt of fixed assets which was included in total turnover as according to the OIR tax was to be computed on 'turnover from all sources'---Expression 'turnover', 'gross sales: 'gross receipts' predominately appear to be interchangeable---Said expressions do not only overlap, but may confuse an assessee ; for example 'gross sales' means total of all sales: 'turnover' also means aggregate of sales: 'gross sales' means similarly, entire cash received as sale price---Said expressions have the sting of overlapping and convey analogous meaning---Appeal filed by the Department was dismissed, in circumstances.

M.K Ranganathan v. Government of Madras AIR 1955 SC 604 ref.

----Ss.15, 15-A, 16, 67, 120 & 122(5A)---Income Tax Rules, 2002, R.13---Income from property---Allocation of expenses---Scope---Company deriving income from telecom and broadband services---Officer Inland Revenue allocated the taxpayer/company expenses relatable to rental income which order was deleted by the Commissioner (Appeal) accepting claim of the taxpayer that properties were rented out in previous years incurring some negligible / immaterial charges not warranting any need to allocate the expenditure to the income---Department assailed order passed by the Commissioner (Appeal) before the Appellate Tribunal Inland Revenue ('Tribunal')---Validity---According to the Commissioner, allocation of expenses to property income was against the provisions of section of the Income Tax Ordinance, 2001 as well as R. 13 of the Income Tax Rules, 2002---There was no justification in the Assessing Officer's stance to allocate expenses from rented property---There was no tangible evidence before the Assessing Officer to show that the allocated expenses were specifically incurred from earning income---Tribunal maintained that expenses prorated by the OIR had no relevance with the earning of property income---Appeal filed by the Department was dismissed, in circumstances.

(d) Income Tax Ordinance (XLIX of 2001)---

----Ss.30, 113, 120 & 122(5A)---Income from other sources---Dividend---Allocation of expenses---Scope---Company deriving income from telecom and broadband services---If the assesse incurs any expenditure for earning of dividend, such expenditure shall be allocated from the dividend income---As a matter of principle only the actual expenses are to be allocated---There is no scope for any estimate of expenditure being made and no notional expenditure can be allocated also for the purpose of earning income unless the facts of the particular case warrant such allocation---Only the actual expenses should be taken into account in reducing the dividend income and not any notional expenditure as has been done in the present case---Assessing Officer did not bring on record any evidence with regard to actual expense incurred by the taxpayer in earning dividend income especially after the denial of the taxpayer in respect of expenses incurred---Addition made by the Assessing Officer was primarily hypothetical and without any evidence, thus, was not sustainable---Impugned order passed by the Commissioner was maintained by the Tribunal---Appeal filed by the Department was dismissed, in circumstances.

(e) Income Tax Ordinance (XLIX of 2001)---

----Ss.37, 120 & 122(5A)---Income from capital gain---Allocation of expenses to exempt capital gain---Scope---Taxpayer being a company deriving income from telecom and broadband services---Department assailed order passed by the Commissioner before the Appellate Tribunal Inland Revenue ('Tribunal') by which allocation of expenses to exempt capital gain was deleted---Validity---Income from capital gain being a separate block of income and being similar in its charge to property income having restrictive allowance of expenditure could not be quantified for prorating the expenses claimed otherwise---Hence, apportionment of expenses was not permissible between exempt capital gain and income earned from other operations---Commissioner had rightly deleted the allocation of expenses under the head-in-question, and the Tribunal maintained the said impugned order---Appeal filed by the Department was dismissed, in circumstances.

2006 PTD 356 ref.

Ahsan Tahir, DR for Appellant.

None for Respondent.

PTD 2024 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN 435 #

2024 P T D (Trib.) 435

2024 P T D (Trib.) 1037

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Muhammad Tahir, Accountant Member

Messrs PUNJAB ALUMINUM EXTRUSION

Versus

COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

S.T.A. No.358/LB of 2022, decided on 16th August, 2023.

(a) Assets Declaration Ordinance (III of 2019)---

----Ss. 3, 6 & 14---Sales Tax Act (VII of 1990), S.11---Declaration of undisclosed assets, sales and expenditures---Tax periods, non-determination of---Effect---Proof of payment of tax not given by the registered person---Effect---Company got itself registered in sales tax on 24-12-2-18 and agreed to deposit certain amount voluntarily---Later registered person filed declaration of amnesty on 03-07-2019 under Assets Declaration Ordinance, 2019 ('the Ordinance 2019')---Assessing Officer taxed the entire undeclared sales shown in amnesty on the basis that since there was no proof of payment of tax paid by the taxpayer under the claimed amnesty, which order was confirmed by the Commissioner (Appeals)---Company (registered person) assailed both orders before the Appellate Tribunal Inland Revenue---Validity---Clause (b) of S. 3 of the Ordinance, 2019 stipulated that any person might declare undisclosed sales made upto 30th June 2018---Phrase " upto 30th June 2018" , being relevant, suggested that any sales prior to said date could be declared under the amnesty scheme---Sales could be of any period which were made till 30th June 2018, which could be one month old, one year old or more than five years old---Under the said provision the appellant declared sales of certain amount made without specifically bifurcating the tax-periods involved in making sales---Department took the entire un-disclosed sales from the claim and taxed it without even making any effort to determine through probe the tax period involved in said sales---Under the provisions of Sales Tax Act, 1990, there were certain time limitations provided for making any assessment which were mandatory to be followed---Recovery of tax was only possible after the tax had been duly assessed and the amount of 'tax due' was determined under S. 11 of the Sales Tax Act, 1990---No determination of the tax periods involved in sales, in the present case, was gathered by the Department---Benefits available to any person under the law could not be overridden by use of unbridled powers, and when the law specifically provided that proceedings could only be initiated within five years from the relevant date of default then without even determining the relevant date of default, any issuance of notice was vague, void and illegal---Appellate Tribunal Inland Revenue declared the impugned orders passed by both the Authorities below to the extent of alleged whole undeclared supplies as unlawful and void, therefore, same were set-aside, however, tax charged on sales of amount for period of July 2018 to November 2018 was confirmed---Appeal filed by the company (registered person) was partly allowed accordingly.

(b) Assets Declaration Ordinance (III of 2019)---

----Ss. 3, 6 & 14---Declaration of undisclosed assets, sales and expenditures---Tax payment, proof of---Confidentiality---Scope---Company got itself registered for sales tax on 24-12-2018 and agreed to deposit certain amount voluntarily---Later registered person filed declaration of amnesty on 03-07-2019 under Assets Declaration Ordinance, 2019 ('the Ordinance 2019')---Assessing Officer taxed the entire undeclared sales shown in amnesty on the basis thatsince there was no proof of payment of tax paid by the taxpayer under the claimed amnesty, which order was confirmed by the Commissioner (Appeals)---Company (registered person) assailed both orders before the Appellate Tribunal Inland Revenue---Appellant (registered person) took the plea of confidentiality against claimed amnesty given under S.14 of the Assets Declaration Ordinance, 2019 ('the Ordinance, 2019') for not providing any payment proof----Validity---Section 14 of the Ordinance 2019 primarily was restrictive for the Department for making any disclosure of amnesty claimed by any person---Appellant could not hide behind said provision to not show proof of payment to the Department while still availing benefit when S. 6 of the Ordinance 2019 envisaged that in case of non-payment of tax , the amnesty declared shall be void---Appellate Tribunal Inland Revenue declared that impugned orders passed by both the Authorities below to the extent of alleged whole undeclared supplies were, unlawful and void, therefore, were accordingly set-aside, however, tax charged on sales of amount for period of July 2018 to November 2018 was confirmed---Appeal filed by the company(registered person) was partly allowed accordingly.

Shahbaz Butt, Advocate Supreme Court for Appellant.

Tallat Mahmood, DR for Respondent.

PTD 2024 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN 1062 #

2024 P T D (Trib.) 1062

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Anwaar Ul Haque, Accountant Member

AHMAD HASHAAM ZAFAR

Versus

COMMISSIONER INLAND REVENUE, RTO, FAISALABAD

I.T.A. No.644/LB/2023, decided on 26th February, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 122, 170 & 221---Deemed assessment order---Rectification---Scope---Refund claim, self-adjustment of---Procedure / mechanism under law, non adopting of---Scope and effect---Commissioner Inland Revenue (Appeal) rejected taxpayer's appeal and confirmed rectification order passed by the Officer Inland Revenue (OIR)---Contention of the appellant / taxpayer was that the action of the OIR rectifying the deemed assessment order by way of rejecting the refund claim/adjusted was beyond his lawful authority---Plea of the Respondent /Department was that the taxpayer had adjusted refund against tax liability for relevant tax year without proper verification and determination by the Commissioner, thus considering the same as mistake/error, the Officer Inland Revenue had rightly passed the rectification order---Validity---Rectification is a jurisdiction ancillary to the appellate jurisdiction intended to rectify a mistake of fact or law apparent on the face of record which does not require investigation appraisal of evidence, interpretation of law or an enquiry into facts---Scope of S. 221 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') is restricted to rectify the mistake apparent from the record---Where an officer exercising such power enters into the controversy, investigates into the matter re-assesses the evidence or takes into consideration additional evidence and on that basis interprets the provision of law and forms an opinion different from the order, then it will not amount to 'rectification' of the order---Any mistake which is not patent and obvious on the record cannot be termed to be an order which can be corrected by exercising power under S. 221 of the Ordinance, 2001---Powers under Ss.120, 122 & 221 of the Ordinance, 2001 are not overlapping rather independent clearly intended to operate within their respective spheres---Powers under S.221 of the Ordinance, 2001 are quite limited to the extent of mistakes apparent form record since there are other provisions which deal with the authority of department officials with regard tore-opening of assessment, revision etc., in cases where the department is of the view that certain income had escaped from the chargeability of tax, but for exercising powers under S.221 of the Ordinance, 2001, there must be a mistake apparently floating on the surface which is so obvious to strike one's mind without entering into long drawn process of reasoning, detailed deliberation etc.---Hence, tax liability created by invoking the provisions of S. 221 of the Ordinance, 2001 in deemed assessment order is illegal and unlawful---However, in the present case , the Officer Inland Revenue declared the self-adjustment of refund as illegal without determination of overpaid tax by the Commissioner, and the appellant /taxpayer had also adjusted refund against his tax liability without filing any refund application under S. 170 of the Ordinance, 2001 for determination of his claim by the Commissioner, rather adjusted the refund against tax liability at the time of filing of return---Retention of money known to have been paid under mistake of law or not due under the law has been discouraged and such practice has been regarded as a shabby thing or dirty trick but the taxpayers cannot be allowed to self-adjust refunds against their tax liabilities without proper determination of overpaid amount by the relevant officer as it would amount to giving them jurisdiction and powers of Commissioners provided under S. 170 of the Ordinance, 2001---Without proper application on given pro-forma and without determination/approval, no refund can be adjusted by the taxpayers against their tax liabilities on their own---Declared version of refund can only be varied through an amendment under S. 122 of the Ordinance, 2001 while disposing of refund application---As the appellant /taxpayer had illegally adjusted the refund against its tax liability without properly filing application for refund and without any determination by the Commissioner, Commissioner (Appeal) was right to the extent that the taxpayer failed to get the refund determined by the Commissioner before the self adjustment, however, he failed to deliberate upon the very vital question of scope of rectification in deemed assessment orders---Thus, appellant/taxpayer committed wrong by adjusting the refund claim against tax ability without getting it determined by the Commissioner; and the OIR rather than dealing the matter under relevant provisions of Ordinance, 2001 proceeded to rectify the self-assessment order which could not be approved as the case of the appellant/taxpayer did not fall in the ambit of rectification---Appellate Tribunal Inland Revenue set-aside impugned orders having been passed without lawful authority and of no legal effect, and directed that the Department would be at liberty to initiate proceedings against the taxpayer for disallowance of refund adjustment after adopting due procedure under the relevant provisions---Appeal filed by the taxpayer was allowed accordingly.

2012 SCMR 371; 2018 SCMR 1131; 2006 PTD 2854; 2021 PTD 913; CIR v. Ch. Steel Mills, Daska in PTR No.335 of 2013; CIR v. Fatima 2016 PTD 377 and 2019 PTD 1116 ref.

M. Azhar Haseeb for Appellant.

Dr. Qurat ul Ain, DR for Respondent.

PTD 2024 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN 1090 #

2024 P T D (Trib.) 1090

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Muhammad Tahir, Accountant Member

ADG LDI (PVT.) LTD.

Versus

COMMISSIONER INLAND REVENUE, RTO, LAHORE

I.T.A. No.2783/LB of 2023, decided on 11th September, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 170,120 & 122---Income Tax Rules, 2002, R. 71 ---Self-assessment scheme---Self-adjustment of refund---Scope---Application to claim refunds, non-submitting of---Effect---Taxpayer/ company itself claimed refund adjustment against tax liability instead of paying amount of admitted liability for the relevant year under self-assessment scheme---Officer Inland Revenue ('OIR') passed amended assessment order holding said amount recoverable from the taxpayer declaring the self-adjustment of refund illegal having been done by the taxpayer without determination of overpaid tax by the Commissioner---Taxpayer/company filed appeal before the Appellate Tribunal Inland Revenue ('the Tribunal') as the amended assessment order was confirmed by the Commissioner (Appeals)---Validity---Appellant (taxpayer/company) admittedly did not file any refund application under S. 170 for determination of his claim by the Commissioner under S. 170 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') while said provisions stipulated that a taxpayer who had paid tax in excess of the amount might apply to the Commissioner for refund of excess amount paid---According to the R.71 of Income Tax Rules, 2002 ('the Rules, 2002') such application would be made in the pro forma specified in Part VI of First Schedule of the Rules, 2002---Thus, the whole mechanism given in the S.170 of the Ordinance, 2001 had not provided /allowed self-adjustment of refund by the taxpayers on their own against their tax liabilities---Without determination / approval, no refund could be adjusted by the taxpayers on their own---Declared version of the refund could only be varied through an amendment under S. 122 of the Ordinance, 2001 while disposing of refund application---Appellant (taxpayer/company) had illegally adjusted the claimed refund against its tax liability without properly filing application for refund and without any determination by the Commissioner, hence OIR had rightly noted the tax return as erroneous and prejudicial to the interest of revenue as admitted tax liability against declared income remained unpaid---Appellate Tribunal Inland Revenue maintained the impugned order passed by the Commissioner (Appeals) who had committed no illegality in confirming the amended assessment order---Appeal filed by the taxpayer/company was dismissed, in circumstances.

CIR v. Fatima Enterprises 2016 PTD 377 ref.

Abdul Sattar, ITP for Appellant.

Mazhar Ali, DR for Respondent.

PTD 2024 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN 1097 #

2024 P T D (Trib.) 1097

[Inland Revenue Appellate Tribunal]

Before Sardar M. Ajaz Khan, Judicial Member and Sajid Nazir Malik, Accountant Member

Messrs SHAHBAZ AHMAD

Versus

COMMISSIONER INLAND REVENUE, RTO, SARGODHA

I.T.A. No.1125/IB of 2022, decided on 31st July, 2023.

(a) Income Tax Ordinance (XLIX of 2001)---

----S.122 (9)---Show-cause notice---Object, purpose and scope---Roving inquiry---Prejudice to taxpayer---Error and prejudice should be clearly manifest from show-cause notice---There is no room for roving inquiry and fishing expedition---Purpose of serving notice on taxpayer is to notify him of the case against him---When such document contains incomplete information it can seriously prejudice taxpayer's defence---When taxpayer if saddled with tax liability that is not disclosed in notice, such liability that is not sustainable.

Commissioner Inland Revenue, Zone-I, LTU v. MCB Bank Limited 2021 PTD 1367; Honda Atlas Cars (Pakistan) Limited v. Appellate Tribunal Customs, Excise and Sales Tax 2021 PTD 1806; Caretex v. Collector of Sales Tax and Federal Excise 2013 PTD 1536; 1987 SCMR 1840; Collector Central Excise and Land Customs v. Rahim Din 1987 SCMR 1844 and Messrs Excide Pakistan v. The Deputy Collector 2004 PTD 1449 rel.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 111, 120 & 122---Convention between the Government of the French Republic and the Government of the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Art.4---Tax recovery---Double taxation---Non-resident---Bilateral treaty---Appellant was aggrieved of show-cause notice issued by authorities for recovery of tax---Plea raised by appellant was that he was a tax non-resident and was assessed in France---Validity---Provisions of Income Tax Ordinance, 2001, could not be invoked as Bilateral Tax Treaty between Pakistan and France had overriding effect---Appellant was filing his tax returns in France and in the light of treaty between Pakistan and France no action could be perpetuated in Pakistan by authorities---Appellant was absolved from taxation in Pakistan and no provision of Income Tax Ordinance, 2001, was attracted as he did not have any plausible source of income that could be deemed to have been accrued to him---Provision of S. 111 of Income Tax Ordinance, 2001, was applicable to residents of Pakistan only and could not be extended to appellant who was resident abroad and did not have taxable in Pakistan---Provision of S. 111 of Income Tax Ordinance, 2001, could be invoked on non-residents whose habitual abode was in France and had more personal and economic interest in France than Pakistan and had not earned Pakistan source income---Authorities failed to discharge onus for reinforcement of S. 111 of Income Tax Ordinance, 2001---Appellate Tribunal Inland Revenue set aside the orders passed by two fora below, as appellant was not taxable in Pakistan and S. 111 of Income Tax Ordinance, 2001, was not attracted to non-resident in presence of treaty between Pakistan and France upon applicable tie-breaker text---Appeal was allowed, in circumstances.

Messrs Siemens Pakistan Engineering Co. Ltd. v. FOP and others 1999 PTD 1358; 2019 PTD 1828 and 2020 PTD 1662 ref.

Imran-ul-Haq for Appellant.

Miss Misbah Noureen, DR for Respondent.

PTD 2024 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN 1432 #

2024 P T D (Trib.) 1432

[Inland Revenue Appellate Tribunal]

Before Zahid Sikandar, Judicial Member and Muhammad Tahir, Accountant Member

Messrs SUI NORTHERN GAS PIPE LINES LIMITED

Versus

COMMISSIONER INLAND REVENUE, LTO, LAHORE

S.T.A. No.1964/LB of 2023, decided on 18th February, 2024.

(a) Sales Tax Act (VII of 1990)---

----S.8---Input tax adjustment---Disallowance---Input tax claimed by Gas Company in respect of UFG (Un-Accounted For Gas)---Scope---Registered person (Sui Northern Gas Pipe Lines Ltd /SNGPL) filed appeal before the Appellate Tribunal Inland Revenue against order passed by Commissioner Inland Revenue (Appeals) whereby he upheld the disallowance of input tax claimed in respect of UFG (Un- accounted for Gas) over and above the permissible limit as determined by the OGRA and input tax claimed under S. 8 of Sales Tax Act, 1990---Held, that during the process of transmission and distribution, significant volume of natural gas remains unaccounted for due to leakage, pilferage, measurement errors or malfunctioning of gas meters which are termed as Unaccounted For Gas (UFG)---While determining the appellant's revenue, final tariff on the basis of guaranteed return OGRA allowed adjustment of UFG to the extent of certain percentage of gas available for sales as against the actual loss incurred on this account---In that background, the appellant was aggrieved by the disallowance of input tax of Rs.1,789,711,550/- as allegedly the same was in excess of percentage approval by OGRA---Previously, there were some conflicting judgments of the Appellate Tribunal Inland Revenue ('the Tribunal') on the issue-in-hand, hence during the course of hearing of company's appeal STA No.833/LB/2016, a miscellaneous application was given for the constitution of Larger Bench to resolve the controversy---Larger Bench of the Tribunal was constituted on the request of the taxpayer and matter was decided in favour of company---Input tax is admissible in respect of gas blown due to ruptures even if gas is not actually supplied as the intention of the appellant at the time of receiving gas was to make taxable supplies, which principle is squarely applicable in the present case---Appellate Tribunal, following the ratio decendi settled by the Larger Bench of the Tribunal in STA No.833/LB/2016, held that the Appellant (SNGPL) was entitled to input tax adjustment/claim incurred in respect of Un-accounted For Gas (UFG)---Commissioner Inland Revenue (Appeals) erred in law while upholding the disallowance of input tax on that account after completely ignoring the decision of the Larger Bench of the Tribunal which was against the lawful rights of the appellant---Tribunal set-aside the impugned order passed by Commissioner Inland Revenue (Appeals)---Appeal filed by registered person (SNGPL) was allowed, in circumstances.

Appeal STA No.833/LB/2016 and 2002 PTCL CL 115 ref.

(b) Sales Tax Act (VII of 1990)---

----S.46---Appellate Tribunal Inland Revenue---Constitution and powers---Decisions of Bench(s) of the Appellate Tribunal Inland Revenue---Binding effect---Scope---Registered person (Sui Northern Gas Pipe Lines Ltd. /SNGPL) filed appeal before the Appellate Tribunal Inland Revenue against order passed by Commissioner Inland Revenue (Appeals) whereby he upheld the disallowance of input tax claimed in respect of UFG (Un-accounted For Gas) over and above the permissible limit as determined by the OGRA and input tax claimed under S. 8 of Sales Tax Act, 1990---Argument of the respondent / Department was that a decision of larger Bench of the Appellate Tribunal Inland Revenue ('the Tribunal') was not binding on the present (smaller / Division) Bench of the Tribunal---Validity---Previously, there were some conflicting judgments of the Tribunal on the issue-in-hand, hence during the course of hearing of company's appeal STA No.833/LB/2016, a miscellaneous application was given for the constitution of Larger Bench to resolve the controversy---Larger Bench of the Tribunal was constituted on the request of the taxpayer and matter was decided in favour of company---There can be hardly any dispute that the Tribunal is a competent authority to pronounce on a question of law arising under the law including issue-in-hand, and it functions in a quasi-judicial manner ; its decisions are to be followed by the lower authorities unless these are upset by a higher Court--- According to a precedent followed by it, the Chairman of the Tribunal can constitute a larger Bench to resolve the conflicting views of various Benches of the Tribunal on the same issue---The decisions of such Larger Benches are binding on smaller Benches unless overruled by the High Courts or the Supreme Court or are distinguishable on facts clearly---Therefore, a decision of a larger Bench of the Tribunal has greater value as a precedent and it has to be preferred over the views expressed by the smaller Benches---Further, on the smaller Benches the view of larger Bench is binding---Viewed in this background, the appellant had rightly contended that the CIR(A) committed an error prejudicial to the interests of the appellant's rights when he failed to notice the decision of the larger Bench of the Tribunal---Argument of the Department was misconceived that the decisions of the Larger Bench of the Tribunal are not binding on smaller bench---Appellate Tribunal, following the ratio decendi settled by the Larger Bench of the Tribunal in STA No.833/LB/2016, held that the Appellant (SNGPL) was entitled to input tax adjustment/claim incurred in respect of Un-accounted For Gas (UFG)---Commissioner Inland Revenue (Appeals) erred in law while upholding the disallowance of input tax on this account after completely ignoring the decision of the Larger Bench of the Tribunal which was against the lawful rights of the appellant---Tribunal set-aside the impugned order passed by Commissioner Inland Revenue (Appeals)---Appeal filed by registered person (SNGPL) was allowed, in circumstances.

Appeal STA No.833/LB/2016 ref.

----"Law of precedent" is an important aspect of legal certainty in rule of law.

Hassan Akhtar for Appellant.

Shah Jahan Khan for Respondent.

2024 P T D 619

[Islamabad High Court]

Before Mohsin Akhtar Kayani and Fiaz Ahmad Anjum Jandran, JJ

Messrs TELENOR PAKISTAN (PVT.) LTD.

Versus

APPELLATE TRIBUNAL INLAND REVENUE, ISLAMABAD and others

I.T.R. No.04 of 2015, 1 of 2017 and 39 to 41 of 2018, decided on 29th April, 2021.

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 20---Deductions in computing income chargeable under the head "Income from Business"---Scope---Taxpayer returned losses with the claim that its deductible expenses exceeded its taxable income--- Taxpayer had deducted from its taxable income, the "activation tax" as an expenditure incurred by it wholly and exclusively for the purposes of business---Validity---Government of Pakistan had imposed a levy at the rate of Rs.500 per set for activation of the cellular phone---Liability to charge, collect and pay the levy was on the cellular company---Levy was to be deposited through a monthly sales tax return---SRO whereby the levy was imposed had clearly stated that no adjustment of input tax was admissible to the cellular company operator or the buyer against the levy---Said charge was an indirect tax and was to be recovered from the customer---In this behalf burden was on the customer and the cellular company was only a collecting agent---Commercial expediency was no justification for not passing on the liability to the customers, as the levy was across the board and not on any individual company---Accessing officer had rightly disregarded the expense claimed by the taxpayer---Reference applications were dismissed.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 20 & 24---Reference before High Court---Factual controversy---Deductions in computing income chargeable under the head "Income from Business"---Amortization deduction on intangibles---Scope---Taxpayer returned losses with the claim that its deductible expenses exceeded its taxable income---Taxpayer had deducted from its taxable income, the expenses incurred on the machinery---Department, after issuance of show cause notice, ordered that the software used in the machinery was an intangible asset, therefore, the expense incurred on the software was required to be deducted separately and in accordance with the procedure provided in S. 24 of the Income Tax Ordinance, 2001---Order-in-original was assailed before two appellate forums but to no avail---Validity---Controversy whether the software was integral part of the equipment or otherwise was a factual controversy, which had rightly been settled by the forums below---Reference applications were dismissed.

----Ss. 20 & 21(a)---Deductions in computing income chargeable under the head "Income from Business"---Deductions not allowed---Scope---Taxpayer returned losses with the claim that its deductible expenses exceeded its taxable income---Taxpayer had deducted from its taxable income, the sales tax paid on free air time by claiming it an expenditure in order to attract the customers---Department, after issuance of show-cause notice, disallowed such deduction---Order-in-original was assailed before two appellate forums but to no avail---Validity---Taxpayer had adopted its own marketing strategy to increase the business or attract the customers but such practice could not absolve it from payment of sales tax on the free air time and when the sales tax had been paid, the same could not be allowed to be considered in terms of expenses as the taxpayer had not booked any revenue against the free air time---Department had rightly disallowed the deduction in terms of S. 21(a) of the Income Tax Ordinance, 2001---Reference applications were dismissed.

(d) Income Tax Ordinance (XLIX of 2001)---

----Ss. 20, 34 & 71---Deductions in computing income chargeable under the head "Income from Business"---Accrual-basis accounting---Unrealized exchange loss---Scope---Taxpayer returned losses with the claim that its deductible expenses exceeded its taxable income--- Taxpayer had deducted from its taxable income, the unrealized exchange loss with the claim that it maintained its account on accrual-basis accounting---Department, after issuance of show cause notice, disallowed such deduction---Order-in-original was assailed before two appellate forums but to no avail---Validity---Section 34 deals with the accrual basis accounting, whereby a person accounting for income chargeable to tax under the head "Income from Business" on an accrual basis shall derive income when it is due to the person and shall incur expenditure when it is payable by the person---An amount shall be payable by a person when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy---Concept of reasonable accuracy is a primary consideration for determining the question of exchange loss in the accrual basis accounting system---Forums below had rightly held that the loss being notional in nature and not sustained by the taxpayer was not an allowable expense---Exchange loss had rightly been disallowed to the taxpayer---Reference applications were dismissed.

Nazir Ahmed v. Federation of Pakistan PLD 1970 SC 453 ref.

Commissioner of Income Tax Companies v. Messrs General Tyre and Rubber Company of Pakistan 1993 PTD 383 distinguished.

(e) Income Tax Ordinance (XLIX of 2001)---

----S. 20---Deductions in computing income chargeable under the head "Income from Business"---Actuarial loss---Scope---Taxpayer returned losses with the claim that its deductible expenses exceeded its taxable income---Taxpayer had deducted from its taxable income, actuarial loss on defined benefit of plans---Department, after issuance of show-cause notice, disallowed such deduction---Order-in-original was assailed before two appellate forums but to no avail---Validity---Actuarial loss was purely an estimation based provision, which had not been approved by any provision of the Income Tax Ordinance, 2001---Actuarial loss on defined benefits was not an allowable expense---Even no question of law was made out in this regard---Reference applications were dismissed.

(f) Income Tax Ordinance (XLIX of 2001)---

----S. 53 & Cl. (102A), Part I, Second Sched.---Exemptions and tax concessions in Second Schedule---Scope---Taxpayer returned losses with the claim that grants provided to it by the Federal Government to setup and develop telecommunication sites in far-flung areas were exempt from payment of income tax---Department, after issuance of show cause notice, added the grant to the income of taxpayer by ordering that the grants had been provided by Universal Service Fund and that it was not the Federal Government---Order-in-original was assailed before two appellate forums but to no avail---Validity---Universal Service Fund was a company distinct from the Federal Government---Any grant extended to the taxpayer was considered to be income of the company which could not be excluded---Clause (102A), Part I of Second Schedule to the Income Tax Ordinance, 2001 related to grants/subsidies from the Federal Government---Universal Service Fund could not be stretched into concept of Federal Government in any manner---Concurrent findings given by the forums below were upheld and maintained---Reference applications were dismissed.

Mustafa Impex v. Government of Pakistan PLD 2016 SC 808 ref.

(g) Income Tax Ordinance (XLIX of 2001)---

----S. 122---Amendment of assessments---Scope---Section 122(5A) deals with amendment of assessment in a detailed manner and provides different eventualities as to when and how the Commissioner may amend any assessment order treated as issued under S. 120 or under S.121---Minimum requirement of the law is the satisfaction of the Commissioner who considers it necessary and may initiate an inquiry as he deems that the assessment is erroneous in so far as it is prejudicial to the interest of revenue.

(h) Income Tax Ordinance (XLIX of 2001)---

----S. 122---Amendment of assessments---Show cause notice---Scope---Section 122 only imposes a single restriction that no assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with opportunity of being heard in terms of its subsection (9).

Pakistan Tobacco Company Ltd. v. Federation of Pakistan 2016 PTD 596 ref.

(i) Income Tax Ordinance (XLIX of 2001)---

----S. 133---Reference to High Court---Scope---Jurisdiction of the High Court under S.133 of the Income Tax Ordinance, 2001, is advisory in nature and the same can be exercised only on a proposition or question of law arising out of the decision passed by the Appellate Tribunal, which is the last fact-finding forum and as such, the High Court in reference jurisdiction cannot change the facts arrived by it.

Commissioner Inland Revenue v. Macca CNG Gas Enterprises 2015 PTD 515 ref.

Ali Sibtain Fazli and Abad-ur-Rehman for Applicant.

Ch. Kamil Hayat (LTU) for Respondent.

Syed Ishfaq Hussain Naqvi and Sultan Qamar Afzal for FBR for the Respondents.

PTD 2024 ISLAMABAD 872 #

2024 P T D 872

[Islamabad High Court]

Before Saman Rafat Imtiaz, J

SOHAIL & COMPANY through Proprietor and others

Versus

ANTI-DUMPING APPELLATE TRIBUNAL, ISLAMABAD and others

Writ Petition No.4643 of 2022 and C.M.As. Nos.96, 162, 165, 169 of 2022 and 04 of 2023, decided on 8th March, 2024.

(a) Anti-Dumping Duties Act (XIV of 2015)---

----Ss.36, 39 & 70---Civil Procedure Code (V of 1908), S.12(2)---Constitution of Pakistan, Art. 199---Constitutional petition---Misrepresentation and fraud---Petitioner / importer was aggrieved of judgment passed by Tribunal referring the matter to National Tariff Commission for de novo determination---Application filed under S.12(2), C.P.C. was dismissed---Validity---Any such decision could not be allowed to remain in field, if it was procured without impleading a party whose rights were involved and such party had been injured---Such party was entitled to file an application under S.12(2), C.P.C.---High Court in exercise of Constitutional jurisdiction declined to interfere in the matter as petitioner / importer had an alternate remedy in terms of S. 70 of Anti-Dumping Duties Act, 2015, whereby appeal to Tribunal was provided---Petitioner in fact had availed such remedy---Constitutional petition was dismissed, in circumstances.

Rab Nawaz and others v. Additional District Judge and others 2023 MLD 511; Moulana Atta ur Rehman v. Al Hajj Sardar Umar Farooq and others PLD 2008 SC 663; Subeh Sadiq v. Mst. Rajan through Legal Heirs PLD 2006 Lah. 585; Muhammad Suleman v. Abdul Rashid and 13 others PLD 1987 Lah. 387; Mst. Maqbool Begum and others v. Gullan and others PLD 1982 SC 46; M/s. Al-Ahmed (Pvt.) Ltd. v. Anjuman Falah-O-Behbood, Hazara Mughal Goth and others 2009 CLC 299; Muhammad Yaqoob v. Mohsin Ali 1999 CLC 1173; Glaxo Laboratories Limited v. Inspecting Assistant Commissioner of Income Tax and others 1992 PTD 932; Bashir Ahmed Badini, D&SJ, Dera Allah Yar and others v. Chairman and Member of Administration Committee and Promotion Committee of High Court of Balochistan and others 2022 PLC (C.S.) 610; Argentina-Cermic Tiles, DSR 2001: XII, P. 6241; China-GOES, DSR 2012:XII, P.6251; EC-Salmon (Norway), DSR 2008:I, P.3; Commission Implementing Regulation (EU) 2023/935 of 11th May 2023; Commission Implementing Regulation (EU) 2021/2239 of 15th December 2021; (WT/DS442/R); (WT/DS427/R); Shafi Muhammad and another v. Waseem Ahmed Khan and 11 others 2011 YLR 2576; Ahmed and others v. Nazir Ahmed and others 2019 CLC 1841; Jubilee General Insurance Company Limited v. Ravi Steel Company through Proprietor 2020 CLC 1440; Shivprasad Shankarlal Pardeshi v. Leelabai Badrinarayan Kalwar AIR 1998 BOM 131; Raja Abdul Qayyum Khan v. Choudhary Latif Akbar and 2 others 1994 MLD 2108 and Sher Bahadur Khan alias Malik Bahadur Khan v. Abdul Samad Khan and others PLD 1975 Pesh. 124 ref.

(b) Anti-Dumping Duties Act (XIV of 2015)---

----Ss. 36 & 39---Determination---Time limit---Discretionary nature---Scope---No consequence has been provided in Ss. 36 & 39 of Anti-Dumping Duties Act, 2015, in case of failure of Commission to do the needful within the prescribed time---Timeframe given is discretionary and not mandatory.

Messrs Aimnaz (Pvt.) Limited v. Federation of Pakistan 2018 PTD 1966 rel.

----S. 70 (13)---Civil Procedure Code (V of 1908), S. 100---Appeal---Procedure---Raising of new plea---Scope---Appeal under S. 70(13) of Anti-Dumping Duties Act, 2015, is subject to same restrictions as a second appeal under S.100, C.P.C.---No new ground can be raised in appeal under S.70 (13) Anti-Dumping Duties Act, 2015, before Appellate Tribunal.

Messrs Rupafil through Personnel Manager v. Deputy Director, Punjab Employees' Social Security Institution and 2 others 2003 PLC (Labour) 399 rel.

Shafqat Mehmood Chohan, Muhammad Immad Qamar, Shabbir Ali Khokhar and Rana Shahid Abbas for Petitioner.

Saifullah Khan, Waqas Amir and Muhammad Azfar for Respondents.

PTD 2024 ISLAMABAD 1049 #

2024 P T D 1049

[Islamabad High Court]

Before Babar Sattar and Saman Rafat Imtiaz, JJ

DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION, FEDERAL BOARD OF REVENUE through Additional Director

Versus

Messrs KHYBER TEA AND FOOD COMPANY IMPORTERS, EXPORTERS AND GENERAL ORDER SUPPLIERS KATCHERY GATE, PESHAWAR and others

Customs Reference No.11 of 2012, decided on 5th March, 2024.

Customs Act (IV of 1969)---

----Ss.179, 197 & 196---Order passed beyond the mandatory prescribed period---Extension of time sought by the authorities---Scope---Taxpayer / company approached the Appellate Tribunal contending that the original order had been passed against it beyond the period of limitation---Department filed Reference Application against acceptance of appeal filed by the taxpayer---Validity---Applicant / Department remained unable to submit / file any documentation regarding any extension granted by the Collector or FBR for purposes of Ss. 197 & 179 of the Customs Act, 1969---Assertion of the applicant was that the Department no longer possessed the original record in the matter---It was for the applicant to satisfy the Court that the original order, which was sought to be upheld in the Reference jurisdiction, was a legal order passed within the time prescribed under S. 179(3) of the Customs Act, 1969, but the same had not been done---Record revealed that the original order was passed 41 days beyond the period prescribed for undertaking the assessment after issuance of the Show-Cause Notice---An order passed beyond the mandatory period prescribed will not sustain in the eyes of law, and such legal objection can be raised by a party at any point---High Court viewed that that the Reference was based on an order which was not sustainable in the eyes of law therefore the same (Reference) was not maintainable---Reference was dismissed, in circumstances.

Nouman Ameen Farooqi for Applicant.

Karachi High Court Sindh

PTD 2024 KARACHI HIGH COURT SINDH 1 #

2024 P T D 1

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

SHAKEEL AHMED KASANA and others

Versus

FEDERAL TAX OMBUDSMAN through Registrar Federal Tax Ombudsman and others

Constitutional Petitions Nos.D-4079 D-4212, D-4341, D-4353, D-4377 of 2021, decided on 28th March, 2023.

Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 10 &17---Constitution of Pakistan, Art. 199---Constitutional petition---Federal Tax Ombudsman---Inspection of office of Inland Revenue---Jurisdiction---Scope---Petitioners were officials of Inland Revenue and were aggrieved of letters issued under S. 17 of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, to inspect their offices---Validity---Office of Federal Tax Ombudsman was not meant to oversee if orders, assessments, decisions etc. were lawful or unlawful---If at all any lawful procedure, as required in terms of S. 10 of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, was to be triggered, it had to be seen first whether such was within the frame of powers described in Establishment of Office of Federal Tax Ombudsman Ordinance, 2000---Petitioners were neither served any notice intimating them with regard to complaints against which investigations were to be conducted nor had been given fair opportunity to respond to the accusations of alleged maladministration and corrupt practices---Federal Tax Ombudsman was authorized to summon record under S.10(9) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 and no reasons had been provided as to why the powers conferred therein were not exercised and resort had been made directly to inspection of the petitioners' offices---High Court set aside the letters issued to petitioners by Federal Tax Ombudsman---Constitutional petition was allowed accordingly.

2005 PTD 23; 2012 SCMR 455 and PLD 1992 SC 485 rel.

Abid S. Zuberi, Ayan Mustafa Memon, M. Saad Siddiqui, Ali Abid Zuberi, Agha Ali Durrani, Fayaz Ali Maitlo, Ovais Ali Shah, Khalid Mehmood Siddiqui, Faooq Mirani and Owais Leghari for Petitioners.

Barrister Ghazi Khan Khalil, Ameer Bakhsh Metlo, Ameer Nausherwan Adil, Abdul Razzaque Panhwar, Abdul Hakeem Junejo and Qazi Ayazuddin Qureshi, Assistant Attorney General for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 49 #

2024 P T D 49

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

INTERNATIONAL BRANDS LIMITED and others

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Ex-Officio Chairman, FBR and 3 others

(And connected matters, particularized in the Schedule1 hereto.)

C.P. No.8569 of 2018 (along with connected petitions), decided on 28th February, 2023.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 59AA, 59B, Second Sched., Cls. 103A & 103C---Group relief, benefit of---Petitioners / taxpayers claimed that since Cl. 103A in Second Schedule to Income Tax Ordinance, 2001, in its original form, extended benefit to qualifying entities under Ss. 59AA & 59B of Income Tax Ordinance, 2001, therefore, excising S.59B of Income Tax Ordinance, 2001, therefrom amounted to discrimination---Validity---It was prerogative of Parliament to confer and withdraw fiscal benefits, in the interests of public at large---Petitioners / taxpayer failed to prove any irrevocable entwining of Cl. 103A of Second Schedule with S. 59B of Income Tax Ordinance, 2001---There was no discrimination as the exemption could not subsist during tenancy of S.59B of Income Tax Ordinance, 2001---Certain benefits under S.59AA of Income Tax Ordinance, 2001, were extended to holding companies and hundred percent owned subsidiaries to be taxed as one fiscal unit---No concept of one fiscal unit existed in S. 59B of Income Tax Ordinance, 2001, wherein benefits including surrendering of losses was offered to qualifying holding / subsidiary companies---Upon the anvil of intelligible differentia categorization in each provision was demonstrably mutually exclusive---Petitioners / taxpayer did not have any case for discrimination---Provision of Cl. 103C was added to Second Schedule of Income Tax Ordinance, 2001 vide Finance Act, 2019 and was omitted therefrom vide Finance Act, 2021---During the subsistence of Cl. 103C to Second Schedule of Income Tax Ordinance, 2001, inter-corporate dividends were once again given tax exemption---No exemption under S. 54 of Income Tax Ordinance, 2001 was to be considered in respect of taxation unless provided for in Income Tax Ordinance, 2001---No exemption in respect of inter-corporate dividends was available to petitioners / taxpayers as they had availed benefit of relevant exemption during its tenancy---High Court declined to interfere in the matter as no case was made out to perpetuate the benefit ad infinitum especially post conscious withdrawal of such benefit by the Parliament---Constitutional petition was dismissed, in circumstances.

Metco Shipbreakers v. Federation of Pakistan 1996 MLD 144; Syed Azam Shah v. Federation of Pakistan 2022 SCMR 1691; CIR Peshawar v. Tariq Mehmood 2021 SCMR 440; Fawad Ahmad Mukhtar v. CIR 2022 SCMR 454; Nagina Silk Mills v. ITO PLD 1963 SC 322; East Pakistan v. Sharafatullah PLD 1970 SC 514; CIT v. EFU Insurance 1982 PLD SC 247; G H Shah v. Chief Land Commissioner 1983 CLC 1585; Al Samrez Enterprises v. Federation of Pakistan 1986 SCMR 1917; WAPDA v. Capt. Nazir 1986 SCMR 96; Chief Land Commissioner v. G H Shah 1988 SCMR 715; Molasses Trading and Export v. Federation of Pakistan 1993 SCMR 1905; Muhammad Hussain v. Muhammad 2000 SCMR 367; Shahnawaz v. Federation of Pakistan 2011 PTD 1558; Zila Council Jhelum v. PTC PLD 2016 SC 398; Al Tech Engineers v. Federation of Pakistan 2017 SCMR 673; Super Engineering v. CIR 2019 SCMR 1111; H M Extraction v. FBR 2019 SCMR 1081 and Anwar Yahya v. Federation of Pakistan 2017 PTD 1069 rel.

(b) Interpretation of statutes---

----Amendment in laws---Presumption---Parliament is aware of statutory positions and undertakes an amendment to alter the status, existing prior to amendment having taken place.

Fatima Fertilizer v. SRB [(2021) 123 Tax 122; Pakistan Tobacco v. Karachi Municipal Corporation PLD 1967 SC 241; Chairman District Council v. Ali Akbar 1970 SCMR 105; State Life Insurance Corporation v. Mercantile Mutual Insurance 1993 SCMR 1394 and S. Zafar Ejaz v. Chairman, Steel Mills Corporation 1998 PLC (C.S.) 777 rel.

Jam Zeeshan, Khalid Javed Khan, Farogh Naseem, Ovais Ali Shah, Rashid Anwar, Uzair Qadir Shoro, Umer Akhund, Marium Riaz, Umer Ilyas Khan, Fizzah Bucha, Ameer Haider Khan, Sami-ur-Rehman Khan, Fahad Khan, Ahmed Hussain, Imran Iqbal Khan, Adil Saeed, Salman Aziz, Faiz Durrani, Ghulam Muhammad and Saima Anjum for Petitioners.

Shahid Ali Qureshi, Huma Sodher, Rana Sakhawat Ali, Ameer Bakhsh Metlo, S. Ahsan Ali Shah, Saad Shafiq Siddiqui, Muhammad Aqeel Qureshi, Tauqeer Ahmed Seehar, Hafeezullah, Fahim Ali, Imtiaz Mansoor Solangi, Sajjad Ali Solangi, Zain Mustafa Soomro, Kashif Nazeer, Manzar Hussain Memon, Irfan Mir Halepota, Faheem Ali, Farha Naz Qazi, Khurram Shehzad, Nadir Hussain Tunio, Bushra Zia, Zubair Qureshi, Ali Tahir Soomro, Tahir Khalil, Barkat Ali Metlo, Imran Ali Metlo, Fayaz Ali Metlo, Arshad Ali Tunio, Muhammad Idrees Rahimoon, Preetam Das, Abdul Mujeeb Zeeshan, Ayaz Sarwar Jamali, M. Taseer Khan, Advocates, G.M. Bhutto (Assistant Attorney General), Qazi Ayazuddin (Assistant Attorney General) for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 71 #

2024 P T D 71

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

The COLLECTOR OF CUSTOMS, through Deputy Collector of Customs

Versus

Messrs RAZ TEXTILE

Special Customs Reference Applications Nos.220, 221, 222, 225, 227, 233, 234, 235, 236, 237, 238, 239, 244, 245, 246, 247, 248 and 249 of 2022, decided on 17th March, 2023.

Customs Act (IV of 1969)---

----Ss.25-A & 196---Reference---Determination of value---Method applied---Principle---Authorities were aggrieved of order passed by Customs Appellate Tribunal setting aside Valuation Ruling and Order-in-Revision---Validity---For transactional values provision of S. 25(1) of Customs Act, 1969, was inapplicable---Stakeholders never provided any substantial documents to accept such transactional values under S.25(1) Customs Act, 1969---Different values were declared by different importers for the same product; and therefore, next method of valuation i.e. identical goods and similar goods methods, as provided under Ss. 25(5) & (6) of Customs Act, 1969, was also inapplicable in absence of absolute demonstrable evidence of qualities and quantities as well as the commercial level of such values---Next method of valuation was invoked i.e. Deductive Value Method under S. 25(7) of Customs Act, 1969, and the values were determined---Customs Appellate Tribunal wrongly held that values of goods in question were to be determined directly under S. 25(9) of Customs Act, 1969, (Fall Back Method) through Valuation Ruling No.1452 of 2020 dated 24-06-2020 without following the sequential methods as provided under S. 25 of Customs Act, 1969---High Court set aside order passed by Customs Appellate Tribunal---Reference was allowed accordingly.

T&N Pakistan Private Limited v. Collector of Customs 2022 SCMR 1119; Pakistan State Oil Co. Ltd., v. Collector of Customs 2019 SCMR 1124 and Fateh Yarn (Pvt.) Limited v. Commissioner Inland Revenue 2021 SCMR 1133. ref.

Khalid Rajpar for Applicants (in SCRAs. Nos. 233, 235 to 239 of 2022).

Aamir Raza for Applicants (in SCRAs. Nos. 220 to 222, 225, 227 and 234 of 2022).

Irfan Mir Halepota for Applicants (in SCRAs. Nos. 244 to 249 of 2022).

Khawaja Shamsul Islam for Respondent.

PTD 2024 KARACHI HIGH COURT SINDH 90 #

2024 P T D 90

[Sindh High Court]

Before Irfan Saadat Khan and Mahmood A. Khan, JJ

DIRECTOR, DIRECTORATE GENERAL INTELLIGENCE AND INVESTIGATION (CUSTOMS)

Versus

Messrs DIGICOM TRADING (PVT.) LIMITED and another

Special Customs Reference Application No.64 of 2019, decided on 30th April, 2022.

Customs Act (IV of 1969)---

----Ss.32-B & 196---Reference---Criminal proceedings, findings on---Customs Appellate Tribunal---Jurisdiction---Civil and criminal findings---Scope---Importer was aggrieved of findings of Customs Appellate Tribunal on criminal aspect of the matter while deciding civil proceedings---Validity---Criminal proceedings were initiated against importer which were pending---Customs Appellate Tribunal while deciding the matter could not discuss criminal aspect of the matter---Civil matter and criminal matters though parametria to each other, but findings in one matter were neither conclusive nor binding upon the other---Customs Appellate Tribunal was not justified in dilating upon the matter concerning criminal aspects, as the same could influence, prejudice and hamper the proceedings which were pending---Customs Appellate Tribunal was the last fact finding authority in respect of factual aspects but while deciding the appeal had dilated upon criminal aspects of the case and the same was not justified---Such observations made by Customs Appellate Tribunal could influence or prejudice the matter pending before Criminal Court---High Court declared that findings given by Customs Appellate Tribunal on criminal aspects could only be treated as academic in nature and would neither influence nor prejudice Trial Court dealing with the prosecution---High Court directed the Trial Court to pass an independent order based on the facts placed before it strictly in accordance with law---Reference was disposed of accordingly.

Dr. Shahnawaz Memon along with Ms. Fauzia M. Murad for Applicant.

M. Umar Akhund along with Uzair Qadir Shoro for Respondent No.1.

PTD 2024 KARACHI HIGH COURT SINDH 156 #

2024 P T D 156

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

Messrs DALDA FOODS LTD.

Versus

FEDERATION OF PAKISTAN and another

Suit No.298 of 2020, decided on 18th April, 2022.

Sales Tax Act (VII of 1990)---

----S. 25---Federal Excise Act (VII of 2005), S. 46---Audit, selection for---Commissioner, powers of---Scope---Plaintiff/taxpayer/company challenged notice issued by the Commissioner Inland Revenue under S.46 of the Federal Excise Act, 2005 and S. 25 of the Sales Tax Act, 1990, whereby the plaintiff was selected for audit---Central issue raised in the suit was whether under said provisions of law, the Commissioner could select a taxpayer for the purpose of conducting audit without assigning any reason---Held, that issue-in-hand had been answered in negative by the judgments of Indus Motors Co. Ltd. v. Federation of Pakistan reported as 2020 PTD 297 as well as Wazir Ali Industries Ltd. v. Federation of Pakistan reported as 2023 PTD 576 by holding that the Commissioner must frame legitimate mindful queries to the knowledge of a taxpayer after going through the returns by which he must be either satisfied after calling the record or otherwise; in case such mindful queries remained unsatisfied, he then was obliged to give reasons under S.25(2) of the Sales Tax Act, 1990 for conducting audit---Plaintiff prayed that present suit might also be decreed in light of the said findings---High Court, while restraining the defendants/FBR from acting upon the impugned audit notice declared that the impugned notice issued by the Commissioner to the plaintiff under S.46 of the Federal Excise Act, 2005 and S.25 of the Sales Tax Act, 1990, selecting the plaintiff for audit was unlawful for failing to disclose reasons and the said notice and also any subsequent follow-up notices were of no legal effect.

Indus Motors Co. Ltd. v. Federation of Pakistan 2020 PTD 297 and Wazir Ali Industries Ltd. v. Federation of Pakistan and others 2023 PTD 576 ref.

Hanif Faisal Alam for Plaintiff.

Bilal Khilji, Assistant Attorney General for Pakistan for Defendant No.1.

Muhammad Aqeel Qureshi for Defendant No.2.

PTD 2024 KARACHI HIGH COURT SINDH 162 #

2024 P T D 162

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

COMMISSIONER (LEGAL DIVISION) INLAND REVENUE

Versus

Messrs KOHINOOR SOAP AND DETERGENTS (PVT.) LTD.

Income Tax Reference Application No.D-39 of 2010, decided on 22nd February, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss.133, 221 & 239---Reference---Tax adjustment---Authorities were aggrieved of order passed by Appellate Tribunal Inland Revenue justifying tax claim entitlement of taxpayer---Validity---Provision of S.239(15) of Income Tax Ordinance, 2001, provided that S.107AA of Income Tax Ordinance, 1979, (since repealed) would continue to apply until 30-06-2002---Tax-credit available from pervious assessment year could be adjusted on or after 30-6-2002 which was in conformity with spirit of S. 239(15) of Income Tax Ordinance, 2001---Tax credit was an entitlement linked with making of an investment, and a tax-payer would become entitled to it as soon as an investment as provided in S.107AA of Income Tax Ordinance, 1979 (since repealed) or for that matter under Ss.107 & 107A is made, whereas its adjustment and deduction in computation of tax payable was a matter of assessment proceedings---Right to claim tax credit came into existence with the making of investment in the purchase of plant and machinery and actual deduction from the tax payable was a matter of implementation only---Respondent / taxpayer was fully entitled to adjust available tax-credit from assessment year 2002-2003, which was available under Income Tax Ordinance, 1979, (since repealed) in its return for tax-year 2003, filed and finalized under Income Tax Ordinance, 2001---High Court declined to interfere in the order passed by Appellate Tribunal Inland Revenue---Reference Application was dismissed accordingly.

Barrister Syed Ahsan Ali Shah for Applicant.

Muhammad Faheem Bhayo for Respondent.

PTD 2024 KARACHI HIGH COURT SINDH 176 #

2024 P T D 176

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs RECKITT AND COLMAN PAKISTAN LIMITED

Versus

The COLLECTOR, COLLECTORATE OF SALES TAX (WEST) and 2 others

Special Sales Tax Reference Application No.399 of 2007, decided on 10th March, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 36 & 47---Notifications SRO 598(I)/90 dated 7-6-1990 & SRO 553(I)/94 dated 9-6-1994---Sales tax, recovery of---Tax exemption---Show-cause notice---Limitation---Dispute of exemption from payment of sales tax was with regard to product namely "Dettol"---Applicant / taxpayer contended that the notice was barred by time under S.36 (2) of Sales Tax Act, 1990---Validity---Narration of facts in Show Cause Notice along with supporting evidence determines offence attracted in a particular case---Jurisdictional threshold required for issuing Show Cause Notice under S.36 of Sales Tax Act, 1990, attained importance because of disparate and contrasting character of mischief envisaged in two subsections of S. 36 of Sales Tax Act, 1990---Unless there was deliberate design or an agreement between persons to defraud tax department and the same was clearly and perspicuously laid out in Show-Cause Notice, mere mentioning of S. 36(1) of Sales Tax Act, 1990 or mentioning words "deliberate act" or "collusion" in Show-Cause Notice would not vest tax department with jurisdiction to invoke S. 36(1) of Sales Tax Act, 1990---Applicability of period of limitation was dependent on facts and circumstances of the case that under which subsection a case would fall when show cause notice was read into with the narration of facts so stated therein---Under law of limitation all were equal before law, whether a citizen or State, and if a law had prescribed period of time for recovery of money, after its lapse recovery was not enforceable through Courts---Requirement of registration under Drugs Act, 1976, had its own implication and merely for such reason it could not become entitled for exemption from sales tax solely on such ground and this was one of the requirements for claiming exemption from sales tax under SRO 598(I)/90 dated 7-6-1990 and SRO 553(I)/94 dated 9-6-1994---Primary condition required to be met was that of a medicinal preparation---This was lacking in the case of applicant / taxpayer, whereas, the product was classified under Pakistan Customs Tariff Code Heading 38.08 as a disinfectant---Issue of the product as to whether it was a disinfectant or a medicinal preparation was settled by classification ruling issued by WCO (World Customs Organization) and no exception could be drawn to such classification---Such classification was a matter of record since 1990 and was not applied retrospectively---Reference was disposed of accordingly.

1989 SCMR 353; 1985 SCMR 1753; PLD 1970 SC 453; 2002 PTD 955; PLD 1994 Kar. 480; 2008 PTD 1475 and 2004 PTD 2516 distinguished.

Caretex v. Collector Sales Tax PLD 2013 Lah. 634 and Federation of Pakistan v Ibrahim Textile Mills Limited 1992 SCMR 1898 ref.

Khawaja Aizaz Ahsan along with Sami-ur-Rehman for Applicant.

Irfan Mir Holepota for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 188 #

2024 P T D 188

[Sindh High Court]

Before Irfan Saadat Khan and Mahmood A. Khan, JJ

Messrs SIKANDAR & CO.

Versus

FEDERATION OF PAKISTAN through Chairman Federal Board of Revenue and 2 others

Constitutions Petition No.D-2184 of 2022, decided on 26th May, 2022.

Customs Act (IV of 1969)---

----Ss.79 & 81 (4)---Constitution of Pakistan, Art. 199---Constitutional petition---Provisional assessment---Finalization---Limitation---Petitioner / importer claimed that after lapse of limitation, provisional assessment of goods imported had become final assessment---Validity---Authorities were supposed to finalize assessment by 15-07-2020 or in such extended period which in no case could exceed 90 days by 14-10-2020, which had not been done---High Court declined to grant any lease, as authorities did not make final assessment after provisional assessment within stipulated period and provisions of S. 81(4) of Customs Act, 1969, were not followed nor complied with by authorities---High Court declared that provisionally assessed goods of petitioner were to be considered as finally assessed---Constitutional petition was allowed, in circumstances.

C.Ps. Nos.D-5491/2021, D-7258/2021, D-7259/2021 and D-7260/2021; C.P. No.D-5674/2020; Special Customs Reference Applications Nos.63/2015 and 64/2015 and C.P. No.D-7271 of 2021 rel.

Aqeel Ahmed Khan for Petitioner.

Kafeel Ahmed Abbasi, Deputy Attorney General for Pakistan (DAG) for Respondent No.1.

Irfan Mir Halepota for Respondent No.2.

Muhammad Khalil Dogar for Respondent No.3.

PTD 2024 KARACHI HIGH COURT SINDH 232 #

2024 P T D 232

[Sindh High Court]

Before Irfan Saadat Khan and Mahmood A. Khan, JJ

The COLLECTOR MODEL CUSTOMS COLLECTORATE, HYDERABAD

Versus

SHAFI MUHAMMAD and another

Special Customs Reference Application No.12 of 2020, decided on 25th May, 2022.

Customs Act (IV of 1969)---

----Ss.156(1)(2) Cl. (89), 187 & 196---Reference---Confiscation of vehicle---Authorities confiscated vehicle in question alleged to have been smuggled non-duty paid---Customs Appellate Tribunal set aside the order passed by authorities---Validity---It was proved that details provided by respondent / owner matched with details of Excise Department---Customs Appellate Tribunal was justified in vacating show-cause notice as well as Order-in-Original---Documents / evidence remained un-rebutted and there was no justification available with authorities to pass an order with regard to outright confiscation of vehicle in question---Respondent / owner had discharged his burden with regard to ownership of the vehicle---High Court declined to interfere in order passed by Customs Appellate Tribunal which was the last fact finding authority and its decision was on the basis of facts obtained in the matter---Reference was dismissed in circumstances.

Muhammad Khalil Dogar for Applicant.

Ms. Dil Khurram Shaheen for Respondent No.1.

PTD 2024 KARACHI HIGH COURT SINDH 256 #

2024 P T D 256

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

NAWAB BROTHERS STEEL MILLS (PVT.) LTD. through Authorized Representative

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance and 3 others

Constitution Petitions Nos.D-8679 of 2018, D-1171, D-1011 and D-3477 of 2019, decided on 11th February, 2023.

Sales Tax Act (VII of 1990)---

----Ss.7, 7A, 8, 8B & 10---Sales Tax Special Procedure Rules 2007, R.5H---Sale tax, collection of---Import of machinery---Petitioners were manufacturers of steel products and were aggrieved by imposition and collection of sales tax at the rate of 17% on import of their plant and machinery---Plea raised by petitioners / manufacturers was that they were governed by virtue of S. 7A of Sales Act, 1990 read with R. 58H of Sales Tax Special Procedure Rules, 2007, having substitute mechanism at import stage---Validity---Right course available to petitioners / manufacturers was to approach Federal Board of Revenue prior to import of their goods to seek any exemption on import of their plant and machinery---When no response was received, petitioners/manufacturers rushed to High Court with their interpretation regarding R. 58H of Sales Tax Special Procedure Rules 2007, but this was not warranted---Mechanism for refund of excess Input Tax was provided under S. 10 of Sales Tax Act, 1990---If any sales tax paid by petitioners / manufacturers at import stage, otherwise qualified as their input tax within the ambit of Sales Tax Act, 1990 including but not limited to restrictions per Ss. 7 & 8 of Sales Tax Act, 1990, then petitioners / manufacturers had a case to seek refund of any excess input tax in accordance with law---High Court in exercise of Constitutional jurisdiction declined to exercise discretion in favour of petitioners---Constitutional petition was dismissed, in circumstances.

Attock Cement Pakistan Ltd. v. Collector of Customs Collectorate of Customs and Central Excise, Quetta and 4 others 1999 PTD 1892; Messrs Daewoo Pakistan Express Bus Services Limited v. Federation of Pakistan and 5 others 2016 PTD 152; Collector of Customs, Sales Tax and Central Excise and others v. Messrs Sanghar Sugar Mills Ltd., Karachi and others PLD 2007 SC 517 = 2007 PTD 1902; The Commissioner, Inland Revenue, Karachi v. Messrs Attock Cement Pakistan Limited, Karachi (Civil Appeal No. 1422/2019) and Insaf Cotton Ginning v. Federation of Pakistan 2016 PTD 2585 rel.

Haider Waheed and Abdul Moiz Jafferi for Petitioners (in C.Ps. Nos.D-8679 of 2018, D-1171, D-3477 and D-1011 of 2019).

Qazi Ayazuddin Qureshi, Assistant Attorney General for Respondent No.1.

Muhammad Khalil Dogar, Zafar Hussain holding brief for Aamir Raza, Rashid Ali holding brief for Ghulam Murtaza and Ms. Afsheen Aman for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 290 #

2024 P T D 290

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

GETZ PHARMA (PVT.) LIMITED and others

Versus

FEDERATION OF PAKISTAN and others

High Court Appeals Nos.259, 272, 277, 278, 279, 280, 281, 282, 284, 298, 320, 338 of 2019, 04 of 2020, Constitutional Petitions Nos.D-6072, D-7920 of 2017, D-2436, D-2691, D-4429 of 2018 and D-2133 and D-3229 of 2019, decided on 24th December, 2021.

Sales Tax Act (VII of 1990)---

----Sixth Schedule, Entry No.105---Customs Act (IV of 1969), First Sched. & Fifth Sched.---Exemption from duty---Packing material---Provisions of two laws---Appellant company claimed that packaging material was entitled to exemption from sales tax as it was included in basic raw material in manufacture of pharmaceutical products---Validity---While interpreting a specific provision of a statute, the intent of Legislature and language employed was determinative of the Legislative intent and the same was primarily gleaned from the parent statute itself---Exemption permissive, vide Customs Act, 1969, was not pari materia to that within Sales Tax Act, 1990---There was no infirmity in the order passed by Judge in Chambers of High Court---Provision of Entry No.105 of Sixth Schedule to Sales Tax Act, 1990, extended a benefit in respect of raw materials for basic manufacture of pharmaceutical active ingredients and for manufacture of pharmaceutical products---High Court declined to interfere in the matter as the claim of appellants did not fall into prior category---Packaging / packing material was chargeable to tax per Sales Tax Act, 1990, and the same was not exempt within the parlance of Entry No.105 of Sixth Schedule to Sales Tax Act, 1990---Intra Court Appeal was dismissed, in circumstances.

Collector of Customs v. Mahboob Industries 2006 PTD 730; Adil Propylene Products Limited v. Federation of Pakistan 2000 SCMR 1708; AKD Investment Management Limited and others v. JS Investment Limited and others 2020 CLD 596; Zahid Iqbal v. Hafiz Muhammad Adnan and others 2016 SCMR 430; Nadeem Ahmed Advocate v. Federation of Pakistan 2013 SCMR 1062; Amanullah Khan v. Chief Secretary N.W.F.P and others 1995 SCMR 1856; Shazeb Pharmaceutical Industries Limited v. Federation of Pakistan 2015 PTD 1532; Pakistan Television v. CIR 2019 SCMR 282; Pakistan Television v. CIR 2017 SCMR 1136; Citibank NA v. Commissioner Inland Revenue 2014 PTD 284; Collector of Customs FBR v. Fitter Pakistan (Pvt.) Ltd. 2020 SCMR 1157; Commissioner of Customs (Imports) v. Dilip Kumar and Company TS 421 SC 2018 and Sun Export Corporations v. Collector of Customs (1997) 6 SCC 564 ref.

Muhammad Vawda, Salman J. Mirza, Hussain Idris, Taha Samad, Abdul Ahad, Faiz Ahmed and Fayaz Ali Metlo for Appellants.

Kafeel Ahmed Abbasi, Deputy Attorney General, Hussain Bohra Assistant Attorney General, Shahid Ali Qureshi, Dr. Shah Nawaz Memon, Khalid Rajpar, Rana Sakhawat Ali, Khalid Mehmood Siddiqui, Noor Nabi, Zafar Imam, Shakeel Ahmed, Masooda Siraj and Ali Qambar Askari for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 325 #

2024 P T D 325

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Ms. Sana Akram Minhas, JJ

The DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION-FBR

Versus

Messrs CUSTOMS APPELLATE TRIBUNAL BENCH-II, KARACHI and another

Special Customs Reference Application No.829 of 2015, decided on 6th September, 2023.

Customs Act (IV of 1969)---

----Ss.2(s), 157(2), Cl. (b), 181 & 196---SRO 499(I)/2009 dated 13.06.2009---Smuggling---Vehicle(s)/conveyance(s) used for transportation of smuggled goods, confiscation of---Transporting of a huge quantity (35000 liters) of Iranian Origin High Speed Diesel (HSD) in tanker (vehicle-in-question)---No option of paying fine in lieu of confiscation---Applicant/ Department assailed judgment passed by the Customs Appellate Tribunal ('Tribunal')whereby the tanker seized in the process of transporting smuggled HSD ('vehicle-in-question') was ordered to be released unconditionally, allowing appeal filed by the respondent (owner of the vehicle-in-question)---Validity---Once the Tribunal came to the conclusion that the vehicle-in-question was carrying smuggled HSD oil, and it was also intercepted lawfully by the applicant/department, then perhaps the contrary findings in respect of (two) other points of difference (i.e. regarding exclusively usage / release of the tanker-in-question in transportation of smuggled / confiscated HSD oil could not have been arrived at in favour of respondent---If the oil tanker in question was carrying smuggled HSD Oil, then as a corollary it was involved in exclusive transportation of smuggled goods---In terms of SRO 499(I)/2009 dated 13.06.2009 issued in exercise of the powers conferred by S.181 of the Customs Act, 1969, it has been directed that no option shall be given to pay fine in lieu of confiscation in respect of (a) smuggled goods falling under clause (s) of S. 2 of the Customs Act, 1969 (IV of 1969); and (b) lawfully registered conveyance including packages and containers found carrying smuggled goods in false cavities or being used exclusively or wholly for transportation of offending goods under clause (s) of Section 2 of the Customs Act, 1969---Once it was not denied that the vehicle-in-question was carrying smuggled HSD Oil, then it was liable to be confiscated outrightly---It could not, even be released against payment of any redemption fine---Appeal of Respondent No.2 ought to have been dismissed as the FBR had powers to prescribe conditions in respect of outright confiscation and redemption fine---Relevant question was answered in negative in favour of the applicant and against respondent/(owner of the vehicle-in-question)---High Court set-aside the order of the Customs Appellate Tribunal---Special Customs Reference Application was allowed, in circumstances.

Collector of Customs v. Wali Khan 2017 SCMR 585; Haji Tooti v. Federal Board of Revenue (Civil Appeal No.24-Q of 2014 vide order dated 26.5.2021); Collector of Customs v. Muhammad Tasleem 2002 MLD 296; Collector of Customs v. Salman Khan 2015 PTD 1733 and Maqbool Ahmed v. Customs Appellate Tribunal 2009 SCMR 226 ref.

Ms. Masooda Siraj along with Saud Hassan Khan, Assistant Director Customs Intelligence for Applicant.

Ms. Dil Khurram Shaheen for Respondent No.2.

PTD 2024 KARACHI HIGH COURT SINDH 355 #

2024 P T D 355

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmad Khan, JJ

Messrs YAKIN CO. through Proprietor

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division and Ex-Officio Chairman and 2 others

Constitution Petition No.D-3945 and C.M.A. No.17732 of 2017, decided on 12th January, 2022.

Sales Tax Act (VII of 1990)---

----S. 11---Assessment of tax and recovery of tax not levied or short levied or erroneously refunded---Order-in-Original, absence of---Fresh/Second Show-Cause Notice, issuance of---Legality---Commissioner Inland Revenue, powers of----Scope---Plea of the Inland Revenue Department for issuance of fresh/second Show-Cause Notice was that due to rampant transfers in the Department the matter could not be finalized---Validity---Sales Tax Authorities under the provisions of S. 11(5) of the Sales Tax Act, 1990, are legally obliged to pass Order-in-Original within 120 days of issuance of the Show-Cause Notice---However, in the present case fresh/second Show-Cause Notice, undeniably, had been issued without there being an Order-in-Original in the field and after 120 days of the issuance of the first Show-Cause Notice, which on the face of it appeared to be time-barred---Proviso to S. 11(5) of the Sales Tax Act, 1990, caters the possibility of any unwarranted delays in adjudicating the matter within 120 days of issuance of Show-Cause Notice as the same empowers the Commissioner Inland Revenue to extend such period of 120 days to another term of 90 days for reasons to be recorded in writing---Where a law requires doing of something in particular manner , it has to be done in the same manner and not otherwise---In the present case, second Show-Cause Notice was issued even after the expiry of further term of 90 days---Plea of respondents/Department hardly carried weight as no one should be made to suffer on account of an act or omission on the part of State functionaries---Action of the respondents/Department in not passing an Order-in-Original on the Show-Cause Notice and issuing second Show Cause Notice after the mandatory period of 120 days was illegal which could not be endorsed---High Court vacated the second/fresh Show-Cause Notice, in circumstances---Constitutional petition was allowed, is circumstances.

The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 PTD 1756; Ajmir Shah, Ex-Sepoy v. The Inspector-General, Frontier Corps Khyber Pakhtunkhwa and another 2020 SCMR 2129; Muhammad Hanif Abbasi v. Imran Khan Niazi PLD 2018 SC 189; Shahida Bibi v. Habib Bank Limited PLD 2016 SC 995; Basar v. Zulfiqar Ali 2010 SCMR 1972 and Arshan Bi v. Maula Bakhsh 2003 SCMR 318 ref.

Abdul Rahim Lakhani for Petitioner.

Kafeel Ahmed Abbasi, DAG for Respondent No.1.

Shahid Ali Qureshi for Respondents Nos.2 and 3.

PTD 2024 KARACHI HIGH COURT SINDH 370 #

2024 P T D 370

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs YUNUS TEXTILE MILLS LIMITED through Authorize Officer and others

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Finance, Islamabad and others

Constitution Petitions Nos.P-5899, P-6929, P-7455, P-7456 and P-5231 of 2022, decided on 11th January, 2023.

Sales Tax Rules, 2006---

----R. 36---SRO 555(I)/2006, dated 05.06.2006---Post-sanction audit of refund claims---Notice, issuance of---Scope---Deputy Commissioner or Commissioner Inland Revenue, Powers of---Scope---Petitioners (companies/registered taxpayers) invoked constitutional jurisdiction of the High Court contending that the impugned notices had been issued by Deputy Commissioner, whereas, R.36 of the Sales Tax Rules, 2006, and the proviso thereof, required that Commissioner Inland Revenue had to carry out such exercise; hence, the impugned notices were without lawful authority and jurisdiction---Validity---Petitioners sought refund of Sales Tax in terms of various online facilities introduced by FBR from time to time (STARR/ERS/FASTER), through which the refunds were processed, sanctioned and paid through Online Portal of FBR---Admittedly, all such refund claims had never been audited prior to its sanction and payment thereof---Rule 36 of Sales Tax Rules, 2006, provides a mechanism for post-sanction audit of such refund claims---In the present case, the plea of the Petitioners was misconceived as the said proviso reads that where the Commissioner Inland Revenue had reason to believe, on the basis of some information, pre-determined criteria or otherwise, that a registered person, whose refund claim was processed or sanctioned after 30.06.2014, had been paid refund which was not admissible, he might direct through order in writing to conduct manual post-refund scrutiny of such claim, which was to be done by the Commissioner Inland Revenue by way of an administrative order and it did not, ipso facto mean that the audit was also to be conducted by the Commissioner himself; it only required an order by him to direct manual post-audit and scrutiny of the claim and if even if no such order for conducting manual audit had been issued by him, it could also be done post facto---Even otherwise, mere selection for audit does not cause an actionable injury to the Tax-payer---Admittedly, the petitioners had obtained refund of Sales Tax without going through the process of audit through Online Portal of FBR and in such case, if any audit was directed under R.36 of the Sales Tax Rules, 2006, for the audit of such refund claims, it did not amount to any adverse order, or a cause of action to raise a question regarding jurisdiction---Refunds, as a matter of routine, had always been subjected to pre-audit, and it is only a facilitation by FBR to the registered person that now under the online system, refunds are sanctioned and paid without pre-audit of the same---High Court, therefore, viewed that if any audit was conducted in respect of the sanctioned and paid refunds, it otherwise did not cause any prejudice so as to challenge the same in Constitutional jurisdiction---Conduct of audit in the present matter was to check accuracy, truthfulness and the veracity of the claim of refund of the petitioners which already stood paid; hence, it did not cause any prejudice to that extent---No reason was made out to interfere with the impugned notices and the audit exercise being carried out by the Respondent/Department---Constitutional petitions filed by the companies/taxpayers were dismissed, in circumstances.

Commissioner Inland Revenue v. Allah Din Steel and Rerolling Mills 2018 SCMR 1328 ref.

Arshad Hussain Shehzad for Petitioners.

Rana Sakhawat Ali for Respondents.

Zubair Hashmi, Advocate and Qazi Ayazuddin, Assistant Attotrney General.

G.M. Bhutoo, Assistant Attotrney General.

PTD 2024 KARACHI HIGH COURT SINDH 380 #

2024 P T D 380

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmad Khan, JJ

The COLLECTOR OF CUSTOMS, MCC (EAST) through Additional Collector of Customs

Versus

Messrs FORTE MARKETING SERVICES and another

Special Customs Reference Applications Nos. 34-63 of 2022, decided on 16th November, 2022.

(a) Customs Act (IV of 1969)---

----Ss. 25, 25-A & 196---Reference---Goods declaration---Valuation Ruling---Non-obstante clause---Scope---Dispute with regard to fixing duty on the basis of Valuation Ruling was set aside by Customs Appellate Tribunal holding that the same were valid for 90 days only---Validity---Reliance could not be placed on a Valuation Ruling if unchallengeable transaction value posed by importer was supported by irrefutable trail of documents---In presence of S. 25 of Customs Act, 1969, non-obstante clause of S.25A of Customs Act, 1969, should be used minimalistically, only in exceptional circumstances, ensuring that no irreparable damage was inflicted by its use---Provisions of S.25A of Customs Act, 1969, could not be used customarily and for long stretch of time (e.g. 90 days)---Under the phrase "at or about the same time" even 90 days lifetime of Valuation Rulings was contrary to the spirit of the currency of trade (i.e., "time")---High Court answered the question framed by authorities in negative, i.e., against the department and in favor of the importers---Reference was dismissed, in circumstances.

Sadia Jabbar v. Federation of Pakistan 2018 PTD 1746; Sky Overseas v. Federation of Pakistan through Secretary, Revenue Division and 4 others 2019 PTD 1964; Danish Jehangir v. Federation of Pakistan through Secretary/Chairman and 2 others 2016 PTD 702 and Messrs Central Insurance Company and others v. The Central Board of Revenue Islamabad and others 1993 SCMR 1232 ref.

Muhammad Iltaf Khan v. Basheer and others 2022 SCMR 356; Understanding the Notwithstanding Mechanism by Tsvi Kahana - The University of Toronto Law Journal Vol. 52, No.2; https://www.nationalamgazine.ca/en-ca/articles/law/rule-of-law/2022/the -lure-of-the-override-clause http://www.nationalamgazine.ca/en-ca/articles/law/rule-of-law/2022/the -lure-of-the-override-clause; Harvard University Press - 1986; Dr. Malik Mehdi Kabir and others v. Rabit-Al-Alam-Al-Islami and others 39 CLC-AD 5505; 899 F.2d 470 (7th Cir. 2018); https://casetxt.com/case/pronschinske-trust-dated-march-21-1995-v-kaw-valley-cos; Notwithstanding anything to the contrary contained herein - By Joshua Stein PLLC - https://www.lexology.com/library; https://www.casebriefs.com/blog/law/commercial-law/commercial-law-Keyed-to-warren/negotiability-and-holders-in-due-course/kaw-Valley-state-bank-trust-co-v-riddle rel.

(b) Interpretation of statutes---

----Non-obstante clause---Applicability---non-obstante clause is added to position its enforceability viz-a-viz another provision it aims to surround---This clause is often used to clarify intention of the Legislature in the case where two provisions are to be given eclipsed interpretation---Non-obstante clause need not necessarily and always be co-extensive with operative part so as to have the effect of cutting down clear terms of an enactment---If words of enactment are clear and are capable of clear interpretation on plain and grammatical construction of words, non-obstante clause cannot cut down the construction and restrict scope of its operation---In such cases non-obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in enactment by the Legislature by way of abundant of caution.

Collins Dictionary; Syed Mushahid Shah and others v. Federal Investigation Agency and others 2017 SCMR 1218; 1992 AIR 81 - 1991 SCR Supl. (1) 387 and Bipathumma and others v. Mariam Bibi - Mysore Law Journal page 162, at page 165 rel.

Ghulam Murtaza along with M. Ishaque Pirzada for Applicants.

Shafaqat Mehmood Chohan and Ghulam Nabi Shar and Ms. Falak Naz Fatima for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 451 #

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PTD 2024 KARACHI HIGH COURT SINDH 595 #

2024 P T D 595

[Sindh High Court]

Before Irfan Saadat Khan and Mahmood A. Khan, JJ

The COLLECTOR OF CUSTOMS through Additional Collector of Customs (Law), Model Customs Collectorate

Versus

Messrs HKL TRADERS, PESHAWAR

Special Customs Reference Application No.20 and C.M.As. Nos.396, 428 of 2022, decided on 27th April, 2022.

Customs Act (IV of 1969)---

----Ss. 32 (1), 32(2), 79 (1) & 156 (1), Cl. (14)---SRO. 499(I)/2009 dated 13-06-2009---Mis-declaration---Examination---Sizes of CKD bicycles, controversy over---Style of measurement---Scope---While the goods were confiscated, an option was given to the importer to redeem the confiscated goods after paying 35% redemption fine as envisaged under SRO. 499(I)/2009 dated 13-06-2009, in addition to the payment of duty and taxes chargeable thereupon---Reference was filed by the Customs Department against the order in favour of the importer passed by the Customs Appellate Tribunal ('Tribunal') observing that while there was no guilty intention on the part of the respondent / importer, the difference in the sizes of the bicycles was due to the style of measurement of the consignment---Validity---Record revealed that the goods were examined more than once and the contravention made out against the respondent / importer by the Customs Authorities was due to their (Authorities') own style of measurement---But on seeing the measurement style of the respondent and as disclosed by the consigner, there was no difference in the sizes---Since the difference in sizes was between the Authorities and importer, therefore, the Tribunal had categorically observed that the same could not be made the basis of contravention or mis-declaration---Respondent / importer also offered the Customs Authorities to explain the method of measurement but no heed was paid by them in said regard---Record showed that the bicycles were imported in kilograms and not on the basis of measurement, whereas the difference in size was due to measurement of the frames of the bicycles, which was not the correct method of measurement---Had the bicycles been imported on sizes basis then it could have been said that the contention of the applicant / Department might be correct but , in the present case, the frames of bicycles were imported in kilograms and not by virtue of sizes---Customs Authorities, on asking by the Tribunal, also failed to produce any basis (law, notification, SRO et.) for their method of measurement---Since onus in such regard was not discharged, therefore, case of mis-declaration was not proved against the respondent / importer ---No interference was made out in findings of the Customs Appellant Tribunal that no discrepancy was found in the description of the goods---Customs reference filed by the Customs Authorities was dismissed, in circumstances.

Aamir Raza for Applicant.

None for Respondent.

PTD 2024 KARACHI HIGH COURT SINDH 681 #

2024 P T D 681

[Sindh High Court]

Before Adnan Iqbal Chaudhry, J

DEWAN SUGAR MILLS LTD. and others

Versus

FEDERATION OF PAKISTAN and others

Suit No.850 of 2020 (and others connected Suits) decided on 9th August, 2021.

(a) Interpretation of statutes---

----Ex visceribus actus---Connotation---Principle Ex visceribus actus means that every part of statute should be construed with reference to context and other provisions of the statute.

Lincoln College (1595) 3 Co. Rep. 58; Canada Sugar Refining Co., Ltd. v. R: 1898 AC 735 and Punjab Beverages (Pvt.) Ltd. Chandigarh v. Suresh Chand AIR 1978 SC 995 rel.

(b) Sales Tax Act (VII of 1990)---

----S. 25---Federal Excise Act (VII of 2005), Ss. 45 & 46---General Clauses Act (X of 1897), S. 24-A---Specific Relief Act (I of 1877), Ss.42 & 54---Suit for declaration and injunction---Ex visceribus actus, principle of---Applicability---Access to record and documents---Conducting of audit---Non-speaking order---Plaintiff companies were aggrieved of notices issued by authorities selecting their cases for audit purposes---Validity---Words "on the basis of the record, obtained" in S.25 of Sales Tax Act, 1990, are only stipulating that officer of Inland Revenue authorized by Commissioner may "conduct" audit on the basis of record obtained under S. 25(1) of Sales Tax Act, 1990 and not that the selection for audit in all cases can only be after obtaining such record---For the purposes of an audit, Ss. 45(1) and 46(1) Federal Excise Act, 2005, are also to be construed ex visceribus actus---Provision of S. 46(1) of Federal Excise Act, 2005, is only stipulating that audit may be "of the records and documents of any person registered under the Act", and not that selection for audit in all cases can only made be after obtaining record of registered person---Giving of reasons by Commissioner for selecting a person for audit was nonetheless implied in S. 25 of Sales Tax Act, 1990 and S.45 read with S. 46 of Federal Excise Act, 2005---This was implicit in the very act of calling upon registered person to produce his record or documents---High Court declared that notices issued by Commissioner Inland Revenue to plaintiff companies under S. 25 of Sales Tax Act, 1990, selecting plaintiff companies for audit, were unlawful for failing to disclose reasons---High Court set aside notices issued to plaintiff companies by authorities as the same were of no legal effect---Suit was decreed accordingly.

Indus Motor Company Ltd. v. Federation of Pakistan 2020 PTD 297 and Pakistan Telecommunication Company Ltd. v. Federation of Pakistan 2016 PTD 1484 distinguished.

Faisalabad Electric Supply Company Ltd. v. The Federation of Pakistan 2019 PTD 1780; Shahnawaz (Pvt.) Ltd. v. Federation of Pakistan 2011 PTD 1558; Commissioner of Inland Revenue, Sialkot v. Allah Din Steel and Rolling Mills 2018 SCMR 1328; Deputy Commissioner of Income Tax Faisalabad v. Punjab Beverage Company (Pvt.) Ltd. 2007 PTD 1347; Pfizer Pakistan Ltd. v. Deputy Commissioner 2016 PTD 1429; Searle IV Solution v. Federation of Pakistan 2018 SCMR 1444; Abbasia Cooperative Bank v. Hakeem Hafiz Muhammad Ghaus PLD 1997 SC 3; Adamjee Insurance Company Ltd. v. The Assistant Collector (P&A) 2021 PTD 281; Commissioner of Income Tax v. Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Lincoln College (1595) 3 Co. Rep. 58; Canada Sugar Refining Co., Ltd. v. R: 1898 AC 735; Punjab Beverages (Pvt.) Ltd. Chandigarh v. Suresh Chand AIR 1978 SC 995; Assistant Director, Intelligence and Investigation, Karachi v. B. R. Herman PLD 1992 SC 485; Muhammad Amin Muhammad Bashir Ltd. v. Government of Pakistan 2015 SCMR 630; Abid Hasan v. PIAC 2005 SCMR 25 and Khalid Humayun v. The NAB through DG Quetta PLD 2017 SC 194 ref.

----S. 25---Federal Excise Act (VII of 2005), S. 45---Access to record and documents---Scope---Notice can be issued only to call record under S. 25(1) Sales Tax Act, 1990 or S. 45(1) of Federal Excise Act, 2005, without audit selection---It may well be that Commissioner requires tax-payer to produce certain record or documents to explain or substantiate an entry in his tax return without selecting him for audit at that stage.

Abdul Sattar Pirzada, Mamoon N. Chaudhry, Qazi Umair Ali, Ali Almani, Faheem Ahmed Bhayo, Muhammad Din, Qazi Waleed Sher Dil, Zain Azad, Abdul Rahim Lakhani, Abdul Jabbar, Muhammad Bilal and Shariq A. Razzaq for Plaintiffs.

Ameer Bakhsh Metlo (assisted by Chand Bibi and Faiz Ali) Muhammad Aqeel Qureshi, Dr. Shahnawaz, Imran Ali Mithani, Junaid Ali Mithani, Mohsin Ali Mithani, Muhammad Aslam and Anwar Kamal, Assistant Attorney General for Defendants.

PTD 2024 KARACHI HIGH COURT SINDH 716 #

2024 P T D 716

[Sindh High Court]

Before Irfan Saadat Khan and Zulfiqar Ahmad Khan, JJ

Messrs SKF PAKISTAN (PVT.) LTD. through Managing Director and others

Versus

FEDERATION OF PAKISTAN through Secretary (Law and Justice Division) and others

C.Ps. Nos.D-2908 and D-6768 of 2022, decided on 4th January, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 122, 174, 177, 214A & 214C---Audit---Reopening of case---Limitation---Past and closed transaction, principle of---Subsequent extension of time---Effect---Petitioner taxpayer was aggrieved of selection of his case for audit after period of limitation---Contention of authorities was that the case was reopened on the basis of subsequent extension of time---Validity---Time limit in the case of petitioner expired on 30-6-2019, whereas mandatory condition for maintaining accounts ended on 31-12-2019---Case of petitioner was selected for audit in year 2016 but the proceedings never culminated and no order under S.122 of Income Tax Ordinance, 2001, was ever passed by authorities---Federal Board of Revenue by exercising its powers under S. 214C of Income Tax Ordinance, 2001, on 04-12-2019 i.e. after expiry of the period, as prescribed under S. 122 of Income Tax Ordinance, 2001, and some 26 days prior to the expiry of time limit as prescribed under S. 174 of Income Tax Ordinance, 2001, i.e. on 04-12-2019 extended time for finalization of audit proceedings up to 30-6-2020, for the tax year 2014---As per S. 122 of Income Tax Ordinance, 2001, time limit for finalizing assessment had already expired, whereas time limit with regard to S. 174 of Income Tax Ordinance, 2001, had remained available for few days only---Even after extension of period by FBR, authorities made no attempt to finalize the audit---There was no authority to proceed against a person when the matter was already time barred---After lapse of prescribed time limit matter had become past and closed transaction---Subsequent extension of time by FBR did not fulfill parameters as enshrined under the law and spelt out under Ss.214A & 214C of Income Tax Ordinance, 2001---Authorities should have finalized audit proceedings on or before 30-6-2020, which was not done---High Court vacated notice for audit pertaining to tax year 2014, as the same was issued after expiry of prescribed period---Constitutional petition was allowed accordingly.

Muhammad Moizuddin and another v. Mansoor Khalil and another 2017 SCMR 1787; Additional Commissioner Inland Revenue, Audit Range, Zone-I and others v. Messrs Eden Builders Limited and others 2018 SCMR 991; Khushi Muhammad through L.Rs. and others v. Mst. Fazal Bibi and others PLD 2016 SC 872; Federal Board of Revenue through its Chairman, Islamabad and others v. Abdul Ghani and another 2021 SCMR 1154; Sami Pharmaceutical (Pvt.) Ltd. and others v. Province of Sindh through Chief Secretary and others 2021 PTD 731; Mir Hassan v. Province of Sindh, through Secretary and 3 others 2017 PLC (C.S.) 864; Commissioner Inland Revenue, Zone-IV, Lahore v. Messrs Panther Sports and Rubber Industries (Pvt.) Ltd. and others 2022 SCMR 1135; Commissioner of Inland Revenue and others v. Jahangir Khan Tareen and others 2022 SCMR 92; The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Muhammad Din and Sons and others 2017 PTD 1756; Haji Abdul Sattar and others v. Farooq Inayat and others 2013 SCMR 1493; Messrs Universal Business Equipment (Pvt.) Limited through Chief Executive v. Deputy Collector of Customs, Customs House, Karachi and another 2014 PTD 1944; The Taxation Officer / Deputy Commissioner of Income Tax, Lahore 2018 SCMR 1131; Messrs/s Attock Cement Pakistan Ltd., through Senior Manager Finance v. Additional Commissioner Inland Revenue 2016 PTD 1872; The Taxation Officer/ Deputy Commissioner of Income Tax, Lahore v. Messrs Rupafil Ltd., and others 2018 SCMR 1131; Messrs Universal Business Equipment (Pvt.) Ltd., through Chief Executive v. Deputy Collector of Customs, Customs House, Karachi and another 2004 PTD 1944; Pepsi Cola International (Private) Limited through Authorized Representative v. Federation of Pakistan through Secretary Revenue Division, Islamabad and another 2022 PTD 51 and D.G. Khan Cement Co. Ltd., through Chief Financial Officer and others v. Federal Board of Revenue through Chairman and 5 others 2020 PTD 2111 ref.

Anwar Kashif Mumtaz and Usman Alam for Petitioners (in C.P. No.D-2908 of 2022).

Kafeel Ahmed Abbasi for Inland Revenue (in C.P. No.D-2908 of 2022).

Anwar Kashif Mumtaz and Usman Alam for Petitioners (in C.P. No.D-6768 of 2022).

Ameer Bakhsh Metlo for Inland Revenue (in C.P. No.D-6768 of 2022).

PTD 2024 KARACHI HIGH COURT SINDH 736 #

2024 P T D 736

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Zulfiqar Ahmed Khan, JJ

SHAMIM AHMED and another

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Chairman, Federal Board of Revenue, Islamabad and others

Constitution Petitions Nos.D-4972 D-1573, D-5966 and D-5626 of 2023, decided on 31st January, 2024.

Customs Act (IV of 1969)---

----Ss. 25-A, 25-D, 194-A & 196---Constitution of Pakistan, Art. 199---Constitutional petition---Interim relief, refusal of---Valuation Ruling, remedy against---Alternate and efficacious remedies---Scope---Petitioners / importers sought that High Court while exercising jurisdiction under Art. 199 of the Constitution should grant interim relief by directing authorities to secure or deposit differential amount of duties and taxes and pass order to release their consignments upon payment of duties and taxes on declared transactional values---Validity---Alternate remedy of Revision was provided against a Valuation Ruling in terms of S. 25-D of Customs Act, 1969 before Director General (Valuation)---Remedy was also available to petitioners / importers by way of appeal under S.194-A of Customs Act, 1969, before Customs Appellate Tribunal and finally before High Court by way of a Reference Application under S. 196 of Customs Act, 1969---Invoking Constitutional jurisdiction directly against Valuation Ruling issued under S. 25-A of Customs Act, 1969 was barred by law---Even if High Court granted any interim relief, until such time the forums below decided the matter, it would amount to assuming jurisdiction over the lis, for which petitioners / importers had invoked alternate remedy and remedial process had been set in motion---Assuming Constitutional jurisdiction for petitioners / importers would amount to frustrating the statutory remedial process as this was discretionary jurisdiction and could not be exercised in every run of a mill case in the manner as was contended by petitioners / importers---Ad-interim relief is only granted by High Court while exercising jurisdiction under Art. 199 of the Constitution, when the Court thinks it appropriate that a case for further indulgence for a final relief is made out, whereas, the petitioner had no other remedy in law---If at all petitioners / importers were finally successful in their challenge to Valuation Rulings in question, they were within their right to seek refund of excess duties and taxes in accordance with law---High Court declined to exercise discretion under Art. 199 of the Constitution to grant interim relief sought by petitioners at such stage of proceedings---Constitutional petition was dismissed in circumstances.

Collector of Customs Lahore v. Wasim Radio Traders, Lahore 2023 SCMR 1716; C.P. No.5966 of 2023; Mian Azam Waheed and others v. The Collector of Customs 2023 SCMR 1247; Syed Imran Raza Zaidi v. Government of the Punjab 1996 SCMR 645; Additional Collector Lahore v. Abdullah Sugar Mills Ltd. 2003 SCMR 1026; Pfizer Pakistan (Pvt.) Ltd. v. Federation of Pakistan 2019 MLD 1849; Fauji Oil Terminal and Distribution Company Ltd. v. Federation of Pakistan 2012 PTD 1762; United Bank Limited v. Akbar Agencies PLD 1987 Kar 81; Sarfaraz Saleem v. Federation of Pakistan PLD 2014 SC 232; Z.N Exports (Pvt.) Ltd. v. Collector of Sales Tax 2003 PTD 1746; Shell Pakistan Limited v. Punjab 2020 PTD 1607; Pakistan Oil Fields Ltd. v. Federation of Pakistan 2016 PTD 1590; Huawei Technologies Pakistan (Pvt.) Ltd. v. Commissioner Inland Revenue 2016 PTD 1799; Muhammad Asim v. Federation of Pakistan 2014 PTD 1897; Touheed Leather v. Additional Collector 2010 PTD 453; Wasim Radio Traders v. Federation of Pakistan 2014 PTD 525; Dr. Iqrar Ahmad Khan v. Dr. Muhammad Ashraf 2021 SCMR 1509; Justice Khurshid Anwar Bhinder v. Federation of Pakistan PLD 2010 SC 483; Muhammad Ali Abbasi and 2 others v. Pakistan Bar Council PLD 2009 Kar. 392 AND Irshad Ahmed Shaikh v. The State 2000 SCMR 814 rel.

Saad Shafiq Siddiqui, Imran Iqbal Khan, Muhammad Adeel Awan, Aneel Zia, Saima Syed, Asadullah Jan and Rana Sakhawat Ali for Petitioners (in all Petitions)

Sardar Zafar Hussain, Muhammad Khalil Dogar, Fahim Raza Khuhro, Ghulam Mujtaba Sahito, Alqamah Bin Mehmood and Muhammad Ishaq Pirzada for Respondents (in all Petitions).

Qazi Ayazuddin Qureshi, Assistant Attorney General.

Khalid Jawed Khan, Amicus Curiae.

Muhammad Nauman Tashfeen, Additional Director (Valuation), Azka Zafar Rana, Deputy Director (Valuation), Tariq Aziz, Assistant Collector (SAPT Collectorate), Amin Haider Shah, Deputy Collector (West Collectorate) and Rahat Naseem, Assistant Collector, (SAPT Collectorate).

PTD 2024 KARACHI HIGH COURT SINDH 754 #

2024 P T D 754

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

UNIVERSAL RECYCLING through authorized Representative

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman FBR and 2 others

C.P. No.D-205 of 2023, decided on 18th January, 2023.

Customs Act (IV of 1969)---

----Ss. 25, 25-A & 25-D [as amended vide Finance Act, 2019]---Assessment of imported goods---Values of goods, determining of---'Director of Valuation' or 'Collector of Customs'---Valuation Advice and a Valuation Ruling, distinguishing of---Petitioner (importer/company) invoked constitutional jurisdiction of the High Court challenging the authority of the Assistant Collector of Customs in issuing a Circular/Notification by the subject of "Assessment Alert"---Plea of the Assistant Collector of Customs was that the "Assessment Alert" was issued by the approval of the Collector of Customs---Validity---Post Finance Act, 2019, under S.25-A of the Customs Act, 1969, it is the Director of Valuation who can determine the values after following the methods as provided under S. 25 of the Customs Act, 1969, and (can) notify the same---Against such determination , an aggrieved person can approach the Director General for its revision under S. 25-D of the Customs Act, 1969---Collector of Customs can only make a reference to the Director of Valuation for determination of Value(s) in terms of S. 25-D of the Customs Act, 1969, and nothing beyond that---In the present case, apparently a reference had already been made---Impugned assessment alert was not a Valuation Ruling, but was an advice at the most which had no binding force; nor the Collector of Customs had any jurisdiction to do so---Moreover, a Valuation Advice (and not a Valuation Ruling) is nothing but an advice which has no binding effect, whereas it is not to be taken as a conclusive evidence while making assessment of goods, and reliance upon the Valuation Advice simplicitor is not a valid basis of assessment of the value of imported goods within the framework of S.25 of the Customs Act, 1969---If it had been a case of exercising powers in terms of S. 25-A of the Customs Act, which admittedly was not the situation in present case, the respondents/Department may have had a case, but in the present case, a Valuation Ruling was yet to be issued in terms of S.25-A of the Customs Act, 1969---At best the assessment can only be made in terms of S.25 of the Customs Act, 1969 and not otherwise ; either by way of an assessment alert or in any other manner---Even otherwise, under the scheme of the Customs Act, 1969, the Collector on its own motion can not determine / notify the values by way of any circular, letter, assessment alert or even an advice---Collector through his authorized officers can only assess and determine the values in terms of S. 25 of the Customs Act, 1969, however, the power is restricted to and is applicable on consignments imported by the respective individuals and does not confer any authority across the board for fixation or determination of values---Therefore, as a natural corollary, the Assistant Collector of Customs by way of any purported delegation of power can not issue Assessment Alert when the Collector himself is not competent to issue any Circular etc.---High Court viewed that goods-in-question shall strictly be assessed in terms of S. 25 of the Customs Act, 1969 by the Competent Officer and appealable Assessment order be passed in terms of S. 80 of the Customs Act, 1969, if needed--- High Court set-aside the impugned Circular /Notification, by the subject of "Assessment Alert", issued by the Assistant Collector of Customs---Constitutional petition, filed by the importer / company, was allowed, in circumstances.

Kings Pen Company v. Collector of Customs 2005 PTD 118; Habib ur Rehman & Company v. Collector of Customs 2005 PTD 69 and M.M.M. Traders v. Deputy Collector of Customs 2006 PTD 313 ref.

Ghulam Nabi Shar for Petitioner.

Shah Nawaz Sahto for Respondents.

Qazi Ayazuddin Qureshi, Assistant Attorney General.

Sardar Amin Farooqui, Assistant Collector.

PTD 2024 KARACHI HIGH COURT SINDH 793 #

2024 P T D 793

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

Messrs TUFAIL CHEMICAL AND SURFACTANTS (PRIVATE) LIMITED through Company Chief Executive Officer

Versus

PROVINCE OF SINDH through Secretary Ministry of Law and others

Constitutional Petition No.1472 of 2016 (and others connected cases) decided on 16th February, 2023.

Sindh Sales Tax on Services Act (XII of 2011)---

----S.8---Constitution of Pakistan, Fourth Schedule, Entry No. 49---Constitutional petition---Toll manufacturing---Recovery of sales tax---Jurisdiction---Petitioner companies were aggrieved of dispute between Sindh Government and Federal Government with regard to collection of sales tax on toll manufacturing---Validity---Post 18th Amendment to the Constitution in a number of cases of like nature, it was the taxpayer who had been dragged into unnecessary and protracted litigation and was subjected to double taxation by the Federation as well as by the Province, in addition to a very heavy burden on the Courts by way of constitutional petitions which could have been better resolved amicably and with consultation between the Federation and the Province---During the period under dispute, the tax which had already been paid by petitioners to the Federation through Federal Board of Revenue, in respect of toll manufacturing, that was their final discharge of liability in respect of sales tax (either under Sales Tax Act, 1990 or under Sindh Sales Tax on Services Act, 2011) they were not obliged to pay any further sales tax on such activity---Any proceedings initiated by the Province of Sindh under Sindh Sales Tax on Services Act, 2011, to such extent stood abated / disposed of in such terms---High Court advised that if the Province of Sindh intended to get any share out of sales tax already collected by Federal Board of Revenue under such head, it could approach Federation for its amicable settlement---Constitutional petition was disposed of accordingly.

2006 PTD 1459 and 2019 SCMR 875 rel.

for the Petitioner.

Khalid Javed Khan, Hyder Ali Khan, Arshad Hussain Shahzad, Samiur Rehman Khan, Omer Akhund, Umaimah Anwar Khan, Abid H. Shaban, Imtiaz Ali, Naveeda Basharat, Lunba Pervez, Shafqat Zaman, Abdul Sattar Silat, Abdul Rahim Lakhani, Asim Iqbal, Farmanullah Khan, Syeda Marium, Abdul Jabbar Mallah, Abdul Ahad, Naeem Suleman, Taqueer Randhawa, Kashan Ahmed, Atif Hafeez, Zeeshan Khan, Khalid Mehmood Siddiqui, Khurram Ashfaq, Muhammad Adeel Awan, Atta Muhammad Qureshi, Asadullah Shaikh, Muhammad Yahya.

for the Respondents.

Shahid Ali Qureshi, Kashif Nazeer, Shamshad Ahmed Narejo, Ameer Bakhsh Metlo, Irfan Mir Halepota, Ayaz Sarwar Jamali, Dr. Huma Sodhar, Muhammad Zubair Hashmi, Fahim Ali, S. Ahsan Ali Shah, Ali Tahir Soomro, Dr. Shah Nawaz Memon, Fozia M. Murad, S.Shafqat Ali Shah Masoomi, S. Mohsin Imam Wasti, Muhammad Aqeel Qureshi.

Zeeshan Adhi, Additional Advocate General Sindh.

Kafeel Ahmed Abbasi, Additional Advocate General Sindh.

Qazi Ayazuddin Qureshi, Assistant Attorney General.

Ms. Manzooran Gopan, Law Officer, Law Department, Government of Sindh.

PTD 2024 KARACHI HIGH COURT SINDH 846 #

2024 P T D 846

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Abdul Mobeen Lakho, JJ

POPULAR INTERNATIONAL (PVT.) LIMITED through duly authorized officer

Versus

PAKISTAN through Secretary, Revenue and Ex-Officio Chairman and another

C.P. No. D-3049 of 2023, decided on 6th November, 2023.

(a) Sales Tax Act (VII of 1990)---

----Eighth Schedule, Entry No. 81---Drug Regulatory Authority of Pakistan Act (XXI of 2012), Ss. 23, 32 & 36---Medical Devices Rules, 2017, R. 52---Notification SRO 526(I)/202, dated 30-04-2021---Notification, vires of---Removal of difficulties clause---Scope---Petitioner, who imported and distributed drugs, was aggrieved of withholding of benefits under Entry 81 of Eighth Schedule to Sales Tax Act, 1990, on the basis of Notification SRO 526 (I)/202, dated 30-04-2021---Plea raised by authorities was that in exercise of powers under S. 23 of Drug Regulatory Authority Act, 2012 and Medical Devices Rules, 2017, the Notification SRO 526(I)/202, dated 30-04-2021, was issued---Validity---Removal of difficulties clause could only be utilized for a restricted purpose and such provision could not be used to alter the scope of parent law---Rules which were merely subordinate legislation could not override or prevail upon the provisions of parent statute and whenever there was any inconsistency between the rule and statute, the latter must prevail---All efforts to reconcile inconsistency should be made and provisions of parent statute should prevail, if the conflict was incapable of being resolved---Constitutional petition filed by petitioner company was allowed accordingly.

Government of Balouchistan v. Shah Muhammad PLD 2023 SC 609; Farrukh Raza Sheikh v. The Appellate Tribunal, Inland Revenue and others 2022 SCMR 1787; Abbu Hashmi v. Federation of Pakistan and others PLD 2021 Sindh 492; Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal) LTU, Islamabad and others 2019 SCMR 282; Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2017 SCMR 1136; Elahi Cotton Ltd. v. Federation of Pakistan PLD 1997 SC 582; Ittefaq Foundry v. Federation of Pakistan and others PLD 1990 Lah. 121; Johnson and Johson Pakistan (Pvt.) Limited v. Federation of Pakistan PLD 2021 Lah. 314; PMDC v. Shahida Islam Medical Complex (Pvt.) Limited 2019 CLC 1761; PLD 2014 SC 389 and PLD 2011 SC 619 rel.

(b) Interpretation of statutes---

----Delegated legislation---Rules made under a statute---Scope---Rules are considered subordinate and delegated legislation deriving authority and legal cover from the provisions of main statute and cannot override the provisions of statute---To determine vires of delegated legislation, Court has to examine as to whether, such delegated legislation is beyond the power granted by enabling legislation and whether such delegated legislation is consistent with and in furtherance of parent statute---Delegated legislation can be struck down if it is repugnant to general purpose of the statute which authorized it or is in conflict with the main statute.

Makhdoom Ali Khan, Abdul Ghaffar Khan, Fahad Khan and Sami-ur-Rehman for the Petitioner.

Muhabbat Hussain Awan, Advocate for Respondent No.1.

Khaleeq Ahmed, D.A.G. for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 955 #

2024 P T D 955

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

SAPPHIRE TEXTILE MILLS LIMITED through Authorized Representative and others

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division and others

Constitution Petition No.8233 of 2019 (and connected matters, particularized in the Schedule1 hereto) decided on 27th February, 2023.

Income Tax Ordinance (XLIX of 2001)---

----S.65B (as amended by Finance Act, 2019)---Tax credits for investment---Purchasing and installing of machinery---Past and closed transactions---Dispute was with regard to cut off date of tax credits for investment made on purchasing and installing of machinery---Validity---Category, wherein purchase and installation had concluded by 30-06-2019, no sanctity could be conferred upon a subsequently inserted proviso in S. 65B to Income Tax Ordinance, 2001, seeking to halve the benefit that had already become due---High Court struck down the proviso to S. 65B to Income Tax Ordinance, 2001, as it was determined to be an unjustifiable attempt to vitiate protected vested rights---High Court restricted its findings to those who had made requisite purchase prior to 30-06-2019, yet completed installation by 30-06-2021---There was no case of any person that could have purchased post 30-06-2019 and / or installed beyond 30-06-2021---Two categories identified had protected vested rights and such rights could not be vitiated in the manner intended by amendment to S. 65B of Income Tax Ordinance, 2001 by Finance Act, 2019---Provision of S.65B(2) of Income Tax Ordinance, 2001 was read to reflect that the provisions of S. 65B(1) were to apply if plant and machinery was purchased before 30-06-2019 and installed before 30-06-2021---Provision of S. 65B(3) of Income Tax Ordinance, 2001 reflected that the amount of credit admissible was to be deducted from tax payable by taxpayer in respect of tax year in which plant and machinery, under reference, was installed---Determination of purchase and installation of pertinent plant and machinery, concluded within the period so specified, was to be undertaken by authorities in respective proceedings pending or initiated there before---High Court struck down 1st proviso to S.65B(1) of Income Tax Ordinance, 2001, inserted vide Finance Act, 2019---Constitutional petition was allowed accordingly.

Gulshan Spinning Mills Limited v. Federation of Pakistan 2005 PTD 259; LDA and others v. Imrana Tiwana and others 2015 SCMR 1739; H M Extraction v. FBR 2019 SCMR 1081; Nagina Silk Mills v. ITO PLD 1963 SC 322; East Pakistan v. Sharafatullah PLD 1970 SC 514; CIT v. EFU Insurance 1982 PLD SC 247; G H Shah v. Chief Land Commissioner 1983 CLC 1585; Al Samrez Enterprises v. Federation of Pakistan 1986 SCMR 1917; WAPDA v. Capt. Nazir 1986 SCMR 96; Chief Land Commissioner v. G H Shah 1988 SCMR 715; Molasses Trading and Export v. Federation of Pakistan 1993 SCMR 1905; Muhammad Hussain v. Muhammad 2000 SCMR 367; Shahnawaz v. Pakistan 2011 PTD 1558; Zila Council Jhelum v. PTC PLD 2016 SC 398; Al Tech Engineers v. Federation of Pakistan 2017 SCMR 673; Super Engineering v. CIR 2019 SCMR 1111; Anwar Yahya v. Federation of Pakistan 2017 PTD 1069; CIR v. Federation of Pakistan (Civil Appeals 930 and 931 of 2017; Multiline Associates v. Ardeshir Cowasjee 1995 SCMR 362; Seaford Court Estates Limited v. Asher [1949] 2 All ER 155, 164 (CA). and The Construction of Statutes by Earl T Crawford page 622 rel.

Raashid Khalid Anwar, Hussain Ali Almani, Ovais Ali Shah, Abid H Shaban, Anwar Kashif Mumtaz, Naveed A. Andrabi, Ammar A. Saeed, Khawaja Aizaz Ahsan, Imran Iqbal Khan, Naeem Suleman, Arshad Hussain Shehzad, Qazi Umair Ali, Fahim Bhayo, Tasawwur Ali Hashmi, Fahad Ali Hashmi, Usman Alam, Ameen M. Bandukda, Sami-ur-Rehman, Syed Muhammad Ali Mehdi, Basil Nabi Malik, Tauqeer Randhava, Asghar Bangash, Ali Akbar Poonawala, Kashan Ahmed, Maimona Nasim, Syed Danish Ghazi, Maaz Waheed, Muhammad Inzimam Sharif, Muhammad Din Qazi, Abdul Rahim Lakhani, Abdul Jabbar Mallah, Atta Muhammad Qureshi, Ameer Haider Khan, Maryam Riaz, Imtiaz Ali Sahito, Naveeda Bisharat, Imtiaz Ali, Sufiyan Zaman, Muneeb U Qidwai, Jawaid Farooqi, Umer Ilays Khan, Faiz Durrani, Samia Faiz Durrani, Ghulam Muhammad, Gharib Shah, Bilal Ahmed Khan, Rizwan Ahmed, Emad ul Hasan, Syed Aamir Ali Shah, Farhan Ali Shah, Faizan Faizi and Ali Nawaz Khuhawar for Petitioners.

Shah Nawaz Memon, Ameer Bakhsh Metlo, Shahid Ali Qureshi, Rana Sakhawat Ali, M. Taseer Khan, Iqbal, Fayaz Ali Metlo, Imran Ali Mithani, Alizeh Shahani, Qaim Ali Memon, Munawwar Ali Memon, Khalid Mehmood Siddiqui, Zohaib Ahmed, Fozia M. Murad, Muhammad Bilal Bhatti, Ayaz Sarwar Jamali, Riaz Sarwar Jamali, Motia Sikandar on behalf of Muhammad Zubair Hashmi, Bushra Zia, Asma Zehra, Irfan Mir Halepota, Farha Naz Qazi, Tauqeer Ahmed Seehar, Iqbal Hussain, Fouzia M. Murad, Sami Malik, Arshad Ali Tunio, Imzan Ahmed Maitlo, Muhammad Idrees Rahmoon, Zulfiqar Ali Jalbani, Ali Tahir, Hafeezulah, Syed Mohsin Imam, Abdul Sattar Pathan, S. Ahsan Ali Shah, Abdul Sami, Faheem Raza, Asif Ali Siyal, Mujeeb Zeeshan Kumbhar, Sajjad Ali Solangi, G.M. Bhutto (Assistant Attorney General), Qazi Ayazuddin (Assistant Attorney General) and Ms. Manzooran Gopang, (Law Officer, Law Department) for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 997 #

2024 P T D 997

[Sindh High Court]

Before Muhammad Shafi Siddiqui and Agha Faisal, JJ

COLLECTOR MODEL CUSTOMS COLLECTORATE OF PREVENTIVE

Versus

Messrs VENUS PAKISTAN (PVT.) LTD. and others

Special Customs Reference Application No.1339 of 2015 (and others connected cases), decided on 7th May, 2024.

Customs Act (IV of 1969)---

----S.196---Customs Rules, 2001, R. 564(4)---Custom General Order 12 of 2002, dated 15-6-2002 [as amended vide Custom General Order 6 of 2010, dated 20-8-2010 para. 25A---Reference---Afghan Transit Trade---Short supply beyond one percent---Dispute between the parties was with regard to levy of duties and taxes in respect of loss of consignment due to transit evaporation beyond one percent and loss due to terrorism---Validity---Damage caused by any event including terrorism, Customs Appellate Tribunal was the last fact finding forum and until such stage not a single incident of act of terrorism was established---Carriers of the consignment were not absolved from their responsibilities and were liable to pay duties and taxes as act of terrorism did not cause any damage to consignments on their way to Afghanistan---Carriers transporting such goods could not establish that loss was due to evaporation rather it was due to ill will of carriers who took advantage of such concession and gained commercially on such count---In absence of such understanding, loss could not be counted against carriers who were entitled to one percent concession and were saddled with responsibilities of duties and taxes over one percent---None of the clauses of paragraph 25A added to Customs General Order 12 of 2002 absolved importer / carrier from payment of duties and taxes beyond one percent whereas concession of one percent would remain intact---Reference was disposed of accordingly.

Al-Haj Enterprises (Pvt.) Ltd. v. Collector of Customs 2017 SCMR 1598 rel.

Muhammad Arif for Applicants (in SCRAs Nos.31 to 38 of 2012 and 192 of 2019).

M. Khalil Dogar for Respondents (in SCRAs Nos.31 to 38 of 2012 and 192 of 2019).

M. Khalil Dogar for Applicants (in SCRA No.329 of 2013).

Umer Akhund for Respondents (in SCRA No.329 of 2013).

M. Khalil Dogar for Applicants (in SCRAs Nos.44 to 67 and 268 to 283 of 2014).

Darvesh K. Mandhan for Respondents (in SCRAs Nos.44 to 67 and 268 to 283 of 2014).

Shahid Ali Qureshi for Applicants (in SCRAs Nos.1339 to 1349 of 2015).

Muhammad Arif for Respondents (in SCRAs Nos.1339 to 1349 of 2015).

M. Khalil Dogar for Applicants (in SCRAs Nos.793 to 801 of 2017).

Muhammad Mustafa Mamdani holds brief for A. Jatoi for Respondents (in SCRAs Nos.793 to 801 of 2017).

PTD 2024 KARACHI HIGH COURT SINDH 1121 #

2024 P T D 1121

[Sindh High Court]

Before Aqeel Ahmed Abbasi and Abdul Mobeen Lakho, JJ

POPULAR INTERNATIONAL (PVT.) LIMITED through duly authorized officer

Versus

PAKISTAN through Secretary, Revenue and Ex-Officio Chairman, F.B.R. and another

C.P. No. D-3049 of 2023, decided on 6th November, 2023.

(a) Drugs Regulatory Authority of Pakistan Act (XXI of 2012)---

----Ss. 23, 32 & 36---Sales Tax Act (VII of 1990), Eighth Schedule, Entry No. 81---Medical Devices Rules, 2017, R. 52---Notification SRO 526(I)/2021, dated 30-04-2021---Notification, vires of---Removal of difficulties clause---Scope---Petitioner, who imported and distributed drugs, was aggrieved of withholding of benefits under Entry 81 of Eighth Schedule to Sales Tax Act, 1990, on the basis of notification SRO 526 (I)/2021, dated 30-04-2021---Plea raised by authorities was that in exercise of powers under S. 23 of Drugs Regulatory Authority Act, 2012 and Medical Devices Rules, 2017, the notification SRO 526(I)/2021, dated 30-04-2021, was issued---Validity---Removal of difficulties clause could only be utilized for a restricted purpose and such provision could not be used to alter the scope of parent law---Rules which were merely subordinate legislation could not override or prevail upon the provisions of parent statute and whenever there was any inconsistency between the rule and statute, the latter must prevail---All efforts to reconcile inconsistency should be made and provisions of parent statute should prevail, if the conflict was incapable of being resolved---Constitutional petition filed by petitioner company was allowed accordingly.

Government of Balochistan v. Shah Muhammad PLD 2023 SC 609; Farrukh Raza Sheikh v. The Appellate Tribunal, Inland Revenue and others 2022 SCMR 1787; Abbu Hashmi v. Federation of Pakistan and others PLD 2021 Sindh 492; Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal) LTU, Islamabad and others 2019 SCMR 282; Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2017 SCMR 1136; Elahi Cotton Ltd. v. Federation of Pakistan 1997 PLD SC 582; Ittefaq Foundry v. Federation of Pakistan and others PLD 1990 Lah. 121; Johnson and Johson Pakistan (Pvt.) Limited v. Federation of Pakistan PLD 2021 Lah. 314; PMDC v. Shahida Islam Medical Complex (Pvt.) Limited 2019 CLC 1761; PLD 2014 SC 389 and PLD 2011 SC 619 rel.

(b) Interpretation of statutes---

Makhdoom Ali Khan, Abdul Ghaffar Khan, Fahad Khan and Sami-ur-Rehman for the Petitioner.

Muhabbat Hussain Awan for Respondent No.1.

Khaleeq Ahmed, D.A.G. for Respondent No. 2.

PTD 2024 KARACHI HIGH COURT SINDH 1163 #

2024 P T D 1163

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Ms. Sana Akram Minhas, JJ

IMRAN QADEER

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Law and 4 others

Constitution Petition No.D-7176 of 2022, decided on 12th October, 2023.

Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss. 9, 10, 13 & 14---Federal Tax Ombudsmen Institutional Reforms Act (XIV of 2013), S. 15---Federal Tax Ombudsman---Supervisory role---Jurisdiction---Petitioner was an official of Inland Revenue and aggrieved of remarks made by Federal Tax Ombudsman while disposing of a complaint filed by a taxpayer---Validity---Office of Federal Tax Ombudsman was to realize its domain and jurisdiction while dealing with complaints and should not become supervisory body or authority of all employees of Federal Board of Revenue who were to be dealt with strictly in accordance with Civil Servants Act, 1973, and Rules framed thereunder---Once any Ordinance or any law has been interpreted by a Constitutional Court, then Ombudsman is bound to accept the same and cannot be said to be aggrieved, if powers to redress mal-administration vested in Federal Tax Ombudsman under the law are modified (enhanced or curtailed) through interpretation of Constitutional Court---Federal Tax Ombudsman does not have any locus standi to challenge an order passed by Constitutional Court that interprets its jurisdiction or powers under the law---Acts and functions, i.e. (passing of orders) by officers of Federal Board of Revenue, while performing quasi-judicial functions under Tax Laws, are not always subject to administrative control of Federal Board of Revenue so as to bring disciplinary proceedings against such officers for passing orders while performing such functions---Conduct of Federal Tax Ombudsman recording adverse findings against petitioner while deciding a complaint of a taxpayer could not be sustained as it was done without any notice and without following the principles of natural justice---Such act of Federal Tax Ombudsman was in violation of judgments of Constitutional Courts, and order in question amounted to violating such judgments---High Court declined to initiate any proceedings against Federal Tax Ombudsman---High Court set aside order in question along with all subsequent actions so initiated---Constitutional petition was allowed accordingly.

Shakeel Ahmed Kasana and others v. Federal Tax Ombudsman and others (C.Ps. Nos. D-4079, D-4212, D-4341, D-4353 and D-4377 of 2021); Abdul Waheed Khan, Commissioner Inland Revenue and others v. Federal Tax Ombudsman and another (Writ Petition No. 2332 of 2021); Waheed Shahzad Butt v. Abdul Waheed Khan and others (Intra Court Appeal No. 2230/2022 in W.P. No. 2332/2021); Mrs. Anisa Rehman v. PIAC 1994 SCMR 2232; Syed Nusrat Nasir v. Federation of Pakistan 2013 PTD 486; Wafaqi Mohtasib Secretariat v. SNGPL PLD 2020 SC 586 and M.A.Rahman v. Federation of Pakistan 1988 SCMR 691 rel.

Malik Altaf Hussain for Petitioner.

Qazi Ayazuddin Qureshi, Assistant Attorney General for Respondent No.1.

Agha Zafar Ahmed for Respondent No.2.

Nemo. for Respondents Nos.3 to 5.

PTD 2024 KARACHI HIGH COURT SINDH 1205 #

2024 P T D 1205

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

The COLLECTOR OF CUSTOMS, ENFORCEMENT, CUSTOMS HOUSE, KARACHI

Versus

ABDUL RAZZAQ and another

Special Customs Reference Application No.512 of 2002, decided on 12th January, 2023.

(a) Customs Act (IV of 1969)---

----Ss. 194 & 196---Findings of the Customs Appellate Tribunal ('the Tribunal') on questions of fact(s)---Reference jurisdiction of the High Court---Scope---Department filed Customs Reference against the judgment passed by the Tribunal---Tribunal sought report from the Commissioner on the basis of which it was concluded that out of total lot of the consignment so seized, 40% of the goods were of local origin, whereas the remaining 60% were of foreign origin---Validity---High Court in reference jurisdiction in terms of S.196 of the Customs Act, 1969, cannot interfere and reach to some other conclusion against the Tribunal's finding---Tribunal is the last fact finding forum and only questions of law are to be examined by the High Court in its reference jurisdiction.

Commissioner Inland Revenue v. Sargodha Spinning Mills Limited 2022 SCMR 1082 ref.

(b) Customs Act (IV of 1969)---

----Ss. 194 & 196---Findings of the Customs Appellate Tribunal ('the Tribunal') on questions of fact(s)---Belated objection regarding inspection order---Department filed Customs Reference against the judgment passed by the Tribunal---Tribunal sought report from the Commissioner on the basis of which it was concluded that out of total lot of the consignment so seized, 40% of the goods were of local origin, whereas the remaining 60% were of foreign origin---Validity---Objection regarding the inspection order was also belated inasmuch as, if aggrieved, the Applicant /Department ought to have impugned the same when the said order was passed.

----Ss. 194C(7)(a), (d) & 196---Inspection carried out through commission by the Customs Appellate Tribunal ('the Tribunal')---Reference jurisdiction of the High Court---Scope---Department filed Customs Reference against the judgment passed by the Tribunal---Validity---In terms of S. 194C (7)(a) & (d) of the Customs Act, 1969, the Customs Appellate Tribunal for the purposes of discharging its functions is even vested with powers of inspection and issuance of commission; hence to the extent of findings of fact, as above, the same cannot be interfered with or altered in the reference jurisdiction.

(d) Customs Act (IV of 1969)---

----Ss. 2(s), 181, 194 & 196---SRO 499(I)/2009 dated 13.06.2009---SRO 566(I)/2005 dated 6.6.2005---Smuggling---Confiscation---Release of the goods on payment of duty and taxes without any redemption---Scope and effect---40,500 kgs of assorted brands and foreign origin cloth were seized from a godown and an order for outright confiscation of the seized goods was passed by the Adjudicating Authority---Appellate Tribunal Inland Revenue ('the Tribunal') permitted release of the goods on payment of duty and taxes, against which judgment the Department filed Reference Application---Plea of applicant / Department was that goods-in-question were smuggled goods as the respondent had failed to provide any lawful defence as to the charge of smuggling in respect of the seized goods---Validity---Tribunal after coming to the conclusion that 60% of the quantity of the seized goods consisted foreign origin cloth, and once there is an admission that no substantial documents were produced as to the ownership and payment of duty and taxes on the seized goods, then there is no occasion for the Tribunal to permit or allow release of the said goods on payment of duty and taxes---Goods were either smuggled or lawfully imported; and once a conclusion has been drawn that the goods were not lawfully imported, otherwise duty and taxes were not to be paid, then 60% of the seized goods were nothing but smuggled goods---The release of smuggled goods (which stood confiscated) on payment of duty and taxes, and that too without any redemption of the said goods did not appear to be correct and supported by any provisions of law---Confiscation and redemption of seized goods is covered by S. 181 of the Act, read with SRO 499(I)/2009 dated 13.06.2009---Moreover FBR had also notified the goods in question as goods falling within the contemplation of S. 2(s)(i) of the Act, vide SRO 566(I)/2005 dated 6.6.2005---Requirement to give option to pay fine in lieu of confiscation in respect of confiscated goods is not absolute and is subject to the Notification issued by FBR under S. 181, and the order of the Tribunal for imposition of redemption fine in lieu of outright confiscation of smuggled goods was unlawful and in violation of S. 181 of the Customs Act, 1969---Tribunal, in the present case, had failed to appreciate the law and passed the impugned judgment in a very slipshod manner---Such conduct on the part of the Tribunal cannot be appreciated which is in fact a special Tribunal created under the Act----Extra care ought to have been taken by the Tribunal in passing such orders which on the face of it appeared to be in violation of the Customs Act, 1969---Impugned judgment could not sustain to the extent of 60% of the goods in question i.e. foreign origin goods which were admittedly smuggled goods warranting an outright confiscation---High Court set-aside/modified the impugned Judgment passed by the Tribunal to the extent of 60% foreign origin goods and the order of the Adjudicating authority is restored to that extent---Reference Application, filed by the Department, was allowed, in circumstances.

Collector of Customs, Peshawar's case 2017 SCMR 585 ref.

Abu Bakar Siddique's case 2006 SCMR 705 distinguished.

Sardar Muhammad Azad Khan for the Applicant.

Ms. Dil Khurram Shaheen for Respondents.

PTD 2024 KARACHI HIGH COURT SINDH 1218 #

2024 P T D 1218

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

CHINA POWER HUB GENERATION COMPANY (PVT.) LIMITED through authorized Officer

Versus

PAKISTAN through Secretary Ministry of Finance and others

Constitutional Petition No.D-3532 of 2020, decided on 11th February, 2021.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 137, 153, 161 & 205(3)---With-holding agent, responsibility of---Amount of tax not withheld by withholding agent---Default surcharge on amount of tax not withheld---Scope---Petitioner /company (China Power Hub Generation Company (Pvt.) Limited) filed constitutional petition to impugn Show-Cause Notice(s) issued under S. 205(3) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') for tax years 2017, 2018 and 2019 for payment of default surcharge on amount of tax not withheld or deducted by it (petitioner) as withholding agent in terms of S. 153 of the Ordinance, 2001---Submission of the petitioner is that for tax years 2017 and 2018, it (petitioner ) was issued Notice under Ss. 161 & 205 of the Ordinance, 2001, and for Tax Year 2019 under S. 161 of the Ordinance, 2001, whereafter pursuant to an order, the adjudged amount was paid as per demand notice under S. 137(2) of the Ordinance 2001; thus, after payment of the entire amount as claimed, impugned Notice(s) had been issued without lawful authority and jurisdiction as no further Notice could be issued for recovery of Default Surcharge which was never adjudicated by the Officer concerned---Question was whether another Notice in respect of the same alleged default can be issued for which earlier a Notice was already issued and while adjudicating the matter, no default surcharge was imposed---Argument of the Department was that once the amount adjudged under S. 161 of the Ordinance, 2001 was paid without objection and any further appeal, the amount of default surcharge became payable mandatorily without further objections---Validity---Argument of the Department was misconceived as, first, default surcharge is not mandatorily payable as it had to be adjudicated upon and such adjudication has to be done along with the main order being passed in terms of S. 161 of the Ordinance, 2001; if not, then in each and every case, which culminates after legal proceedings by way of Appeal and Reference as provided under the Ordinance, 2001 , a new show-cause notice would be issued in a mechanical manner---It is the officer concerned having jurisdiction who first has to issue a combined notice under S.161 read with S. 205 of the Ordinance, 2001, confronting a taxpayer as to why the amount of tax not withheld or deducted be recovered and further as to why on failure to do so, the default surcharge be also recovered---There can't be separate or independent proceedings under both the (Ss. 161 & 205 of the Ordinance, 2001)---If it is a case of confronting a tax-payer under S.161 of the Ordinance, 2001 , then it has to be done simultaneously---It is only in this manner that the officer passing the order under S. 161 of the Ordinance, 2001 can decide and come to a conclusion that the taxpayers conduct also warrants imposition of a default surcharge---High Court set-aside the impugned show cause notices issued under S.205(3) of the Ordinance 2001 in respect of relevant tax years (2017, 2018 and 2019), declaring the Order(s) passed thereon to have been issued / passed without lawful authority and jurisdiction---Constitutional petition, filed by taxpayer/company, was allowed, under circumstances.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 137, 153, 161 & 205(3)---With-holding agent , responsibility of---Amount of tax, not withheld by withholding agent---Default surcharge on amount of tax not withheld---Scope---Officer, powers of---If for some reason the officer concerned has failed to adjudicate the quantum of Default Surcharge, the only inference which can be drawn is, that the officer has consciously not imposed any default surcharge.

----Ss. 205(3); proviso, 129, 131, 137, 153 & 161---With-holding agent, responsibility of---Amount of tax not withheld by withholding agent---Default surcharge, on amount of text not withheld---Taxpayer not filing appeal under S.131 of Income Tax Ordinance, 2001---Effect---Petitioner / company (China Power Hub Generation Company (Pvt.) Limited) filed constitutional petition to impugn Show-Cause Notice(s) issued under S. 205(3) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') for tax years 2017, 2018 and 2019 for payment of default surcharge on amount of tax not withheld or deducted by it (petitioner) as withholding agent in terms of S. 153 of the Ordinance, 2001---Validity---Impugned notice(s) had been issued under S. 205(3) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001')---Section 205(3) had a proviso and it provides that if a person opts to pay the tax due on the basis of an order under S.129 of the Ordinance, 2001 [i.e. decision in Appeal by the Commissioner on the 1st Appeal] on or before the due date given in the notice under S. 137(2) of the Ordinance 2001 issued in consequence of the said order and does not file an appeal under S. 131 of the Ordinance 2001, he shall not be liable to pay default surcharge for the period beginning from the date of the order under S. 161 of the Ordinance, 2001 to the date of payment---Said proviso is beneficial inasmuch as it waives even the total amount of default surcharge which may have been imposed through an order S.161 of the Ordinance, 2001, if the tax-payer after filing of 1st Appeal and passing of an order by the Commissioner under S. 129 of the Ordinance 2001 does not pursue any further Appeal---In the present matter, the petitioner had paid the amount adjudged through an order under S. 161 pursuant to a demand notice under S.137(2) of the Ordinance, 2001 without even resorting to 1st Appeal in terms of S. 129 of the Ordinance, 2001, whereas, for reasons best known to the Respondents / Department an honest and tax compliant person had been dragged into this litigation without any substantial basis in hand---Even if any amount of default surcharge would have been imposed or adjudged along with the order under S. 161 of the Ordinance, 2001, it was subject to waiver, if the Petitioner had filed 1st Appeal and after passing of an order under S. 129 of the Ordinance, 2001 had paid the adjudged amount of tax---It had discouraged the petitioner from being tax complaint; rather encouraged the petitioner to pursue 1st Appeal in all cases---Therefore, even when looked into from this angle, the impugned notices were wholly unwarranted in law---Hence, the impugned show-cause notices issued in terms of S. 205(3) of the Ordinance, 2001, were not sustainable and liable to be quashed / set-aside---High Court set-aside the impugned show-cause notices issued under S.205(3) of the Ordinance, 2001 in respect of relevant tax years (2017, 2018 and 2019), declaring the Order(s) passed thereon to have been issued / passed without lawful authority and jurisdiction---Constitutional petition, filed by taxpayer/company, was allowed, in circumstances.

(d) Income Tax Ordinance (XLIX of 2001)---

----Ss. 137, 153, 161 & 205(3)---Default surcharge, imposition of---Mens-rea, absence of ---Scope and effect---Default surcharge is not to be imposed in a mechanical manner; but only after a proper adjudication as to the willful default and presence of mens-rea---In the present case, it had been averred on behalf of the petitioner all along that firstly, after submission of reply, the allegation of not withholding / deducting tax against host of issues was decided in his favour; whereas, even a rectification was also allowed in respect of one tax-year, and lastly, the only issue decided against it was in respect of withholding of tax for payment made under offshore-contracts and was a case of interpretation of S. 152 of the Ordinance, 2001 as according to the petitioner the title of assets was transferred outside Pakistan; hence it was a case of a genuine interpretation of the contracts and the applicability of the Ordinance, 2001 on such contracts---In these circumstances, it would have been even a difficult proposition to sustain imposition of any default surcharge---Each and every case has to be decided on its own merits as to whether the evasion or payment tax was wilful or mala fide, decision of which would depend upon the question of recovery of additional tax---High Court set-aside the impugned show-cause notices issued under S.205(3) of the Ordinance, 2001 in respect of relevant tax years (2017, 2018 and 2019), declaring the Order(s) passed thereon to have been issued / passed without lawful authority and jurisdiction---Constitutional petition, filed by taxpayer/company, was allowed, in circumstances.

DG Khan Cement Company Limited v. Federation of Pakistan 2004 PTD 1179 ref.

(e) Income Tax Ordinance (XLIX of 2001)---

----Ss.137, 153, 161 & 205(3)---Withholding agent, responsibility of---Amount of tax not withheld by withholding agent---Default surcharge on amend of tax not withheld---Scope---Petitioner / company (China Power Hub Generation Company (Pvt.) Limited) filed constitutional petition to impugn Show-Cause Notice(s) issued under S. 205(3) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001') for tax years 2017, 2018 and 2019 for payment of default surcharge on amount of tax not withheld or deducted by it (petitioner ) as withholding agent in terms of S. 153 of the Ordinance, 2001---As regard passing of an order pursuant to the impugned show-cause notice on the pretext that the interim order was not served upon within time, since the Court had come to the conclusion that the impugned Show-Cause Notice(s) itself was without jurisdiction and was to be set-aside / quashed; hence, by applying the principle of taking notice of the subsequent events to grant requisite relief, without going into the exercise of determination that whether the ad-interim order was served or not High Court also set aside the order passed subsequently, pursuant to the impugned Show-Cause Notice(s)---High Court set-aside the impugned show-cause notices issued under S. 205(3) of the Ordinance, 2001 in respect of relevant tax years (2017, 2018 and 2019), declaring the Order(s) passed thereon to have been issued / passed without lawful authority and jurisdiction---Constitutional petition, filed by taxpayer/company, was allowed, in circumstances.

Samar Gul v. Central Government PLD 1986 SC 35 and Syed Ali Asghar v. Creators (Builders) 2001 SCMR 279 ref.

Hyder Ali Khan, Samiur Rehman Khan and Hamza Waheed for Applicant.

Dr. Shah Nawaz Memon for Respondent.

PTD 2024 KARACHI HIGH COURT SINDH 1330 #

2024 P T D 1330

[Sindh High Court]

Before Irfan Saadat Khan and Mahmood A. Khan, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, HYDERABAD

Versus

ABDUL SATTAR and another

Special Customs Reference Application No.493 of 2016, decided on 10th May, 2022.

Customs Act (IV of 1969)---

----Ss. 2(s), 156(1), 157(2), 171 & 215---SRO No. 499(I)/2009 dated 13-06-2009---Smuggling, allegation of---Vehicle used in smuggling of fuel, confiscation of---Release of the vehicle-in-question (Oil Tanker) against the payment of 20% fine---Allegation was that Oil Tanker was used for smuggling of High Spirit Diesel (HSD) without proper documentation---Department filed Reference application as the Customs Appellate Tribunal while setting aside Order-in-Original, ordered release of the vehicle-in-question (Oil Tanker) to the respondent, being lawful owner, against the payment of 20% fine---Plea of the applicant / Department was that Oil Tanker was very much part and parcel of the illegality and violation made by the respondent---Validity---Record revealed that when the Oil Tanker was taken into custody there was nobody in it, thereafter it was taken to the concerned Customs House---When a Show-Cause Notice was issued, in response the owner of the Oil Tanker appeared and submitted before the Customs Authorities ('the Authorities') that he had nothing to do with the HSD and stated that his Oil Tanker was plying on hire basis---High Court viewed that though the Customs Authorities rightly impounded the HSD as no person claiming its ownership came forward clearly depicting that it was smuggled ,hence seizing of the Oil Tanker was not justified when complete ownership documents of it were duly furnished---At the time of raid, interestingly, the subject-vehicle (Oil Tanker) was found abandoned but it was also said to have been registered with the Motor Vehicle Authority---However, the Authorities failed to acquire details and to issue Show-Cause Notice to the owner---Though ownership documents of the Oil Tanker were furnished, however, no effort was made by the Authorities to verify the same from the Excise Department---Prior to the incident, which took place on 26-5-2015 with regard confiscation of the HSD in the Oil Tanker, the Department was not in possession of any material or evidence against the owner of the Oil Tanker to be involved in any objectionable activity---It was only when the Authorities failed to release the Oil Tanker, the respondent approached the High Court and got directions for the release of the Oil Tanker subject to furnishing ownership documents to the Nazir and obtaining an undertaking from the owner that till such time the present Special Customs Reference Application was pending he would not sale out the said Oil Tanker---Customs Appellate Tribunal while allowing the appeals had categorically observed that after seizing the Oil Tanker necessary legal requirements with regard to issuing proper Show-Cause Notice to the owner and confronting him on other aspects was not carried out by the Department, which was in violation of mandatory provision of S. 171 of the Customs Act, 1969---Authorities made no effort to create a link between the HSD and the Oil Tanker, which established that the confiscation of HSD and the Oil Tanker were two different aspects requiring different treatments---However, it was observed that a somewhat similar treatment was accorded by the Department to the HSD as well as to the Oil Tanker---Nobody came forward to claim ownership of the HSD whereas owner of the Oil Tanker was claimed through some documents but the HSD and the Oil Tanker were incorrectly treated alike by the Authorities---Hence, the Department had simply failed to make out case of smuggling/confiscation of the Oil Tanker as mentioned under S.2(s) of the Customs Act, 1969, and no misinterpretation on the part of the Customs Appellate Tribunal had either been found or established by the Department---Therefore, confiscation of the Oil Tanker was unwarranted and could not be approved---High Court, in circumstances, confirmed the release of the vehicle (Oil Tanker) and answered the question raised in the present matter in negative i.e. against the Department and in favour of the Respondent---Special Customs Reference Application, filed by the Department, was dismissed.

Shahid Ali Qurreshi for Applicant.

Dr. Muhammad Khalid Hayat for Respondent No.1.

Nemo for Respondent No.2.

PTD 2024 KARACHI HIGH COURT SINDH 1360 #

2024 P T D 1360

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

IBRAHIM FIBRES LIMITED through Company Secretary

Versus

PROVINCE OF SINDH through Chief Secretary and 2 others

Constitutional Petition No.D-3309 of 2011, decided on 4th June, 2021.

(a) Interpretation of statutes---

----Viers of law---Declaration of Court---Effect of judgment rendered by competent Court of law declaring any provision of law as ultra vires or declaring levy of a tax as illegal can be undone---This can only be done if grounds of illegality or invalidity are capable of being removed and are in fact removed.

(b) Sindh Development and Maintenance of Infrastructure Cess Act (XVIII of 2017)---

----S. 3---Sindh Finance Act (XXIV of 2017), S. 1 (3)---Constitution of Pakistan, Arts. 142(c) & 199---Sindh Finance Act (XIII of 1994)---Sindh Finance Act (XV of 1996)---Sindh Finance (Amendment) Ordinance (IX of 2001)---Sindh Finance (Second Amendment) Ordinance (XVI of 2001)---Sindh Finance (Amendment) Act (II of 2007)---Sindh Finance (Amendment) Act (III of 2009)---Constitutional petition---Vires of Infrastructure fee / Cess---Provincial Legislature, competence of---Principle---Petitioners / importers assailed levy known as Infrastructure Fee / Cess imposed by Provincial Government Sindh through Sindh Finance Act, 1994 and its subsequent versions---Levy in question was demanded and collected before release of goods from Customs jurisdiction either at sea port or airports---Plea raised by petitioners / importers was that such levy was ultra vires to the Constitution and beyond the competence of Provincial Legislature---Validity---Levy in question was neither a tax nor fee on import and export of goods though it was levied and collected in the same manner as the Customs duty under the Customs Act, 1969, including that on ad-valorem basis---Merely by providing a mechanism of collection of levy in question, it did not ipso-facto become a customs duty, falling within the domain of Federal Legislature---Levy in its existing form was a cess for maintenance and development of infrastructure on goods upon entering or before leaving the Province from or for outside the country, through air or sea for carriage by road and smooth and safer movement in the Province---Levy in question was only applicable and challenged upon goods entering the Province from outside the country and as for the remaining it had been exempted---High Court declared that first four versions of law introduced through Sindh Finance Act, 1994, amended through Sindh Finance Act, 1996, Sindh Finance (Amendment) Ordinance, 2001, and Sindh Finance (Second Amendment) Ordinance, 2001 had attained finality and was past and closed transaction---High Court further declared that notwithstanding promulgation of fifth version of levy in question vide Sindh Finance (Amendment) Ordinance, 2006, further amended by Sindh Finance (Amendment) Act, 2007 and Sindh Finance (Amendment) Act, 2009, Sindh Finance Act, 2017, promulgated retrospectively with effect from 1-7-1994 was a valid law within the competence of Provincial Legislature under the Constitution and was applicable retrospectively---All imposition and collection of levy in question with effect from 01-07-1994 pursuant to S. 1(3) of Sindh Finance Act, 2017, were retrospective in effect and were validly done and collected---All Bank Guarantees furnished by petitioners up to 27-12-2006 who had litigated earlier and were appellants in Sanofi Aventis case reported as PLD 2009 Karachi 69 stood discharged whereas bank guarantees furnished by them on or after 28-12-2006 would be en-cashed and paid to authorities---Guarantees furnished by rest of the petitioners not covered as appellants in Sanofi Aventis case reported as PLD 2009 Karachi 69 would be en-cashed and paid to authorities---Constitutional petition was disposed of accordingly.

PLD 2009 Kar. 69 ref.

----Fourth Sched. Legislative entries---Conflict---Duty of Court---Principle---When an issue arises as to interpreting apparent conflicting legislative entries when there are distinct entries for Federal and Provincial Legislatures, even in that situation it is not that the Court would always arrive at a conclusion that either of them has the competency to do so---In such situation controversies do arise as to the competency and as to who is exceeding its own domain and encroaching upon the others---In such case it is not the name of the tax; but its real nature i.e. the "pith and substance" that determines into what category or in whose domain such legislation would fall.

Governor General in Council v. Madras 1945 FCR 179 rel.

Makhdoom Ali Khan, Hyder Ali Khan, Hussain Ali Almani, Fahad Khan, Rashid Anwar, Ahmed Hussain, Ameen M. Bandukda, Samiur Rehman Khan, Shaheer Roshan Shaikh, Navin Merchant along with Salman Yousuf, Faiz Durrani, Samia Faiz Durrani, Ghulam Muhammad, Muhammad Faheem, Umer Akhund, Sofia Saeed Shah, Aijaz Ali, Sobia Mehak, Ghulam Hussain Shah, Muhammad Adeel Awan, Shahan Karimi, Jehanzeb Awan, Karim Abbasi, S. Zeshan Ali, Imran Iqbal Khan, Rafiq Ahmed Kalwar, Nadir Hussain Abro, Rashid Mahar, Shafqat Zaman, Abdul Ahad Nadeem, Zahid Abbas, Yousuf Moulvi alongwith Rafia Murtaza, Taimur A. Mirza, Muhammad Arshad Mehmood, Aijaz Ahmed Zahid, Dr. Muhammad Khalid Hayat, Muhammad Irshad, Wajid Wyne, Shfaqat Zaman, Hamza Waleed, Rashid Mahar, Arshad Shahzad, Naeem Suleman, Asif Ali, Ahmed Hussain, Jawaid Farooqui, Imran Ali Abro, Zubair Ahmed Abro, Adnan Ahmed Zafar, Ajeet Sundar, Waqar Ahmed, Muhammad Adnan Moton, Khalid Mehmood Siddiqui, Barrister Usman Waleed, Muhammad Inzimam Sharif and Salman Aziz for Petitioners.

Farooq H. Naek, along with, Zulfiqar Arain, S. Qaim A. Shah, representing Excise and Taxation Dept. Salman Talibuddin, Advocate General Sindh assisted by Abdullah Abid, Advocate, Jawed Dero Additional Advocate General, Saifullah Assist. Advocate General, Khalid Rajpar, Shahid Ali Qureshi, Mohsin Imam Wasti, Muhammad Zubair, Irfan Mir Halepota, Imran Ali Mithani, Muhabbat Hussain Awan, Muhammad Rashid Arfi Okash Mustafa for Muhammad Bilal Bhatti Advocates for Customs Department for Respondents.

Dates of hearing: 26th October, 5th November, 2020, 25th January, 15th April and 28th May, 2021.

JUDGMENT

MUHAMMAD JUNAID GHAFAR, J.----This Petition along with Petitions as mentioned in Annexure "A" to this Judgment involve an identical legal issue and are therefore, being decided through this common Judgment. The Petitioners have impugned a levy known as Infrastructure fee / Cess imposed by the Province of Sindh through Sindh Finance Act, 1994 and its subsequent versions including the final version i.e. Sindh Development and Maintenance of Infrastructure Cess Act, 2017, on the ground that it is ultra vires to the Constitution and beyond the competence of the Provincial Legislature. All Petitioners before us are Importers of various goods and are aggrieved with the impugned levy being demanded and collected on such goods before their release from the Customs jurisdiction either at Sea Port(s) or Airport.

Learned Counsel for the Petitioners1 have contended that the impugned levy is beyond the legislative competence of the Provincial legislature as it has no authority under the Constitution to levy a fee or cess on imports and exports into the Province from or for outside the country; that in all (7) seven versions of the law, the instance of the impugned levy is on goods entering or leaving the Province from or for outside the country through Air or Sea, whereas, after three versions while enacting the fourth version, the law was changed by insertion of additional purpose of the levy through insertion of words, "the smooth and safer movement of goods", however, it still remains a levy on the import and export of goods which falls within the legislative competence of the Federal Legislature; that the nature and character of the impugned levy is to be determined on the basis of the taxable event which in the instant matter is the import and export of the goods into the and out of the Province from outside the country; that this taxable event is directly covered through Entries 24,2 27,3 and 434 of the Federal Legislative List under the Fourth Schedule to the Constitution; hence, the Province does not have any authority to impose this levy; that in accordance with the Article 142 of the Constitution, it is only the Federation which has the exclusive legislative competence in respect of the matters enumerated in these Entries; that Customs Duties have been levied through the Customs Act, 1969 on the import and export of the goods into and outside the country; hence, the impugned levy is beyond the competence of the Provincial legislature as it amounts to encroaching upon the legislative competence of the Federation; that it is settled law that entries in the legislative list are to be construed in a widest possible manner and not in a narrow, restricted or pedantic manner; that the Province of Baluchistan had also imposed a similar Infra-structure Cess through Baluchistan Infrastructure Development Cess Act, 2019 which has been declared ultra vires5; that the impugned levy is nothing but a Customs duty which is confirmed by way and in the manner, in which it has been levied and is calculated i.e. on the value of goods as assessed by the Customs Authorities; that insertion of additional levy of 1 paisa per kilometer through subsequent versions is irrelevant and is an attempt to cure an unconstitutional imposition of the levy; that it is a colorable exercise of legislation and impinges upon the powers of the Federation; that it is settled law that measure of levy imposed has a nexus with the nature of levy; that even otherwise, the impugned levy discriminates between locally manufactured goods as against the Petitioners imported and exported goods; that as to various attempts of re-validating the earlier versions, it is settled law that such an attempt cannot nullify the judgments of this Court without removing the defects in law pointed out by the Court in its earlier judgments; that the subsequent Acts / Ordinances do not remove any of the defects pointed out by this Hon'ble Court including that the cess is still imposed on the import and export of the goods; that it is still calculated primarily on the value of the goods which has no nexus with the nature and character of the levy; that even if it is assumed that this cess was a fee, no services are being provided in return; that the subsequent amendments including the 2017 Act, cannot be given retrospective effect as the charging section does not provides for any such effect; that without prejudice, as to the first four versions of law, it is a matter of past and closed transaction which cannot be reopened as this Court has already declared the first four versions of the impugned levy as ultra vires against which the Appeal before the Hon'ble Supreme Court stands withdrawn, and therefore, to that extent the demand of the impugned levy on the basis of the first four versions of the law is illegal and beyond the power and authority of the Province. They have relied upon numerous reported cases6 in support of their plea.
Mr. Farooq H. Naek Advocate appearing on behalf of Excise and Taxation Department due to his illness has not been able to argue in person; but has filed written arguments, copies of which were also supplied to the Petitioner's Counsel. According to him, the Petitions are not maintainable as the Petitioners have not challenged the vires of law in question as being violative of any provision of the Constitution; that the Province of Sindh has the prerogative to levy tax, duty, fee and cess for the benefit of its infrastructure which is within the legislative competence of the Province and neither it is violative of any rights guaranteed under the Constitution; nor transgresses the limitation imposed by Article 155 of the Constitution; that even otherwise, the bar as contained in Article 151 ibid is also not attracted as imposition of tax in itself is not a restriction on freedom of trade and commerce between the Provinces, whereas, the impugned levy is for the betterment of the infrastructure of the Province as a whole and would contribute to the efficiency of trade and commerce; that the subject of impugned legislation (all versions) is not covered or hit by any item either in the Federal or in the Concurrent Legislative List; that the Provincial legislature enjoys exclusive legislative authority on the subject matter in terms of Article 142 (c) of the Constitution; that it is neither a customs duty which is levied by the Federation under entry 43 of Part 1 of the Federal Legislative List; nor the levy in question is a tax on import or export and in fact it is a levy on imported goods which are being transported within the country by road using infrastructure of the Province; that reliance on entry No. 24 of the Federal Legislative List is misconceived as it is about carriage of goods by sea or air, and does not include carriage of goods by road; hence, levy of infrastructure cess on carriage of goods by road is a Provincial subject and within the competence of the Provincial legislature; that notwithstanding the judgments of this Court in respect of earlier versions, subsequently, the law has been amended and lastly through Sindh Finance Act, 2009 and the 2017 Act, which has given retrospective effect to all such amendments; hence, the defect, if any, also stands cured; that levy of this cess is not discriminatory as it is charged on standard basis pursuant to a Schedule annexed with the Act and is applicable on a certain class i.e. importers and exporters. He has sought support from various reported cases7.
Learned Advocate General on Court notice issued in terms of Order 27A of the Civil Procedure Code has argued that judgment of the Appellate Court in Sanofi Aventis8 to the extent of first four versions of law is no more in field after promulgation of subsequent Ordinances and Act retrospectively, and as a consequence thereof, the judgment in Quetta Textile9 is still in field through which the impugned law / levy was held to be intra vires, whereas, Entry 24 of the Federal Legislative List does not cover the word "Road"; hence, the Province is competent to legislate on this subject.
We have heard all the learned Counsel as well as learned Advocate General Sindh and have perused the record. It appears that the impugned levy was introduced for the first time by the Province of Sindh in the year 1994 through Sections 9 and 10 of the Sindh Finance Act, 1994 which came into effect from 01.07.1994 (first version)10 and pursuant to this Act on 22.08.1994 Sindh Development and Maintenance of Infrastructure Fee Rules, 1994 were notified, which provided the rates11, quantification, assessment, appeal and revision. Subsequently, through Section 5 of the Sindh Finance Act, 1996, Section 9 of the 1994 Act was substituted (second version)12.
The above levy was then challenged by a number of aggrieved parties through Constitutional Petitions as well as Civil Suits. A learned Single Judge of this Court in the case reported as H. A. Rahim (Pvt.) Ltd. (supra) was pleased to decree the Suits by declaring the infrastructure fee as unconstitutional and ultra vires. The said judgment was then impugned through a time barred High Court Appeal No. 33/2001 by the Province of Sindh and during its pendency Sindh Finance (Amendment) Ordinance, 2001 dated 24.02.2001 was promulgated and an attempt was made to annul the judgment of the learned Single Judge by changing the nomenclature of the impugned levy from infrastructure fee to infrastructure cess with addition of a revalidation clause. The pending Petitions were then dismissed as infructuous in view of promulgation of the Sindh Finance (Amendment) Ordinance, 2001 (third version) as above, by permitting the aggrieved parties to challenge or impugn the validity of the same by filing fresh cases. Insofar as High Court Appeal No. 33/2001 was concerned, the delay in filing of the same was though condoned; but the Advocate General filed a statement to the effect that in view of Amendment Ordinance, 2001 his Appeal has become infructuous and he no longer wishes to press the same. On such statement, the Appeal was disposed of. Thereafter, in this backdrop various Suits were filed in this Court on the Original Side challenging the vires of Sindh Finance (Amendment) Ordinance, 200113. Thereafter when these Suits were pending, fourth version of the law was introduced through Sindh Finance (Second Amendment) Ordinance, 2001 on 15.05.2001 which was made effective retrospectively from 24.02.2001 through which various amendments were made in the Sindh Finance Act, 199414.
At this point of time, there were in effect four versions of the impugned levy / law which were in field and the pending Suits were then heard and decided by a learned Single Judge of this Court whereby, all the Suits were dismissed in the case of Quetta Textile (Supra). The said judgment was impugned by way of High Court Appeals and a learned Division Bench of this Court in Sanofi Aventis (Supra) decided the Appeals in favour of the litigants to the extent that the first three versions of the law were in fact an imposition on the import and export and for that the Province of Sindh had no authority or jurisdiction; hence, it was ultra vires and unconstitutional. It was further held that insofar as the fourth version is concerned, it had no nexus with the nature and character of the levy and was also struck down; however, during pendency of the Appeals, a fifth version was also promulgated by way of Sindh Finance (Amendment) Ordinance 200615 on 29.12.2006 and notwithstanding that it was never under challenge, either in the original Suits (in fact it could not have been as the Suit were much earlier in time) nor in the Appeals by way of any formal amendment of the pleadings; but at the request and consent of the Counsel for the Province of Sindh, was permitted to be challenged through verbal arguments. The learned Division Bench while deciding Sanofi Aventis to the extent of the fifth version, came to the conclusion that it was intra vires to the Constitution and the previous shortcomings and defects in the legislation in respect of discrimination and the measurement of the levy had been cured, and therefore, it was upheld. It may also be of relevance to observe that though in Sanofi Aventis the fifth version was upheld; but it had been re-enacted through Sindh Finance (Amendment) Act, 2007 on 24.10.2007 made effective from 28.3.2007; however, the judgment deals with the Ordinance, 2006, with a categorical finding that it is neither retrospective in nature nor it is applicable to past and closed transactions and section 1(2) of 2006 Ordinance confirms that it shall be enforceable at once, i.e. from the date of its promulgation, being prospective and not retrospective16.
The Province of Sindh as well as the litigants being aggrieved preferred Appeals before the Hon'ble Supreme Court. The litigants impugned the judgment to the extent of the findings in relation to the fifth version, whereas, the Province impugned the same to the extent of the judgment in respect of the first four versions. On 17.05.2011 the Counsel for the Province of Sindh withdrew the Appeals on the ground that he has been instructed by the Government of Sindh not to press these Appeals as subsequent amendments have been made which are retrospectively applicable, and therefore, the entire case of the Government of Sindh would be dependent upon the result of the Appeals of the private persons. The said order passed by the Hon'ble Supreme Court on 17.05.2011 reads as under: -

"Iftikhar Muhammad Choudhry, C.J.- Mr. Fakhar-ud-Din G. Ibrahim, learned Sr. ASC states that he has been instructed by the Government of Sindh not to press the above listed appeals. Further that the Sindh Finance (Amendment) Ordinance, 2006 ratified into the Sindh Finance Act (Act No. II of 2007), was further amended by the Sindh Finance Act, 2009 to make the same retrospectively applicable. And therefore the entire case of Government of Sindh would depend upon the result of the appeals of the private persons arising out of the impugned judgment wherein following operative para of the judgment has been challenged: -

"(b) the fifth version of law i.e. the Sindh Finance (Amendment) Ordinance, 2006 is valid and hence the levy imposed and collected from the effective date of the fifth version i.e. 28.12.2006 is valid and all imposition and collection before such date are declared to be invalid;"

In view of the above prayer of the learned Sr. ASC appearing for Government of Sindh, the above listed appeals are dismissed as not pressed."
Similarly, insofar as the Appeals filed by the private parties were concerned, though they were argued on certain dates; however, on 20.05.2011 pursuant to a joint statement filed by the respective Counsel for the contesting parties the said Appeals were also disposed of in the following terms: -

"Iftikhar Muhammad Choudhry, C.J.- Learned Counsel for the parties after having addressed arguments at length were enquired / required to satisfy that in absence of specific challenge to 5th version of the Sindh Finance (Amendment) Ordinance, 2006, (Sindh Ordinance No. XXXVIII of 2006), re-enacted through Sindh Finance (Amendment) Ordinance, 2007 (No. XX of 2007) and then ratified through Sindh Finances Amendment Act, 2007 (No. II of 2007) whether it was legally possible for the learned High Court to decide the appeals arising out of the judgment dated 28.10.2003 passed by a learned Single Judge whereby civil suits filed by the parties were disposed of.

It is to be noted that instant proceedings have arisen out of a civil suit instituted by the appellants wherein the first, second, third and fourth version of the law mentioned hereinabove were challenged, but so far fifth version is concerned, it was promulgated when the appeals before the High Court were pending, therefore, it had become necessary to amend the pleadings and challenged the same because of a number of differences in the earlier versions and re-enacted through Sindh Finance (Amendment) Ordinance, 2007 (No. XX of 2007) and then ratified through Sindh Finances Amendment Act, 2007 (No. II of 2007). Had the matter arisen between the parties out of petition under Article 199 or any other relevant provisions, perhaps, the High Court may have allowed the parties to argue their case as to the developments taking place during pendency of the lis, but when there was a suit on the basis of pleadings, in our considered opinion amendment of the pleadings was necessary and if any concessional statement on the issue was given by the learned counsel for the respondents the same was not admissible under the law. On this learned counsel for the parties discussed the said issue and filed the following joint statement:

"Joint statement

By consent the subject appeals may be disposed of in the following terms:

The subject appeals all challenge inter alia the judgments of the learned single judge as well as the division bench of the Honorable High Court of Sindh at Karachi whereby the fifth version of the impugned law in question introduced vide Sindh Finance (Amendment) Ordinance, 2006, (No. XXXVIII of 2006), re-enacted through Sindh Finance (Amendment) Ordinance, 2007 (No. XX of 2007) and then ratified through Sindh Finances Amendment Act, 2007 (No. II of 2007) was upheld and the fourth version of the impugned law in question introduced vide the Sindh Finance (Second Amendment) Ordinance, 2001 (XVI of 2001) was upheld to the extent of legislative competence.
That notwithstanding the concessional statement to the effect that no formal challenge would be required having been made by the then learned counsel appearing then for the Government of Sindh, this Honorable Court may kindly be pleased to set aside the impugned orders, judgments, decrees passed by the courts below to the extent noted above. (Emphasis supplied)
The appellants will be at liberty to challenge any / all versions of the levy on infrastructure with which the appellants are aggrieved.

It is therefore, prayed that all the appeals be disposed of in the above terms."

Mr. Makhdoom Ali Khan, learned counsel for the appellant's states that Mr. Khalid Anwar, learned Sr. ASC, who is not available today in Islamabad, has instructed him to file statement on his behalf and that such instructions have been taken on telephone.
As a result of above Joint Statement (Arrangement between the parties) the impugned judgments along with the interim order already passed on 27.10.2008, etc. whereby the parties were directed to maintain status quo, are set aside with all the legal consequences legally to be followed after vacating the said order. The appellants in terms of above arrangement, however, shall be free to challenge any or all versions of levy on infrastructure with which they feel aggrieved save in accordance with law.
All the appeals are disposed of in the above terms. Parties are left to bear their own costs."
Insofar as the case of the present Petitioners is concerned, it has been argued that since the Government of Sindh had withdrawn its Appeals and the said withdrawal was dependent upon the outcome of the Appeals filed by the private parties which were then disposed of through a joint statement which was only to the extent of the fourth version (only the legislative competence) and the fifth version; therefore, insofar as the judgment in the case of Sanofi Aventis is concerned, the same is now a case of past and closed transaction, whereby, the first four versions of the impugned levy were struck down. On the other hand, the case of Province of Sindh is that since the subsequent Amending Ordinance i.e. Sindh Finance (Amendment) Ordinance, 2006, (No. XXXVIII of 2006), re-enacted through Sindh Finance (Amendment) Ordinance, 2007 (No. XX of 2007) and then ratified through Sindh Finance Amendment Act, 2007 (No. II of 2007) and Sindh Finance Act, 2009 were made applicable retrospectively, whereas, a revalidation clause was also promulgated; therefore, the effect of the judgment in the case of Sanofi Aventis is no more in field. On perusal of the record and the orders passed by the Hon'ble Supreme Court in the respective Appeals of the parties, we are of the considered view that the stance of the present Petitioners appears to be correct to a certain extent. It is to be noted that it was the Province of Sindh which first withdrew its Appeals, and the said order very clearly reflects that it is being done on the instructions of the Government of Sindh i.e. not to press the Appeals. It has been recorded that the entire case of the Government of Sindh would be dependent upon the result of the Appeals of the private persons, whereas, despite a statement of their Counsel regarding enactment of subsequent legislation retrospectively, the final order of the Hon'ble Supreme Court is only a simplicitor withdrawal of the Appeals filed by the Province. It was observed that in view of above prayer of the learned Senior Advocate appearing for the Government of Sindh the Appeals are dismissed as not pressed. It has neither remanded the matter nor has asked the Appellate Court to decide it afresh after examining the Re-validation clause and retrospective effect of the enactments as contended by their Counsel. Admittedly the private parties had only challenged the judgment in the case of Sanofi Aventis to the extent of the fourth version in respect of legislative competence, and the entire fifth version of the law. On the other hand, the Appeals of the aggrieved parties were disposed of on the basis of a joint statement which was only in respect of the fourth version (partly) and the fifth version of the law. In our considered view, the entire case of the Province to the extent of their Appeals before the Hon'ble Supreme Court was (i) that it withdrew its Appeals merely on the ground that subsequent legislation had been made or enacted, and that satisfies them to withdraw their Appeals; and (ii) it was also dependent on the outcome of the Appeals of the private persons. When the two orders as above are read in juxtaposition to arrive at a fair conclusion, it appears that insofar as the subsequent Amending Ordinance of 2006, The 2007 Act and the 2009 Act, and its retrospective applicability is concerned, it was never touched upon by the Hon'ble Supreme Court; nor was it remanded to the Appellate Court for any adjudication. It was just merely a statement of the learned Advocate for the Province of Sindh; but in effect, there was no conclusive finding by the Hon'ble Supreme Court that as to what would be the effect of these Amending Ordinance / Act through which the same were purportedly made applicable retrospectively. The aggrieved party was left to challenge it (i.e. the fifth version or any other version) and naturally they would only challenge what is against them. At that point of time it was only the fifth version which they could have challenged and not the first four versions in respect of which Sanofi Aventis had decided it in their favor (barring the legislative competence in respect of the fourth version). Similarly, when the joint statement filed in the Appeals of the private parties is examined, it appears to be filed by consent and it clearly reflects that it was only to the effect of setting aside the impugned judgment in the case of Sanofi Aventis to the extent of the fourth version in respect of its legislative competence and the fifth version. And this arrangement was apparently arrived at because before the High Court the fifth version was permitted to be impugned on a verbal concession of the Counsel then appearing for the Province of Sindh without a formal amendment of the pleadings. It was also observed by the Hon'ble Supreme Court in the order date 20.5.2011 that these proceedings had arisen out of a civil suit instituted by the appellants wherein the first, second, third and fourth version of the law mentioned hereinabove were challenged, but so far the fifth version is concerned, it was promulgated when the Appeals before the High Court were pending, therefore, it had become necessary to amend the pleadings and challenge the same because of a number of differences in the earlier versions and re-enactment through Sindh Finance (Amendment) Ordinance, 2007 (No. XX of 2007) and then ratified through Sindh Finances Amendment Act, 2007 (No. II of 2007). It was further observed that had the matter arisen between the parties out of petition under Article 199 or any other relevant provisions, perhaps, the High Court may have allowed the parties to argue their case as to the developments which took place during pendency of the lis, but when there was a suit on the basis of pleadings, in our considered opinion amendment of the pleadings was necessary and if any concessional statement on the issue was given by the learned counsel for the respondents the same was not admissible under the law. It appears that on this observation, the parties filed a joint statement for disposal of the said set of Appeals. Even otherwise, after withdrawal of the Appeals filed by the Government of Sindh it could not be presumed that the private parties would agree for setting aside of the entire judgment even to the extent of the first four versions which was in their favour. Therefore, in our considered view and insofar as the present position is concerned, the judgment in the case of Sanofi Aventis to the extent of the first four versions of the impugned levy has attained finality and for the present purposes we are not required to examine the validity of these four versions any further, on the ground that thereafter an Amending Ordinance in 2006 and the 2009 Act had been promulgated. It could have only been done in the pending Appeals if the Province of Sindh had not withdrawn their appeals simplicitor; and if it had sought a disposal order by remanding the matter to the Appellate Court on this touchstone that the subsequent Amending Ordinances / Act, have been given effect retrospectively and had also in effect nullified the impugned judgment; the Appeals be heard afresh. This was never their case. In fact, the court in Sanofi Aventis while considering the effect of Amendment Ordinance, 2006, had clearly observed that the fifth version was prospective in nature as it was effective from the date of its promulgation. Though at that point of time Sindh Finance Act, 2007 (Sindh Act No. II of 2007) had also been passed through which it was given effect from 28.3.2007 and had also repealed Amendment Ordinance, 2006; however, it was not considered by the learned Bench in the case of Sanofi Aventis. Moreover, it was only in the sixth version in 2009 that it was given effect from the date of introduction of the levy through Sindh Finance Act, 1994 i.e. 1.7.1994.
The upshot of the above discussion is that the judgment in the case of Sanofi Aventis to the extent of validity or otherwise of the first four versions of the law in question is concerned, it has attained finality as the Province of Sindh had withdrawn its Appeals to that extent without seeking any remand of the matter to the same Appellate Court. This includes the question of any retrospective applicability of the Amending laws i.e. the fifth version onwards. However, since it was arising out of proceedings initiated by way of a Civil Suit between the parties, it is only applicable to the inter-parties who were before the Court at the original stage by way of Suits in Quetta Textile and then in Appeals in Sanofi Aventis and not in rem to all.
Alternatively, even if we assume for a moment that the stance of the Province before the Hon'ble Supreme Court was justified to the extent that since subsequently after pronouncement of judgment in Sanofi Aventis an amending law "The Sindh Finance Act, 2009" had been passed retrospectively; hence, the Appeals were necessarily ought to have been withdrawn. However, at the very outset (and discussed in detail hereinafter) we may point out that the Sindh Finance Act, 2009, was never a law which had anything to do with undoing the judgment in Sanofi Aventis. Nonetheless the validity of such amending and validation clauses even otherwise cannot ipso-facto invalidate the judgment in the case of Sanofi Aventis. Such amending and or Re-validation law still has to pass the test of settled law in this context. We notwithstanding our above findings will even examine such Re-validation which purportedly as per the Respondents case has undone the effect of the judgment in Sanofi Aventis. It may be recalled that when the judgment in Sanofi Aventis was passed, four versions of law were already in challenge and all had been declared as ultra vires. The fifth version came during pendency of the Appeal and its vires were permitted to be impugned verbally by way of arguments. And while the Appeal of the Province was pending before the Hon'ble Supreme Court, The Sindh Finance Act, 2009 was promulgated and the Appeals were not pressed. Now on a holistic examination of the same we do not see as to how the stance of the Province is justified that the amending Ordinance and or law as well the re-validation clauses have undone the effect of the judgment in the case of Sanofi Aventis. Though it is a well settled principle that effect of a judgment rendered by a competent Court of law declaring any provision of law as ultra vires or declaring levy of a tax as illegal can be undone; however, it is also well settled that it can only be done if the grounds of illegality or invalidity are capable of being removed and are in fact removed. This Court in several cases has recognized the right of the legislature to re-enact a law on the same subject, which on account of legal infirmities in its enactment process had been declared invalid by a Court of law, by removing the causes that led to its invalidity. The legislature is also competent to make the re-enacted law applicable retrospectively in order to bind even the past transactions that had been declared invalid17. But at the same time it is also well settled that when a legislature intend to validate a tax declared by a Court to be illegally collected under an invalid law, the cause for ineffectiveness or invalidity must be removed before the validation can be said to take place effectively and it will not be sufficient merely to pronounce in the statute by means of a non-obstinate clause that the decision of the Court shall not bind the authority, because that will amount to reversing a judicial decision rendered in exercise of the judicial power, which is not within the domain of the Legislature. It is therefore necessary that the conditions on which the decision of the Court intended to be avoided is based, must be altered so fundamentally, that the decision would not any longer be applicable to the altered circumstances. The seminal judgment in this regard is of Molasses Trading18 wherein the issue was that to undo the effect of judgment rendered in the case of Al-Samrez Enterprises19 by the Hon'ble Supreme Court, section 31A in the Customs Act, 1969 was introduced and an attempt was made to give the amendment a retrospective effect. However, in Molasses Trading20 it was held that despite such an attempt the insertion of section 31A did not have an effect on the past and closed transactions. The pertinent observation is as under:

"Before considering this question it would be appropriate to make certain general observations with regard to the power of validation possessed by the legislature in the domain of taxing statute. It has been held that when a legislature intend to validate a tax declared by a Court to be illegally collected under an invalid law, the cause for ineffectiveness or invalidity must be removed before the validation can be said to take place effectively. It will not be sufficient merely to pronounce in the statute by means of a non-obstinate clause that the decision of the Court shall not bind the authority, because that will amount to reversing a judicial decision rendered in exercise of the judicial power, which is not within the domain of the Legislature. It is therefore necessary that the conditions on which the decision of the Court intended to be avoided is based, must be altered so fundamentally, that the decision would not any longer be applicable to the altered circumstances. One of the accepted modes of achieving this object by the Legislature is to re-enact retrospectively a valid and legal taxing provision, and adopting the fiction to make the tax already collected to stand under the re-enacted law. The Legislature can even give its own meaning and interpretation of the law under which the tax was collected and by 'legislative fiat' make the new meaning biding upon Court. It is in one of these ways that the Legislature can neutralize the earlier decision of the Court. The Legislature has within the bound of the Constitutional Limitation the power to make such a law and give it retrospective effect so as to bind even past transaction. In ultimate analysis therefore a primary test of validating piece of legislation is whether the new provision removes the defect, which the Court had found in the existing law, and whether adequate provisions in the validating law for a valid imposition of tax were made."

It was further held that vested rights cannot be taken away save by express words or necessary intendment in the statute; that Legislature, which is competent to make a law, has full plenary powers within its sphere of operation to legislate retrospectively or retroactively; that vested right can be taken away by a retrospective/retroactive legislation and such legislation cannot be struck down on that ground; that Statute cannot be read in such a way as to change accrued rights, the title to which consists in transactions past and closed or any facts or events that have already occurred; that when a statute contemplates that a state of affairs should be deemed to have existed, it clearly proceeds on the assumption that in fact it did not exist at the relevant time but by a legal fiction Court has to assume as if it did exist; that when a statute enacts that something shall be deemed to have been done which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purpose and between what persons the statutory fiction is to be resorted to. It is a well-settled principle of interpretation that there is a strong presumption against the retrospectivity of a legislation which touches or destroys the vested rights of the parties. No doubt the Legislature is competent to give retrospective effect to an Act and can also take away the vested rights of the parties, but to provide for such consequences, the Legislature must use words which are clear, unambiguous and are not capable of any other interpretation or such interpretation follows as a necessary implication from the words used in the enactment. Therefore, while construing a legislation which has been given retrospective effect and interferes with the vested rights of the parties, the words used therein must be construed strictly and no case should be allowed to fall within the letter and spirit of Act which is not covered by the plain language of the legislation21.

While keeping in view the above dicta when the issue in hand and the purported retrospective legislation is looked into, it appears that it fails the above test miserably. As would be recalled the Appeals before the Hon'ble Supreme Court were withdrawn on the ground that Sindh Finance (Amendment) Ordinance, 2006 ratified into the Sindh Finance Act (Act No. II of 2007), and further amended by the Sindh Finance (Amendment) Act, 200922 has made the impugned levy retrospectively applicable. But apparently this does not suffice in any manner. The Sindh Finance (Amendment) Ordinance, 2006 dated 28.12.2006 provided that it shall come into effect at once. This means that it is effective from 28.12.2006. This ends the matter here. And this is what has been held in Sanofi Aventis. Thereafter Sindh Finance Act (Act No. II of 2007) was promulgated on 24.10.2007 and stated that it shall come into force at once and shall be deemed to have taken effect on and from 28.3.2007. Again it had no retrospective effect so as to cure any past defects in the law except that it was made applicable from 28.3.2007 though it was issued on 24.10.2007. Finally Sindh Finance (Amendment) Act, 2009 was promulgated on 23.2.2009 and provided that the Sindh Finance Act (Act No. II of 2007) be amended and shall be deemed to have been amended with effect from 1.7.1994. The other amendments made are not of relevance for the present purposes. It is to be noted that Sindh Finance (Amendment) Act, 2009 was promulgated on 23.2.2009 i.e. after judgment was delivered on 17.9.2008 in the case of Sanofi Aventis; however, neither any retrospective purposeful legislation was made; nor any attempt was made to undo the judgment in Sanofi Aventis; but surprisingly the Appeals were not pressed before the Hon'ble Supreme Court by stating that some retrospective legislation had been made. It may also be noted that the curative or otherwise re-validation laws that were stated to have been in field at the time of withdrawal of the Appeals by the Province had got nothing to do with their Appeals at least, as the fifth version had already been held to be intra vires in Sanofi Aventis. When we examine the relevant provisions in question on the touchstone of law settled by the Hon'ble Supreme Court from time to time including that in Molasses Trading, we are undoubtedly of the view that the suggested amendments as above have failed to cure any defect in the legislation; at least to the extent of the first four versions of the law between the parties in litigation till Sanofi Aventis was delivered. Neither there is any deeming clause in the 2009 Act; nor it caters or even mentions the judgment; nor has a non-obstante clause; except some retrospective effect. That may be good for those who had not challenged the levy from the outset; however, this would not be applicable to the parties who already had a judgment in their favor i.e Sanofi Aventis. It need not be reiterated that when a statute enacts that something shall be deemed to have been done which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to23. It would require language much more explicit than that which is to be found in Ordinance, 2009, to justify a Court of law in holding that a legislative body intended not merely to alter the law, but to alter it so as to deprive a litigant of a judgment rightly given and still subsisting24.
Therefore, from the above discussion it can be safely concluded that insofar as the first four versions of the law / impugned levy is concerned, the judgment in the case of Sanofi Aventis has settled the matter between the litigating parties and is a case of a past and closed transaction. The subsequent attempt by way of any law up to the Sindh Finance Act, 2009, does not undo the effect of such judgment, as neither any proper retrospective effect was given to the subsequent law; nor any satisfactory curative or re-validation clauses were incorporated which could pass the litmus test for doing so in terms of law settled by the superior court including that in the case of Molasses Trading.
Finally, the seventh version of the law was introduced through Sindh Development and Maintenance of Infrastructure Cess Act, 2017 and the relevant provisions read as under:-

"THE SINDH DEVELOPMENT AND MAINTENANCE OF INFRASTRUCTURE CESS ACT, 2017

SINDH ACT NO. XVIII OF 2017

ACT

to consolidate the law relating to the levy of a cess on goods entering into and leaving the Province from or for outside the country through air or sea;

Preamble WHEREAS it is expedient to consolidate the law relating to the Preamble levy of a cess on goods entering into and leaving the Province from or for outside the country through air or sea, for development and maintenance of infrastructure of the Province;

It is hereby enacted as follows:-

CHAPTER-I

PRELIMINARY

Short title, extent and commencement.---(1) This Act may be called the Sindh Development and Maintenance of Infrastructure Cess Act, 2017.

(2) It extends to the whole of the Province of Sindh.

(3) It shall come into force at once and shall be deemed to have taken effect on and from 1st July, 1994.

Definition.--- In this Act, unless there is anything repugnant in the subject or context -

(a) "cess" means the cess payable under section 3 of the Act;

(b) "Director" means the Director, Excise, Taxation and Narcotics Control;

(d) "District Excise, Taxation and Narcotics Control Officer" means the Senior Excise, Taxation and Narcotics Control Officer or Excise, Taxation and Narcotics Control Officer of the District, having jurisdiction;

(e) "Government" means the Government of Sindh;

(f) "owner" means the person in whose name the goods are entering or leaving the Province from or for outside the country by air or sea and includes the clearing agent;

(g) "prescribed" means prescribed by rules;

(h) "person" includes the person, entity, any company or association or body of persons, whether incorporated or not;

(i) "Province" means the Province of Sindh;

(j) "rules" means rules made under this Act; and

(k) "Schedule" means Schedule appended to this Act;

CHAPTER-II

SCOPE OF CESS

Levy of cess.----There shall be levied and collected a cess for maintenance and development of infrastructure on goods at the rate determined on the basis of their value, net weight and distance in accordance with the Schedule, for carriage by road and smooth and safer movement in the Province upon entering or before leaving the Province from or for outside the country, through air or sea:

Explanation: for the purpose of this section, the word "infrastructure" includes roads, streets, bridges, culverts, lights on passages, plantation on passages, beaches, public parks, place of public recreation and convenience, eating places, landscape, forests, fisheries, delta conservation, lakes, breeding places of aquatic life, wild life and its sanctuaries, public schools, vocational and technical training centers and projects, libraries, museums and similar institutions controlled and financed by the Province, control of traffic for smooth flow and safer movement of goods, public order, police force, patrol for safety of goods, stands for loading and unloading of goods, parking places, markets, water supply, hospitals and dispensaries and development, improvement, maintenance and protection of such matters".

Chapter-IV / Miscellaneous

13. Validation.---Notwithstanding anything contained in any law, rules or Judgment, order or decree of any court the Infrastructure Cess levied, assessed, charged and collected in pursuance of Sindh Finance Act, 1994 and amendments thereof, before coming into force of this Act shall be deemed to have been validly levied, assessed, charged or collected.

The aforesaid Act of 2017 was made effective by virtue of section 1(3) from 1.7.1994. It also substituted the charging section to read that now the cess was levied and collected for maintenance and development of infrastructure for carriage by road and smooth and safer movement in the Province upon entering or before leaving the Province from or for outside the country, through air or sea, whereas the explanation appended thereto provided the meaning and purpose for the said levy of infrastructure cess. The precise case of the Petitioners is in respect of the legislative competence of the Province under the Constitution and whether it discriminates the petitioners in any manner or not. And lastly, whether this 2017 Act, is applicable retrospectively or not (this we may add to the extent of litigants in the earlier round in Sanofi Aventis already stands discussed earlier). Petitioners Counsel have argued that the Province cannot legislate on the subject matter as according to them the levy in question is covered by Entries 2425, 2726 and 4327 of the Federal Legislative List as enumerated in the Fourth Schedule to the Constitution and by virtue of Article 142(a) ibid, it is only the Federation which can legislate on it. Their emphasis has been that the levy in question is in fact a tax or fee on the import and export of goods as it is being levied and collected in the same manner as the Customs duty under the Customs Act, 1969, including that on ad-valorem28 basis. With respect we do not agree. This is wholly misconceived and untenable as merely by providing a mechanism of collection of the levy in question, it would not ipso-facto become a customs duty, and consequently, falling within the domain of the Federal Legislature. The impugned levy in its present form is a cess for maintenance and development of infrastructure29 on goods upon entering or before leaving the Province from or for outside the country, through air or sea for carriage by road and smooth and safer movement in the Province. For the present purposes the levy is only applicable and challenged upon goods entering the Province from outside the Country as for the remaining it is exempted30.
As of today, post 18th amendment we need to look into Article 142 of the Constitution first which determines the boundaries of the Federal and Provincial Legislatures. In terms of Article 142(a) the Parliament (Federal Legislature) has the exclusive power to make laws with respect to any matter enumerated in Federal List; pursuant to Article 142(b), the Federal and Provincial Legislatures have powers to make laws with respect to criminal laws, criminal procedure and evidence; and pursuant to Article 142(c) the Parliament / Federal Legislature shall not and Province shall have power to make laws with respect to any matter not enumerated in the Federal Legislative List. Post 18th amendment the net result is that now there are (a) enumerated competences set out in the Federal List, which are exclusive to the Federation, (b) three enumerated competences which are concurrent, and (c) a whole host of non-enumerated competences which are exclusive to the Provinces31. Though it is also a well-settled proposition of law that an entry in a Legislative list cannot be construed narrowly or in a pedantic manner but it is to be given liberal construction in this behalf32; however, at the same time one must take note that the present case is not that of legislation being challenged on the ground that it does not fall or is not covered within a certain legislative entry; rather it is the inverse in this case. The Provincial Legislature has ample powers to legislate on any matter not falling within any of the Entries of the Federal Legislative List. And that is the end of the matter. It is the petitioners who have come before this Court to assert that the impugned levy falls with the competence of the Federal Legislature. At the same time the Federal Legislature has not imposed any such levy; nor has the competence of the Provincial Legislature is under dispute at least by the Federation itself as has been the case in a number of laws post 18th amendment33. It is in fact a case of residuary powers of the Provincial Legislature which has been exercised and its interpretation cannot be aligned or equated with the principles of interpretation applicable while examining the same on the touchstone of a specified Entry in the Legislative List. Unlike India, presently we do not have any Legislative List for the Provinces. In fact, as of today, post 18th amendment [subject to Article 142(b)], we do not even have any Concurrent Legislative List. It is in this context that we need to examine and interpret the legislative powers of the Province. As must be understood, it is not humanly possible to conceive all legislative fields and to overcome this, now we have a system in place which empowers the Provincial Legislature to enact laws as are not covered by any of the Entries in the Federal Legislative List. This at the same time does not permit or provides sanction or authority to the Province to legislate on any matter as it deems fit. All these powers remain circumscribed as to the intent and will of the Constitution as a whole. The main focus of the Petitioners Counsel against the validity of the impugned levy was in respect of its taxable event. According to them since it was being levied at the same time and in the same manner as a customs duty under the Customs Act, 1969; hence, it would fall within the competence of the Federal Legislature pursuant to Entry 43 (Duties of Customs, including export duties) of the Federal Legislative List. However, this argument is least impressive as it is not always so. A closer analysis invariably reveals that what appears to be the same event is (usually) in fact and (certainly) in law, two separate taxing events each of which falls, properly, within the scope of a distinct taxing power34. This has been well defined now in respect of levy of Professional Tax, which is though a tax on income and by way of Entry 47 in the Federal List falls within the competence of the Federation; however, by way of Article 163 ibid, the Province (subject to limitations) can levy taxes on professions, trades, callings or employments. Hence, on the same taxing event, even both legislatures have their respective competence.
While hearing arguments we had confronted both lead Counsels for the petitioners that earlier in a somewhat similar manner, levy of Octroi in terms of Municipal Administration Ordinance, 1960 (X of 1960) ("Ordinance"), vide West Pakistan Municipal Committee Octroi Rules, 1964, has been held to be a valid levy by this Court on a number of occasions inasmuch as it was also levied and collected on Imports as "Sea dues" and in the same manner as Customs Duty on ad-valorem basis. In response we were assisted that ratio of such judgments35 would not apply to the present levy. Precisely, according to them, taxable event for imposition of Octroi was the import of goods in the Octroi limits for consumption, use or sale within that area i.e. the goods had to be imported into the Octroi limits for the purpose of consumption, use or sale within those limits and if either of these conditions was not met, there was no taxable event and Octroi was not payable. With respect we disagree. In Universal Merchants36 the challenge was against imposition and enhancement of rates of Octroi on liquor. At the relevant time Karachi Municipal Corporation, then functioning under the Ordinance (relevant period being between abrogation of the 1956 Constitution and before enactment of the 1962 Constitution) and when the country was being governed by virtue of certain other instruments so far as may be in accordance with the 1956 Constitution. Pursuant to section 33 of the Ordinance KMC was authorized to levy in the prescribed manner all or any of the taxes, rates, tolls and fees mentioned in the Third Schedule including Tax on the import of goods for consumption, use or sale in a municipality and Tax on the export of goods from a municipality. Further in terms of sections 35, 37, 38, 39, 41 and 121 of the Ordinance the Government had made rules which were called the West Pakistan Municipal Committee Octroi Rules, 1964 levying Octroi and prescribing a detailed procedure for its collection at the rates specified in the Appendix to the rules. This levy was of two types. One on goods imported from abroad; and the other on goods being brought into the respective Municipal limits for sale, use or consumption. Rule 2(e) of the said Rules defined "export"37, 2(i) defined "import"38, 2(m) defined "octroi"39, 2(s) defined "Value"40. This levy of Octroi on Import from abroad was challenged before a Divison Bench of this Court in the case of Universal Merchants (Supra). The precise case of the Petitioners was that it could not be imposed at all in respect of Karachi as it was interference with the freedom of trade and commerce in the country and the only competent authority was the Federal Legislature. It was argued that item 5 of the 5th Schedule to the 1956 Constitution41 enumerates competence of the Central Legislature; hence, it was ultra vires. In fact when 1964 Rules were promulgated item 5 in the Third Schedule to the 1962 Constitution42 was somewhat similar in nature. At Para 6 of the judgment the Court observed as follows;

6. Assuming, however, for the sake of argument in favour of the petitioners that the Municipality cannot, under the Ordinance, impose a tax in any field which belongs to the exclusive competence of the Central Legislature I still do not think that Octroi is such a tax as come within the relevant item which I have quoted from the 1956 and the 1962 Constitutions. It is true of course that goods which enter the city of Karachi may be entering from a province other than the one in which Karachi is situate or even from outside the country altogether. The tax is nevertheless a tax upon the import of goods for consumption, use or in a Municipality. The purpose of the tax, therefore, is to levy a charge upon goods which are brought in, not only within the city but for consumption, use or sale within the City. If goods are landed from abroad but are not intended for such consumption sale or use but are intended to be so used, let us say, in Lahore, then, Octroi would not be leviable. The entire purpose of making the Central Legislature, the authority who alone is competent to legislate upon inter-provincial trade and trade with foreign countries, is to allow it to have control over such trade. Octroi on the other hand is a charge upon import within a city. The fact that in a given case the goods may happen to come from another province or from outside the country is incidental and besides the point. Even so if they are not intended for use in the city the tax would not be chargeable. The argument, therefore, I think is wholly fallacious Octroi, is not a tax which is concerned with inter-provincial trade or trade with foreign countries and is, therefore, within the competence of the Provincial Legislature and therefore of the Municipality.

This judgment was then followed in the case of Shershah Industries43 and Hyderi Ship Breaking44 by another Division Bench of this Court, which even went further and also dilated upon the issue and interpretation of the words "Import" on which much stress was laid by the Petitioners Counsel before us. The petitioners in that case had imported a Vessel for scrapping and dismantling which arrived at the Outer Anchorage of the Port, which location, according to the petitioners, was outside the Karachi Port, and was then taken directly to Gadani Beach, in Lasbella District of the Province of Baluchistan. There it was scrapped and when petitioners wanted to bring the ship scrap into Karachi by road, Octroi was demanded at the rate of 2% ad valorem of the duty paid value of the vessel pursuant to Schedule A of the Rules applicable to all imported goods. The petitioners were willing to pay Octroi at Rs. 3.50 per ton on the scrap being brought by them into Karachi Municipal limits through trucks via R.C.D. Highway, and challenged the demand of Octroi at 2% ad valorem of the duty paid value of the vessel. When this petition was being heard the provisions under consideration were of the interim Constitution of 1972 and the 1973 Constitution. It was contended by the Petitioners that Octroi in question though described as Octroi, was actually a "customs or import duty" which is a Federal subject under the two Constitutions and the Provincial Government by levying such Octroi duty has transgressed the Federal field of legislation, and in support reliance was placed on Article 138 and the entries of the Federal Legislative list contained in the Fourth Schedule to the 1972 Interim Constitution45. The finding of the Court is as under;

As observed earlier, "Octroi" has been defined in the 1964 Octroi Rules as a tax on the "import" of goods for consumption, use or sale within the Octroi limits, and "import" has been defined as import within the Octroi' limits, therefore, does not attract Octroi but the import within the Octro' limits must also be coupled with the purpose of consumption, use or sale within the Octroi limits. Unless Octroi is equated with customs duty, do not see how such tax falls within the items of Federal Legislative Lists of the two Constitutions of 1972 and 1973 pointed out by the learned counsel. We say so as by Item No. 47 of the Provincial List of the Fourth Schedule to the Interim-Constitution, framers of that constitution specifically and with clarity included Octroi within the Provincial Legislative field. Item 47 reads as follows;--

"Cesses on entry of goods into a local area for consumption, use or sale therein."

Now in the Interim-Constitution of 1972, apart from the Federal and Concurrent Lists, there was a separate Provincial Legislative List, whereas in the 1973 Constitution there are only two Legislative List namely the Federal Legislative List and the concurrent Legislative List. However, Article 142(c) If 1973 Constitution provides that "Provincial Assembly shall, and Parliament shall not, have power to make laws with respect to any matter not enumerated in either the Federal Legislative List or the concurrent Legislative List. It may be mentioned here that Article 142 remains intact and has not been deleted by the Provincial Constitution Order; 1981. Subject contained in Item 47 of the Provincial Legislative List of the Interim-Constitution, 1972 is neither mentioned nor covered by any item of the two Legislative Lists of the 1973 Constitution. The only logical conclusion is that by virtue of Article 142(c) of the 1973 Constitution, the Subject "Cesses on entry of goods into a local area for consumption, use or sale therein falls squarely" within the Provincial Legislative field"

We may now examine the other limb of the argument of the learned counsel for the petitioners that Octroi on goods imported by sea is in essence and reality a duty of customs but in the garb of Octroi. According to Mr. Khurshid Anwar Shaikh as Octroi becomes leviable as soon as the goods are imported into Karachi from abroad, the notifications of 15-6-1973 are in effect imposing a duty of customs. Mr. A. A. Fazeel, learned counsel for K. M. C., referred us to a Division Bench judgment of this Court in the case of Universal Merchants v. Commissioner of Karachi 1980 C L C 704, and urged that this point has been considered and decided in that judgment. In paragraph 4 of the said judgment it is observed as under;

We are in respectful agreement with the aforesaid observations. Octroi tax has been clearly distinguished from other taxes and the basic reason is that it' is a tax "upon goods which are brought in not only within the city but for consumption, use or sale within the city." In our view Octroi tax on good's coming from abroad and entering the municipal Octroi limits for the purpose) of consumption, use or sale within the Octroi limits cannot be equated with duties of customs.

Though the learned Counsel for the Petitioners emphatically contended that these two judgments do not support the case of the Respondents and in fact they are supportive of the stance taken by the Petitioners inasmuch as the reason which prevailed upon the learned Benches to uphold the levy of Octroi on imports was due to the fact the goods were being either sold, used or otherwise consumed within the Municipal limits. However, with respect we are not in agreement with such suggestion put forth by them. The goods in that case were coming from abroad admittedly; the levy was on ad-volaram basis; it was on all imported goods; and lastly was being collected in the same manner and at the same time as the Customs Duty. Secondly, Shershah Industries (supra) has also dealt with somewhat similar situation while dilating upon the position with respect to the interim Constitution of 1972. The Interim-Constitution of 1972, apart from the Federal and Concurrent Lists, also had a separate Provincial Legislative List. On the other hand the 1973 Constitution only had two Legislative Lists namely the Federal Legislative List and the Concurrent Legislative List. In somewhat similar manner as it is today, in terms of Article 142(c) of the 1973 Constitution Provincial Assembly shall, and Parliament shall not, have power to make laws with respect to any matter not enumerated in either the Federal Legislative List or the Concurrent Legislative List. Since the subject contained in Item 4746 of the Provincial Legislative List (List-II) of the Interim-Constitution, 1972 was neither mentioned nor covered by any item of the two Legislative Lists of the 1973 Constitution, the learned Division Bench observed that the only logical conclusion is that by virtue of Article 142(c) of the 1973 Constitution, the Subject "Cesses on entry of goods into a local area for consumption, use or sale therein" falls squarely within the Provincial Legislative field. This reasoning of the Court is very relevant and pertinent for the present purposes. And this is for the reason that in the present context the scope of Provincial Legislature has not been curtailed in any manner pursuant to the 18th Amendment. It is not that the said item or entry has been included in the Federal Legislative List. Neither by express words nor by implication. Rather it is left open and remains available to the Provincial Legislature. Therefore, the argument that since the impugned levy in question is on ad-valoram basis and is being collected on imported goods, it becomes a Customs Duty; and in terms of Entry 43 of the Federal Legislative List, it is only the Federation which is competent to levy and impose it, is neither convincing nor is supported by the precedents discussed as above. In fact, in our considered view, the two judgments as above are contrary to what has been argued before us.
Subsequently, another Division Bench of this Court in the case of Pakistan International Freight Forwarders47 has also followed and endorsed this view regarding similarity in the taxing event and the competence of the Federal and Provincial Legislature at the same time. What one understands from this is that despite there being various Entries in the Federal Legislative List which are analogous to the present Entries under discussion and relied upon by the Petitioners, earlier, the Province by way of a specific Entry in its Legislative List, and thereafter, by way of Concurrent List, has been declared to be competent to levy a tax on import of goods from abroad (notwithstanding its consumption within certain limits), and such Entry i.e. 47 from the Interim Constitution having not been incorporated into the Federal Legislative List, remains available simultaneously to the Provincial Legislature irrespective of the fact that presently there is no specific List for it after the 18th Amendment. Hence, the argument that the impugned levy is in fact a Customs Duty being levied and collected in the same manner on ad-valoram basis, therefore, cannot be sustained is not correct and is hereby repelled.
In Azfar Laboratories (Supra) before a learned Division Bench of this Court it was contended that insofar as residual non-enumerated powers are concerned, they did not constitute specific legislative fields or competences. The Court did not agree with this. It was observed that when the 18th Amendment omitted the Concurrent List and most of its entries became non-enumerated powers exclusive to the Provinces, they did not disappear into some undifferentiated mass of legislative power and remained what they had been before: distinct and discrete legislative fields. Thus the huge swaths of legislative power that are exclusive to the Provinces comprise of specific and discrete legislative fields or competences, which are known with particularity.
Now coming to the second limb of the argument of the Petitioners Counsel that levy of Octroi was declared valid and intra vires only because it was on goods which were being sold, used or otherwise consumed within certain Municipal Limits and not on goods in transit. To that we may be observe that this again is not correct and is misconceived. In the impugned legislation a very specific purpose has been provided for the imposition of the levy i.e. "for maintenance and development of infrastructure for carriage by road and smooth and safer movement of goods entering or before leaving the Province from or for outside the country, through air or sea". This in our view suffices and fulfills the requirement for imposition of the levy in question. It is no more a fee after the 3rd version and is a cess. It provides very clearly in the enactment the basic purpose and reason for justifying the impugned levy. It is no more a case of any fee or its quid pro quo; hence, to this extent, the impugned levy cannot be challenged. The Honorable Supreme Court in the case of Khurshid Soap and Chemical48 has been pleased to hold that if there is a declared purpose for imposition of a levy which comes with a promise to bring some benefit or advantage in future which is basically meant for its payers, and if such benefit or advantage is made available on the ground may be availed by others as well, but that would not change the status of such fee-levying enactment, and would remain a valid levy. The crux of the judgment is that if a cess is imposed with a specific purpose then it is distinct from a fee and does not require fulfillment of the doctrine of quid pro quo; and cannot be challenged to this extent. The relevant finding reads as under:

20. ".The other kind of a fee-levying legislation is where Cess is imposed as a compulsory exaction in the same manner where taxes are imposed with the distinction that it is imposed for achieving a specific purpose promised in the enactment itself which when realized would bring some advantage or benefit for the payers in future. It can be described as 'purpose specific' and in many judicial pronouncements have been termed as 'Cess-fee'. In such a form of levy, the specified purpose is pre-committed to the payers before the revenue is collected under the legislation. To quote a few examples, Cess is imposed to meet the extraordinary costs involved in providing infrastructure such as construction of dams or for importing oil or gas from abroad through pipelines or to build farm to mill roads in order to facilitate marketing of the agricultural produce or for conducting research and development in some specialized field. In such a form of levy the rule of quid pro quo does not exist in the same sense as it exists in a case where an existing service is rendered or a privilege is extended directly to the payer for a fee. What needs to be taken into consideration is whether the enactment has promised some benefit or advantage for the payers to be made available in future by utilizing the revenue, making it more akin to a fee then a pure revenue raising measure like taxes in general are imposed with no precondition attached for their spending.."

The basic difference between the enactment where fee-simplicitor is imposed and where Cess-fee is imposed is that in the former a service or a privilege is made available to the payer directly on the strict principle of quid pro quo whereas in the latter case, the declared purpose comes with a promise to bring some benefit or advantage in future which is basically meant for its payers. Such benefit or privilege once made available on the ground may be availed by others as well but that would not change the status of such fee-levying enactment. It would remain a specie of fee-levying enactment in contradistinction to tax-levying enactment in which no specific purpose or specific service needs to be disclosed by the legislature in order to justify its imposition.
When an issue arises as to interpreting apparent conflicting legislative entries when there are distinct entries for Federal and Provincial Legislatures, even in that situation it is not that the Court would always arrive at a conclusion that either of them has the competency to do so. It is but natural that in this situation controversies do arise as to the competency and as to who is exceeding its own domain and encroaching upon the others. In that case it is not the name of the tax; but its real nature i.e. the "pith and substance" that determines into what category or in whose domain such legislation would fall. In Governor General49, the Privy Council laid down important principles for interpreting apparently conflicting Legislative Entries in general and tax entries in particular. It was held, first, that though a tax may overlap, in fact there would be no overlapping, if the taxes were separate and distinct imposts; secondly, that the machinery of tax collection did not affect the real nature of a tax. Another principle for reconciling apparently conflicting tax entries follows from the fact that a tax has two elements; the person, thing or activity on which tax is imposed, and the amount of the tax. The amount may be measured in many ways; but decided cases establish a c lear distinction between the subject matter of a tax and the standard by which the amount of tax is measured. These two elements are described as the subject or a tax and the measure of a tax. This was also quoted with approval by the Supreme Court of India in D.G.Gouse50 as stating precisely the two elements involved in almost all tax cases, namely the subject of a tax and the measure of a tax. The conclusion for this kind of a situation is that principles of interpretation of conflicting Entries of Legislation cannot be placed in a strait jacket formula and it will vary, primarily depending upon the subject matter of the legislation in issue. Here in the matter in hand we do not even have such an issue, as Federal Legislature is not disputing the Provincial Legislatures exercise of powers in enacting legislation in respect of the impugned levy. Even where there have been separate entries for the Federal and Provincial Legislature, the Courts have, by applying the pith and substance principle validated such exercise of powers by either of the Legislatures. In determining the pith and substance of an existing law, one has only to look at the law itself regardless of its provenance under whatever constitutional dispensation it had originally been enacted. If it related to none of the entries in either of the Lists then it fell in the exclusive provincial domain and became a provincial law (coming also within the Federal domain but only in relation to those areas of Pakistan that did not form part of a Province, being effectively and principally the Capital)51. The pith and substance of the legislated subject is to be examined to determine in whose legislative sphere a particular subject comes under. And above all a reasonable interpretation which does not produce impracticable results should be adopted52.
It is settled law that there is always a distinction between the object of tax, the incidence of tax and the machinery for the collection of the tax. The distinction is important and shall always be kept in consideration. Legislative competence is to be determined with reference to the object of the levy and not with reference to its incidence or machinery. Here in the impugned levy the imposition is on goods which are using the infrastructure of the Province after having landed at Port from abroad. Almost the entire cargo being imported in the Country routs through the Province of Sindh, and for that the Provincial Legislature thought it appropriate to impose a certain amount of tax in the form of a cess. It is though being collected from an Importer of goods; but in essence it is not on imports; but for maintenance and development of infrastructure on imported goods. Since goods using this infrastructure by itself cannot pay; nor can it be so recovered, and has to be recovered from someone i.e. the importers. The importers in this case are then persons having a direct control, connection, possession and nexus with these goods, and therefore, can be called to pay the impugned levy. And this to us seems to be fine and within the legislative competence of the Province. At the most it is only an expedient and convenient manner for which it has been levied at the stage of imports and nothing more.
In view of the above discussion it is hereby declared that insofar as the first four versions of the law / impugned levy is concerned, the same has no applicability on the petitioners who had earlier challenged the same and were before the Court in Sanofi Aventis; as the said judgment has attained finality and is a case of past and closed transaction. It is further held that The Sindh Finance Act, 2017, promulgated retrospectively with effect from 1.7.1994 is a valid law, within the competence of the Provincial Legislature and is applicable retrospectively; however, barring the Appellants in Sanofi Aventis.
Accordingly, in view of hereinabove facts and circumstances, all listed petitions are disposed of in the following terms;

a. Insofar as the first four versions of law introduced through Sindh Finance Act, 1994, amended through Sindh Finance Act, 1996, the Sindh Finance (Amendment) Ordinance, 2001, and the Sindh Finance (Second Amendment) Ordinance, 2001 are concerned, their applicability on the petitioners who had litigated earlier and were Appellants in Sanofi Aventis53, has attained finality and is a past and closed transaction, notwithstanding promulgation of its fifth version vide Sindh Finance (Amendment) Ordinance, 2006, further amended by The Sindh Finance (Amendment) Act, 2007 (Sindh Act No: II of 2007, and The Sindh Finance (Amendment) Act, 2009 (Sindh Act No.III of 2009);

b. The Sindh Finance Act, 2017, promulgated retrospectively with effect from 1.7.1994 is a valid law within the competence of the Provincial Legislature under the Constitution and is applicable retrospectively; however, [subject to (a) as above];

c. All imposition and collection of the impugned levy with effect from 1.7.1994 pursuant to section 1(3) of the Sindh Finance Act, 2017, being retrospective in effect has been validly done and collected; again however, [subject to (a) as above];

d. All Bank Guaranteed furnished by the petitioners up to 27.12.2006 who had litigated earlier and were Appellants in Sanofi Aventis53, shall stand discharged; whereas those furnished by them on or after 28.12.2006 shall be en-cashed and paid to the department;

e. All Bank Guarantees furnished by rest of the Petitioners not covered at (a) as above, shall be en-cashed and paid to the department;

f. The operation of this judgment, considering the intricacy and the issue involved is hereby suspended for a period of 90 days from today; and in the meantime the earlier arrangement for release of the petitioners consignments shall continue on the same terms;

All listed petitions are disposed of in the above terms.

Annexure "A"

| | | | | --- | --- | --- | | 1. | Const. P.D 1598/2011 | Pakistan Tabacco Co. Ltd. v. Province of Sindh and others | | 2 | Const. P.D 1654/2011 | Muhammad Iqbal Bilwani and another v. The Province of Sindh and another | | 3. | Const. P.D 1655/2011 | Muhammad Iqbal Bilwani and another v. The Province of Sindh and another | | 4. | Const. P.D 1656/2011 | Salman Mir and another v. The Province of Sindh and another | | 5. | Const. P.D 1657/2011 | Qamar Abbas and another v. The Province of Sindh and another | | 6. | Const. P.D 1662/2011 | Messrs The Paracha Textile Mills Ltd. v. Province of Sindh and another | | 7. | Const. P.D 1668/2011 | ICI Pakistan Ltd. v. Province of Sindh and others | | 8. | Const. P.D 1669/2011 | Amer Cotton Mills (Pvt.) Ltd. v. Province of Sindh and others | | 9. | Const. P.D 1671/2011 | Nishat Mills Ltd. v. Province of Sindh and Others | | 10. | Const. P.D 1673/2011 | Indus Motors Co. Ltd. v. Province of Sindh and others | | 11. | Const. P.D 1674/2011 | Nishat (Chunian) Ltd., v. Province of Sindh and others. | | 12. | Const. P.D 1676/2011 | Jubilee Spinning and Weaving Mills Ltd. v. Province of Sindh and another | | 13. | Const. P.D 1678/2011 | Premium Textile Mills Ltd. v. Province of Sindh and others | | 14. | Const. P.D 1681/2011 | Messrs Azam Textile Mills Ltd. v. Province of Sindh and another | | 15. | Const. P.D 1687/2011 | Gulshan Spinning Mills Ltd. v. Province of Sindh and another | | 16. | Const. P.D 1689/2011 | Lotle Pakistan PTA Ltd. v. Province of Sindh and others | | 17. | Const. P.D 1693/2011 | Pakistan State Oil Co. Ltd. v. Province of Sindh and another | | 18. | Const. P.D 1694/2011 | Crescent Steel and Allied Products Ltd. v. The Province of Sindh and another | | 19. | Const. P.D 1695/2011 | Sanofi Aventis Pakistan Ltd. v. Province of Sindh and others | | 20. | Const. P.D 1699/2011 | Nishat Paper Products Company Limited v. The Province of Sindh and another | | 21. | Const. P.D 1700/2011 | D.G Khan Cement Company Limited v. The Province of Sindh and another | | 22. | Const. P.D 1701/2011 | Reckitt Benckiser Pakistan Limited v. The Province of Sindh and another | | 23. | Const. P.D 1726/2011 | International Industries Limited v. The Province of Sindh and another | | 24. | Const. P.D 1727/2011 | Shabbir Tiles and Ceramics Limited v. The Province of Sindh and another | | 25. | Const. P.D 1728/2011 | Agriauto Industries Limited v. The Province of Sindh and another | | 26. | Const. P.D 1729/2011 | Dynea Pakistan Limited v. The Province of Sindh and another | | 27. | Const. P.D 1730/2011 | Au Vitronics Limited v. The Province of Sindh and another | | 28. | Const. P.D 1754/2011 | Messrs Umer Spinning Mills (Pvt) Ltd v. Province of Sindh and another | | 29. | Const. P.D 1756/2011 | Messrs Acro Spinning and Weaving Mills (Pvt.) Ltd. v. Province of Sindh and another | | 30. | Const. P.D 1757/2011 | Rawal Textile Mills Ltd. v. Province of Sindh and others | | 31. | Const. P.D 1759/2011 | Bestway Cement Ltd. v. Province of Sindh and others. | | 32. | Const. P.D 1766/2011 | Messrs Mahmood Textile Mills Ltd. v. Province of Sindh | | 33. | Const. P.D 1776/2011 | Naveena Industries Ltd. v. Province of Sindh and another | | 34. | Const. P.D 1778/2011 | Messrs Naveena Experts Ltd. v. Province of Sindh and another | | 35. | Const. P.D 1781/2011 | Messrs Masood Fabrics Ltd. v. Province of Sindh | | 36. | Const. P.D 1798/2011 | Salfi Textile Mills Limited v. The Province of Sindh and others | | 37. | Const. P.D 1799/2011 | Island Textile Mills Limited v. The Province of Sindh and others | | 38. | Const. P.D 1800/2011 | Tata Textile Mills Limited v. The Province of Sindh and others | | 39. | Const. P.D 1805/2011 | Messrs Artistic Apparels (Pvt.) Ltd. v. Province of Sindh and another | | 40. | Const. P.D 1808/2011 | Messrs Masood Spinning Mills Ltd. v. Province of Sindh | | 41. | Const. P.D 1809/2011 | Inter Loop Ltd. v. Province of Sindh and others | | 42. | Const. P.D 1812/2011 | Margalla Textile Mills Ltd. v. Province of Sindh and others | | 43. | Const. P.D 1817/2011 | Messrs Colony Industries (Pvt.) Ltd. v. Province of Sindh and another | | 44. | Const. P.D 1819/2011 | Messrs Roomi Fabrics Limited v. Province of Sindh and others | | 45. | Const. P.D 1820/2011 | Messrs Fazal Rehman Fabrics Limited v. Province of Sindh and another | | 46. | Const. P.D 1821/2011 | Olympia Blended Fibre Mills Ltd. v. Province of Sindh and others | | 47. | Const. P.D 1823/2011 | Prsperity Weaving Mills Ltd. v. Province of Sindh and another | | 48. | Const. P.D 1826/2011 | Engro Eximp (Pvt.) Ltd. v. The Province of Sindh and others. | | 49. | Const. P.D 1827/2011 | Engro Polymer v. P.DO Sindh and others | | 50. | Const. P.D 1828/2011 | Engro Fertilizers Limited v. The Province of Sindh and others | | 51. | Const. P.D 1829/2011 | Engro Foods Ltd. v. P.DO Sindh and others | | 52. | Const. P.D 1830/2011 | Engro Foods Supply v. P.DO Sindh and others | | 53. | Const. P.D 1833/2011 | Messrs Waheed Hafeez Ghee (Pvt.) Ltd. v. Province of Sindh and another | | 54. | Const. P.D 1842/2011 | Messrs Hussanian Daud Oil and Ghee Mills (Pvt.) Ltd. v. Province of Sindh and another | | 55. | Const. P.D 1849/2011 | Messrs Ab Wahid Ab. Majid (Pvt.) Ltd. v. Province of Sindh and another | | 56. | Const. P.D 1850/2011 | Messrs Al-Hilal Vegetable Ghee Mills (Pvt.) Ltd. v. Province of Sindh and another | | 57. | Const. P.D 1866/2011 | Pakistan Cables Limited v. The Province of Sindh and another | | 58. | Const. P.D 1867/2011 | Siddiq sons Tin Plate Ltd. v. The Province of Sindh and another | | 59. | Const. P.D 1868/2011 | Maple Leaf Cement Factory Ltd. v. The Province of Sindh and another | | 60. | Const. P.D 1873/2011 | Messrs Stallion Textiles (Pvt.) Ltd. v. Province of Sindh and another | | 61. | Const. P.D 1882/2011 | Al-Nasr Textile Ltd. v. Province of Sindh and others | | 62. | Const. P.D 1884/2011 | Messrs Hassan Limited v. Province of Sindh and another | | 63. | Const. P.D 1887/2011 | Adil Enterprise v. Province of Sindh and another | | 64. | Const. P.D 1891/2011 | Messrs Nishat (Chunian) Power Ltd. v. Province of Sindh and another | | 65. | Const. P.D 1899/2011 | Messrs Olympia Blended Fibre Mills Ltd. v. Province of Sindh and another | | 66. | Const. P.D 1900/2011 | Ahmed Hassan Textile Mills v. Province of Sindh and others | | 67. | Const. P.D 1911/2011 | Messrs Bismillah Textiles Ltd. v. Province of Sindh and another | | 68. | Const. P.D 1920/2011 | Mohammad Younus Abbasi v. Province of Sindh and others | | 69. | Const. P.D 1921/2011 | Resham Textiles Industries Ltd. v. Province of Sindh and another | | 70. | Const. P.D 1946/2011 | Shafi Texcel Ltd. v. Province of Sindh and others | | 71. | Const. P.D 1979/2011 | Messrs Eastern Spinning Mills Ltd. v. Province of Sindh and another | | 72. | Const. P.D 1995/2011 | Messrs Waheed Traders v. Province of Sindh and another | | 73. | Const. P.D 1996/2011 | Messrs Niaz Soap Factory v. Province of Sindh and another | | 74. | Const. P.D 2013/2011 | Ejaz Spinning Mills Ltd. v. Province of Sindh and another | | 75. | Const. P.D 2043/2011 | Master Textile Mills Ltd. v. Province of Sindh and another | | 76. | Const. P.D 2058/2011 | Dura Industries (Pvt.) Ltd v. Province of Sindh and another | | 77. | Const. P.D 2060/2011 | Messrs Ruby Textile Mills Ltd. v. Province of Sindh and another | | 78. | Const. P.D 2091/2011 | Premier Formica Industries Ltd. v. Province of Sindh and others | | 79. | Const. P.D 2092/2011 | Messrs Mohsin Match Factory (Pvt.) Ltd. v. Province of Sindh and another | | 80. | Const. P.D 2142/2011 | Messrs Internatoional Steel Ltd. v. Province of Sindh and others | | 81. | Const. P.D 2257/2011 | Bhimra Textile Mills (Pvt.) Ltd. v. Province of Sindh and others | | 82. | Const. P.D 2312/2011 | M. Shafi Tanneries (Pvt.) Ltd. v. Province of Sindh and others | | 83. | Const. P.D 2314/2011 | Shafi Clucochem (Pvt.) Ltd. v. Province of Sindh and others | | 84. | Const. P.D 2502/2011 | Messrs Mehboob Tube Mills v. Province of Sindh and others | | 85. | Const. P.D 2684/2011 | Messrs Artistic Denim Mills Ltd. v. Province of Sindh and another | | 86. | Const. P.D 2751/2011 | Messrs Flexipack Films v. The Province of Sindh and others | | 87. | Const. P.D 2753/2011 | Messrs Ismail Industries Ltd. v. Province of Sindh and others | | 88. | Const. P.D 2800/2011 | Procter and Gamble Pakistan (Pvt.) Ltd. v. Province of Sindh and others | | 89. | Const. P.D 2962/2011 | Sitara Auto Impex v. Secretary Revenue and others | | 90. | Const. P.D 3041/2011 | Capital Industries (Pvt.) Ltd. v. Province of Sindh and others | | 91. | Const. P.D 3043/2011 | Diamond Products (Pvt.) Ltd. v. Province of Sindh and others | | 92. | Const. P.D 3045/2011 | Shaffi Chemical Industries Ltd. v. Province of Sindh and others | | 93. | Const. P.D 3046/2011 | Diamond Home Textile (Pvt.) Ltd. v. Province of Sindh and others | | 94. | Const. P.D 3047/2011 | Diamond Tyres Ltd. v. Province of Sindh and others | | 95. | Const. P.D 3084/2011 | BASF Pakistan (Pvt.) Ltd. v. Province of Sindh and others | | 96. | Const. P.D 3085/2011 | BASF Chemicals and Polymers Pakistan (Pvt.) Ltd. v. Province of Sindh and others | | 97. | Const. P.D 3129/2011 | Messrs Samin Textiles Mills Ltd. v. Province of Sindh and others | | 98. | Const. P.D 3167/2011 | Messrs Sheikh Pipe Mills v. Province of Sindh and others | | 99. | Const. P.D 3349/2011 | Pak Denim Ltd., v. Province of Sindh and others. | | 100. | Const. P.D 3560/2011 | Messrs Pakistan Petroleum Ltd. v. Province of Sindh and others. | | 101. | Const. P.D 4122/2011 | Shakeel Ahmed and others v. Province of Sindh and others | | 102. | Const. P.D 4123/2011 | Shakeel Ahmed and others v. Province of Sindh and others | | 103. | Const. P.D 4169/2011 | Messrs Pak Elektron Ltd. v. Province of Sindh and others | | 104. | Const. P.D 1764/2011 | Indus Home Ltd. v. Province of Sindh | | 105. | Const. P.D 1933/2011 | M/s. Lahore Feeds Ltd. VS. Province of Sindh | | 106. | Const. P.D 2002/2011 | Messrs Javed Impex v. Province of Sindh | | 107. | Const. P.D 1675/2011 | The Cresent Textile Mills Ltd. v. Province of Sindh | | 108. | Const. P.D 1818/2011 | Fatima Enterprises Ltd. v. Province of Sindh | | 109. | Const. P.D 1885/2011 | Naseem Exports Ltd. v. Province of Sindh | | 110. | Const. P.D 1670/2011 | Sapphire Textile Mills Ltd. v. Province of Sindh | | 111. | Const. P.D 1822/2011 | Bhanero Textile Mills Ltd. v. Province of Sindh | | 112. | Const. P.D 2147/2011 | Apollo Textile Mills Ltd. v. Province of Sindh | | 113. | Const. P.D 2051/2011 | Kamal Textile Mills Ltd. v. Province of Sindh | | 114. | Const. P.D 1978/2011 | Messrs Eastern Lether Co. (Pvt.) Ltd. v. Province of Sindh | | 115. | Const. P.D 1639/2011 | Gulistan Spinning Mills v. Province of Sindh | | 116. | Const. P.D 1640/2011 | Unilever Pakistan Foods v. Province of Sindh | | 117. | Const. P.D 2014/2011 | Ejaz Dyeing and Finishing Mills v. Province of Sindh | | 118. | Const. P.D 1653/2011 | Mapak Edible Oils (Pvt.) Ltd. v. Province of Sindh | | 119. | Const. P.D 1811/2011 | Firhaj Footwear (Pvt.) Ltd. v. Province of Sindh | | 120. | Const. P.D 1647/2011 | Diamond Fabric v. Province of Sindh | | 121. | Const. P.D 1667/2011 | Muhammad Ahmed v. Province of Sindh | | 122. | Const. P.D 1661/2011 | Faisal Export (Pvt.) Ltd. v. Province of Sindh | | 123. | Const. P.D 1991/2011 | Al Hamd Edible Oil Industries (Pvt.) Ltd. v. Province of Sindh | | 124. | Const. P.D 1780/2011 | Artistic Apparels v. Province of Sindh | | 125. | Const. P.D 1852/2011 | ACP Oil Mills Pvt. Ltd. v. Province of Sindh | | 126. | Const. P.D 1762/2011 | Sunrays Textile Mills Ltd. v. Province of Sindh | | 127. | Const. P.D 1664/2011 | Hafeez Ghee and General Mills v. Province of Sindh | | 128. | Const. P.D 1642/2011 | Messrs Gulshan Waving Mills v. Province of Sindh | | 129. | Const. P.D 1761/2011 | Feroz Textile v. Province of Sindh | | 130. | Const. P.D 1837/2011 | Messrs Taj Vegetable Oil Processing Unit (Pvt.) Ltd. v. Province of Sindh | | 131. | Const. P.D 1666/2011 | Messrs Shakoo (Pvt.) Ltd. v. Province of Sindh | | 132. | Const. P.D 2122/2011 | Messrs Agritech Limited v. Province of Sindh | | 133. | Const. P.D 1677/2011 | Dossa Cotton and General Trading (Pvt.) Ltd. v. Province of Sindh | | 134. | Const. P.D 1875/2011 | Messrs Colony Sugar Mills v. Province of Sindh | | 135. | Const. P.D 1814/2011 | Messrs Quetta Textile Mills Ltd. v. Province of Sindh and others | | 136. | Const. P.D 1738/2011 | Adeel Hamza Oil Ind. v. Province of Sindh | | 137. | Const. P.D 1660/2011 | Hafeez Iqbal Oil and Ghee v. Province of Sindh | | 138. | Const. P.D 1672/2011 | Messrs Sapphire Textile Mills Ltd. v. Province of Sindh | | 139. | Const. P.D 1910/2011 | Messrs Premier Clipboard Industries (Pvt) Ltd. v. Province of Sindh | | 140. | Const. P.D 1915/2011 | Messrs A-J Match (Pvt) Ltd. v. Province of Sindh | | 141. | Const. P.D 2061/2011 | Messrs Ishaq Textile Mills Ltd. v. Province of Sindh | | 142. | Const. P.D 1851/2011 | Messrs Khadija Edible Oil Refinery (Pvt.) Ltd. v. Province of Sindh | | 143. | Const. P.D 1942/2011 | Amin Feroz and Company v. Province of Sindh | | 144. | Const. P.D 1892/2011 | Messrs Suraj Fertilizer Ind. (Pvt.) Ltd. v. Province of Sindh | | 145. | Const. P.D 1773/2011 | Ahmed Fine Textile Mills v. Province of Sindh | | 146. | Const. P.D 1770/2011 | Olympia Spinning and Weaving Mill v. Province of Sindh | | 147. | Const. P.D 1686/2011 | Gulistan Textile Mills v. Province of Sindh | | 148. | Const. P.D 2815/2011 | Capital Industries Enterprises (Pvt.) Ltd. v. Province of Sindh | | 149. | Const. P.D 1824/2011 | Nadeem Textile Mills v. Province of Sindh | | 150. | Const. P.D 1806/2011 | Faisal Spinning Mills v. Province of Sindh | | 151. | Const. P.D 1934/2011 | Messrs Olympia Chemical Ltd. v. Province of Sindh | | 152. | Const. P.D 2078/2011 | Messrs Kohat Textile Mills Ltd. v. Province of Sindh | | 153. | Const. P.D 1710/2011 | Al-Saeed Enterprises v. Province of Sindh | | 154. | Const. P D 1771/2011 | Din Textile Mills Ltd. v. Province of Sindh | | 155. | Const. P.D 1646/2011 | Messrs Naeelam Textile Mills Ltd. v. Province of Sindh | | 156. | Const. P.D 1896/2011 | Ayesha Textile Mills (Pvt.) Ltd. v. Province of Sindh | | 157. | Const. P.D 1706/2011 | Messrs MIMA Leather (Pvt.) Ltd. v. Province of Sindh | | 158. | Const. P.D 1665/2011 | Messrs Habib Oil Mills (Pvt) Ltd. v. Province of Sindh | | 159. | Const. P.D 1711/2011 | Messrs Soya Weaving Mills (Pvt) Ltd. v. Province of Sindh | | 160. | Const. P.D 1895/2011 | Premier Industries Chemical v. Province of Sindh | | 161. | Const. P.D 1775/2011 | Messrs A.J. Textile Mills Ltd. v. Province of Sindh | | 162. | Const. P.D 1994/2011 | Messrs Saad Internationals v. Province of Sindh | | 163. | Const. P.D 2068/2011 | Tanveer Spinning and Weaving Mill v. Province of Sindh | | 164. | Const. P.D 1877/2011 | Nafeesa Textile Ltd. v. Province of Sindh | | 165. | Const. P.D 1845/2011 | Messrs Hameeda Industries (Pvt.) Ltd. v. Province of Sindh | | 166. | Const. P.D 1878/2011 | M/s. Asia Ghee Mills (Pvt.) Ltd. v. Province of Sindh | | 167. | Const. P.D 1993/2011 | Messrs Allah Ditta and Sons Ltd. v. Province of Sindh | | 168. | Const. P.D 1810/2011 | Zahra Textile (Pvt.) Ltd. v. Province of Sindh | | 169. | Const. P.D 1816/2011 | Messrs Fazal Cloth Mills Ltd. v. Province of Sindh | | 170. | Const. P.D 1886/2011 | Messrs Acro Textile Mills (Pvt.) Ltd. v. Province of Sindh | | 171. | Const. P.D 1679/2011 | N.P Spinnings Mills Ltd. v. Province of Sindh | | 172. | Const. P.D 1683/2011 | Deewan Farooq Motors Ltd. v. Province of Sindh | | 173. | Const. P.D 1760/2011 | A&B Food Industries (Pvt.) Ltd. v. Province of Sindh | | 174. | Const. P.D 1988/2011 | Messrs Al Hashimi Brothers and Oil Industries Co. Ltd. v. Province of Sindh | | 175. | Const. P.D 1709/2011 | Messrs Universal Leather (Pvt.) Ltd. v. Province of Sindh | | 176. | Const. P.D 1599/2011 | Messrs Uniliver Pakistan Ltd. v. Province of Sindh | | 177. | Const. P.D 2062/2011 | Messrs Arshad Textile Mills Ltd. Co. v. Province of Sindh | | 178. | Const. P.D 1684/2011 | Artistic Fabric Mills Ltd. v. Province of Sindh | | 179. | Const. P.D 1748/2011 | ATS Systematic (Pvt.) Ltd. v. Province of Sindh and others | | 180. | Const. P.D 1708/2011 | Mima Knit (Pvt.) Ltd. v. Province of Sindh | | 181. | Const. P.D 1765/2011 | Nagina Cotton Mills v. Province of Sindh | | 182. | Const. P.D 1836/2011 | Transtech v. Province of Sindh | | 183. | Const. P.D 3609/2011 | Ever Fresh Farms (Pvt.) Ltd. v. Province of Sindh | | 184. | Const. P.D 1769/2011 | Shadman Cotton Mills. v. Province of Sindh | | 185. | Const. P.D 1935/2011 | Messrs Kohinoor Mills Ltd. v. Province of Sindh | | 186. | Const. P.D 1768/2011 | Messrs Idrees Textile Mills Ltd. v. Province of Sindh | | 187. | Const. P.D 1917/2011 | Messrs Mohsin Enterprises v. Province of Sindh | | 188. | Const. P.D 1641/2011 | Sapphire Fishing Mills Ltd. v. Province of Sindh | | 189. | Const. P.D 1874/2011 | Bilal Fibre v. Province of Sindh | | 190. | Const. P.D 1871/2011 | Fashion Knit Industries v. Province of Sindh | | 191. | Const. P.D 1834/2011 | Yaqoot Oil Processing and Extracting v. Province of Sindh | | 192. | Const. P.D 1897/2011 | Zafar Fabric Ltd. v. Province of Sindh | | 193. | Const. P.D 1774/2011 | N P Cotton Mills v. Province of Sindh | | 194. | Const. P.D 1749/2011 | B.P.D Industries (Pvt.) Ltd. v. Province of Sindh | | 195. | Const. P.D 1801/2011 | Gul Ahmed Textile Mills Ltd. v. Province of Sindh | | 196. | Const. P.D 1844/2011 | Zakariya Enterprises v. Province of Sindh | | 197. | Const. P.D 1846/2011 | Ashraf Industries (Pvt.) Ltd. v. Province of Sindh | | 198. | Const. P.D 1913/2011 | Ayesha Spinning Mills Ltd. v. Province of Sindh | | 199. | Const. P.D 2090/2011 | Yaqoot Traders v. Province of Sindh and others | | 200. | Const. P.D 2077/2011 | Messrs Saif Textile Mills Ltd. v. Province of Sindh | | 201. | Const. P.D 1870/2011 | Messrs Kamarl Ltd. v. Province of Sindh | | 202. | Const. P.D 1989/2011 | Messrs WR Edible Oil Refinery (Pvt.) Ltd. v. Province of Sindh | | 203. | Const. P.D 1755/2011 | SA Trading Corporation Co. Ltd. v. Province of Sindh | | 204. | Const. P.D 1680/2011 | Messrs Saritow Spinning Mills Ltd. v. Province of Sindh | | 205. | Const. P.D 1916/2011 | SGM Sugar Mills Ltd. v. Province of Sindh | | 206. | Const. P.D 1847/2011 | Messrs Agro Processors and Atmopheric Gases Ltd. v. Province of Sindh | | 207. | Const. P.D 1807/2011 | Messrs Khas Textile Mills (Pvt.) Ltd. v. Province of Sindh | | 208. | Const. P.D 1750/2011 | Messrs Indus Dyeing and Manufacturing Co. Ltd. v. Province of Sindh | | 209. | Const. P.D 1763/2011 | Artistic Millinners (Pvt.) Ltd. v. Province of Sindh | | 210. | Const. P.D 1644/2011 | Sapphire Power Generation Ltd. v. Province of Sindh | | 211. | Const. P.D 1782/2011 | Diamond International v. Province of Sindh | | 212. | Const. P.D 1643/2011 | Messrs Paramount Spinning Mills Limited v. Province of Sindh | | 213. | Const. P.D 1772/2011 | Messrs Ahmed Oriental Textile Mills Ltd. v. Province of Sindh | | 214. | Const. P.D 1909/2011 | Messrs Al-Textile (Pvt.) Ltd. v. Province of Sindh | | 215. | Const. P.D 1987/2011 | Messrs Farooq Oil Industries (Pvt.) Ltd. v. Province of Sindh | | 216. | Const. P.D 1840/2011 | Messrs Sadiq Vegetable Ghee Mill (Pvt.) Ltd. v. Province of Sindh | | 217. | Const. P.D 1914/2011 | Messrs BNP Industries Ltd. v. Province of Sindh | | 218. | Const. P.D 1876/2011 | Messrs Shafi Spinning Mills Ltd. v. Province of Sindh | | 219. | Const. P.D 1990/2011 | Messrs Gul Shahzada Enterprises (Pvt.) Ltd. v. Province of Sindh | | 220. | Const. P.D 1779/2011 | Hussain Mills v. Province of Sindh | | 221. | Const. P.D 1912/2011 | Al Moiz Industries v. Province of Sindh | | 222. | Const. P.D 1992/2011 | Bhatti Traders v. Province of Sindh | | 223. | Const. P.D 1777/2011 | Messrs North Star Textile v. Province of Sindh | | 224. | Const. P.D 1893/2011 | Asian Food Industries v. Province of Sindh | | 225. | Const. P.D 1722/2011 | Lucky Textile Mills v. Province of Sindh | | 226. | Const. P.D 1843/2011 | Messrs Khayaban Ghee Mills (Pvt.) Ltd. v. Province of Sindh | | 227. | Const. P.D 2001/2011 | Messrs Hamza Vegetable Oil Refinery and Ghee Mills (Pvt.) v. Province of Sindh | | 228. | Const. P.D 1832/2011 | Messrs Azhar Corporation (Pvt.) Limited v. Province of Sindh | | 229. | Const. P.D 1712/2011 | Messrs Sargodha Jute Mills Ltd. v. Province of Sindh | | 230. | Const. P.D 1758/2011 | Messrs Soorty Enterprises (Pvt.) Ltd. v. Province of Sindh | | 231. | Const. P.D 1688/2011 | Artistic Garment Industries (Pvt.) Ltd. v. Province of Sindh | | 232. | Const. P.D 1600/2011 | Messrs Shell Pakistan Ltd. v. Province of Sindh | | 233. | Const. P.D 1719/2011 | Fazal Textile Mills (Ltd.) v. Province of Sindh | | 234. | Const. P.D 1720/2011 | Gadoon Textile Mills (Ltd.) v. Province of Sindh | | 235. | Const. P.D 1682/2011 | Messrs Hantex v. Province of Sindh | | 236. | Const. P.D 1663/2011 | Messrs Associated Industries Ltd. v. Province of Sindh | | 237. | Const. P.D 1659/2011 | Messrs Riaz Textile Mills Ltd. v. Province of Sindh | | 238. | Const. P.D 2503/2011 | Mehboob Steel Pipes v. Province of Sindh | | 239. | Const. P.D 2044/2011 | Messrs Sapphire Dairies (Pvt.) Ltd. v. Province of Sindh | | 240. | Const. P.D 2059/2011 | Messrs Azgard Nine Limited v. Province of Sindh | | 241. | Const. P.D 1841/2011 | Messrs Tahir Amar Industries (Pvt) Ltd. v. Province of Sindh | | 242. | Const. P.D 1890/2011 | Mayfair Limited v. Province of Sindh | | 243. | Const. P.D 2118/2011 | US Denim Mills (Pvt.) Ltd. v. Province of Sindh | | 244. | Const. P.D 1839/2011 | Abdul Majid v. Province of Sindh | | 245. | Const. P.D 1872/2011 | Kassim Textile v. Province of Sindh | | 246. | Const. P.D 1848/2011 | Hina Khurrum v. Province of Sindh | | 247. | Const. P.D 1705/2011 | Pakistan Vinyal Industries v. Province of Sindh | | 248. | Const. P.D 1804/2011 | Messrs Blessed Textiles Ltd. v. Province of Sindh | | 249. | Const. P.D 1980/2011 | Messrs Reliance Weaving Mills Ltd. v. Province of Sindh | | 250. | Const. P.D 1813/2011 | Messrs Nisar Spinning Mills Limited v. Province of Sindh | | 251. | Const. P.D 1645/2011 | Messrs Reliance Cotton Spinning Mills Ltd. v. Province of Sindh | | 252. | Const. P.D 1838/2011 | Messrs Muridke Refine Oil Mills v. Province of Sindh | | 253. | Const. P.D 1835/2011 | Messrs Iffco Pakistan (Pvt) Ltd. v. Province of Sindh | | 254. | Const. P.D 1898/2011 | Messrs Colony Mills Limited v. Province of Sindh | | 255. | Const. P.D 1466/2012 | General Tyre and Rubber Co. Pakistan v. The Province of Sindh and others | | 256. | Const. P.D 2570/2012 | M/s. Nishat Dairy (Pvt.) Ltd. v. The Province of Sindh and another | | 257. | Const. P.D 2697/2012 | SPEC (Pvt.) Ltd. v. The Province of Sindh and others | | 258. | Const. P.D 2879/2012 | Mian Nazir Sons Ind v. Province of Sindh and others | | 259. | Const. P.D 3001/2012 | M/s. Suraj Cotton Mills Ltd. v. Province of Sindh and others | | 260. | Const. P.D 3002/2012 | M/s. Shams Textile Mills Ltd. v. Province of Sindh and others | | 261. | Const. P.D 3003/2012 | M/s. Equity Textile Mills Ltd. v. Province of Sindh and others | | 262. | Const. P.D 3653/2012 | Messrs Karachi Tube Mills Pvt. Ltd. v. Province of Sindh and others | | 263. | Const. P.D 1351/2013 | M/s. Kamal Textile Mills(Pvt) Ltd. v. Province of Sindh and others | | 264. | Const. P.D 138/2013 | M/s. Nimir Chemicals v. Province of Sindh and others | | 265. | Const. P.D 1786/2013 | Digital World (Pvt.) Ltd. v. Province of Sindh and others | | 266. | Const. P.D 1787/2013 | DWP Technologies (Pvt.) Ltd. v. Province of Sindh and others | | 267. | Const. P.D 2173/2013 | Messrs Matco Rice Proceedings (Pvt.) Ltd. v. Province of Sindh and others | | 268. | Const. P.D 2623/2013 | Messrs Aisha Steel Mills Limited v. Province of Sindh and others. | | 269. | Const. P.D 3410/2013 | Messrs Nishat Lines (Pvt.) Ltd. v. Province of Sindh and others | | 270. | Const. P.D 3424/2013 | Messrs Fazal Weaving Mills v. Province of Sindh and others | | 271. | Const. P.D 3712/2013 | Messrs Shafi Taxcel Ltd. v. Province of Sindh and others | | 272. | Const. P.D 3819/2013 | Messrs K.K Oil and Ghee Mills (Pvt.) Ltd. v. Province of Sindh and others | | 273. | Const. P.D 4028/2013 | Messrs Masco Spinning Mills (Pvt.) Ltd. v. Province of Sindh and others | | 274. | Const. P.D 4577/2013 | Inter Loop Diaries Ltd. v. Province of Sindh and others | | 275. | Const. P.D 5197/2013 | Messrs Ahmed Oil Industries (Pvt.) Ltd. v. Province of Sindh and others | | 276. | Const. P.D 5198/2013 | Messrs Plastiflex Films (Pvt.) Ltd. v. Province of Sindh and others | | 277. | Const. P.D 1010/2014 | Messrs Mujahid Enterprises v. Province of Sindh and others | | 278. | Const. P.D 1011/2014 | Messrs Imran Yaqoob Ghee Inds v. Province of Sindh and others | | 279. | Const. P.D 1066/2014 | Messrs Commodity World v. Province Of Sindh and others | | 280. | Const. P.D 1521/2014 | Atlas Honda Ltd. v. Sindh and others | | 281. | Const. P.D 1522/2014 | Honda Atlas Cars (Pakistan) Ltd. v. Sindh and others | | 282. | Const. P.D 1706/2014 | Atlas Battery v. Sindh and others | | 283. | Const. P.D 1707/2014 | Atlas Hitec v. Sindh and others | | 284. | Const. P.D 1708/2014 | Atlas Engineering v. Sindh and others | | 285. | Const. P.D 1709/2014 | Atlas Autos v. Sindh and others | | 286. | Const. P.D 1710/2014 | Shirazi Trading and Co. v. Sindh and others | | 287. | Const. P.D 2346/2014 | Pak Suzuki Motor Co. Ltd. v. Province of Sindh and others | | 288. | Const. P.D 2552/2014 | Messrs Atif Enterprises (Pvt.) Ltd. v. Province of Sindh and others | | 289. | Const. P.D 2553/2014 | Mirpur Oil and Ghee v. Province of Sindh and others | | 290. | Const. P.D 2808/2014 | Messrs Kamal Indutries v. Province of Sindh and others | | 291. | Const. P.D 3544/2014 | Honda Atlas Power Product v. Sindh and others | | 292. | Const. P.D 3615/2014 | Messrs Ideal Spinning Mills Ltd. v. Province of Sindh and others | | 293. | Const. P.D 3714/2014 | Engro Elengy Terminal (Pvt.) Ltd. v. The Province of Sindh and others | | 294. | Const. P.D 3923/2014 | Sheikh Pipe Mills v. Province of Sindh and others | | 295. | Const. P.D 3924/2014 | Messrs Sheikh Engineering Co. v. Province of Sindh and others | | 296. | Const. P.D 4341/2014 | Messrs H.M Extraction Ghee and Oil Industries v. Province of Sindh and others | | 297. | Const. P.D 4342/2014 | Messrs Lal Ghee and Oil Mills v. Province of Sindh and others | | 298. | Const. P.D 4352/2014 | TRI-Pack Films Ltd. v. Federation of Pakistan and others | | 299. | Const. P.D 4567/2014 | Messrs Nishat Hotels and Properties Ltd. v. Province of Sindh and others | | 300. | Const. P.D 4645/2014 | Messrs Cresent Hadeed (Pvt) Ltd. v. Province of Sindh and others | | 301. | Const. P.D 4733/2014 | Messrs Pakgen Power Ltd. v. Province of Sindh and others | | 302. | Const. P.D 4734/2014 | Messrs Cherat Cement Co. v. Province of Sindh and otherss | | 303. | Const. P.D 4735/2014 | Messrs Lalpir Power Ltd. v. Province of Sindh and others | | 304. | Const. P.D 5010/2014 | Messrs HNR Co. v. Province of Sindh and others | | 305. | Const. P.D 5067/2014 | Messrs Salman Oil Ghee Mills (Pvt) Ltd. v. Province of Sindh and others | | 306. | Const. P.D 5068/2014 | Messrs Pak Pertochemical Industries (Pvt) Ltd. v. Province of Sindh and others | | 307. | Const. P.D 5402/2014 | Messrs Bhanero Energy Ltd. v. Province of Sindh and others | | 308. | Const. P.D 5691/2014 | Messrs Fahad Hamad Oil v. Province of Sindh and others | | 309. | Const. P.D 6529/2014 | Messrs Cresent Fibres Limited v. Province of Sindh and others | | 310. | Const. P.D 778/2014 | Messrs Al Karam Towel Industries (Pvt.) Ltd. v. Province of Sindh and others | | 311. | Const. P.D 864/2014 | Messrs Cherat Packaging Limited v. Province of Sindh and others | | 312. | Const. P.D 98/2014 | Messrs Olympia Textile Mills limited v. Province of Sindh and others | | 313. | Const. P.D 1522/2015 | Fatima Energy Ltd. v. Province of Sindh and others | | 314. | Const. P.D 1653/2015 | Siddiq Leather Work v. Province of Sindh and others | | 315. | Const. P.D 1923/2015 | Messrs NC Electric Co. Ltd. v. Province of Sindh and others | | 316. | Const. P.D 2029/2015 | Messrs Syed Mohammad and Sons v. P.DO Sindh and others | | 317. | Const. P.D 2049/2015 | Messrs Sapphire Wind Power v. Province of Sindh and others | | 318. | Const. P.D 2215/2015 | Messrs Meezan Edible Oil v. Province of Sindh and others | | 319. | Const. P.D 2216/2015 | Messrs Mezan Te (Pvt) Ltd. v. Province of Sindh and others | | 320. | Const. P.D 2349/2015 | Messrs FKW Global Communication (Pvt.) Ltd. v. Province of Sindh and others | | 321. | Const. P.D 250/2015 | Ms Load Limited v. Province of Sindh and others | | 322. | Const. P.D 3081/2015 | Messrs Huffaz Seamless Pipe v. Government of Sindh and others | | 323. | Const. P.D 3208/2015 | Messrs IIL Stainless Steel (Pvt.) Ltd. v. Province of Sindh and others | | 324. | Const. P.D 561/2015 | Mushtaqim Dyeing and Printing Industries (Pvt.) Ltd. v. P.DO Sindh and others | | 325. | Const. P.D 601/2015 | Hudson Pharma (Pvt) Ltd. v. Province Of Sindh and others | | 326. | Const. P.D 6619/2015 | Pak Arab Fertilizers and others v. Province of Sindh and others | | 327. | Const. P.D 7779/2015 | Thal Boshoku Pakistan v. Province of Sindh and others | | 328. | Const. P.D 874/2015 | Messrs Biotech Energy v. Province of Sindh and others | | 329. | Const. P.D 2015/2016 | Messrs Crescent Powertec Ltd. v. Province of Sindh and others | | 330. | Const. P.D 2205/2016 | Messrs Al-Momin Packaging v. Province of Sindh and others | | 331. | Const. P.D 3655/2016 | Messrs Nishat Commodities (Pvt.) Ltd. v. Province of Sindh and others | | 332. | Const. P.D 4032/2016 | Messrs Hi-Tech Lubricants (Pvt) Ltd. v. Province of Sindh and others | | 333. | Const. P.D 4033/2016 | Messrs Hi-Tech Blending (Pvt) Ltd. v. Province of Sindh and others | | 334. | Const. P.D 4335/2016 | Messrs Maple Leaf Power Ltd. v. Province of Sindh and others | | 335. | Const. P.D 5410/2016 | Indus Motor Co. Ltd. v. Province of Sindh and others | | 336. | Const. P.D 5411/2016 | Sapphire Textile Mills Ltd. v. Province of Sindh and others | | 337. | Const. P.D 5412/2016 | Sapphire Fibres Ltd. v. Province of Sindh and others | | 338. | Const. P.D 5413/2016 | Amer Cotton Mills v. Province of Sindh and others | | 339. | Const. P.D 5414/2016 | Umer Farms (Pvt.) Ltd. v. Province of Sindh and others | | 340. | Const. P.D 5415/2016 | Firhaj Footwear (Pvt.) Ltd. v. Province of Sindh and others | | 341. | Const. P.D 5416/2016 | Faisal Spinning Mills v. Province of Sindh and others | | 342. | Const. P.D 5417/2016 | Bhanero Textile Mills Ltd. v. Province of Sindh and others | | 343. | Const. P.D 5418/2016 | Bhanero Energy Ltd. v. Province of Sindh and others | | 344. | Const. P.D 5419/2016 | Blessed Textile Ltd. v. Province of Sindh and others | | 345. | Const. P.D 5424/2016 | Thal Ltd. v. Province of Sindh and others | | 346. | Const. P.D 5463/2016 | Artistic Fabric and Garment Industries (Pvt) Ltd. v. Province of Sindh and others | | 347. | Const. P.D 5607/2016 | Messrs Kohinoor Textile Mills Ltd. v. Province of Sindh and others | | 348. | Const. P.D 5661/2016 | Messrs Rawat Oil and Ghee Mills v. Province of Sindh and others | | 349. | Const. P.D 6085/2016 | Messrs Sky Linker Business Chain v. Province of Sindh and others | | 350. | Const. P.D 6086/2016 | Messrs Royal Zone (Pvt.) Ltd. v. Province of Sindh and others | | 351. | Const. P.D 6152/2016 | Messrs Utman Ghee Ind. v. Province of Sindh and others | | 352. | Const. P.D 6153/2016 | Messrs Pan Asia Food Products v. Province of Sindh and others | | 353. | Const. P.D 6154/2016 | Messrs Al-Makkah Oil Refinery v. Province of Sindh and others | | 354. | Const. P.D 6234/2016 | Messrs Nishat Agriculture Farming v. Province of Sindh and others | | 355. | Const. P.D 6325/2016 | Lucky Entertainment (Pvt.) Ltd. v. Province of Sindh and others | | 356. | Const. P.D 6326/2016 | ICI Pakistan Ltd. v. Province of Sindh and others | | 357. | Const. P.D 6327/2016 | Lucky Textile Mills Ltd. v. Province of Sindh and others | | 358. | Const. P.D 6328/2016 | Gadoon Textile Mills v. Province of Sindh and others | | 359. | Const. P.D 6487/2016 | Lucky One (Pvt) Ltd. v. Govt. of Sindh and others | | 360. | Const. P.D 6488/2016 | Younus Textile Mills Ltd. v. Govt. of Sindh and others | | 361. | Const. P.D 6489/2016 | Lucky Energy (Pvt.) Ltd. v. Govt. of Sindh and others | | 362. | Const. P.D 6490/2016 | Lucky Landmark (Pvt.) Ltd. v. Govt. of Sindh and others | | 363. | Const. P.D 1755/2017 | Messrs Glaxy Rice Mills (Pvt.) Ltd. v. Province of Sindh and others | | 364. | Const. P.D 2746/2017 | Al-Muqeet Textiles (Pvt.) Ltd. v. Province of Sindh and others | | 365. | Const. P.D 275/2017 | Messrs Lucky Knit (Pvt.) Ltd. v. Province of Sindh and others | | 366. | Const. P.D 347/2017 | Tapal Tea (Pvt.) Ltd. v. Sindh and others | | 367. | Const. P.D 6347/2017 | EFert Agritrade (Pvt.) Ltd. v. Province of Sindh and others | | 368. | Const. P.D 643/2017 | Shahbaz Garments (Pvt.) Ltd. and others v. Province of Sindh and others | | 369. | Const. P.D 6500/2017 | Messrs Amreli Steels Ltd. v. Province of Sindh and others | | 370. | Const. P.D 6928/2017 | Messrs Indus Motor Co. Ltd. v. Province of Sindh and Others | | 371. | Const. P.D 7164/2017 | Thal Ltd. and others v. Sindh and others | | 372. | Const. P.D 730/2017 | Pakistan Aluminium Beverages Can Ltd. v. Province of Sindh and others | | 373. | Const. P.D 765/2017 | Messrs C.A Textile Mills (Pvt.) Ltd. v. Province of Sindh and others | | 374. | Const. P.D 8140/2017 | National Foods Ltd. v. Sindh and others | | 375. | Const. P.D 8358/2017 | Abdul Hafeez Shafi Leather v. Province of Sindh and others | | 376. | Const. P.D 8400/2017 | Sargodha Jute Mills Ltd. v. Province of SIndh and others | | 377. | Const. P.D 8401/2017 | Shahzad Textile Mils Ltd. v. Province of Sindh and others | | 378. | Const. P.D 8408/2017 | Premier Textile Mills Ltd. and others v. Sindh and others | | 379. | Const. P.D 8448/2017 | Packages Ltd. v. Sindh and others | | 380. | Const. P.D 8449/2017 | DIC Pakistan v. Sindh and others | | 381. | Const. P.D 8450/2017 | Bulleh Shah Packaging (Pvt.) Ltd. v. Sindh and others | | 382. | Const. P.D 8491/2017 | Messrs Liberty Power Tech Ltd. v. Sindh and others | | 383. | Const. P.D 8492/2017 | Messrs Libery Mills Ltd. v. Sindh and others | | 384. | Const. P.D 8494/2017 | M.A.K Automotive (Pvt.) Ltd. v. Province of Sindh and others | | 385. | Const. P.D 8511/2017 | Engro Polymer and Chemicals Ltd. v. Sindh and others | | 386. | Const. P.D 8676/2017 | Tri-Pack Films Ltd. v. Province of Sindh and others | | 387. | Const. P.D 8750/2017 | Messrs Trade Ocean International v. Province of Sindh and others | | 388. | Const. P.D 8752/2017 | Advance Telecom v. Province of SIndh and others | | 389. | Const. P.D 8817/2017 | Margalla Textile Mills Ltd. v. Province of Sind and others | | 390. | Const. P.D 8818/2017 | Olympia Blended Fibre Mills Ltd. v. Province of Sind and others | | 391. | Const. P.D 8819/2017 | Jamhoor Textile Mills Ltd. v. Province of Sind and others | | 392. | Const. P.D 8820/2017 | Rawal Textile Mills Ltd. v. Province of Sind and others | | 393. | Const. P.D 8821/2017 | The Lahore Textile and General Mills Ltd. v. Province of Sind and others | | 394. | Const. P.D 8822/2017 | Tribal Textile Mills Ltd. v. Province of Sind and others | | 395. | Const. P.D 7613/2017 | Atlas Honda Ltd. and others v. Sindh and others | | 396. | Const. P.D 7614/2017 | Atlas Battery Ltd. and others v. Sindh and others | | 397. | Const. P.D 7615/2017 | Atlas Engineering Ltd. and others v. Sindh and others | | 398. | Const. P.D 7616/2017 | Atlas Metal (Pvt.) Ltd. and others v. Sindh and others | | 399. | Const. P.D 1075/2018 | Shamim uddin Ahmed and others v. POS and others | | 400. | Const. P.D 1265/2018 | Engro Foods Ltd. v. Sindh and others | | 401. | Const. P.D 2984/2018 | Messrs Krystopac Energy (Pvt.) Ltd. v. Province of Sindh and others | | 402. | Const. P.D 3265/2018 | Pakistan Cables Ltd. v. Province of Sindh and Others | | 403. | Const. P.D 3267/2018 | Messrs Trade Ocean International v. Province of Sindh and others | | 404. | Const. P.D 345/2018 | Munib Abdul Rauf v. Province of Sindh and others | | 405. | Const. P.D 3942/2018 | Messrs Krystalite Products (Pvt.) Ltd. v. Province of Sindh and others | | 406. | Const. P.D 442/2018 | Messrs Agar Textile (Pvt.) Ltd. v. Sindh and others | | 407. | Const. P.D 5003/2018 | Messrs Kausar Ghee Mills v. Province of Sindh and others | | 408. | Const. P.D 5235/2018 | KIA Lucky Motors Pakistan Ltd. v. Province of Sindh and others | | 409. | Const. P.D 5605/2018 | Messrs A.K Oil and Ghee v. Province of Sindh and others | | 410. | Const. P.D 7698/2018 | IL Apparel (Pvt.) Ltd. v. Province of Sindh and others | | 411. | Const. P.D 7728/2018 | Saleem Memorial Trust Hospital v. Province of Sindh and others | | 412. | Const. P.D 8321/2018 | Memon Motors (Pvt.) Ltd. v. Province of Sindh and others | | 413. | Const. P.D 8345/2018 | Messrs Kashmir Oil and Ghee Mills (Pvt.) Ltd. v. Province of Sindh and Others | | 414. | Const. P.D 8764/2018 | Messrs Marclum Ind (Pvt.) Ltd. v. Province of Sindh and others | | 415. | Const. P.D 877/2018 | REckitt Benckiser Pakistan Ltd. v. Sindh and others | | 416. | Const. P.D 1067/2019 | Messrs International Textile Ltd. v. Province of Sindh and others | | 417. | Const. P.D 1462/2019 | Messrs Salim Winding Works and others v. Province of Sindh and others | | 418. | Const. P.D 1629/2019 | Messrs Lucky Electric Power Company Ltd. v. Province of Sindh and others | | 419. | Const. P.D 2028/2019 | Messrs ASCO International (Pvt.) Ltd. v. Province of Sindh and others | | 420. | Const. P.D 2607/2019 | PSO Co. Ltd. v. Sindh and others | | 421. | Const. P.D 2666/2019 | Messrs AAA Plastc v. Province of Sindh and others | | 422. | Const. P.D 37/2019 | AlKaram Textile Mills (Pvt) Ltd. v. Province of Sindh and others | | 423. | Const. P.D 4258/2019 | Messrs G- Pac Engergy (Pvt) Ltd. v. Province of Sindh and others | | 424. | Const. P.D 4334/2019 | Messrs Hyundai Nishat Motors (Pvt.) Ltd. v. Province of Sindh and others | | 425. | Const. P.D 4335/2019 | Messrs Digital Apparel (Pvt.) Ltd. v. Province of Sindh and thers | | 426. | Const. P.D 4374/2019 | Power Cement Ltd. v. Province of Sindh and thers | | 427. | Const. P.D 5149/2019 | Messrs Platinum Agro Oil and Ghee Ind (Pvt.) Ltd. v. Province of Sindh and thers | | 428. | Const. P.D 5442/2019 | Ms Bara Ghee Mills (Pvt.) Ltd. v. Province of Sindh and thers | | 429. | Const. P.D 5540/2019 | Messrs Universal Tube Mills (Pvt.) Ltd. v. Province of Sindh and others | | 430. | Const. P.D 5611/2019 | US and Dynamo Mills (Pvt.) Ltd. v. Province of Sindh and others | | 431. | Const. P.D 5886/2019 | Messrs H.Sheikh Noor ud Din and Sons (Pvt.) Ltd. v. Province of Sindh and others | | 432. | Const. P.D 6129/2019 | Messrs Kohinoor Textile Mills Ltd. v. Province of Sindh and others | | 433. | Const. P.D 700/2019 | Messrs Naveena Steel Mills (Pvt.) Ltd. v. Province of Sindh and others | | 434. | Const. P.D 7293/2019 | Engro Peroxide (Pvt.) Ltd. v. Sindh and others | | 435. | Const. P.D 7485/2019 | Messrs Lucky Commodities (Pvt.) Ltd. v. Province of Sindh and others | | 436. | Const. P.D 7532/2019 | Messrs Garibsons (Pvt.) Ltd. v. Province of Sindh and others | | 437. | Const. P.D 7569/2019 | Messrs Hascol Petroelum Ltd. v. Province of Sindh and others | | 438. | Const. P.D 7814/2019 | Olympia (Pvt.) Ltd. v. Province of Sindh and others | | 439. | Const. P.D 8023/2019 | Messrs J.B Ind v. Province of Sindh and others | | 440. | Const. P.D 8519/2019 | Qasim International Container Terminal Pak Ltd. v. Sindh and others | | 441. | Const. P.D 1261/2020 | Zahidjee Textile Mills Ltd. v. Province of Sindh and others | | 442. | Const. P.D 1286/2020 | OTO Pakistan (Pvt.) Ltd. v. Province of Sindh and others | | 443. | Const. P.D 1311/2020 | PSO Co. Ltd. v. Sindh and others | | 444. | Const. P.D 137/2020 | Messrs SS Fashion Resources v. Federation of Pakistan and others | | 445. | Const. P.D 181/2020 | Messrs Megna Processing Industries (Pvt.) Ltd. v. Federation of Pakistan and others | | 446. | Const. P.D 182/2020 | Messrs Megna Textile Industries (Pvt.) Ltd. v. Federation of Pakistan and others | | 447. | Const. P.D 2601/2020 | Reckitt Benckiser Pakistan v. Sindh and others | | 448. | Const. P.D 2793/2020 | Messrs Artistic Fabric Mills v. Province of Sindh and others | | 449. | Const. P.D 3038/2020 | Messrs AR Sovent and Ghee Ind. Ltd. v. Province of Sind and others | | 450. | Const. P.D 3039/2020 | Messrs Gul Shahzad Steel Mills v. Province of Sindh and others | | 451. | Const. P.D 3040/2020 | Messrs Maqboolo Plastic Ind. v. Province of Sindh and others | | 452. | Const. P.D 3041/2020 | SB Steel Metal and Pipe Mills v. Province of Sindh and others | | 453. | Const. P.D 3261/2020 | Aisha Steel Mills Ltd. v. Province of Sindh and Others | | 454. | Const. P.D 3303/2020 | Messrs Fatima Oil and Ghee Mills (Pvt.) Ltd. v. Province of Sindh and others | | 455. | Const. P.D 3304/2020 | Messrs Gul Edible Oil Refinery (Pvt.) Ltd. v. Province of Sindh and others | | 456. | Const. P.D 3419/2020 | Messrs Management Pakistan (Pvt.) Ltd. v. Province of Sindh and others | | 457. | Const. P.D 3593/2020 | Archroma Pakistan Ltd. v. Sindh and others | | 458. | Const. P.D 3652/2020 | Atlas D.I.D (Pvt.) Ltd. v. Sindh and others | | 459. | Const. P.D 3653/2020 | Atlas GCI (Pvt.) Ltd. v. Sindh and others | | 460. | Const. P.D 3993/2020 | Messrs Ocean Plastic and Metal Solution (Pvt.) Ltd. v. Province of Sindh and others | | 461. | Const. P.D 4089/2020 | Messrs Win Pipe Industries (Pvt.) Ltd. v. Federation of Pakistan and others | | 462. | Const. P.D 4090/2020 | Messrs Unity Foods Ltd. v. Federation of Pakistan and others | | 463. | Const. P.D 4404/2020 | Messrs S T Cold Rolling v. Province of Sindh and others | | 464. | Const. P.D 543/2020 | PSO Co. Ltd. v. Sindh and others | | 465. | Const. P.D 5796/2020 | Messrs Dalda Food Ltd. v. Province of Sindh and others | | 466. | Const. P.D 5797/2020 | Messrs Oil Processor of Refinery (Pvt.) Ltd. v. Province of Sindh and others | | 467. | Const. P.D 5990/2020 | Exceed Petroleum (Pvt.) Ltd. v. Province of Sindh and others | | 468. | Const. P.D 6071/2020 | Messrs Master Motors Corp v. Province of Sindh and others | | 469. | Const. P.D 6215/2020 | Messrs Hi Tech Lubricants Ltd. v. Province of Sindh and others | | 470. | Const. P.D 6222/2020 | Messrs Roomi Fabrics Ltd. v. Province of Sindh and others | | 471. | Const. P.D 6223/2020 | Messrs Mahmood Textile Mills Ltd. v. Province of Sindh and others | | 472. | Const. P.D 6224/2020 | Messrs Masood Fabrics Ltd. v. Province of Sindh and others | | 473. | Const. P.D 6225/2020 | Maqsod Spinning Mills Ltd. v. Province of Sindh others | | 474. | Const. P.D 6245/2020 | Messrs Pakistan Synthetics Ltd. v. Province of Sindh and others | | 475. | Const. P.D 6246/2020 | Messrs Amna Industries v. Province of Sindh and others | | 476. | Const. P.D 800/2020 | Be Energy Ltd. v. Sindh and Others | | 477. | Const. P.D 801/2020 | Byco Petroleum Pakistan Ltd. v. Sindh and others | | 478. | Const. P.D 97/2020 | Printkraft (Pvt.) Ltd. v. Province of Sindh and others | | 479. | Const. P.D 98/2020 | IRC Dairy Product (Pvt.) Ltd. v. Province of Sindh and others | | 480. | Const. P.D 1098/2021 | Bismillah Textile Ltd. v. Province of Sindh and others | | 481. | Const. P.D 1171/2021 | Tufail Chemicals Ind and others v. Province of Sindh and Others | | 482. | Const. P.D 1205/2021 | Oncogen Pharma (Pvt.) Ltd. v. Province of Sindh and Others | | 483. | Const. P.D 1421/2021 | Shafi Agro (Pvt.) Ltd. v. Province of Sindh and others | | 484. | Const. P.D 1459/2021 | Inovi Telecom (Pvt.) Ltd. v. Province of Sindh and others | | 485. | Const. P.D 442/2021 | Service Long March Tyres (Pvt.) Ltd. v. Province of Sindh and others | | 486. | Const. P.D 660/2021 | Messrs Fimcotex Ind (Pvt.) Ltd. v. Province of Sindh and others |

PTD 2024 KARACHI HIGH COURT SINDH 1448 #

2024 P T D 1448

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Ms. Sana Akram Minhas, JJ

Messrs COTTON EXPORT CORPORATION OF PAKISTAN (PVT.) LTD. KARACHI and others

Versus

The COMMISSIONER OF INCOME TAX, COMPANIES-III, KARACHI and others

Income Tax Cases Nos.10, 11 of 1994 and Income Tax Reference No.137 of 1994, Income Tax References Nos. 95, 193 and 194 of 2001, decided on 28th September, 2023.

(a) Income Tax Ordinance (XXXI of 1979) [Since repealed]---

----Ss. 62 & 66-A---Original assessment order, passing of---Revision---Inspecting Additional Commissioner, jurisdiction /powers of---Whether Inspecting Additional Commissioner (IAC) had any jurisdiction to exercise powers under S. 66-A of the Income Tax Ordinance, 1979 ('the Ordinance, 1979')---Case of the Taxpayer (M/s Cotton Export Corporation of Pakistan (Pvt.) Ltd.) was that after passing of the original assessment order under S. 62 of the Ordinance, 1979, it could not have been revised under S. 66-A of the Ordinance, 1979 , as the original assessment order under S.62 was passed with the approval and consent of IAC, and therefore, he could not have reopened the said order---Validity---From perusal of the finding of facts, in the impugned order by the Tribunal, it was reflected that though, initially the Income Tax Officer had sent a draft order to the Commissioner Income Tax (ITO) through IAC for approval; but, admittedly, the same was retuned back with the comments that ITO should decide the case on its own responsibility---Resultantly, when the original assessment order was passed under S. 62 of the Ordinance, 1979 by the concerned ITO, it could not be assumed that it was passed with the approval of the IAC, rather was done by him without involvement of his superior officer---In fact, even if some assistance had been sought by an assessing officer from the IAC, this was not in itself sufficient to preclude the IAC from invoking S. 66-A of the Ordinance, 1979 in relation to that particular case---It would also further have to be shown, as a matter of fact, that the degree of involvement was of such intensity that it would make subsequent recourse to S. 66-A impermissible---This is so because the mere fact of consultation or even approval was not enough---Degree and intensity of the consultation was also to be established and shown to have been of such level that it would preclude the subsequent exercise of powers under S. 66-A of the Ordinance, 1979 ---Therefore, if subsequently, the IAC had revised the order by exercising his powers under S. 66-A of Ordinance, 1979, it cannot be presumed that he had no jurisdiction to do so and that it was an illegality on this ground alone---Thus, the relevant question of law was answered against the Taxpayer and in favour of the Department---All the cases /References filed by the Taxpayer (M/s Cotton Export Corporation of Pakistan (Pvt.) Ltd.) stood dismissed, whereas, the reference filed by the department was allowed.

Nishat Mills Limited v. Commissioner of Income Tax 2021 PTD 1986 ref.

(b) Income Tax Ordinance (XXXI of 1979) [Since repealed]---

----Ss.2(24)(b), 62 & 66-A---Income---Loss---Original assessment order, amending / correcting of---Ingredients i.e. erroneous and prejudicial to the interest of the Revenue---Inspecting Additional Commissioner, jurisdiction /powers of---Argument raised by the Taxpayer (M/s. Cotton Export Corporation of Pakistan (Pvt.) Ltd.) was that the order under S.62 of the Income Tax Ordinance, 1979 ('the Ordinance, 1979'), may have been erroneous at best, but was not prejudicial to the interest of the Revenue inasmuch as the assessment order was an order showing losses in its return; hence, S.66-A of the Ordinance, 1979 could not have been invoked---Validity---For invoking the provisions of S.66-A of the Ordinance, 1979 (section 122 of the Income Tax Ordinance, 2001), it is a must that both the ingredients i.e. an assessment order being erroneous and prejudicial to the interest of the Revenue, are fulfilled---Mere erroneous order of an Income Tax Officer without causing prejudice to the interest of the Revenue will not authorize Inspecting Additional Commissioner (IAC) to exercise powers under S. 66-A of the Ordinance, 1979 and these ingredients must be satisfied before invoking S.66-A of the Ordinance, 1979---In terms of S. 2(24) (b) of the Ordinance, 1979, the income includes any loss of such income and profits or gains, and therefore, even if a Return is showing losses, assessment can still be prejudicial to the interests of the Revenue and once it is not denied that the original assessment order was erroneous, then by merely arguing that the second condition (to the effect that it was not prejudicial to the interests of the Revenue) is not fulfilled, cannot be sustained---In the present case, both the preconditions for invoking the provision of S.66-A of the Ordinance, 1979 are fulfilled---Furthermore, as the loss, if any, in one income year is carried forward to the next income year, and while computing the income of the subsequent year(s), these losses are permitted to be deducted---Therefore, any such carry forward loss pursuant to some erroneous assessment order will always remain prejudicial to the interest of the Revenue: being liable to correction amendment of the original assessment order after reopening of the same---Therefore, the objection as to the original assessment order not being prejudicial to the interest of Revenue pursuant to a return of loss, and short of meeting the requirement of S.66-A of the Ordinance, 1979 is misconceived---Thus, in the present case, the IAC had jurisdiction to exercise powers under S.66-A of the Ordinance, 1979---Thus, the relevant question of law was answered against the Taxpayer and in favour of the Department---All the cases/References filed by the Taxpayer (M/s Cotton Export Corporation of Pakistan (Pvt.) Ltd.) stood dismissed, whereas, the reference filed by the department was allowed.

Glaxo Laboratories Ltd v. Inspecting Assistant Commissioner PLD 1992 SC 549 = 1992 PTD 932 ref.

----Ss. 62 & 66-A---Original assessment order , passing of---Revision---Loss suffered---Subsidy being granted---Whether a Revenue receipt or a Capital receipt---Subsidy was granted by the Federal government to reimburse losses suffered by the Taxpayer (M/s. Cotton Export Corporation of Pakistan (Pvt.) Ltd.)---Question was whether the subsidy paid by the Federal Government to the taxpayer was a Revenue receipt or a Capital receipt---Held, that record revealed that the dispute firstly arose in assessment years 1978-1979 to 1980-1981 when the then Income Tax Appellate Tribunal ('the Tribunal') came to the conclusion that the subsidy-in-question was paid by the Federal Government due to losses suffered by the taxpayer and in the public interest to reimburse those losses, which in no way could be treated as trading receipt ; it was further observed by the Tribunal that the taxpayer has purchased cotton at a certain price fixed by the Government and since the export price is generally lower than the purchase price, the taxpayer necessarily suffered losses, whereas, it is 100% owned by the Federal Government and therefore re-imbursement of such losses to the taxpayer could not be considered as a trading receipt; it was further observed that all receipts, which are not capital receipts are not necessarily income within the meaning of the Ordinance 1979 ; lastly, it was also observed that all receipts are not always capital receipts or Revenue receipts as some receipts may be neither, but at the same time it may not be income either---Tribunal in the impugned order made some reference to the cases of West Pakistan Road Transport Lahore (reported as PLD 1974 Note 9) and Sindh Industrial Trading Estate (reported as PLD 1975 Kar. 128), however, said judgments had no relevance with the controversy in hand---Thus, the Tribunal has failed to appreciate the dissimilarity in the facts, therefore, impugned order passed by the Tribunal in respect of these assessment years cannot be sustained---In the present case, the intent and purpose behind paying subsidy to taxpayer was to reduce its losses---High Court viewed that the subsidy paid by the Federal Government to the taxpayer was a revenue receipt and was liable to income tax---Thus, the relevant question of law was answered against the Taxpayer and in favour of the Department---Reference filed by the Taxpayer ( M/s Cotton Export Corporation of Pakistan (Pvt) Ltd. ) stood dismissed, whereas, the reference filed by the department was allowed.

West Pakistan Road Transport Board Lahore v. The Commissioner of Income Tax PLD 1974 Note 9 and Sindh Industrial Trading Estate Ltd. Karachi v. Central Board of Revenue PLD 1975 Kar. 128 distinguished.

(d) Income Tax Ordinance (XXXI of 1979) [Since repaled]--

----Ss. 2(24) (b), 62 & 66-A---Original assessment order , passing of---Revision---Loss suffered---Subsidy being granted---Whether a Revenue receipt or a Capital receipt---Principles of accounting---Subsidy was granted by the Federal government to reimburse losses suffered by the Taxpayer (M/s. Cotton Export Corporation of Pakistan (Pvt.) Ltd.), a Corporation created by law and owned by the Government---Question was whether the subsidy paid by the Federal Government to the taxpayer was a Revenue receipt or a Capital receipt---Argument of the Taxpayer (M/s Cotton Export Corporation of Pakistan (Pvt.) Ltd.) was that subsidy paid by the Federal Government year after year to cover up the losses sustained by the taxpayer was a capital receipt and at most a gift but not a Revenue receipt ; and that if at all it is so then the subsidy received is a capital receipt on the ground that 100% shares of the taxpayer were held by the Federal Government and was kind of a subsidiary created by the Federal Government---Held, that if that was so, then induction of this subsidy as a capital would have resulted in the increase of shareholding by way of extra capital, but this is not the case of the taxpayer---By merely arguing that this subsidy was never shown in profit and loss account, but in the appropriation account, hence it was not a Revenue receipt, would not ipso facto make it so---Question has to be decided by a consideration of the true nature and purpose of the payment and the facts and circumstances of the case as there is no single or infallible test which can be applied to resolve the question---Neither the form of the transaction giving rise to the payment, nor the name, which is given to it is relevant in determining the liability of tax---In general, it may be said that what is received for loss of capital is a capital receipt and what is received as profit in trading transaction, is taxable income---As per accounting practice(s) the appropriation account contains both, capital receipts and unappropriated profits usually based on accumulated profits already subjected to tax or untaxed capital gains remaining undistributed during the preceding years till the date of preparation of the appropriation accounts---These could be capital receipts or Revenue receipts and the nature of such receipts has to be looked into---Appropriation is primarily an act of setting aside money for a specific purpose---In the present case, it is not the Government itself who is the taxpayer, rather a Corporation created by law, which is owned by the Government---Taxpayer was a concern which operated to make profits, and if any amount was shown as an appropriation, then it had to come from its profits, or as retained earnings, or from its reserves or something which had been kept for debt repayment and to finance capital expenditures---None of these were present in this case---Here, an amount had been received, and when questioned as to its treatment, an argument was being made that it was an item in the appropriation account; hence, cannot be taxed---Said analogy of the taxpayer appeared to be incorrect and against the settled accounting principles even if it was to be shown as an item in the appropriation account---In the present case, the intent and purpose behind paying subsidy to taxpayer was to reduce its losses---High Court viewed that the subsidy paid by the Federal Government to the taxpayer was a revenue receipt and was liable to income tax---Thus, the relevant question of law was answered against the Taxpayer and in favour of the Department---All the cases/References filed by the Taxpayer (M/s Cotton Export Corporation of Pakistan (Pvt.) Ltd.) stood dismissed, whereas, the only reference filed by the department was allowed.

Commissioner of Income Tax v Forbes Campbell & Co Ltd. PLD 1978 Kar. 1047 ref.

(e) Income Tax Ordinance (XXXI of 1979) [Since repealed]---

----Ss. 2(24) (b), 62 & 66-A---Doctrine of mutuality---Original assessment order, passing of---Revision---Loss suffered---Subsidy being granted---Whether a Revenue receipt or a Capital receipt---Subsidy was granted by the Federal government to reimburse losses suffered by the Taxpayer (M/s. Cotton Export Corporation of Pakistan (Pvt.) Ltd.)---Question as to whether the subsidy paid by the Federal Government to the taxpayer was a Revenue receipt or a Capital receipt---Argument being that 100% shares of the Taxpayer are owned by the Federal Government---Validity---It is of relevance to note that as a matter of fact the Federal Government's policy in respect of purchase of cotton requires the taxpayer to purchase it from the grower on fixed notified prices---A times, the cotton is purchased at a higher price as against the price on which it is exported, resulting in losses, and the Federal Government on regular basis, was making payments to the taxpayer to run its affairs smoothly and efficiently---It was also an admitted position that these subsidies given year after year, were not refundable to the Federal Government, whereas, any capital induction was always a liability and it was to be repaid to the contributor---As to the argument that 100% shares were owned by the Federal Government and it was a case, wherein, doctrine of mutuality would apply; it may be of relevance to observe that such doctrine was only applicable when the participants were earning the profits and the beneficiaries were the same---Here it was not so, inasmuch as mere ownership of 100% in the taxpayer /company would not make it a Federal Government---Admittedly, the taxpayer was a company incorporated by way of some law having its own identity, different to that of the Federal Government---Undisputedly, the taxpayer was a Company paying taxes all along on its profits and losses---In the present case, the intent and purpose behind paying subsidy to taxpayer was to reduce its losses---High Court viewed that the subsidy paid by the Federal Government to the taxpayer was a revenue receipt and was liable to income tax---Thus, the relevant question of law was answered against the Taxpayer and in favour of the Department---All the cases/References filed by the Taxpayer (M/s Cotton Export Corporation of Pakistan (Pvt.) Ltd.) stood dismissed, whereas, the reference filed by the department was allowed.

Unreported judgment dated 10.3.2023 in ITR No.211 of 1991; 2019 PTD 1734 and 2019 PTD 587 ref.

The Commissioner of Income Tax v. Smith Kline and French of Pakistan Limited 1991 SCMR 2374 and Harmone Laboratories Pakistan Limited v. Commissioner Income Tax 2011 PTD 627 distinguished.

(f) Income Tax Ordinance (XXXI of 1979) [Since repealed]---

The Ratna Sugar Mills Ltd. v. The Commissioner of Income Tax AIR 1958 Allahabad 633; Raghuvanshi Mills Ltd. v. Commissioner of Income Tax, Bombay City AIR 1953 SC 4 and Lincolnshire Sugar Co. v. Smart ((1937) 20 Tax Case 643 ref.

Iqbal Salman Pasha for Applicant (in I.T.R. No.137 of 1994).

Faheem Ali Memon and Muhammad Taseer Khan for Respondent (in I.T.R. No.137 of 1994).

PTD 2024 KARACHI HIGH COURT SINDH 1478 #

2024 P T D 1478

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Agha Faisal, JJ

IRFAN HUSSAIN HALAI through duly constituted attorney and others

Versus

FEDERATION OF PAKISTAN through Secretary, Revenue Division, Ministry of Finance and others

Constitution Petitions Nos. D-4942 of 2022 (and other connected Petitions), decided on 30th December, 2022.\

(a) Constitution of Pakistan---

----Art. 142 (d) & Fourth Schedule [as amended by Constitution (Eighteenth Amendment) Act (X of 2010)]---Federal Legislative List---Scope---What is not within the competence of Province stand reverted to the Parliament---Parliament has exclusive powers to make laws under Art. 142(d) of the Constitution with respect to all matters pertaining to such areas in the Federation as are not included in any Province---Parliament has competence to legislate in respect of all fields of legislation, which are either enumerated in Federal Legislative List or otherwise---Only condition which has to be met is that such law should not be in respect of any area, which is included within the Province.

(b) Constitution of Pakistan---

----Arts. 142(c) & 142(d)---Residuary provisions---Scope---Provisions of Art. 142 (c) of the Constitution not only make specific provision for exclusive legislative domain in respect of "residuary subjects" (i.e. subjects/entries left out of Federal Legislative List) over respective provincial territories of Provincial Assembly, but it also recognizes exclusive domain of Federal Legislature over "residuary subjects" in respect of territories or areas 'not included in any province' by operation of Art. 142(d) of the Constitution which includes Islamabad Capital Territory.

----S. 116(2)---Finance Act (IV of 2022), S. 8---Foreign Assets (Declaration and Repatriation) Act (XXX of 2018), S. 14---Constitution of Pakistan, Art. 142 & Fourth Schedule, Entry No. 50---Levy of tax--Federal Legislative List---Foreign assets---Section 8 of Finance Act, 2022, vires of---Petitioners/resident taxpayers assailed levy of tax on their foreign assets under the provision of S. 8(2)(b) of Finance Act, 2022---Plea raised by petitioners/resident taxpayers was that Parliament had no legislative competence to levy such tax on foreign assets---Validity---Plea that "immoveable property" was not within the legislative competence of the Parliament, was completely out of the box---Such subject was though within the competence of the Parliament but was qualified to whatever had been so stated in Entry 50 of Fourth Schedule to the Constitution and that was not including taxes on immovable property, falling within the territorial limits of the Province ---Such provision could not be read in isolation by holding that use of the words not including taxes on immovable property would also mean and exclude the subject in its entirety from the competence of the Parliament---This would be reading into what was not provided by the legislature---Any property which was beyond the territorial limits of the Province (including any property outside Pakistan) would still remain within the competence of the Parliament for the purposes of imposition of tax in terms of Entry 50 of the Federal Legislative List of Fourth Schedule to the Constitution---Levy in question was not on the property itself, it was on the capital value of the asset of a resident person holding it---Such property was a subject matter of wealth statement of resident person, filed under S. 116(2) of Income Tax Ordinance, 2001, which statement was a mandatory requirement for filing of an Income Tax Return under Income Tax Ordinance, 2001---Law in question was though extra-territorial in one sense; however applied to a resident person filing an income tax return in Pakistan---Foreign asset in question was part of the asset of the resident person---Taxing event as well as the person was within the territorial limits and was already subject to taxation under the laws of Pakistan---Property in question was part of the wealth of the resident person---It was immaterial that it was so pursuant to a Declaration under Foreign Assets (Declaration and Repatriation) Act, 2018 or otherwise, but for the purposes of a person's wealth it had become part and parcel of it---Tax in question was a tax on the capital value of such asset, which was within the competence of the Parliament---Pursuant to Foreign Assets (Declaration and Repatriation) Act, 2018, petitioners/resident taxpayers as well as other taxpayers availed such amnesty and after paying requisite tax, they declared their properties under their Wealth Tax Returns---Such properties had become part of Wealth Tax Returns of petitioners/ resident taxpayers---There was a nexus of such properties with income and wealth of petitioners/resident taxpayers and there was no impediment or restriction for the Parliament to levy tax in question---High Court declined to declare provision of S. 8 of Finance Act, 2022, as ultra vires the Constitution---Constitutional petition was dismissed, in circumstances.

Dr. Zahid Javed v. Dr. Tahir Riaz Chaudhary and others PLD 2016 SC 637; District Bar Association Rawalpindi and others v. Federation of Pakistan and others PLD 2015 SC 401; Baz Muhammad Kakar and others v. Federation of Pakistan and others PLD 2012 SC 923; Collector of Customs (Appraisement), Karachi and others v. Messrs Abdul Majeed Khan and others 1977 SCMR 371; Messrs Independent Media Corporation (Pvt.) Ltd. Through Director Finance v. Province of Sindh through Chief Secretary Sindh and others 2018 PTD 1869; The Imperial Tobacco Co. of India Ltd. v. The Commissioner of Income Tax, South Zone, Karachi and another PLD 1958 SC (Pak.) 125; Independent Thought v. Union of India and another AIR 2017 SC 4904; Messrs Pak Gulf Construction Company (Pvt.) Ltd. Islamabad and others v. Federation of Pakistan and others 2020 SCMR 146; Muhammad Khalid Qureshi v. Province of Punjab through Secretary, Excise and Taxation Department, Lahore and another 2017 PTD 805; Syed Muhammad Shah and others v. Federal Investment Agency and others 2017 SCMR 1218; Gul Taiz Khan Marwat v. The Registrar, Peshawar High Court, Peshawar and others PLD 2021 SC 391; Haji Muhammad Shafi and others v. Wealth Tax Officer and others 1992 PTD 726; Messrs East and West Steamship Company v. Pakistan and others PLD 1958 SC (Pak.) 41; Commissioner of Income Tax v. Messrs Phillips Holzman A. G. Ameejee Valeejee & Sons, Karachi PLD 1968 Kar. 95; Messrs I.C.C. Textile Ltd. and others v. Federation of Pakistan and others 2001 SCMR 1208; Muhammad Khan v. The Border Allotment Committee and another PLD 1965 SC 623; Pakistan Mobile Communications Ltd. and others v. Pakistan/Federation of Pakistan and others 2022 PTD 266; Zona Pakistan (Pvt.) Ltd. v. Province of Sindh and others (C. P. No. D-5791/2016), Sapphire Textile Mills Limited v. Federation of Pakistan and others 2021 PTD 971; Province of Sindh through Chief Secretary and others v. M.Q.M. through Deputy Convener and others PLD 2014 SC 531; Government of Sindh through Secretary Health Department and others v. Dr. Nadeem Rizvi and others 2020 SCMR 1; Lahore Development Authority through D.G and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739; Pakistan International Freight of Forwarders Association through General Secretary v. Province of Sindh through Secretary and another 2017 PTD 1; Messrs Gadoon Textile Mills and 814 others v. WAPDA and others 1997 SCMR 641; Muhammad Hanif Abbasi v. Imran Khan Niazi and others PLD 2018 SC 189; The Commissioner Inland Revenue, Zone-IV, Corporate Regional Tax Officer, Karachi v. MSC Switzerland Geneva 2021 PTD 885; Commissioner of Income Tax, Karachi v. Grindlays Bank PLC, Karachi 2010 PTD 2012;Commissioner Inland Revenue (Legal Division), LTU, Islamabad v. Messrs Geopfizyka Krakow Pakistan Ltd. 2017 SCMR 140; Attock Petroleum Limited (APL) v. National Highway Authority and another 2022 PTD 222; Muhammad Khalid Qureshi v. Province of Punjab through Secretary Excise and Taxation Department Lahore 2017 PTD 805; Shahnawaz (Pvt.) Ltd. v. Pakistan through the Secretary Ministry of Finance, Government of Pakistan Islamabad 2011 PTD 1558; Sui Southern Gas Company Ltd. v. Federation of Pakistan 2018 SCMR 802; Province of Sindh through Chief Secretary v. M.Q.M. through Chief Convenor PLD 2014 SC 531; Muhammad Shaif v. Wealth Tax Officver Circle-IV PLD 1989 Kar. 15; Haji Muhammad Shafi v. Wealth Tax Officer 1992 PTD 726; I.C.C. Textile Limited v. Federation of Pakistan 2001 PTD 1557; Messrs Volkart Pakistan (Private) Limited through Manager Finance v. Federation of Pakistan 2006 PTD 236; Pakistan Gulf Construction Company (Pvt.) Ltd. Islamabad v. Federation of Pakistan through Secretary Finance Islamabad 2020 SCMR 146; Sui Southern Gas Company Ltd. v. Federation of Pakistan 2018 SCMR 802; Association of Pakistan through Chairman v. Federation of Pakistan through Secretary, Ministry of Petroleum and Natural Resources, Islamabad and Others 2021 CLD 214; Sindh Revenue Board through Chairman Government of Sindh and Another v. The Civil Aviation Authority of Pakistan through Airport Manager 2017 SCMR 1344; Muhammad Khalid Qureshi v. Province of Punjab through Secretary Excise and Taxation Department Lahore 2017 PTD 805; Lahore Development Authority v. Ms. Imrana Tiwana 2015 SCMR 1739; Special Reference under Article 187 of the Interim Constitution of Republic of Pakistan v. in re: PLD 1973 SC 563; I.C.C. Textile Ltd. v. Federation of Pakistan 2001 PTD 1557; Sui Southern Gas Company v. Federation of Pakistan 2018 SCMR 802; KESC v. N.I.R.C PLD 2014 Sindh 553; Federal Government Employees Housing Foundation v. Malik Ghulam Mustafa 2021 SCMR 201; 1993 SCMR 287 and AIR 1948 Privy Council 118 rel.

(d) Interpretation of Constitution---

----Holistic interpretation---Words should be read in their ordinary, natural and grammatical meaning subject to the rider that in construing words in a Constitution conferring legislative power the most liberal construction should be put upon the words so that they may have effect in their widest amplitude---Interpretation of any provision of the Constitution is true and perfect only when the Court looks at the Constitution holistically and keeps in view all important and significant features of the Constitutional scheme constantly reminding itself of the need for a harmonious construction lest interpretation placed on a given provision has the effect of diluting or whittling down the effect or the importance of any other provision or feature of the Constitution.

Jindal Stainless v. State of Haryana AIR 2016 SC 5617 and Constitutional Law of India (4th Edition) by H.M. Seervai at Para 2.12 rel.

Advocates for the Petitioners

Muhammad Osman Ali Hadi, Rashid Anwar, Ovais Ali Shah, Arshad M. Tayebaly, Omar Memon, Abdul Rahim Lakhani, Dr. Tariq Masood, Abid H. Shaban, Mushtaq Hussain Qazi, Jahanzeb Awan, Iqbal Salman Pasha, Ameen Mohammad Bandukda, Abdur Raafae Soori, Maryam Riaz, Wishno, , Syed Riazuddin, Muhammad Jawed Zakria, Abdul Jabbar Mallah, Atta Muhammad Qureshi, Imtiaz Ali Sahito, Saifullah Khawaja, Nahl Chamdia, Naveeda Basharat, Imtiaz Ali, Asad Manzoor Halepota, Aitezaz Manzoor Memon, Saad Fayyaz Memon, Muhammad Asad Ashfaq Tola, Muhammad Amayed Ashfaq Tola, Qazi Umair Ali, Naeem Suleman, Arshad Hussain Shehzad, Muneer Ahmed Sahito, Muhammad Aleem, Ajeet Kumar, Nadir Hussain Abro, Vishwa Mittar, Syed Muhammad Ahsan, Anwar Kashif Mumtaz, Ammar Ather Saeed, Usman Alam, Muhammad Rashid Khan Mahar, Abdul Rehman, Ms. Lubna Pervez, Shafqat Zaman, Jawaid Farooqui, Ahmed Ali Hussain, Aman Aftab, Muhammad Inzimam Sharif, Muhammad Aizaz Ahmed, Syed Hamza Ahmed Hashmi, Ghazala Rafiq, Elahi Bakhsh, Muhammad Imran Khan, Abdallah Azzaam Naqvi, Sufiyan Zaman, Muneeb Uddin Qidwai, Muhammad Arshad Athar, Nasir Latif Khan, Muhammad Ahmed Masood, Muhammad Mazharul Hassan, Shams Mohiuddin Ansari, Taimur Ali Mirza, Syed Sultan Ahmed, Muhammad Ali Aziz, Muhammad Naqqash Siddiqui, Syed Muhammad Hussain, Syed Muhammad Ahsan, Fizzah Bucha, Ovais Farooqui, Umer Ilyas, Ameer Hyder, Hamda Ali Khan and Kashan Ahmed.

Advocates for the Respondents

Dr. Shah Nawaz Memon, Ameer Bakhsh Metlo, Ameer Nausherwan Adil Memon, Ghazi Khan Khalil, Fayyaz Ali Metlo, Asif Ali Siyal, Zohaib Ahmed, Muhammad Idrees Rahimoon, Arshad Ali Tunio, Ms. Fozia M. Murad, Faheem Raza, Dr. Huma Sodher, Abdul Razaque Panhwar, Sajjad Ali Solangi, S. Ahsan Ali Shah, Kafil Ahmed Abbasi, Hayat Muhammad Junejo, Bilal Memon, Abdul Hakeem Junejo, Abdul Sami, Shaheer Saleem Memon, Jamshed Ahmed Abbasi, Muhammad Awais, Zain Mustafa Soomro, Jazib Aftab Memon, Abdul Wahid Shar, Additional Commissioner and Syed Yasir Shah, Assistant Attorney General.

PTD 2024 KARACHI HIGH COURT SINDH 1507 #

2024 P T D 1507

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Jawad Akbar Sarwana, JJ

CIVIL AVIATION AUTHORITY OF PAKISTAN

Versus

FEDERATION OF PAKISTAN and others

C.P. No.1513 of 2024, decided on 30th May, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss.54 & 134A [as amended by the Finance (Amendment) Act, 2024]---State-Owned Enterprises (Governance and Operations) Act (VII of 2023), Ss. 2 (e)(ii) & 3---Rules of Business, 1973, R. 8 (2)---Inter Division Procedure---Alternate Dispute Resolution---State-owned enterprise---Tax exemption, dispute of---Petitioner / Civil Aviation Authority claimed that it was exempted from levy of income tax and that it was not obliged to follow Alternate Dispute Resolution---Validity ---Petitioner was an authority generating its revenue from selling services on a commercial basis, therefore, provision of S. 2(e)(ii) of State-Owned Enterprises (Governance and Operations) Act, 2023 was fully attracted---Petitioner / Authority was being run on a commercial basis and was controlled or managed by Federal Government---Petitioner / Authority was covered by State-Owned enterprises (Governance and Operations) Act, 2023---Internal mechanism under S.134A of Income Tax Ordinance, 2001, was evolved for quick disposal of tax disputes between State-Owned Enterprises and Federal Board of Revenue, as in any such disputes, it was, in fact, the Federal Government who was the ultimate loser, by way of litigation costs besides delay in settlement of such disputes from Courts of law---High Court declined to exercise its discretion under Art. 199 of the Constitution so as to adjudicate the matter on merits---High Court directed petitioner / Authority to either avail Alternate Dispute Resolution mechanism under S. 134A of Income Tax Ordinance, 2001 or under R. 8(2) of Rules of Business, 1973 and if at all the issue was not resolved by way of such two alternate mechanisms and petitioner / Authority remained aggrieved, then the petitioner / Authority was at liberty to seek remedy as could be available under the law---High Court directed Federal Board of Revenue to form Committee in terms of S.134A(3) of Income Tax Ordinance, 2001, in case petitioner / Authority would opt for Alternate Dispute Resolution in terms of S.134A of Income Tax Ordinance, 2001---High Court directed Inland Revenue authorities to halt recovery proceedings under S. 134A (7) of Income Tax Ordinance, 2001, as soon as a Committee was notified---Constitutional petition was disposed of accordingly.

1995 SCMR 1647; PLD 2013 Lahore. 343; Province of Punjab v. Haroon Construction Company 2024 SCMR 947; Faisal Zafar v. Siraj-ud-Din 2024 CLD 1; Netherlands Financierings Maatschappij Voor Ontwikkelingslanden N.V. (F.M.O.) v. Morgah Valley Limited and SECP PLD 2024 Lah. 315 = 2024 CLD 685 and Shehzad Arshad v. Pervez Arshad 2024 CLD 1121 ref.

Ammar Athar Saeed and Usman Alam for Petitioner.

Dr. Shahnawaz Memon for Respondents.

Kashif Nazeer, Assistant Attorney General.

PTD 2024 KARACHI HIGH COURT SINDH 1532 #

2024 P T D 1532

[Sindh High Court]

Before Muhammad Iqbal Kalhoro and Agha Faisal, JJ

Messrs PACKAGES LIMITED through Seniors Accountants

Versus

CUSTOMS APPELLATE TRIBUNAL through Chairman and 3 others

Special Customs Reference Application No.756 of 2015, decided on 29th March, 2022.

(a) Customs Act (IV of 1969)---

----Ss. 32(1), 32(2), 32(3-A), 79, 80 & 156(1), (14)---Sales Tax Act (VII of 1990), Ss. 3 & 6---Misdeclaration---Duties and taxes, evasion of---Department adjudging evaded duties and taxes on cleared consignments---Past Departmental practice qua wrong benefit extended beyond the law/policy---Scope and effect---Importer / Company was alleged to have of imported and got cleared water based varnishes in the garb of acrylic polymer as items having different PCT Headings attracting different duty rate of 20% and 10% respectively---Importer was ordered to deposit the evaded duties and taxes vide Order-in-Original---Applicant (importer) filed Reference Application as Order-in-Original was maintained by the Appellate Tribunal Inland Revenue (' Tribunal')---Contention of the applicant was that previously it had been able to clear identical consignments while paying lower duties and taxes---Validity---Record revealed that the Show-Cause Notice was predicated on data coming into the knowledge of the Respondent / Department and not upon any ruling---It was also apparent from the reply filed by the applicant/importer, to the Notice, that no objection had been taken to the jurisdiction of the issuing authority or the applicability of the provisions of law under which the same was issued---No cavil had been articulated before the High Court to suggest any impropriety in the department adjudication---Therefore, the High Court reformulated the question to be answered, in terms of the verbiage, and the only question arising was "whether in the facts and circumstances of the case the department had due cause to adjudge evaded duties and taxes on cleared consignments of the applicant"---Regarding plea of the applicant with respect to past departmental practice, the Tribunal had specifically addressed that issue and observed that previous treatment of like consignments was "actually based on incorrect and incomplete data provided by the applicant"; the Tribunal further observed that the subsequent scrutiny resulted in identification of the actual composition of the imported item, hence, the determinant classification---No cavil had been articulated by the applicant / importer to the findings with regard to the composition of the imported item (and the sole objection was that the earlier classification ought to have been maintained merely as the same had been done in the past)---There was no unsubstantiated departure in the present case---A wrong benefit, extended beyond the law/policy, may not be perpetuated---Thus, the plea/contention of the applicant / importer was misconceived---Reference application, filed by the importer / company, was dismissed, in circumstances.

A.P. Moller Maersk and others v. Commissioner Inland Revenue and others 2020 PTD 1614; Commissioner (Legal) Inland Revenue v. E.N.I. Pakistan (M) Limited, Karachi 2011 PTD 476; Commissioner Inland Revenue, Zone-II, Karachi v. Kassim Textile Mills (Private) Limited, Karachi 2013 PTD 1420; Radaka Corporation and others v. Collector of Customs and another 1989 SCMR 353; Nazir Ahmad v. Pakistan and others PLD 1970 SC 453 and Syed Azam Shah v. Federation (Civil Appeal 764 of 2021) ref.

(b) Customs Act (IV of 1969)---

----Ss. 32(1), 32(2), 32(3-A), 79, 80 & 156(1), (14)---Sales Tax Act (VII of 1990), Ss. 3 & 6---Evasion of duties and taxes, allegation of---Factual controversy---Appellate Tribunal Inland Revenue, powers of---Scope---Importer was ordered to deposit evaded duties and taxes vide Order-in-Original---Applicant (importer) filed Reference Application as Order-in-Original was maintained by the Appellate Tribunal Inland Revenue ('Tribunal')---Validity---Appellate Tribunal Inland Revenue is final arbitrator of facts and factual controversies are not ordinarily amenable for adjudication before the High Court in reference jurisdiction---Reference application was dismissed, in circumstances.

Collector of Customs v. Mazhar ul Islam 2011 PTD 2577 ref.

Pervaiz Iqbal Kasi for Applicant

Khalid Rajpar for Respondents.

Irfan Ahmed Memon, Deputy Attorney General.

PTD 2024 KARACHI HIGH COURT SINDH 1547 #

2024 P T D 1547

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Mohammad Abdur Rahman, JJ

Messrs YOUNG'S (PRIVATE) LIMITED through Authorized Representative

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division / Chairman, FBR, Islamabad and another

Constitutional Petitions Nos.D-4036, D-3091, D-5467 and D-5819 of 2023, decided on 27th August, 2024.

Customs Act (IV of 1969)---

----S.18(1) & Fifth Schedule, Table-B, Part-II, Chapter-VII, Serial No.2---Notifications SRO 1261(I)/2007 dated 31-12-2007 and SRO 967(I)/2022 dated 30-06-2022, Cls. 3(vi)---Tax exemption---Additional customs duty---Scope---Petitioners / importers were aggrieved of levy of additional customs duty on importing Cocoa Powder (HS Code 1805.0000) pursuant to Cls. 3(vi) of SRO 967(I)/2022 dated 30-06-2022---Petitioners / importers claimed that they were entitled to benefit of exemption of customs duty under SRO 1261(I)/2007 dated 31-12-2007---Plea raised by authorities was that petitioners / importers could not claim exemption under two different Notifications/SROs simultaneously---Validity---Additional customs duty was levied pursuant to SRO 967(I)/2022 dated 30-06-2022 on all goods, except as provided therein only---Petitioners/ importers could not claim benefit of serial No.3(vi) of SRO 967(I)/2022 dated 30-06-2022, as the same was only available to goods which had been charged or were subjected to customs duty under Fifth Schedule of Customs Act, 1969---Petitioners / importers did not claim exemption under two different SROs---Petitioners were not entitled for any exemption pursuant to serial No.3(vi) of SRO 967(I)/2022 dated 30-06-2022---This was not a case of denying a claim of exemption under two SRO's simultaneously---High Court declined to interfere in the matter---Constitutional petition was dismissed, in circumstances.

Imran Iqbal Khan along with Aneel Zia for Petitioner (in all Petitions).

Khalid Mahmood Siddiqui for Respondents (in C.P. No.D-4036 of 2023).

Faheem Raza for Respondents (in C.P. No.D-3091 of 2023).

Khalid Mahmood Rajpar for Respondents (in C.Ps. Nos.D-5467 and D-5819 of 2023).

Agha Shahid Majeed for Respondent (in C.P. No.D-5467 of 2024).

Sardar Zafar Hussain along with Tariq Aziz, Assistant Collector, SAPT for Respondents (in C.Ps. Nos.D-1740 and D-2574 of 2023).

Kashif Nazeer, Assistant Attorney General for the Federation of Pakistan.

PTD 2024 KARACHI HIGH COURT SINDH 1571 #

2024 P T D 1571

[Sindh High Court]

Before Muhammad Junaid Ghaffar and Mohammad Abdur Rahman, JJ

TRADING CORPORATION OF PAKISTAN (PVT.) LTD. through Authorized Officer

Versus

FEDERATION OF PAKISTAN through Secretary Finance Division, Islamabad and 3 others

Constitutional Petitions Nos.D-3642 and 4059 of 2024, decided on 5th September, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss.54 & 134A [as amended by Finance (Amendment) Act, 2024]---Sales Tax Act (VII of 1990), S. 47A---Alternate Dispute Resolution---State-owned enterprise---Petitioner / Trading Corporation of Pakistan was aggrieved of recovery notices issued by Income Tax Authorities without constituting Alternative Dispute Resolution Committees--- Validity---Inland Revenue Officials realized that certain amendments had been carried out in Income Tax Ordinance, 2001, as well as other Federal fiscal laws, whereby, State Owned Enterprises were required to apply to Federal Board of Revenue for constitution of Alternate Dispute Resolution Committee (ADRC) for the resolution of any dispute---Officials of Inland Revenue were under obligation to withdraw any and all pending litigations---Inland Revenue authorities were directed to withdraw all recovery notices issued to State Owned Enterprises under tax laws as there was no other legal remedy available to them except applying for constitution of Alternative Dispute Resolution Committee---Constitutional petition was disposed of accordingly.

Civil Aviation Authority of Pakistan v. Federation of Pakistan and others (Constitution Petition No.D-1513 of 2024) fol.

Province of Punjab v Haroon Construction Company5 2024 SCMR 947 rel.

Rafiq A. Kalwar along with Muhammad Yasir for Petitioner (in both petitions).

Mukesh Kumar Khatri for Respondent.

Kashif Nazeer, Assistant Attorney General for the Federation of Pakistan.

Lahore High Court Lahore

PTD 2024 LAHORE HIGH COURT LAHORE 8 #

2024 P T D 8

[Lahore High Court]

Before Asim Hafeez, J

OUTFITTERS STORES (PRIVATE) LIMITED through Director

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division, FBR and 2 others

Writ Petition No.68823 of 2022, decided on 8th December, 2022.

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 175(1)(a)---Criminal Procedure Code (V of 1898), S. 103---Expression "full and free access"---Scope---Raid, search and impounding of documents---Jurisdiction---Expression "full and free access" employed in S. 175 (1)(a) of Income Tax Ordinance, 2001, has to be given full effect---Expression "search" in heading of S. 175 of Income Tax Ordinance, 2001, has to be construed in the company of expressions "full and free access"---Effect and significance of S.175(7) of Income Tax Ordinance, 2001, cannot be undermined or overlooked---Legislature consciously has avoided reference to requirements prescribed for search in terms of S.103 of Criminal Procedure Code, 1898---Warrant of authorization depicts an apparent purpose, i.e., enforcement of provision of Income Tax Ordinance, 2001.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 175 & 177---Sales Tax Act (VII of 1990), S.11---Constitution of Pakistan, Art.199---Constitutional petition---Authorization Order---Raid, search and impounding of documents---Jurisdiction---Petitioner company was aggrieved of issuance of Authorization Order by authorities to initiate coercive measures including raid, search and impounding of record---Validity---High Court under judicial review jurisdiction could not embark upon an exercise to probe to ascertain whether documents supplied by petitioner company were sufficient to satisfy officer conducting audit---Satisfaction was prerogative of the Commissioner, who upon petitioners' lack of cooperation was constrained to invoke S.175 of Income Tax Ordinance, 2001---Warrant of Authorization in question fulfilled prescribed statutory requirements, contained reasoning, justification and requisite necessity of invoking S.175 of Income Tax Ordinance, 2001, in the wake of violation to comply with the directives under S. 177 of Income Tax Ordinance, 2001, in the context of audit proceedings conducted and apparent non-cooperation by failing to provide documents requested for facilitating audit---High Court did not find any illegality in exercise of jurisdiction under S. 175 Income Tax Ordinance, 2001---High Court declined to interfere in the matter as there was no bias, mala fide, or misuse of authority established and obliquely purpose of the present petition was to forestall or obstruct audit proceedings---High Court did not find any reason to assume and exercise constitutional jurisdiction as assumption of jurisdiction would otherwise be unjust and unfair, which tantamount to interfering in audit proceedings---High Court declined to decide issue of legality of notice under S. 11 of Sales Tax Act, 1990---Petitioner company could invoke remedies available in the context of proceedings in question---Constitutional petition was dismissed, in circumstances.

Collector of Customs, Lahore v. Nestle Milk Pack Limited, Sheikhupura 2007 PTD 921; Muhammad Waheed through Attorney v. Customs Appellate Tribunal and another 2016 PTD 35; The Province of West Pakistan through the Secretary, Social Welfare and Local Government Department and The Registrar, Co-operative Societies, West Pakistan, Lahore v. Ch. Din Muhammad and others PLD 1964 SC 21 and Agha Steel Industries Ltd. through Authorized Company Secretary and another v. Directorate of Intelligence and Investigation through Director and 2 others 2019 PTD 2119 ref.

Khurram Shahzad v. Federation of Pakistan and others 2019 PTD 1124; K.K. Oil and Ghee Mills (Pvt.) Ltd. v. Federal Board of Revenue and others 2016 PTD 2601; A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. through Manager Finance v. Federation of Pakistan through Secretary, Revenue Division/ Ex-Officio Chairman, C.B.R., Islamabad and 2 others 2009 PTD 1083; Messrs Ihsan Yousaf Textile Mills (Pvt.) Ltd., Faisalabad v. Federation of Pakistan through Ministry of Finance, Islamabad and 4 others 2003 PTD 2037; Federation of Pakistan through Secretary, Ministry of Finance, Federal Secretariat, Islamabad and 4 others v. Messrs Master Enterprises (Pvt.) Ltd. through Managing Director 2003 PTD 1034 and Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd. and another 2007 PTD 2356 distinguished.

Pakistan Petroleum Limited through Authorized Officer v. Pakistan through Secretary Finance and 4 others 2016 PTD 2664; Raza Motor Industries through Authorized Representative v. Federation of Pakistan through Secretary Finance, Revenue Division, Islamabad and 3 others 2022 PTD 19; Commissioner of Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328; Khan Bacha v. The State PLD 2006 Kar. 698; D.G. Khan Cement Company Limited and others v. The Federal Board of Revenue (W.P. No.15880 of 2021); Collector of Customs, Islamabad v. Messrs Askari Cement (Pvt.) Ltd. and others 2020 SCMR 649 and Atlas Honda Ltd. through Authorized Attorney v. Pakistan through Secretary Revenue and 3 others 2022 PTD 866 rel.

----S. 175---Constitution of Pakistan, Art.199---Authorization Order---Judicial review---Scope---It is not for High Court to pass any direction when remedy is available under S. 175(5) of Income Tax Ordinance, 2001.

(d) Income Tax Ordinance (XLIX of 2001)---

----S. 175---Authorization Order---Maxim Absoluta sentential expositore non indiget---Applicability---Provisions of laws from different fiscal statutes cannot be read as part of S.175 of Income Tax Ordinance, 2001, which is offensive to the textual meaning of S. 175 of Income Tax Ordinance, 2001---Maxim Absoluta sententia expositore non indiget which means plain words need no exposition, is applicable, as there is no ambiguity in the text.

Sarfaraz Ahmad Cheema and Anas Irtiza Awan for Petitioner.

Sheraz Zaka, Assistant Attorney General for Pakistan.

Ms. Humaira Bashir Chaudhary for Respondents Nos.2 and 3.

Yasir Islam Chaudhary, Advocate for Respondent No.3.

PTD 2024 LAHORE HIGH COURT LAHORE 32 #

2024 P T D 32

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan, J

RIZWAN ALI SAYAL

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.1938 of 2023, heard on 19th September, 2023.

(a) Words and phrases---

----Aetiology---Connotation---Aetiology means investigation or attribution of case or reason for something often expressed in terms of historical or mythical explanation.

(b) Public functionaries---

----Appointment---Fitness to hold public office---First Information Report, registeration of---Acquittal on basis of compromise---Mere registration of FIR against any person cannot be used as a definitive test to label him as having a bad character---All acquittals including acquittal on compromise are honorable for the reason that prosecution does not succeed to prove its case against accused on the strength of evidence of unimpeachable character---There can be no acquittals, which may be said to be dishonorable---Law has not drawn any distinction between any types of acquittals.

Jawad Ahmad Mir v. Prof. Dr. Imtiaz Ali Khan, Vice-Chancellor, University of Swabi, District Swabi, Khyber Pakhtunkhwa and others 2023 SCMR 162; Mumtaz Ali Shah v. Chairman, Pakistan Telecommunication Company Ltd., H.Q., Islamabad and 6 others PLD 2002 SC 1060 and (Suo Motu Case No. 03 of 2017) PLD 2018 SC 703 rel.

----S. 130(3)---Constitution of Pakistan, Art. 199---Constitutional petition---Quo warranto---Appellate Tribunal Inland Revenue---Judicial Member, appointment of---Pre-conditions---Involvement in criminal case---Effect---Petitioner assailed appointment of respondent as Member Judicial in Appellate Tribunal Inland Revenue on the ground that an FIR was registered against him---Validity---No restrictions or conditions were provided under S. 130(3) of Income Tax Ordinance, 2001 relating to character verification during probationary period of respondent---Mere involvement of a candidate in any criminal case/FIR was not sufficient to bring any clog for appointment of respondent as a Judicial Member of Appellate Tribunal Inland Revenue---Respondent was never adjudged as guilty of the charges, rather complainant of that case had entered into a compromise with him and he was acquitted on the basis thereof---No other occasion, besides registration of one FIR pertaining to any criminal liability of respondent was brought on record by petitioner---Respondent was appointed as Member Judicial Appellate Tribunal Inland Revenue by Federal Government after he qualified the Federal Public Service Commission Exam.---Petitioner was appointed under S. 130(3) of Income Tax Ordinance, 2001 read with Appointment of Income Tax Appellate Tribunal Member's Rules, 1998---Office of Member Judicial, Appellate Tribunal Inland Revenue by all intents and purpose is a public office which office is created by the State and the statute, and duties attached to the office are of a public nature---Petitioner neither challenged qualifications of respondent, as mentioned in S. 130 of Income Tax Ordinance, 2001 nor his experience---Respondent was holding public office strictly as per criteria stipulated in S. 130(3) of Income Tax Ordinance, 2001---Such requirement was duly considered by Federal Government at the time of appointment of respondent through notification of his appointment followed by memorandum which was sent to him clearly mentioning terms and conditions mentioned therein---High Court declined to interfere in the appointment of respondent---Constitutional petition was dismissed, in circumstances.

Messrs Service Global Industries Limited through Usman Liaqat v. Federation of Pakistan and others PLD 2023 Lahore 471 = 2023 PTD 1120; President National Bank of Pakistan and others v. Waqas Ahmed Khan 2023 SCMR 766; Saqib Ali v. Government of Punjab and others 2023 PLC (C.S.) 310; Mirza Shahzeb v. City Police Officer and others 2023 PLC (C.S.) 749; Dr. Muhammad Islam v. Government of NWFP and others 1998 SCMR 1993; Malik Muhammad Ejaz Channar v. The State PLD 2022 Lah. 427; Naimat Ullah v. The State 2021 PCr.LJ 1339; Mst. Kulsoom v. Sessions Judge 2018 MLD 1484; Muhammad Qasim v. Muhammad Iqbal 2017 YLR 752; Muhammad Zafar v. Rustam Ali 2017 SCMR 1639; Raja Muhammad Safdar v. District Returning Officer, Rawalpindi 2006 CLC 87; Ismail Ijaz v. The State 2023 PCr.LJ 114; Nadeem Ahmad v. Saif-ur-Rehman 2021 MLD 354 and Muhammad Umais v. Rawalpindi Cantonment Board and others PLD 2022 Lah. 148 ref.

Nisar Khan Khattak v. Haji Adam, Director General (Admin), PEMRA Headquarter, Mauve Area, Islamabad and another 2021 PLC (C.S,) 140; Attaullah Khan v. Ali Azam Afridi and others 2023 PLC (C.S.) 182; Mirza Abdul Rehman v. Federation of Pakistan and others 2017 PLC (C.S.) 1327; Member (S&R)/Chief Settlement Commissioner, Board of Revenue, Punjab, Lahore and another v. Syed Ashfaque Ali and others PLD 2003 SC 132; Aftab Iqbal Khan Khichi and another v. Messrs United Distributors Pakistan Ltd. Karachi 1999 SCMR 1326; Lahore Stock Exchange v. Lahore Appellate Bench S&EC 2006 CLD 988; M.U.A. Khan v. Rana M. Sultan and another PLD 1974 SC 228; Akbar Khan v. Said Gul PLD 2020 Pesh. 10; Dr. Farzana Bari v. Ministry of Law, Justice And Human Rights PLD 2018 Isl. 127 and Muhammad Shahid Akram v. Government of the Punjab through Chief Secretary and 3 others 2016 PLC (C.S.) 1335 rel.

(d) Constitution of Pakistan---

----Art. 199---Writ of "quo warranto", issuance of---Principle---Writ of quo warranto should only be issued in exceptional cases and relief should not be allowed in a casual manner, especially when candidate's qualifications were thoroughly examined during his appointment.

Abrar Hassan v. Government of Pakistan and Respondents

PLD 1976 SC 315 and Asif Hassan and others v. Sabir Hussain and others 2019 SCMR 1720 rel.

(e) Words and phrases---

----Public office---Defination.

Masud-ul-Hassan v. Khadim Hussain PLD 1963 SC 203; M.A.U.Khan v. M. Sultan PLD 1974 SC 228; Black's Law Dictionary 9th Edition; Pramanatha Aiyar's The Advanced Law Lexicon, 4th Edition; Ferris' Extraordinary Legal Remedies 72 CWN 64, Vol. 72; V.C. Shukla v. State (1980) Supp SCC 249 and Salahuddin v. Frontier Sugar Mills and Distillery Ltd. PLD 1975 SC 244 rel.

Tanveer Iqbal, Advocate Supreme Court and Barrister Usama Tanveer Iqbal for Petitioner with Rizwan Ali Sayal, Petitioner.

Malik Muhammad Siddique Awan, Additional Attorney General along with Arshad Mahmood Malik, Assistant Attorney General, Barrister Asfandyar Khan Tareen with Arslan Saleem Chaudhry for Respondent No.5.

Abid Aziz Rajori and Jalil Akhtar Abbasi, Assistant Advocates General and Rashid Mehmood, Research Officer, Lahore High Court, Rawalpindi Bench, Rawalpindi for Respondents.

Date of hearing: 19th September, 2023.

"heterodoxy, or, as some might say, heresy, is not the more attractive because it is dignified by the name of reform. Nor will I easily be led by an undiscerning zeal for some abstract kind of justice to ignore our first duty, which is to administer justice according to law, the law which is established for us by Act of Parliament or the binding authority of precedent. The law is developed by the application of old principles to new circumstances. Therein lies its genius".11

PTD 2024 LAHORE HIGH COURT LAHORE 61 #

2024 P T D 61

[Lahore High Court]

Before Shams Mehmood Mirza and Muhammad Raza Qureshi, JJ

Messrs HONDA ATLAS CARS (PAKISTAN) LIMITED

Versus

ADDITIONAL COLLECTOR, LEGAL LTU, LAHORE and others

S.T.Rs. Nos.93 of 2010 and 85 of 2011, heard on 20th June, 2023.

Sales Tax Act (VII of 1990)---

----Ss.3 & 47---Sale of Goods Act (III of 1930), S.12---Goods under warranty---Taxable supply---Taxpayer was aggrieved of charging sales tax by authorities with regard to replacement of auto parts under warranty free of charge---Validity---Warranty assured customers of replacement of defective parts within the agreed period or mileage, free of charge---Such fact could not be rejected in the orders of all the forums---Contract of such sale related to composite supply of vehicle and service for replacement of defective parts, both bundled in one contract---Auto parts were supplied free of charge to customers by taxpayer under warranty and at the time of such replacement no separate consideration was charged for the reason that consideration of such parts formed an integral part of price of the contract which was received at the time of sale---Sales tax charged and paid on contractual consideration at the time of supply of motor vehicle included such tax on auto parts to be replaced under warranty---Cost of warranty replacements was incorporated in price of motor vehicle on which sales tax had already been paid---Absent consideration in such transaction, it did not fall under the definition of 'supply' as contained in Sales Tax Act, 1990, at relevant time---High Court answered all questions in affirmative and set aside orders / judgments of Tribunal and forums below, as replacement of auto parts covered by a manufacturer's warranty were not taxable at the relevant time---Reference was allowed, in circumstances.

Commissioner of Sales Tax v. Prem Nath Motors (1979) 43 STC 52 (Delhi); Prem Motors, Gwalir v. Commissioner of Sales Tax, Gwalior 1986 (61) STC 244; Geo Motors v. State of Kerala (2001) 122 STC 285; Mohd. Ekram Khan & Sons v. Commissioner of Trade Tax UP (2004) 6 SCC 183 and Messrs Tata Motors v. The Deputy Commissioner of Commercial Taxes (SPL) and another (Civil Appeal No.1822 of 2007) ref.

Khalid Ishaq, Abid Hussain Sayyal and Wajahat Ali for Applicant.

Malik Abdullah Raza for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 80 #

2024 P T D 80

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, ZONE-I, REGIONAL TAX OFFICE, GUJRANWALA

Versus

MUHAMMAD KHALID CHAUDHRY

I.T.R. No.1255 of 2023, heard on 12th October, 2023.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss.133(1), 214A & 214D [as amended by Finance Act (XXX of 2018)]---Reference---Selection for audit---Amendment in law---Order selecting case of respondent / taxpayer for audit was set aside by Appellate Tribunal Inland Revenue---Validity---Provision of S. 214D of Income Tax Ordinance, 2001, under which subject notice was issued, was omitted by Finance Act, 2018 which took effect on 22-05-2018 while subject notice was issued on 08-11-2018 when the provision was no more in field---No right had accrued in favor of authorities at the time of issuance of notice in question---Selection for audit was not automatic or forthwith triggered upon happening of an event of default, as envisaged by S. 214A of Income Tax Ordinance, 2001 but upon latest discovery of information, incidentally when relevant provision of law was not available on the statute book---High Court declined to interfere, as the authorities failed to point out any illegality or legal infirmity in order passed by Appellate Tribunal Inland Revenue, which was well-founded---Reference was dismissed, in circumstances.

Commissioner of Income Tax, Peshawar v. Messrs Islamic Investment Bank Ltd. 2016 SCMR 816 distinguished.

Hamid Mahmood v. Federation of Pakistan and others (W.P. No.49412 of 2019) ref.

(b) Interpretation of statutes---

----Saving clause---Retrospective effect---Scope---When the Legislature, while amending any statute, intends to preserve any inchoate right under a repealed provision, it usually incorporates a saving clause or provision in amending statute---When any amendment is made in a statute which is procedural in nature then retrospective rule of construction is to be applied even if it is not specifically given retrospective effect---There is an exception to such general rule i.e. when any substantial right stands accrued in favor of a person then general rule is not to be applied.

Controller General of Accounts, Government of Pakistan, Islamabad and others v. Abdul Waheed and others 2023 SCMR 111; Niaz Muhammad through Attorney v. Federation of Pakistan through Secretary, Ministry of Commerce, Islamabad and 2 others 2008 PTD 1517 and Commissioner Inland Revenue, Zone-II, Islamabad v. Messrs Wise Communication System, Islamabad 2019 PTD 2313 rel.

Muhammad Yahya Johar for Applicant.

Waseem Ahmad Malik, Syed Nawazish Hussain and Zaki Vohra for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 99 #

2024 P T D 99

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, RTO, LYALPUR ZONE, FAISALABAD

Versus

Messrs M.M. ENTERPRISES (MUNIR AHMAD), FAISALABAD

I.T.R. No.77156 of 2022, decided on 18th September, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 113, 133 (1) & Second Sched., Part-IV, Cl. 45A---Notification SRO No. 333(I)/2011, dated 02-05-2011---Reference---Withholding tax---Deductions---Whether the Appellate Tribunal had not erred in law by vacating orders passed by lower fora wrongly relying on Notification SRO 333(I)/2011, dated 02-05-2011 and Clause 45A of Part IV of Second Sched. ignoring S.113 of the Income Tax Ordinance, 2001---Validity---Restraint imposed specifically excluded incidence of withholding tax deductions under S.153(1)(a) of Income Tax Ordinance, 2001---As no deduction was permissible, therefore, no question of classification of such deduction as final tax, in terms of S.153(3) of Income Tax Ordinance, 2001 had arisen---Taxpayer claimed income from both streams, covered under normal and final tax regimes---Incidence of deduction of withholding tax under S. 153(1)(a) of Income Tax Ordinance, 2001 and claiming benefit of proviso were mutually exclusive---Allegations that withholding tax deductions were claimed as corresponding adjustment of minimum tax liability were misconceived---Provision of S. 113 of Income Tax Ordinance, 2001 was not ignored and order of Appellate Tribunal Inland Revenue was not fully comprehended---Appellate Tribunal Inland Revenue did not commit any illegality and had rightly construed scope and effect of proviso to Cl. 45A of Part-IV of Second Schedule to Income Tax Ordinance, 2001 and correctly allowed concessional rates for the purposes of minimum tax liability---High Court declined to interfere in the matter as Appellate Tribunal Inland Revenue did not commit any error while construing S.113 and Cl. 45A, Part-IV of Second Sched. to Income Tax Ordinance, 2001 for the purposes of relevant tax years--Reference was dismissed, in circumstances.

Commissioner Inland Revenue v. M/s. Ch. Khushi Muhammad Prop. Tax Reference No. 09-P of 2016 and Commissioner Inland Revenue, Zone-II Regional Tax Office, Lahore v. M/s Daewoo Pakistan Motor Way Services (Pvt.) Ltd. 2022 PTD 1019 ref.

Ms. Riaz Begum for Applicant-Department.

PTD 2024 LAHORE HIGH COURT LAHORE 158 #

2024 P T D 158

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, ZONE-IV, REGIONAL TAX OFFICE, LAHORE

Versus

UNIQUE CYCLE INDUSTRY

Sales Tax Reference No.72126 of 2022, decided on 26th September, 2023.

Income Tax Ordinance (XLIX of 2001)---

----S.133 (1)---Notification SRO No.670(I)/2013, dated 18-7-2013---Reference---Concessions, grant of---Principle---Input/output ratios of manufacturer---Determination---Dispute was with regard to grant of concession under Notification SRO No. 670(I)/2013 dated 18-7-2013---Validity---Reading of Notification SRO No.670(I)/2013 dated 18-7-2013 in bits and pieces would contravene the intent and purpose of statutory instrument, which purpose was grant of concession but subject to scrutiny regarding determination of input/output ratios of manufacturer---Strict adherence to requirements of Notification SRO No.670(I)/2013, dated 18-7-2013 would ensure supply of completely assembled bicycles and not the sale of parts of bicycles---This was the mischief sought to be addressed by introducing statutory instrument---Harmonious reading of subject matter conditions would ensure enforcement of Notification SRO No.670(I)/2013, dated 18-7-2013 in letter and spirit and lawful gaining of advantages / concessions extended thereunder---High Court set aside the order and remanded the matter to Appellate Tribunal Inland Revenue which had decided the matter on erroneous construction of subject matter conditions---High Court directed Appellate Tribunal Inland Revenue to decide appeal of respondent / registered person afresh upon reading conditions (i) and (ii) of Notification SRO No.670(I)/2013, dated 18-7-2013, conjunctively and not disjunctively---Reference was allowed accordingly.

Sh. Muhammad Ali, Ms. Maryam Asad, Malik Aziz-ur-Rehman, Muhammad Sharfeen and Abdul Hafeez for Applicant-Department.

PTD 2024 LAHORE HIGH COURT LAHORE 183 #

2024 P T D 183

[Lahore High Court]

Before Jawad Hassan, J

TETRA PAK (PAKISTAN) LIMITED

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.40201 of 2021, decided on 23rd June, 2021.

Income Tax Ordinance (XLIX of 2001)---

----S.138(1)---Workers' Welfare Fund Ordinance (XXXVI of 1971), S.4(9)---Constitution of Pakistan, Art. 199---Interim order in tax or revenue matters---Scope---Petitioner sought judicial review of a public action taken by the FBR through issuance of notices under S. 138(1) of the Income Tax Ordinance, 2001, read with S. 4(9) of the Workers' Welfare Fund Ordinance, 1971, for recovery of certain amount of tax and the Workers' Welfare Fund---Validity---High Court after hearing arguments of the parties ordered for sending a copy of the writ petition along with all the annexures to the FBR, who would consider it as a representation of the petitioner, carefully look into the FBR Circular No. 4(33)-Rev.Bud./99, dated 17-02-2000 and then decide the issue in hand after providing proper hearing to all the concerned including the petitioner, strictly in accordance with relevant provisions of the Income Tax Ordinance, 2001, as well as Workers' Welfare Fund Ordinance, 1971, keeping in mind the constitutional provisions and the law, through a speaking order, within two weeks from the receipt of certified copy of the order---In the meanwhile, no coercive measures would be taken against the petitioner for recovery of the disputed amount of tax or Workers' Welfare Fund, till decision of representation---Constitutional petition was disposed of accordingly.

Watan Party and another v. Federation of Pakistan and others PLD 2011 SC 997; Workers' Welfare Funds, Ministry of Human Resources Development, Islamabad through Secretary and others v. East Pakistan Chrome Tannery (Pvt.) Ltd. through G.M (Finance), Lahore and others PLD 2017 SC 28; Commissioner Inland Revenue Multan v. Messrs Allah Wasaya Textile and Finishing Mills Ltd. 2013 PTD 1548; Ramzan Sugar Mills Limited v. Federal Board of Revenue and others 2021 PTD 1321; Chenab Flour and General Mills and others v. Federation of Pakistan through Secretary Revenue Division and others PLD 2021 Lah. 343; Ramzan Sugar Mills Limited v. Federal Board of Revenue and others 2021 PTD 1321 and Shell Pakistan Limited v. Government of Punjab and others 2020 PTD 1607 ref.

Mansoor Usman Awan, Advocate Supreme Court for Petitioner.

Mirza Nasar Ahmad, Additional Attorney General along with Asad Ali Bajwa, Deputy Attorney General, Adeel Ahmad Kamra, Assistant Attorney General, Monim Sultan, Assistant Attorney General and Ms. Sadia Malik, Assistant Attorney General for Federation of Pakistan (on Court's call).

Malik Abdullah Raza for Respondent-FBR assisted by Shahzad Ahmad Cheema and Anas Sheikh (on watching brief).

PTD 2024 LAHORE HIGH COURT LAHORE 208 #

2024 P T D 208

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan, J

Messrs NORDEX SINGAPORE EQUIPMENT LIMITED

Versus

FEDERAL BOARD OF REVENUE, CIR AND FFC ENERGY LTD.

Writ Petition No.420 of 2014, heard on 10th October, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 2 (41), 122A, 122B, 152, 153 & 206---Income Tax Rules, 2002, R.231-A---Constitution of Pakistan, Art. 199---Constitutional petition---Avoidance of Double Taxation Treaty---Offshore company---Petitioner was an offshore company and was aggrieved of deduction of tax in presence of Avoiding Double Taxation Treaty (ADTT) between Pakistan and Singapore Governments as the same was applicable to procurement and supply of goods to respondent company---Validity---Federal Board of Revenue was the Regulator who did not meet its statutory obligations and had passed order in question against the provisions and all norms of law---Matter in issue was not timely decided in absolute form as well as common purpose of applications made under different statutory provisions was defeated---Such practice of authorities not only frustrated cause of justice but had also added agonies of parties as well as put additional burden and workload for High Court taking away precious time, energy and sources of machinery of law---Order in question was passed without properly hearing the petitioner or its representative---Remedy of revision under S. 122A or 122B of Income Tax Ordinance, 2001, was available---Order in question was passed against intent, object and spirit of relevant law setting prescribed standards and norms---High Court declined to restrict scope of Constitutional petition merely due to reason that the petitioner could have preferred a revision against order in question---Provisions of Ss.206A & 152(5) of Income Tax Ordinance, 2001, were interconnected and in order in question care was not taken that provisions of Ss.152 & 206A of Income Tax Ordinance, 2001, were intertwined and were required to be read together simultaneously for purpose of deciding the issue---High Court in order to advance the cause of justice and to prevent miscarriage of justice set aside the order and remitted the matter to Commissioner Inland Revenue to decide the same afresh by providing proper hearing to all concerned including the petitioner---Constitutional petition was allowed accordingly.

Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173; Town Committee, Piplan v. Muhammad Hanif and others 2008 SCMR 723; Government of Pakistan through Director-General, Ministry of Interior, Islamabad and others v. Farheen Rashid 2011 SCMR 1; Messrs United Woollen Mills Ltd. Workers' Union v. Messrs United Woollen Mills Ltd. 2010 SCMR 1475; Altaf Ibrahim Qureshi and another v. AAM Log Ittehad and others PLD 2019 SC 745; Chenab Flour and General Mills v. Federation of Pakistan and others PLD 2021 Lah. 343; The Murree Brewery Co. Ltd. v. Pakistan through the Secretary to Government of Pakistan Works Division PLD 1972 SC 279; Sargodha Textile Mills Limited through General Manager v. Habib Bank Limited through Manager and another 2007 SCMR 1240; M.C.R (Pvt.) Ltd. Franchisee of Pizza Hut v. Multan Development Authority and others 2021 CLD 639; Mian Asghar Ali v. Government of Punjab through Secretary (Colonies) BOR, Lahore and others 2017 SCMR 118; Shaheen Merchant v. Federation of Pakistan/National Tariff Commission and others 2021 PTD 2126 and Shell Pakistan Limited v. Punjab through The Secretary Ministry of Finance and others 2020 PTD 1607 rel.

Shehbaz Butt, Advocate Supreme Court for Petitioner.

Dr. Farhat Zafar, Advocate Supreme Court for Respondent No.1 and along with Shaikh Anwar-ul-Haq Law Officer.

Barrister Raja Jibran Tariq Ali for Respondent No.3.

Arshad Mahmood Malik, Assistant Attorney General for Pakistan.

PTD 2024 LAHORE HIGH COURT LAHORE 242 #

2024 P T D 242

[Lahore High Court]

Before Raheel Kamran, J

CHINA MACHINERY ENGINEERING CORPORATION, PAKISTAN BRANCH

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.29586 of 2023, decided on 11th December, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss.138 & 140---Recovery of tax due---Coercive measures---Principle---Petitioner / taxpayer assailed recovery of tax due from its bank accounts by authorities---Plea raised by petitioner / taxpayer was that such recovery was made without issuance of prior notice under S.138(1) of Income Tax Ordinance, 2001---Validity---Revenue functionaries have an obligation to exercise their authority under Income Tax Ordinance, 2001, such that it does not undermine rights of taxpayers to due process, fair trial and access to justice---Tax authorities are under obligation to afford protection of law to the citizens rather than becoming instruments of denying taxpayer of such protection---Regardless of whether it is Commissioner (Appeals), Income Tax Appellate Tribunal, or High Court upholding an assessment order, tax authorities are under an obligation to issue notice under S. 138(1) of Income Tax Ordinance, 2001, before they resort to use of coercive means under S. 138(2) or 140 of Income Tax Ordinance, 2001---Provision of S. 138(1) of Income Tax Ordinance, 2001, conceives that a reasonable timeframe is to be specified by the Commissioner within which tax due is to be paid---It is inconceivable that such reasonable time could be a period of less than 7 days as the purpose of such provision is to put the taxpayer on notice to discharge tax obligation within a reasonable period and also afford taxpayer an opportunity to avail his statutory right of appeal, if so advised---High Court set aside notice issued by authorities in purported exercise of authority under S.140 of Income Tax Ordinance, 2001, as the same was without lawful authority and of no legal effect for not complying with mandatory requirement of issuing a notice under S.138(1) of Income Tax Ordinance, 2001---High Court directed the authorities to ensure reimbursement of amount recovered from bank accounts of petitioner / taxpayer pursuant to notice under S.140 of Income Tax Ordinance, 2001, or to credit it to the same bank accounts, unless the same was otherwise liable to be recovered or retained in accordance with law---Constitutional petition was allowed, in circumstances.

Mubashir Yameen v. Assistant/Deputy Commissioner Inland Revenue, RTO, Rawalpindi and others 2023 PTD 146; Messrs Pakistan LNG Limited through Authorized Representative v. Federation of Pakistan, through Secretary Revenue Division, Ministry of Finance, Islamabad and 2 others 2022 PTD 1763; Sungi Development Foundation Employees Provident Fund Trustees v. Federation of Pakistan through Secretary Ministry of Finance, Revenue and Economic Affairs and others 2022 PTD 1690; Mst. Fouzia Razzak v. Federal Board of Revenue and others 2021 PTD 162; Quaid-e-Azam Thermal Private Limited through Chief Executive Officer, Lahore v. Federal Board of Revenue through Chairman, Lahore and others 2020 PTD 165; Messrs Huawei Technologies Pakistan (Pvt.) Ltd. v. Commissioner Inland Revenue and others 2016 PTD 1799; Brothers Textile Mills Limited v. Federation of Pakistan through Secretary and 03 others 2003 PTD Lah. 2834; Z.N. Exports Private Limited v. Collector of Sales Tax 2003 PTD 1746 and Messrs Pak-Saudi Fertilizers Limited vs. Federation of Pakistan and others 2002 PTD 679 and Messrs Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others 2017 SCMR 1136 rel.

Faisal Islam, Advocate Supreme Court for Petitioner.

Muhammad Mansoor Ali Sial, Assistant Attorney General for Federation of Pakistan.

Barrister Ahmad Pervez Advocate Supreme Court for Respondents Nos.3 to 5.

Usman Akram Sahi with Hammad Altaf Khan, Chief Legal Officer and Aurangzeb Shami, Manager Legal for Respondent No.6.

PTD 2024 LAHORE HIGH COURT LAHORE 265 #

2024 P T D 265

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

Messrs BASFA TEXTILE (PVT.) LIMITED, LAHORE

Versus

DEPUTY COLLECTOR (CUSTOMS), LAHORE and 4 others

Customs Reference No.52 of 2016, heard on 2nd February, 2023.

(a) Sales Tax Act (VII of 1990)---

----Ss.4(c), 3(2)(b), 3(6), 8(1)(b) & 71---Indian Raw Cotton, import of---Zero rating---Applicability of sales tax at 16% or 2%---During course of audit, observation of the Department was that importer was liable to pay sales tax @ 16%, which observation culminated in passing order-in-original, creating demand of certain defaulted amount and penalty ; importer filed appeal but the Appellate Tribunal ('the Tribunal') rejected the same---Contention of the importer (Reference Applicant) was that SRO 1125(I)/2011, having been amended by SRO 154(I)/2013, ('the amended SRO')was also applicable on import by registered manufacturers of the five sectors mentioned in condition (i); and that the imported raw cotton was an industrial input used for further manufacturing by applicant, thus sales tax @ 2% was leviable---Contention of the respondent/department was that the SRO 154(I)/2011 was applicable upon stages beyond spinning and there were two more stages in between ginning and spinning i.e. carding and combing; and that vide condition (ii) of said SRO, ginned cotton was specifically excluded from the purview of concession---Validity---By way of SRO 154(I)/2013 dated 28.02.2013 (effective from 01.03.2012), certain amendments were brought in SRO 1125(I)/2011, and amendments in conditions (i), (ii) & (iii)---It was explicit from condition (ii)(a) that SRO 154(I)/2013 duly included the spinning stage (in textile sector); thus contention of the respondent/department was totally misconceived--- Through the SRO, the concession had been given on goods useable as industrial inputs (at spinning stage in textile sector) by charging sales tax @ 2%---High Court viewed that applicant was entitled to the benefit of SRO 1125(I)/2011, as amended by SRO 154(I)/2013---Thus, the answer to the proposed question was in negative i.e. in favour of applicant and against respondent / department---Reference Application filed by the importer was allowed, in circumstances.

(b) Sales Tax Act (VII of 1990)---

----Ss.4(c), 3(2)(b), 3(6), 8(1)(b) & 71---Indian Raw Cotton, import of---Zero Rating---Applicability of sales tax at 16% or 2%---Scope---During course of audit, observation of the Department was that importer was liable to pay sales tax @ 16%, which observation culminated in passing order-in-original, creating demand of certain defaulted amount and penalty ; importer filed appeal but the Appellate Tribunal rejected the same---Contention of the importer (Reference Applicant) was that SRO 1125(I)/2011, having been amended by SRO 154(I)/2013,( ' the amended SRO')was also applicable on import by registered manufacturers of the five sectors mentioned in condition (i); that the imported raw cotton is an industrial input used for further manufacturing by applicant, thussales tax @ 2% was leviable---Contention of the respondent/department was that two additional steps were available in between ginned cotton and spinning stage i.e. carding and combing, emphasizing that only after completion of said stages, the produce could be termed as raw material for the spinning stage---Validity --- Undoubtedly, carding and combing do not change the texture or form of material and only line up the fibers nicely to make them easier to spin;in these processes, neither textural form nor chemical composition is changed inasmuch as these are not essential to be performed for forming the cotton as raw material for spinning; the moment when cotton is ginned and converted into bales, whether or not it is carded and combed, it becomes raw material for spinning---High Court viewed that applicant was entitled to the benefit of SRO 1125(I)/2011, as amended by SRO 154(I)/2013--- Thus, the answer to the proposed question was in negative i.e. in favour of applicant and against respondent/department---Reference Application filed by the importer was allowed, circumstances.

----Fiscal statute---Scope---Words in a taxing statute including notifications and orders, unless ambiguous, must be given their ordinary and natural meaning---Subject is not to be taxed unless the statute / notification clearly imposes the burden of tax, while language of the taxing statute / notification must not be strained to tax a transaction on the premise that had the Legislature thought of the same, it would have covered the events by appropriate words---While interpreting a taxing statute / notification, equitable consideration is entirely out of place---Nor can taxing statute / notification be interpreted on any presumptions or assumptions---Court must look squarely at the words of the statute / notification and interpret them---Court cannot imply anything that is not expressed; it cannot import provisions in the statute / notification so as to supply an assumed deficiency---Moreover, interpretation of fiscal statute / notification has to be made strictly and any doubts arising therefrom must be resolved in favour of taxpayer and even if two reasonable interpretations are possible, one favouring taxpayer has to be adopted.

Messrs Khurshid Soap and Chemical Industries (Pvt.) Ltd. through Sheikh Muhammad Ilyas and others v. Federation of Pakistan through Ministry of Petroleum and Natural Resources and others PLD 2020 SC 641; Messrs Continental Chemical Co. (Pvt.) Ltd. v. Pakistan and others 2001 PTD 570 and Fatima Fertilizer Company Limited through Duly Authorized Officer v. Commissioner-II, Sindh Revenue Board 2021 PTD 484 ref.

Abad-ur-Rehman for Applicant.

Izhar-ul-Haq Sheikh for Respondent-Department.

PTD 2024 LAHORE HIGH COURT LAHORE 275 #

2024 P T D 275

[Islamabad High Court]

Before Miangul Hassan Aurangzeb and Arbab Muhammad Tahir, JJ

COLLECTOR, SALES TAX AND FEDERAL EXCISE, REGIONAL TAX OFFICE, ISLAMABAD

Versus

CUSTOMS, CENTRAL EXCISE AND SALES TAX, APPELLATE TRIBUNAL, ISLAMABAD and another

S.T.R. No.19 of 2008 and C.M. No.1054 of 2019, decided on 9th May, 2022

Sales Tax Act (VII of 1990)---

----S. 73---Adjustment of input tax---Requirement of S.73 of the Sales Tax Act, 1990, non-compliance of---Question was, whether or not, non-compliance of requirement of S. 73 of the Sales Tax Act, 1990 ('the Act, 1990') would be sufficient for the department to disallow input tax adjustment and for an order for recovery of the principal amount along with default surcharge and penalty---Appellate Tribunal allowed the appeal preferred by the taxpayer against disallowance of the input tax adjustment by Assistant Collector, which order was assailed by the Collector / Department by filing Sales Tax Reference---Validity---Record revealed that Assistant Collector disallowed the input tax adjustment of the respondent/registered person on the ground that the payment had not been made in accordance with the requirement of S. 73 of the Act, 1990---Section 73 of the Act 1990 required payment of an amount for a transaction exceeding the value of Rs. 50,000/ = however, in the present case, the amount involved was less than Rs.50,000/=---It was not the case of the applicant / department that the respondent was claiming input tax adjustment against fake invoices or had evaded the payment of tax---Section 73 of the Act, 1990 did not prescribe the penalty of disallowing the input adjustment for failure to show compliance with the requirement of S.73 of the Act, 1990---Appellate Tribunal had upheld the penalty of Rs. 5,000/= imposed on respondent for not showing compliance with the requirement of S.73 of the Act, 1990---Applicant department had failed to give reason for interference of the High Court in the order passed by the Appellate Tribunal---Sales Tax Reference filed by the department was dismissed, in circumstances.

Riaz Hussain Azam Bopara for Applicant.

Ibrar Hussain, representative for Respondent No.2.

PTD 2024 LAHORE HIGH COURT LAHORE 281 #

2024 P T D 281

[Lahore High Court]

Before Shahid Jamil Khan, J

LAHORE TAX BAR ASSOCIATION

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.27339 of 2023, heard on 18th December, 2023.

Income Tax Ordinance (XLIX of 2001)---

----S.130---Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020---Constitution of Pakistan, Arts. 240 & 242---Constitutional petition---Appointment of Chairman---Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020, vires of---Petitioner / Tax Bar Association assailed appointment of respondent as Chairman Appellate Tribunal Inland Revenue along with vires of Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020---Validity---Words 'Prime Minister' as used in existing S.130(2) of Income Tax Ordinance, 2001, was to be read as 'Federal Government' from the date when the provision was brought in the statute book---Provision was to be read down accordingly---High Court declared Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020, ultra vires the Constitution as same were not approved by Federal Cabinet---Appointments, under Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020, were also illegal and without lawful authority---High Court invoked de facto doctrine to save continuity in system and directed that Members and Chairman appointed under the Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020, were allowed to continue their service, till the appointment of regular incumbents, under the Rules, to be framed and promulgated by Federal Government, in consonance with the law---High Court directed the authorities to frame Rules within thirty (30) days from the date of judgment and process of recruitment to be completed within forty five (45) days thereafter---Posts of Members and Chairman of Appellate Tribunal Inland Revenue are in connection with the affairs of the Federation, therefore, under Art. 240 of the Constitution, appointments to the posts and the conditions of service should be under the Act of Majlis-e-Shura (Parliament)---Even if Rules to be framed under the S.130(2) are under the Act of Parliament, framers of the Rules, have to comply with command of the Constitution---For purposes of a competitive process to determine capacity and capability based on eligibility, Public Service Commissions are constituted under Art. 242 of the Constitution---Statutes under this mandate provided an independent forum and procedure---High Court deprecated tendency of bypassing such forum as the same would not only deprive deserving candidates from appointment on merits, but would instill mistrust in the candidates and those who are striving for their future---Constitutional petition was allowed accordingly.

Sh. Riaz-ul-Haq and another v. Federation of Pakistan through Ministry of Law and others PLD 2013 SC 501 ref.

Messrs Mustafa Impex Karachi and others v. The Government of Pakistan through Secretary Finance, Islamabad and others PLD 2016 SC 808 rel.

Shahbaz But and Chaudhry Anwaar-ul-Haq Arif for Petitioner.

Mirza Nasar Ahmad, Additional Attorney General and Syed Sajjad Haider Rizvi, Assistant Attorney General for Federation.

Barrister Lamia Niazi for Respondent No.5.

M. Nazeer Chauhan for Respondent No.6.

PTD 2024 LAHORE HIGH COURT LAHORE 299 #

2024 P T D 299

[Lahore High Court (Rawalpindi Bench)]

Before Mirza Viqas Rauf, J

SUFI ABDUL QADEER and 2 others

Versus

ADDITIONAL DISTRICT JUDGE, RAWALPINDI and 3 others

Writ Petition No.3868 of 2022, heard on 31st May, 2023.

Income Tax Ordinance (XLIX of 2001)---

----S. 216---Specific Relief Act (I of 1877), S.42---Suit for declaration etc.---Disclosure of information by a public servant---Bar contained in S. 216 of the Income Tax Ordinance, 2001---Scope---During the proceedings before the Civil Court in a suit filed by the plaintiffs against a private person/party, they filed an application for summoning the concerned Commissioner Inland Revenue Department for production of record, which was allowed---Department claimed immunity under provisions of S.216 of the Income Tax Ordinance, 2001---Appellate Court allowed revision filed by the Department---Contention of the petitioners /plaintiffs was that bar contained in terms of S.216 of the Income Tax Ordinance, 2001, was not absolute---Validity---Suit was, admittedly, inter se private parties---Respondent/ Commissioner Inland Revenue was not party to the suit---Section 216 of the Income Tax Ordinance, 2001, stipulates that in terms of subsection (2), a bar is imposed upon the powers of the Court or other authority to require any public servant to produce before it any return, accounts, or documents contained in, or forming a part of the records, relating to any proceedings under the Income Tax Ordinance, 2001, or declarations made under the relevant laws (like Voluntary Declaration of Domestic Assets Act, 2018, etc.) or any records of the Income Tax Department generally, or any part thereof, or to give evidence before it in respect thereof except in the manner provided in the Income Tax Ordinance, 2001---Subsection (3) of S. 216, however, ordains that nothing contained in subsection (1) shall preclude the disclosure of any such particulars to a Civil Court in any suit or proceedings to which the Federal Government or any income tax authority is a party which relates to any matter arising out of any proceedings under the Income Tax Ordinance, 2001---Though in terms of subsection (4), it is stated that nothing in section 216 shall apply to the production by public servant before a Court of any document, declaration, or affidavit filed or the giving of evidence by a public servant in respect thereof but said provision cannot be read in isolation to subsection (3)---Trial Court before passing an order for the production of documents should have resorted to the provisions of the Income Tax Ordinance, 2001, in absence whereof it was precluded to pass such order---Thus, the Appellate Court was justified to exercise its revisional jurisdiction while setting aside the order of the Trial Court---Constitutional petition, being meritless was dismissed, in circumstances.

Mrs. Khalida Azhar v. Viqar Rustam Bakhshi and others

2009 PTD 1694 ref.

Malik Ghulam Sabir for Petitioners.

Malik Itaat Hussain Awan for Respondent No.2.

Malik Shehriyar Qamar Afzal for Respondent No.3.

PTD 2024 LAHORE HIGH COURT LAHORE 340 #

2024 P T D 340

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

QAISER IQBAL and others

Versus

COLLECTOR OF CUSTOMS (PREVENTIVE), LAHORE

Customs Reference No.85 of 2015, decided on 14th March, 2023.

Customs Act (IV of 1969)---

----Ss. 2(s) & 139---Smuggling---Declaration by passenger or crew of baggage---Scope---Applicants who were going abroad entered the Customs Hall and presented their accompanied baggage and traveling documents to the officers of Customs for examination---As required under S. 139 of the Customs Act, 1969, the officers asked them if they were carrying anything objectionable such as narcotics or currency in their accompanied baggage, to which they replied negatively; they were also asked to provide a written declaration about the foreign currency they were carrying and they declared that they were carrying only UAE Dirham 2500/---However, during the baggage inspection, 8 packets of different foreign currencies and 12 notes of UAE Dirham were found, for which the applicants failed to produce any evidence to support their lawful export or possession---As a result, the applicants were issued a show-cause notice, which led to the passing of an order-in-original whereby the foreign currency was confiscated and a penalty was imposed upon the applicants---Appellants filed an appeal before the Appellate Tribunal, which was later dismissed---Applicants did not make any declaration regarding the recovered foreign currency, nor did they provide any document to show that the currency was obtained from an authorized dealer after obtaining permission from the State Bank of Pakistan---Findings of the Appellate Tribunal were final and not subject to further examination by the High Court---Reference application was decided against the applicants.

Mukhtar Ahmad Awan for Applicants.

PTD 2024 LAHORE HIGH COURT LAHORE 368 #

2024 P T D 368

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Jawad Hassan, JJ

COMMISSIONER INLAND REVENUE, ZONE-II, RTO, FAISALABAD

Versus

Messrs CHAWLA ENTERPRISES, FAISALABAD

S.T.R. No.145 of 2016, decided on 28th March, 2023.

Sales Tax Act (VII of 1990)---

----S.47---Reference to High Court---Factual controversy---Scope---Findings of fact given by Appellate Tribunal are not open to further examination by the High Court---High Court cannot entertain any question on a finding of fact---Reference against a judgment or order of Appellate Tribunal can only be filed on a question of law.

Messrs F.M.Y Industries Ltd. v. Deputy Commissioner Income Tax 2014 SCMR 907 and Pakistan Match Industries (Pvt.) Ltd. and others v. Assistant Collector, Sales Tax and Central Excise Mardan and others 2019 SCMR 906 ref.

Shahzad Ahmad Cheema, Legal Advisor for Applicant-department.

PTD 2024 LAHORE HIGH COURT LAHORE 406 #

2024 P T D 406

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

SOOFI MUHAMMAD FARRUKH AMIN and others

Versus

FEDERATION OF PAKISTAN through Secretary of Finance Revenue Division, Ministry of Finance, Economic Affairs, Statistics and Revenue, Pakistan

Secretariat, Islamabad and others

I.C.A. No.1181 of 2016, decided on 11th March, 2022.

Per Muhammad Sajid Mehmood Sethi, J and Asim Hafeez, J. agreeing

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 116---Income Support Levy Act, 2013, Ss. 2 (1)(a), 3 & 9---Constitution of Pakistan, Arts. 73 (1) & 189---Law Reforms Ordinance (XII of 1972), S.3---Intra Court Appeal---Judgment of Supreme Court--Leave to appeal declined---Effect---Income Support Levy---Vires of---Appellants / taxpayers were aggrieved of levy of Income Support Levy at the rate of 0.5% on value of net movable assets / wealth exceeding one million Rupees---Appellants / taxpayers assailed the Levy as ultra vires the Constitution---Judge in Chambers of High Court dismissed petitions filed by appellants / taxpayers---Validity---Supreme Court refused to grant leave to appeal, however, decided the matter on merits by enunciating principles of law---Such decision had the force of precedent and was binding on all subordinate Courts and Tribunals including High Court, in terms of Art. 189 of the Constitution---When Supreme Court deliberately and with intention of settling the law pronounced upon a question, such pronouncement was law declared by Supreme Court within the meaning of Art. 189 of the Constitution and was binding on all Courtsin Pakistan---Division Bench of High Court followed the judgment passed by Supreme Court---Intra Court Appeal was allowed accordingly.

Commissioner Inland Revenue Federal Board of Revenue, Karachi v. Muhammad Mustafa Gifi and others (Civil Petitions Nos.490-K to 561-K and others) fol.

Yaqoob Ahmed through Attorney and others v. Federation of Pakistan through the Secretary of Law, Ministry of Law and others 2020 PTD 1407; Abdullah v. The State 2001 MLD 1554; Collector of Sales Tax and Federal Excise v. Messrs Wyeth Pakistan Limited 2009 YLR 2096; Commissioner of Income Tax and others v. Mubashar Sheikh, City Towers 2017 PTD 795; Commissioner Income Tax v. Habib Bank Limited and ANZ Grindlays Bank PLC 2015 PTD 619; Hasnain Raza and another v. Lahore High Court, Lahore and others PLD 2022 SC 7 and S. Nasim Ahmed Shah and 115 others v. State Bank of Pakistan through Governor and another 2017 PTD 2029 rel.

Per Asim Hafeez, J:-

(b) Income Tax Ordinance (XLIX of 2001)---

----S.116---Income Support Levy Act, 2013, Ss. 2(1)(a), 3 & 9---Constitution of Pakistan, Arts. 73(1) & 189---Law Reforms Ordinance (XII of 1972), S. 3---Intra Court Appeal---Judgment of Supreme Court---Leave to appeal declined---Effect---Income Support Levy---Vires of---Appellants / Taxpayers were aggrieved of levy of Income Support Levy at the rate of 0.5% on value of net movable assets / wealth exceeding one million Rupees---Validity---Constitutional petition and other connecting petitions which were subject matter of Intra Court Appeal---Held, that Question of vires of Income Support Levy was not subject of challenge in said Constitutional petitions but demand raised through demand notices largely on the premise of lack of audience and effect of appeal was assailed---Supreme Court had decided question of vires of Income Support Levy in context of Art. 73 of the Constitution adjudicating upon another case and had declared the levy void and of no legal effect---Intra Court Appeal was allowed, in circumstances.

Commissioner Inland Revenue Federal Board of Revenue, Karachi v. Muhammad Mustafa Gifi and others (Civil Petitions Nos.490-K to 561-K and others) rel.

Shahbaz Butt, Muhammad Ajmal Khan, Muhammad Azhar Khan Joyya, Mian Abdul Ghaffar, Rai Amer Ejaz Kharal, Ch. Rehmat Ali; Omer Wahab, Mansoor Beg (vice Dr. Ikram-ul-Haq, Advocate), Imtiaz Rashid Siddiqui, Shehryar Kasuri, Raza lmtiaz Siddiqui, Jamshaid Alam, Qadeer Kalyar, Sabeel Tariq Mann, M. Humzah Sheikh, Mian Ashiq Hussain, Syed Naveed A. Andrabi, Khurram Saleem, Javed Iqbal Qazi, Barrister Malik Muhammad Kashi Rafique Rajwana, Dr. Muhammad Hafeez Malik, Mudassar Shuja-ud-Din, Hashim Aslam Butt, Usman Ali Bhoon, Muhammad Shabbir Hussain, Malik Ahsan Mehmood, Mian Abdul Sattar Sial, Shahzad Ata Elahi, Ch. Muhammad Ali, Shah Behram Sukhera, Salman Zaheer Khan, Majid Jehangir, H.M. Majid Siddiqui, Jan Muhammad Ch., Habib-ur-Rehman, Hammad-ul-Hassan Hanjra, Saadat Ali Saeed, Usman Latif, Ch. Mumtaz-ul-Hassan, Farhan Shahzad, Mian Mohsin Mehmood, Rafaqat Ali Baig Mirza, Syed Nasir Ali Gillani, Shahbaz Siddique, Mian Muhammad Zubair Waheed, Barrister Hamza Shahram Sarwar, Umair Ahmad, Imran Anjum Alvi, Rizwan Qureshi, Abdul Razaq Chadhar, Shahid Ibrar, Ch. Muhammad Naseer, Dr. Mazhar Ilahi, Omer Iqbal Khawaja, Muhammad Siddique Butt, Mehar Alam Sher, Muhammad Amin Goraya, Barrister Ahmad Pervaiz, Muhammad Fahad Hafeez, Muhammad Waseem Akram, Muhammad Rashid, Muhammad Naeem Munawar, Naeem Khan, Faisal Rasheed Ghouri, Yasir Hameed, Azhar Mukhtar, Saood Nasrullah Cheema, Zahid Attique Chaudhry, Sardar Qasim Hassan Khan, Syed Nafees-ul-Hassan, Ch. Sultan Mehmood, Shahbaz Jahanger, Miss Nasreen Aftab, Sheraz Jahangir Mannoo, Barrister Rana Khizar Hayat, Muhammad Ameen Gorayya, Barrister Zargham Lukhesar, Faisal lqbal Khawaja, Muhammad Abubakar, Malik Nadir Ali Sherazi, Asad Jawaid Jutt, Husnain Muqsood, Mian Ijaz Hunain, Ashiq Ali Rana, Muqsit Saleem, Khalil-ur-Rehman, Muhammad Ahmad Qayyurn, Shamail Arif, Hashim Maqsood, Mirza Mubashir Baig, Abdul Waheed Habib, Ch. Samran Mushtaq Ch., Usman Khalil, Ali Ijaz Shah, Shahid Pervez Jawaid, Syed Safdar Hassan Gillani, M. Younas Khalid, Muhammad Akram, Muhammad Imran Rasheed, Oneeb Akhtar Ansari, Abdul Waheed, Syed Saqlain Hussain, Ch. Hasham Hayat Wathra, Ghulam Mustafa Umair, Nadeem Shehzad Hashimi, Syed Muhammad Islam Khan, Zulfiqar Ahmad, Azeem Ullah Virk, Rana M. Usman Habib, Ahsan Naqaz Sial, Noureen, Mirza Ilyas Baig, Rana M. Afzal, Nauman Mushtaq Awan, Rana Javed, Muhammad Imran Rashid, A.R.A. Minhas, M. Yasin Khan, Sh. Muhammad Akram, Sheikh Aqeel Ahmad, S.M. Raheel, Farid Adil Ch., Ch. Qamar-uz-Zaman, Muhammad Waqar Akram, Muhammad Khalid, Arif Munir, Rana Asim Zubair, Mustafa Katmal, Muhammad Bilal Pervaiz, Mian Mahmood Rashid, Roohi Saleh, Mian Zulfiqar Ali, Bashir Malik, Rai Inam Qadir, Zeba Munir, Israr Saeed, Asad Abbas Raza, Usman Zia, Ibraheem Hassan, Salman Ahmad, Ch. Muhammad Khaliq, Saith Iftikhar Tayyab, Nasir Khan, M. Rehan Sarwar, Muhammad Mohsin Virk, Sohail Murshid Malik, Syed Ahmad Doud and Malik Muhammad Latif Khokhar for the Appellants.

Nasar Ahmad, Additional Attorney General and Azmat H. Khan Lodhi, Assistant Attorney General along with Dr. Ishtiaq Ahmad Khan, Commissioner Inland Revenue, Ms. Zarish Fatima, Aftab Raheem and Sheikh Nadeem Anwaar, Assistant Attorney Generals, Barrister Ameer Abbas Ali Khan, Assistant Advocate General, Sarfraz Ahmad Cheema, Shahzad Ahmad Cheema, Ch. Shakeel Ahmad, Saba Saeed Sheikh, Shahid Sarwar Chahil, Muhammad Asif Butt, Liaquat Ali Chaudhry, Ch. Muhammad Zafar Iqbal, Faraz Ansar, Abul Hassan Ch., Aamer Khan, Sahar Iqbal, Ch. Muhammad Yasin Zahid, Ibrar Ahmad, Shahid Usman, Foziya Bukhsh, Rana Sardar Ali, Mian Yusuf Umar, Syed Tassadaq Murtaza Naqvi, Umair Anwar, Abdul Waheed Khan Baloch, Syed Zain-ul-Aabidin Bukhari, Zafar Iqbal Bhatti, M. Saad Bin Ghazi, Malik Abdullah Raza and Falak Sher Khan, Imran Rasool, Samra Malik, Masroor Ahmad Khan, Khawaja Muhammad Nadeem, Muhammad Anwar, Javed Akhtar, Sardar Kalim Ilyas, M. Zafar Iqbal, Mohsin Ali, Barrister Osama Zafar, Riaz Begum, Muhammad Ahmad Pansota, Scherzade Shahyar, Fozia Bukhsh, Ijaz Mahmood Chaudhry, Mian Yousaf Umar, Kausar Parveen, Waqar A. Sheikh, Rana Muhammad Mehtab, Adeel Spahid Krim, M. Yasir Khan, Sardar M.S Tahir, Muhammad Asif, Kashif Ali Zain, Barrister Muhammad Saram Israr, Muhammad Yahya Johar, Syed Zain ul Abidien Bokhari, Malik Rizwan Khalid Awan, Akhtar Ali Monga, Ali Asad Gondal, Sardar Ali Masood Raza Qazilbash and Iyyaz Mahmood Sabir, Advocates Legal Advisors for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 440 #

----Ss. 2(8), 56 & Schedule-I, Arts.23 & 35---Punjab Finance Act

(XLI of 2012), S. 6---Capital Value Tax, imposing of---Principle---Lease deed---Chief Revenue Officer---Jurisdiction and powers---Petitioners challenged the validity and imposition of Capital Value Tax (CVT), enforced through S.6 of Punjab Finance Act, 2012 and demanded at the time of registration of instruments of lease of immovable properties falling within the limits of Cantonment---Authorities contended that instruments of lease, extending leases over immovable property for twenty years and more, were subject to duty computable under Art. 23 of Schedule-I to Stamp Act, 1899---Plea raised by petitioners was that instruments of lease were liable to be charged for stamp duty under Art. 35 of Schedule-I to Stamp Act, 1899---Validity---Chief Revenue Authority, defined under S. 2(8) of Stamp Act, 1899, is Senior Member Board of Revenue, who possesses jurisdiction and power to examine and express opinion qua the instrument, in terms of S. 56 of Act, 1899---Chief Revenue Authority, in terms of S. 57 of Stamp Act, 1899, is otherwise competent to state a case for opinion of High Court---High Court restrained from expressing its opinion with respect to chargeability of instruments, for the purposes of stamp duty and opted to resort to statutory mechanism provided in the law and referred the matter to Chief Revenue Authority---High Court clarified that treatment extended, status conferred, or rights assigned through instruments of lease under other statutes were not subject matter of controversy---To avoid complication, High Court contextualized the controversy and defined the scope of question referred for determination to Chief Revenue Authority and framed the question, "what amount of stamp duty is payable against subject matter instruments of lease under Art. 35 of Schedule-1 to Stamp Act, 1899; and whether any such instrument of lease could be brought within the scope of Art. 23 of Schedule-I to Stamp Act, 1899; and if so, what are those distinguishing conditions embodied in the instrument(s)"---Constitutional petition was disposed of accordingly.

Rana Ansar Hussain for Petitioners.

Nadeem Saeed and Muhammad Mustafa Khalid for Petitioners (in W.Ps. Nos. 249094, 249098 and 249095 of 2018).

Noraiz Ismail Gondal, Khalil-ur-Rehman and Ali Ashraf Mughal for Petitioners (in connected petitions).

Rizwan Khalid Awan for Petitioner (in W.P. No. 256421/2018).

Barrister Hassan Safdar Khan and Rana Muhammad Ansar for Petitioner (in W.P. No. 73615/2023).

Mian Imran Mushtaq for Petitioner (in W.P. No. 9665/2019).

Ch. Muhammad Aslam for Petitioner (in W.P. No. 2846/2019).

Rana Ahmad Tayyab Shahid for Petitioner (in W.Ps. Nos. 198788/2018, 150099/2018 and 198785/2018).

Zahid Manzoor Awan, Riaz Ahmad Tahir, Rana Shahzad Khalid, Abida Abdul Khaliq and Mian Najam-us-Saqib for Petitioners (in connected petitions).

Ch. Muhammad Aslam for Petitioner (in W.P. No. 2846/2019).

Shehzad Hassan Pervaiz for Petitioner (in W.P. No.7650/2023).

Mudassar Abbas Maghiana and Faheem Ali Sipra for Petitioner (in W.P. No. 38252/2021).

Rizwan Khalid Awan for Petitioner (in W.P. No. 256421/2018).

Shahzad Haq Pervaiz for Petitioner (in W.P. No. 7650/2023).

Nadeem Ahmad Saeed for Petitioner (in W.P. No. 2093/2020).

Faheem Ali Sipra for Petitioner (in W.P. No. 38252/2021).

Sameer Iqbal Awan and Aamir Saleem Khan for Petitioner (in W.P. No. 35714/2021).

Malik Muhammad Afzal Khokhar for Petitioner (in W.P. No.8285/2020).

Falak Sher Khan for Petitioner (in W.P. No.194099/2018).

Mian Imran Mushtaq for Petitioner (in W.P. No. 9665/2019).

Dr. Bibi Saira Nouman and Muhammad Nouman Shamas Qazi for Petitioner.

Sajid Hussain Qureshi, Abrar Ahmad Chaudhary and Ch. Muslim Abbas for Petitioner.

Malik Shah Muhammad Ali Awan for Petitioner (in W.P. No.16323/2019 and W.P. No.50440/2019).

Tariq Hussain Maken for Petitioner.

Rana Nasr Ullah Khan for Petitioners (in connected petitions).

For Respondents.

Waqar Saeed Khan, Assistant A.G.

Ch. Imtiaz Elahi, Deputy Attorney General for Pakistan along with Muhammad Rana Khalid Masood, Assistant Secretary (Tax- II), Board of Revenue.

Muhammad Junaid, Senior Inspector of Stamps Board of Revenue Punjab.

Khalid Mehmood Tipu, Secretary Taxes Board of Revenue Punjab.

PTD 2024 LAHORE HIGH COURT LAHORE 670 #

2024 P T D 670

[Lahore High Court]

Before Shahid Karim and Raheel Kamran, JJ

MILLAT TRACTOR LIMITED through duly authorized representative

Versus

FEDERAL BOARD OF REVENUE through Chairman and 7 others

I.C.A. No.83099 of 2022, heard on 8th March, 2023.

Sales Tax Act (VII of 1990)---

----Eighth Schedule, Table-I, Column 5---Notifications SRO No.363 (I)/2012, dated 13-04-2012 and SRO No. 563 (I)/2022 dated 29-04-2022---Refund of duty---Appellant company was aggrieved of order passed by Deputy Commissioner Inland Revenue holding it disentitled to refund claim in respect of period from July 2021 to February 2022---Validity---Provisions of Notification SRO No. 563(I)/2022 dated 29-04-2022 did not apply retrospectively and had struck down word 'existing' in R. 39-O of Notification SRO No. 563 (I)/2022 dated 29-04-2022---Show-cause notice dated 21-11-2022 as well as order dated 21-11-2022, passed by Deputy Commissioner Inland Revenue, were passed without lawful authority and were of no legal effect---High Court did not permit appellant company to go through the rigours of long drawn litigation process for refund claim to be made over to appellant company---Entire exercise of issuance of Notification SRO No. 563 (I)/2022 dated 29-04-2022 and for it to apply retrospectively was a mala fide act on the part of Federal Board of Revenue to deprive appellant of its due refund claim---Division Bench of High Court declared that provisions of SRO No. 563 (I)/2022 dated 29-04-2022 did not apply to refund claims of appellant which must be processed and disbursed expeditiously under Notification SRO 363 (I)/2012, dated 13-04-2012---Division Bench of High Court further declared that show cause notice issued to appellant and order passed by authorities were null and void and of no effect---Intra Court Appeal was allowed accordingly.

PLD 1965 SC 671; Wade and Forsyth's Administrative Law (Twelfth edition); De smith's Judicial Review (seventh edition, p.290); Al-Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917; Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan and others 1993 SCMR 1905; Messrs M.Y. Electronics Industries (Pvt.) Ltd. through Manager and others v. Government of Pakistan, through Secretary Finance, Islamabad and others 1998 SCMR 1404 = 1998 PTD 2728; Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652; Muhammad Rafique and others v. Federation of Pakistan and others 2014 PTD 1881 and Pakistan International Airlines Corporation through Chairman and others v. Samina Masood and others PLD 2005 SC 831 ref.

Imtiaz Rashid Siddiqui, Shahryar Kasuri, Raza Imtiaz Siddiqui and Muhammad Hamza for Appellants.

Ahmed Pervaiz, Saffi ul Hassan and Asad Ali Bajwa, Deputy Attoney General for Pakistan for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 728 #

2024 P T D 728

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

COMMISSIONER INLAND REVENUE, LEGAL ZONE, CORPORATE TAX OFFICE, LAHORE

Versus

LF LOGISTICS PAKISTAN (PVT.) LTD., LAHORE and another

I.T.R. No.73773 of 2022, heard on 11th October, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss.113(3)(b), 153(7)(v)(b) & 133---Minimum tax on the turnover of service-provider---"Gross turnover"---Freight charges, terminal charges, shipment handling charges, payment of duties and other taxes under the term gross turnover, inclusion of---Taxpayer (company/service-provider) was engaged in the business of freight forwarding by air and sea to and from Pakistan and also customs house brokerage, road freight etc.---Assessment order (return) filed by taxpayer (company/service-provider), was amended by levying turnover tax @ 1.25%, which was endorsed by Commissioner Inland Revenue (Appeals), however, Appellate Tribunal Inland Revenue ('the Tribunal') vacated both the said orders---Department filed reference against the said judgment passed by the Tribunal---Contention of the Applicant/Department was that freight charges, terminal charges, shipment handling charges, duties and taxes ('other amounts') were part of invoiced amount(s), hence construable as gross receipts, and said amounts could not be excluded from the ambit of turnover as defined in clause (a) subsection (3) of S. 113 of the Income Tax Ordinance ('the Ordinance, 2001') 2001, thus, the Tribunal incorrectly held that only the fee, claimable as service charges could be recognized as taxable for the purposes of minimum tax liability---Plea of the respondent / taxpayer was that case of the taxpayer falls within clause (b) of subsection (3) of S. 113 of Ordinance, 2001 as taxpayer was a service provider and charges fees for rendering services, and all other amounts, erroneously treated as part of the turnover, were otherwise reimbursable expense, incurred at the behest of the recipient of service---Validity---Turnover, in terms of clause (b) of subsection (3) of S.113 of the Ordinance, 2001 means the gross fees paid for rendering of services other than those covered by final discharge of tax liability, for which tax is separately paid or payable---Fundamental question is whether the said other amounts, otherwise distinguishable from the fees paid in lieu of rendering of services in terms of clause (b) of subsection (3) of S. 113 of the Ordinance of 2001, could be treated as gross receipts---Factually, the claim of reimbursement of other amounts is not disputed; if construction proposed by the department is acknowledged (to treat other amounts and the service fees as part of gross receipts), it would not only render clause (b) of subsection (3) of S. 113 ibid, redundant but conspicuously distort the meaning effect of sub-clause (b) of clause (v) of subsection (7) of S. 153 of the Ordinance 2001---Term "gross fee", in the context of rendering of or providing of services, would exclude reimbursable expenses for the purposes of ascertaining the volume of the "turnover"---Accordingly, it is the gross fee and not the gross receipts, which shall be treated as part of turnover for the purposes of commuting the minimum tax liability in terms of clause (b) of subsection (3) of S.113, of the Ordinance, 2001, and the other amounts have to be excluded for the purposes of turnover in terms of clause (b) of subsection (3) of S. 113 of the Ordinance, 2001---It was not the case of the department that the other amounts were treated as part of gross receipts for the purposes of deduction of withholding tax in terms of subsection (1) of S. 153 of the Ordinance, 2001---Tribunal rightly differed with the determinations by the Commissioner (Appeals) and Commissioner, which had erroneously treated the amounts, comprising of freight charges, terminal charges, shipment handling charges payment of duties and other taxes, in addition to the gross fee for rendering services, as part of gross receipts---Applicant /Department had failed to point out any illegality or legal infirmity in the order passed by the Appellate Tribunal Inland Revenue, which needed no interference---Answer of the High Court to the proposed questions was in negative, i.e., against applicant-department and in favour of respondent-taxpayer---Reference Application filed by the Department was dismissed.

Malik Abdullah Raza for Applicant.

Shoaib Rashid for Respondent.

PTD 2024 LAHORE HIGH COURT LAHORE 758 #

2024 P T D 758

[Lahore High Court]

Before Muhammad Sajid Mehmood Sethi and Jawad Hassan, JJ

COMMISSIONER INLAND REVENUE, ZONE-II, LTU, LAHORE

Versus

Messrs SHEZAN INTERNATIONAL LTD., LAHORE

P.T.R. No.147 of 2013, heard on 29th March, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 37, 75, 97 & 120---Amalgamation of companies---Merger of wholly owned subsidiary---Capital gains---Scope and effect---Assessment order (Income Tax Return) filed by the Taxpayer/company (deriving income from manufacturing and sale of juices, pickles, jams, ketchups etc.) was amended by putting in additions on account of capital gains thereby disallowing the expense on repair and maintenance of the vehicles---Appellate Tribunal Inland Revenue ('Tribunal'), on appeal preferred by the company, deleted the addition, made under S.37 of Income Tax Ordinance, 2001 ('the Ordinance, 2001'), by the Additional Commissioner Inland Revenue which was confirmed by the Commissioner (Appeals)---Department filed reference before the High Court against the order passed by the Tribunal---Contention of the applicant/Department was that the Appellate Tribunal was not justified in deleting the addition made on account of capital gains under S. 37 of the Ordinance, 2001 without making any comparison or without having any material before it for the purpose of cross-checking in order to satisfy the parameters provided in S.97 of the Ordinance 2001---Plea of the respondent(company/taxpayer) was that merger of wholly owned subsidiary was fully covered under the provisions of S. 97 of the Ordinance of 2001, thus, no gain or loss shall be taken to arise on disposal of its assets---Validity---Record revealed that respondent/company had a subsidiary company with a different name and style ('the subsidiary'), which was merged into respondent/company pursuant to a Court's order, and the subsidiary merged into respondent/company under the scheme of arrangement for merger / amalgamation---Merger of two or more companies is essentially a process of corporate reconstruction whereby assets of merging companies are either clubbed or brought together in the surviving or new company, however, proprietary rights of assets remained intact---No financial transaction could be said to have taken place between the merging companies---As such in the scheme of merger arrangement, there does not take place any sale, disposition, exchange or relinquishment or extinguishment of any right on the part of the amalgamating companies that gives rise to any income or gain resulting in a taxable event---If upon merger, the net assets of the merging companies remain unaltered and also the proprietary interest of the shareholders in the amalgamated company remains the same, a corporate merger does not give rise to any taxable event---A merger does not give rise to any financial transaction to create a taxable event and no cash payment is involved in any manner---Amalgamation does not involve any sale or purchase and any surplus of value of shares issued by the amalgamated company over the value of one asset transferred does not result in any taxable gain---Amalgamation of the wholly-owned subsidiary company with its parent company does not result in transfer for consideration and, therefore, does not give rise to any capital gains---Liability to capital gains tax (if any) can only be on the transferor company (subsidiary), which in the present case had lost its identity and ceased to exist---Subsidiary (company), which got amalgamated with the respondent/company, was a hundred percent subsidiary of the respondent/company---By virtue of the amalgamation, all the assets and liabilities of the subsidiary became the assets and liabilities of the respondent/company---Where the amalgamating company, which is a hundred percent subsidiary, merges with the holding company (amalgamated company), no question of any profit or gain would arise because the amalgamating company (wholly owned subsidiary), on amalgamation, ceases to exist and its identity merges completely with the amalgamated company; however, in case the amalgamating company receives nothing but the shareholders receive shares of the amalgamated company, there is no question of capital gains in the hands of the amalgamating company since it is the shareholders who receive consideration (if any)---In an amalgamation where no shares are issued by the amalgamated company, because the amalgamating company was a wholly owned subsidiary, no question of capital gains can arise because the amalgamating company does not receive any consideration---Applicant/department had failed to point out any illegality or legal infirmity in the order passed by the Appellate Tribunal, which even otherwise was unexceptionable, thus, needed no interference---High Court answered to the purposed questions in affirmative, i.e. against applicant/department and in favour of respondent/company---Reference Application filed by the Department was dismissed accordingly.

CIT (Delhi) v. Bhahrat Development (Pvt.) Limited 135 ITR 456; Forbes Forbes Campbell and Company Ltd. v. Commissioner of Income-Tax (1983) 37 CTR Bom 212; Shaw Wallace & Co. Ltd. v. Commissioner of Income-Tax (1979) 119 ITR 399 and General Radio and Appliances Co. Ltd. v. M.A. Khader (Dead) By Lrs 1986 AIR 1218 = 1986 SCR (2) 607 ref.

Imran Rasool for Applicant.

Hameed Bukhsh for Respondent.

PTD 2024 LAHORE HIGH COURT LAHORE 808 #

2024 P T D 808

[Lahore High Court]

Before Asim Hafeez, J

KASHF FOUNDATION through Chief Executive

Versus

CHIEF COMMISSIONER INLAND REVENUE, LTU, FEDERAL BOARD OF REVENUE and 2 others

Writ Petition No.79632 of 2022, decided on 17th January, 2024.

Income Tax Ordinance (XLIX of 2001)---

----S.2(36)---Income Tax Rules, 2002, R. 217---Non-Profit Organization---Exemptions and privileges---Petitioner company claimed certain exemptions and privileges attached to and otherwise available to organizations qualifying for Non-Profit Organization without appreciating the conditions---Validity---Effect of limiting such exemptions and privileges to any Non-Profit Organization regime, required strict application and enforcement---Petitioner company was unworthy and not entitled to availing such exemptions or privileges in the wake of transactions transacted having effect of conferring private benefit attributable and realized between two points in time---Despite all commercial prudence applied to justify transactions, the reality of conferring private benefits could neither be effaced nor belittled, while appreciating the effect of under-priced loan, injection of equity by petitioner upon purchase of shares of Kashf Holdings (Pvt.) Limited, at premium price - seven times the face value of share---And then was the decision of off-loading of shares of Microfinance Bank which showed that transactions in question were not intended to secure firm corporate footing for petitioner in Microfinancing Bank but manifested reaping of private benefits---Mischief intended to be remedied through limitations prescribed under S. 2(36) of Income Tax Ordinance, 2001 and R. 217(1)(b) of Income Tax Rules, 2002 was traced and correctly targeted---High Court declined to interfere in the orders passed by authorities, as there was no jurisdictional defect manifested in exercise of powers available under R. 217(1)(b) of Income Tax Rules, 2002---Constitutional petition was dismissed, in circumstances.

Jaipur Charitable Trust v. Commissioner of Income Tax (1981) 127 ITR 620; Hamdard Laboratories India and others v. Assistant Director of Income Tax, Commissioner of Income Tax v. Andhra Chamber of Commerce 1965 AIR 1281; Commissioner of Taxation v. Word Investments Limited 2007 FCAFC 71; 164 FCR 194; Congregational Union of NSW v. Thistlethwayte (1952) 87 CLR 375; Stratton v. Simpson (1970) 125 CLR 138; Treat Corporation Ltd. v. ELMAC Ltd. 2011 YLR 2825; Ahmad Khan Bhatti v. Masooda Fatimia PLD 1981 Kar. 398; Pak Arab Fertilizers v. Dawood Herculis PLD 2015 Sindh 142 and Shariq ul Haq and others v. PIA 2018 PLC (C.S.) 975 distinguished.

Shehbaz Butt, Mehak Zafar, Ibrahim Shahbaz, Khurram Shahbaz, Asfand Yar Waheed and Sara Majeed for Petitioner.

Ch. Imtiaz Elahi, Deputy Attorney General.

Ch. Muhammad Zafar Iqbal and Osama Zafar for Respondents Nos.1 and 2.

Bilal Munir, Advocate for respondent No.3 - FBR.

PTD 2024 LAHORE HIGH COURT LAHORE 837 #

2024 P T D 837

[Lahore High Court]

Before Shahid Karim, J

Messrs NISHAT HOTELS AND PROPERTIES LTD. through Authorized Officer and another

Versus

PROVINCE OF PUNJAB through Secretary Ministry of Finance, Government of Punjab and 3 others

Writ Petition No.16217 of 2020 (and other connected petitions), heard on 6th June, 2023.

Punjab Sales Tax on Services Act (XLII of 2012)---

----S. 52---Punjab Revenue Authority Act (XLIII of 2012), S.3---Show-cause notice---Jurisdiction---Petitioners assailed show cause notices issued to them by the Authority (constituted under the Punjab Revenue Authority Act, 2012)---Plea raised by petitioners was that without framing of rules, the Authority could not exercise its jurisdiction---Validity---If the Legislature intended the Authority to appoint officers by firstly enacting rules in such regard, then no officer could either be appointed nor could he exercise jurisdiction unless the Authority had acted under the rules which were formulated for the purpose---High Court declared act of the Authority ultra vires in conferring jurisdiction upon officers to issue show-cause notices in respect of cases and areas---High Court set aside show-cause notices as the same had been issued incompetently, without lawful authority and were of no legal effect---Constitutional petition was allowed, in circumstances.

Imtiaz Rasheed Siddiqui, Barrister Shehryar Kasuri, Muhammad Ajmal Khan, Khurram Shahbaz Butt, Ch. Anwar ul Haq Arif, Muhammad Nasir Khan, Azeem Hafeez, Mudassar Shuja ud Din, Waseem Ahmad Malik, Muhammad Farooq Sheikh, Irtaza Ali Naqvi, Shahid Pervez Jami, Mustafa Kamal, Mahmood Ahmad, Muhammad Asif ur Rehman, Anwar ul Haq, Raza Imtiaz Siddiqui, Muhammad Hamza Sheikh, Jamshaid Alam, Sabeel Tariq Mann, Fasih ur Rehman, Muhammad Ahsan Nawaz, Azeem Ullah Virk, Omer Wahab, Rana Usman Habib Khan, Noreen Fozia, Muhammad Yasir Ibrahim, Gul-e-Shifa, Mahmood Arif, Rana Muhammad Afzal Razzaq Khan, Asmar Tariq Mayo, Faisal Anwar Minhas, Kashif Habib, Muhammad Zeeshan Sulehria, Muhammad Arslan Saleem Chaudhry, Mohsin Majeed, Asif Amin Goraya, Najmul Husnain, Ch. Sabir Ali and Hannan Maqsood, for Petitioners.

Waqas Ahmad Mir, Ahmad Hassan, Momna Taufeeq, Sajid Ijaz Hotiana, Tanzil ur Rehman Hotiana, Dilnawaz Ahmad Cheema, Sardar Qasim Hassan Khan, Hassan Kamran Bashir, Fahad Ikram, Riaz Ahmad Kharal, Ans Ghazi, Sikandar Ali, Ch. Sultan Mahmood, Haseeb Tariq, Muhammad Amin, Samran Mushtaq Chaudhry, Ch. Ahmad Ali Gondal, Faizullah Niazi, Muhammad Baqir Hussain, Syed Tassadaq Mustafa Naqvi, Muhammad Sarfraz Nawaz, Muhammad Ali Farooq, Ghulam Mustfa, Naheed Baig, Muhammad Nauman Yahya, Malik Muhammad Awais Khalid, Ch. Nusrat Javed Bajwa, Qasim Mustafa, Asad Abbas Butt, Riaz Ahmad Khan, Ali Javed Bajwa and Muhammad Umer Riaz for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 858 #

2024 P T D 858

[Lahore High Court]

Before Shams Mehmood Mirza, J

Messrs RIAZ BOTTLERS (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.76380 of 2023, decided on 20th November, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 48 & 49(1)---Constitution of Pakistan, Art. 199---Recovery of arrears of tax---Sales or transfer of taxable activity---Issuance of show-cause notice---Constitutional petition---Maintainability---Deputy Commissioner Inland Revenue, jurisdiction of---Show-cause notice alleged that the petitioner (company) sold/ transferred its taxable activity to the other company which was an unregistered person on the effective date of the scheme of arrangement and as such the petitioner was liable to make payment of the sales tax in terms of S. 49(1) of the Sales Tax Act, 1990---Contention of the petitioner / company was that transfer of assets took place on the basis of an order passed by the Court and as such S. 48 of the Sales Tax Act, 1990, was not applicable to the said transaction---Validity---Contention of the petitioner regarding lack of authority or jurisdiction of the Deputy Commissioner Inland Revenue qua show-cause notice was misplaced---Allegation made in the show-cause notice might or might not be tenable or the provisions of S. 49 of the Sales Act, 1990, might or might not be attracted to the transaction in question; this per se, however, did not demonstrate absence of jurisdiction in Deputy Commissioner Inland Revenue to issue the show-cause notice---Petitioner had since filed reply to the show-cause notice and the matter was now pending before the Deputy Commissioner Inland Revenue---Any order passed by Deputy Commissioner Inland Revenue on the show-cause notice is appealable under the Sales Tax Act, 1990---Thus, the constitutional petition was not maintainable---Constitutional petition was dismissed, in circumstances.

Commissioner Inland Revenue and others v. Jahangir Khan Tareen and others 2022 SCMR 92 ref.

Ali Sabtain Fazli, Abad-ur-Rehman, M. Umar Tariq Gill, Isa Ahmad Jalil and Kairan Hussain Mir for Petitioner.

PTD 2024 LAHORE HIGH COURT LAHORE 869 #

2024 P T D 869

[Lahore High Court]

Before Shams Mehmood Mirza, J

Mst. SADIA ISHFAQ

Versus

CHIEF COMMISSIONER and 6 others

Writ Petition No.17688 of 2024, decided on 28th March, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss.216(1) & 216 (3)(m)---Information of a taxpayer, disclosure of---Scope---Legal representative of deceased taxpayer, rights of---Daughter sought, from the concerned Commissioner Inland Revenue, the copies of tax returns of her deceased father in order to ascertain her share from the properties left by him, which request was rejected---Argument of the Commissioner, relying on S. 216(3)(m) of the Income Tax Ordinance, 2001 ('the Ordinance, 2001'), was that the information required by the petitioner/daughter could not be provided to her as she had to approach the civil court and through its processes the Commissioner might provide the necessary tax returns in evidence before the Civil Court---Validity---Provisions of S. 216(3)(m) of the Ordinance, 2001 stipulated that the bar contained in S.216(1) of the Ordinance, 2001 shall not be applicable to proceedings pending in a Civil Court in which the Federal Government or any income tax authority is a party relating to any matter arising out of any proceedings under the Ordinance, 2001---Said provision by its terms does not support the reasons mentioned in the impugned order to deny the petitioner the tax returns of her father---It is apparent from the said provision that the suit or proceedings pending in the Civil Court must relate to a matter arising out of any proceedings under the Ordinance, 2001---Petitioner had sought seeks copies of the tax returns of her deceased father to ascertain the (movable and immovable) properties left by him ; she could not simply file a suit without mentioning the properties to which she was entitled on account of inheritance---Even otherwise, any dispute regarding the tax affairs of the deceased after his death shall have to be dealt with by his legal representatives---Petitioner being one of the legal representatives of the deceased was entitled to obtain the information from the tax returns to lay claim on her legal entitlement under the Islamic law of inheritance---High Court viewed that S. 216 of the Ordinance, 2001 did not place any bar on legal representative(s) of a deceased taxpayer from obtaining the copies of his / her tax returns--- High Court set-aside impugned order passed by the Commissioner Inland Revenue and directed him to provide necessary information / tax returns of the deceased father of the petitioner to the petitioner---Constitutional petition filed by the daughter of deceased taxpayer, was allowed, in circumstances.

Muhammad Osama Asif for Petitioner.

Syed Zain ul Aabedin Bukhari for Respondent/FBR.

PTD 2024 LAHORE HIGH COURT LAHORE 889 #

2024 P T D 889

[Lahore High Court]

Before Shahid Karim and Rasaal Hasan Syed, JJ

COMMISSIONER INLAND REVENUE and others

Versus

MUHAMMAD OSMAN GUL and others

I.C.A. No.35908 of 2023, in Writ Petition No.52559 of 2022, decided on 15th February, 2024.

(a) Income Tax Ordinance (XLIX of 2001)---

----S.7E---Constitution of Pakistan, Art. 25, Fourth Sched. Federal Legislative List, Entries 47 & 50---Intra Court Appeal---Capital Value of Assets, taxing of---Vires---Discrimination---Authorities were aggrieved of judgment passed by Judge in Chambers of High Court declaring provision of S. 7E of Income Tax Ordinance, 2001, ultra vires the Constitution---Validity---Provision of S. 7E of Income Tax Ordinance, 2001, treats increment in value of capital asset as income and resident person cannot be left immersed in the thought of deriving double benefit viz one increase in value of his capital asset and two zero tax---In case an owner of property disposes of his asset, no tax is leviable under S. 7E of Income Tax Ordinance, 2001---But beyond six years, he does not pay capital gain tax on such sale, too---Such tax has been levied on notional income but not a notional asset (from which it is deemed to arise)---Legislature has intended to tax an asset apparently lying dormant and not generating an income in cash but indeed capable of increment in value---It is the value addition that S.7E of Income Tax Ordinance, 2001, seeks to tax---Notionally the augmentation in value becomes part of taxpayer's income---Provision of S. 7E (2)(d)(i) to (iv) of Income Tax Ordinance, 2001, does not suffer from vice of discriminatory legislation and does not offend Art.25 of the Constitution---Categories of persons have been carved out in S. 7E (2)(d)(i) to (iv) of Income Tax Ordinance, 2001, which are distinct and apart from general category of taxpayers---Legislature is empowered to create categories of taxpayers and to tax one and not the other---Division Bench of High Court in exercise of appellant jurisdiction set aside judgment passed by Judge in Chambers of High Court---Intra Court Appeal was allowed, in circumstances.

Elahi Cotton Mills v. Federation of Pakistan PLD 1997 SC 582; Idea of Public Law' (Oxford OUP, 2003); Legal Interpretation of Tax Law (2nd Edition); Cape Brandy Syndicate v. IRC (1921) 12 TC 358; Lehnhausen v. Lake Shore Auto Parts Co. 410 U.S 356, 364 (1973); Treatise on the Law of Taxation; 254 US 418; Halsbury's Laws of England (Fourth Edition) (23) Tax Law, State-Building and the Constitution by Dominic de Cogan); John McEldowney, (The Changing Constitution, 8th edn. (Oxford, 2015); Anthony Trollope; Principals of Tax Law, Geoffery Morse and Sandra Eden, Ninth Edition); Lowe v. Ashmore [1971] 1 All ER 1057 and Pepper v. Hart (1992) 65 TC 421 rel.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 7E---Capital Value of Assets, taxing of---Scope---This is taxing potential earning and would be considered imputed income from actual return on investment in the form of use rather than money.

----Fourth Sched., Federal Legislative List, Entry 47---Term "income"---Connotation---Term "income" has not been defined in certain manner by the Constitution and it must be given its widest and broadest meaning---Amplitude of the term cannot be confined to mean a certain thing and not the other---It has been left to the Legislature to define term "income".

(d) Constitution of Pakistan---

----Fourth Sched., Entries 47, 48, 49, 50, 51, 52 & 53---Federal Legislative List---Taxes and Entries---Scope---Single tax may derive its sanction from one or more entries and many taxes may emanate from one single entry---Entry in Legislative List must be give a wide and liberal interpretation.

(e) Income Tax Ordinance (XLIX of 2001)---

----S. 4---Constitution of Pakistan, Fourth Sched., Entry 47---Federal Legislative List---Taxon taxable income---Categorization---Scope---Words used in Entry 47 of Fourth Schedule to the Constitution mean a wide array of different taxes which may be imposed on income---Taxes of different nature are imposed under Income Tax Ordinance, 2001, on income of a person or different persons---Legislature chooses to impose a tax on certain set of persons and to grant exemption in respect of other set of persons---Mere categorization of tax is not un-Constitutional.

(f) Income Tax Ordinance (XLIX of 2001)---

----S.2(29) [as amended by Finance Act (I of 2003)]---Phrase "any amount treated as income under any provision of Income Tax Ordinance, 2001"---Scope---Sentence "any amount treated as income under any provision of Income Tax Ordinance, 2001" has to be read as whole---When the sentence is read as whole it conveys that the Legislature may treat any amount as income---Use of word "treated" is crucial and connotes an amount which may be deemed or imputed as income.

(g) Income Tax Ordinance (XLIX of 2001)---

----S. 2(29)---Term, "income"---Meaning---Resort cannot be made to definition of 'income' as given in dictionaries since the term has already been defined in Income Tax Ordinance, 2001.

(h) Interpretation of statutes---

----Reading down, principle of---Applicability---Rule of reading down has to be disapplied for countries with a written Constitution---This is a concept peculiar to the United Kingdom administration of justice which does not have a written Constitution and Courts have fallen back on the rule of reading down (reading in) to save statutory provision or to confirm it with constitutional principles---Courts cannot use devise of reading down in order to re-write a statutory provision---There is no compulsion on the Courts to save legislation if it is beyond the Legislative competence---Un-constitutional legislation must be struck down and not saved.

(i) Income Tax Ordinance (XLIX of 2001)---

----Ss. 7E & 37---Capital Value of Assets and Capital Gain---Taxes, nature of---Distinction---Taxes in respect of Ss. 7E & 37 of Income Tax Ordinance, 2001, are distinct and separate and are triggered under different circumstances---There is no duplication in imposition of taxes under Ss. 7E & 37 of Income Tax Ordinance, 2001, and question of double taxation does not apply.

Syed Moazzam Ali Shah, Abdul Muqtadar Khan, Ms. Asma Hamid, Shahzad Ahmad Cheema, Malik Abdullah Raza, Barrister Ahmed Pervaiz, Syed Ahmed Hasnain Rizvi, Rana Muhammad Akram, Hassan Ali, Ms. Sana Azhar, Mustafa Khalid, Ms. Samar Masood Soofi, Bakhtawar Bilal Soofi, Shamsher Ali, Shahjahan Khan, Murad Ali Khan Marwat, Raja Abdul Qadeer, Ms. Hina Bandealy, Ms. Foziya Bukhsh, Barrister Ali Umrao, Barrister Scheherzade Shaharyar, Muhammad Zafar Iqbal, Syed Zeeshan Haider Zaidi, Muhammad Bilal Munir, Barrister Ahtasham Mukhtar, Falak Sher Khan, Muqtedir Akhtar Shabir, Mirza Shahryar Beg, Muhammad Shabbir Hussain, Muhammad Ali Talib, Nadeem Shahzad Hashmi, Malik Ahsan Mehmood, Barrister Raja Abdul Qadeer Janjua and Muhammad Shafique Baloch for Appellants.

Barrister Shaharyar Kasuri, Shahbaz Butt, Syed Muhammad Ijaz, Ali Raza, Sufiyan Zaman, Tanveer Ahmad, Muhammad Ajmal Khan, Muhammad Imran Rashid, Sh. Muhammad Akram, Mian Mahmood Rashid, Syed Naveed A. Andrabi, Khurram Saleem, Abbas Ali Awan, Waqas Qadeer Sheikh, Hasham Maqsood, Ashraf Samar, Sharif Khokhar, Adnan Tariq, Waheed Ahmad, Hafiz M. Adeel Azam, Ashiq Ali Rana, Syed Majid Ali Bukhari, Muhammad Nasir Khan, M. Irfan Aslam Rana, Mian Zahid, Raza Imtiaz Siddiqui, Jamshid Alam, Fasih-ur-Rehman, Abu-ul-Hassan Rana, Muhammad Arshad, Barrister Asad Rahim Khan, Malik Muhammad Abbas Farooq, Syed M. Baqir Ali, Syed Zeeshan Haider Zaidi, Syed Shaukat Ali Shah, Muhammad Ijaz Ali Bhatti, Riaz Ahmad Kharal, M. Tahir Munir, Muhammad Tariq Bashir, Muhammad Kashif Tahir, M. Saqib Jillani, Imran Ashraf Awan, Madiha Farooq Sheikh, Sajid Hussain Qureshi, Waqas Ahmad Aziz, Qamar-ul-Zaman, Arslan Saleem Ch., Qamar-ul-Haq Bhatti, Zain-ul-Hassan Shabbir, Ibrahim Haroon, Muhammad Mahtab Chugtai, Malik Muhammad Sharif Khokhar, Muhammad Mustafa Khalid, Muhammad Shaban, Rana Muhammad Aslam, M. Irfan Aslam Rana, Muhammad Hamza Habib, Shoaib Ilyas, Arfan Ahmad, Ch. Imran Arshad Naro, Muhammad Mustafa Khalid, M. Abubakar Shahzad, Barrister Asad Rahim Khan, Ms. Nimra Arshad, Faiz-e-Azhar, Mohammad Iftikhar Ali, Ms. Faiqa Dawood Barrech, Barrister Ameer Abbas, Hassan Aman, Syed Nasir Ali Gillani, Abuzar Hussain, Muhammad Asif Rana, Rabeel Safdar Tatla, Barrister M. Abubakar, Malik Nadir Ali Sherazi, Muhammad Usman, Zahid Ateeq Ch., Rashid Khan, Faisal Rasheed Ghouri, Saqib Qadeer, Yasir Hameed, Muhammad Abrar, Yasir Akram Qureshi, Azeem Suleman, Syed Nasir Ali Shah, Syed Zeeshan Hassan Gillani, Azhar Mukhtar, Qamar-uz-Zaman, Muhammad Khalid, Muhammad Bilal, Arif Munir, Saud Qamar, Zaiba Munir, Ali Raza Cheema, Muhammad Murtaza, Muhammad Naveed Shabbir Goraya, Omer Iqbal Khawaja, Hassan Kamran Bashir, Sikandar Ali, Muhammad Muqadam Sukhera, Muhammad Mansha Sukhera, Zeeshan Asif, Muhammad Ali Awan, Saghir Ahmed, Azeem Ullah Virk, Omer Wahab, Rana Usman Habib, M. Ahsan Nawaz, Muhammad Waqar Akram, Mian Muhammad Zahid, Rana Muhammad Afzal, Hassan Aujla, Farhan Shahzad, Syed Ali Talab, Muhammad Afzal Dharala, Mian Muhammad Zahid, Muhammad Hamza Rauf, Muhammad Siddique Butt, Muhammad Imran Khan, Fahim Khadam, Waseem Ahmad Malik, Iftikhar Nawaz Gujjar, Hafiz Tanveer Nasir, Asif Amin Goraya, Muhammad Zeeshan Sulehria, Rana Munir Hussain, Shahbaz Siddique, Mian Haseeb Tahir, Abdul Majid Azad, Sheikh Aqeel Ahmed, Muhammad Shahid Baig, Muhammad Bilal Pervaiz, Syed Zeeshan Ali, S.M. Raheel, Murtaza Naeem, Uzair Sajid, M. Umer Rafiq, Rana M. Afzal Razzaq Khan, M. Adeel Ch., Abdul Latif, Ghulam Abbas Haral, Syed Ali Tarab, Zohaib Ali Sidhu, Ch. Ali Aqib, Malik M. Zarif and Malik Bashir Khalid for Respondents.

Mirza Nasar Ahmad, Additional Attorney General.

Asad Ali Bajwa, Deputy Attorney General.

Ms. Deeba Tasnim Anwar, Assistant Attorney General.

M. Zain Qazi, Assistant Attorney General.

PTD 2024 LAHORE HIGH COURT LAHORE 989 #

2024 P T D 989

[Lahore High Court (Rawalpindi Bench)]

Before Jawad Hassan, J

RAHAT CAFÉ, RAWALPINDI

Versus

GOVERNMENT OF PUNJAB through Secretary Finance and others

Writ Petition No.4290 of 2023, heard on 1st April, 2024.

Punjab Sales Tax on Services Act (XLII of 2012)---

----Ss.24 & 52---Constitution of Pakistan, Art. 199---Constitutional petition---Show-cause notice---Producing of documents and providing of information---Object, purpose and scope---Petitioners / taxpayers were aggrieved of show cause notices issued under S. 24(2) of Punjab Sales Tax on Services Act, 2012, by respondent / Authority, without assessment of liability---Validity---Intent behind provision of S. 52 of Punjab Sales Tax on Services Act, 2012, in connection with requisite inquiry was to bring on record justified footings and reasons for assessment of tax liabilities on basis of record---Impugned notices were bereft of requisite inquiry prescribed under the umbrella of Punjab Sales Tax on Service Act, 2012---Said notices were without strength of due inquiry and petitioners / taxpayers were not afforded opportunity of hearing---Objections raised by the petitioners / taxpayers in their respective replies were not given due consideration---High Court set aside show-cause notices, as the same could not be allowed to breath in field anymore---High Court remanded the matter to respondent / authority to first conduct due inquiry in terms of S. 57 of Punjab Sales Tax on Services Act, 2012, after ensuring submission of replies by all the petitioners / taxpayers---Constitutional petition was allowed accordingly.

Commissioner Inland Revenue, Lahore v. Messrs Millat Tractors Limited, Lahore and others 2024 SCMR 700 fol.

Hafiz Muhammad Idris, Advocate Supreme Court with Syed Farid Ahmed Bukhari, Faizan Ahmed Mirza, Hassan Askari Kazmi, Bilal Kayani and Faisal Khurshid Awan for Petitioner (in this petition and connected W.P.No.751 of 2024).

Ch. Naeem ul Haq, Advocate Supreme Court with Ch. Imran ul Haq and Ch. Faheem ul Haq for Petitioners (in connected W.Ps. Nos.3957, 3958, 3959, 3961, 4102, 4103, 4104, 4104, 4106, 4107, 4198, 4199, 4200, 4255, 4256 of 2023, 76, 77, 79, 81, 82, 243, 301, 446, 447, 448, 449, 450,451, 606, 607 and 851 of 2024).

Syed Farid Bukhari, Faisal Khurshid Awan and M. Bilal Bukhari for Petitioner (in connected W.P.No.4228 of 2023).

Muhammad Musawar Gill for Petitioners (in connected W.Ps. Nos.4244 of 2023 and 123 of 2024).

Nasir Muhammad Malik for Petitioners (in connected W.Ps. Nos.129, 130, 131 and 141 of 2024).

Malik Muhammad Aslam for Petitioner (in connected W.P.No.214 of 2024).

Ghazala Nazir Qureshi for Petitioners (in connected W.Ps. Nos.361, 362, 363, 364 and 365 of 2024).

Muhammad Taimur Malik, Advocate Supreme Court for Petitioners (in connected W.Ps. Nos.385, 386, 387 of 2024).

Khalid Jamshed Khattak for Petitioner (in connected W.P.No.453 of 2024).

Atif Waheed and Ahmad Shahzad for Petitioners (in connected W.Ps. Nos.569, 570 and 571 of 2024).

Hassan Kamran Basheer, Advocate Supreme Court with Abdul Wakeel for Respondents/PRA (in connected W.Ps.Nos.3958, 3959, 4104 and 4256 of 2023, 77 and 130 of 2024) with Ms. Nadia Murad, Legal Officer, PRA and Finance Department, Government of Punjab, Lahore.

Zeeshaan Zafar Hashmi, for Respondents-PRA (in W.Ps. Nos.3150, 3151 of 2022, 4153 and 4228 of 2023, 76, 84, 129, 301, 363, 385, 449, 450, 570 and 606 of 2024).

Asim Waqar for Respondents (in connected W.Ps. Nos.4198, 4199, 4200, 4244 of 2023, 141, 364, 387, 446 and 571 of 2024).

Muhammad Hussam for Respondent-PRA (in connected W.Ps. Nos.4105, 4106, 4107 and 4255 of 2023).

Raja Umair Mustafa for the Respondent-PRA (in connected W.Ps.Nos.3961, 4102 and 4103 of 2023).

Muhammad Baqir Hussain and Nauman Ali Malik for Respondent-PRA (in connected W.Ps. Nos.123, 243, 362, 447, 453 and 569 of 2024).

Malik Amjad Ali, Additional Advocate General with Abid Aziz Rajori, Assistant Advocate General.

Arshad Mahmood Malik, Assistant Attorney General.

Rashid Mehmood, Research Officer, Lahore High Court, Rawalpindi Bench, Rawalpindi.

PTD 2024 LAHORE HIGH COURT LAHORE 1017 #

2024 P T D 1017

[Lahore High Court]

Before Raheel Kamran, J

Messrs RADIANT MEDICAL (PVT.) LIMITED

Versus

The FEDERAL BOARD OF REVENUE and others

Writ Petition No.34736 of 2024, decided on 3rd June, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss.127 & 140---Constitution of Pakistan, Art. 199---Constitutional petition---Recovery of tax---Person holding money on behalf of taxpayer---Petitioner / taxpayer was aggrieved of deduction of tax liability from his bank account, during pendency of appeal---Validity---Appeal preferred by petitioner / taxpayer under S. 127 of Income Tax Ordinance, 2001, against amended assessment was pending---Respondent / authorities never asked to pay 10% of amount of tax due against which appeal under S. 127 of Income Tax Ordinance, 2001 was preferred by petitioner / taxpayer---Recovery proposed to be effected by authorities beyond 10% of tax liability of petitioner / taxpayer, as determined in amended assessment order was without lawful authority under the provisions of S. 140(1) of Income Tax Ordinance, 2001---High Court directed the authorities to reimburse the amount recovered from bank account of petitioner / taxpayer after deducting 10 % of tax liability therefrom---Constitutional petition was allowed accordingly.

China Machinery Engineering Corporation, Pakistan Branch v. Federation of Pakistan and others 2024 PTD 242; Messrs Pak Saudi Fertilizers v. Federation of Pakistan and others 2002 PTD 679; Z.N. Exporters (Pvt.) Ltd. v. Collector of Sales Tax 2003 PTD 1746; Brothers Engineering (Pvt.) Ltd. v. Appellate Tribunal Sales Tax 2003 PTD 1836 and Messrs Islamabad Electric Supply Company Limited v. Additional Commissioner Inland Revenue and others 2024 PTD 30 ref.

Naveed Zafar Khan for Petitioner.

Muhammad Mansoor Ali, Assistant Attorney General for Pakistan (On Court's call).

PTD 2024 LAHORE HIGH COURT LAHORE 1029 #

2024 P T D 1029

[Lahore High Court (Multan Bench)]

Before Muhammad Sajid Mehmood Sethi and Raheel Kamran, JJ

COMMISSIONER INLAND REVENUE

Versus

ZIA-UR-REHMAN

Income Tax Reference No.36 of 2022, decided on 22nd May, 2024.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 122 & 177(6A) [as substituted / inserted/ amended through Finance Act, 2019]---Audit---Substituted subsection (6) and newly inserted subsection (6A) of S. 177 of the Income Tax Ordinance, 2001, applicability of---Retrospective effect---Scope---Department filed reference against the judgment passed by the Appellate Tribunal Inland Revenue in favour of the taxpayer/respondent, with the plea that the applicability of substituted subsection (6) and newly inserted subsection (6A) of S.177 of the Income Tax Ordinance, 2001, was retrospective---Validity---Taxpayer / respondent was selected for audit on 09.05.2019 whereas Show-Cause Notice proposing to amend assessment under S.122 of Income Tax Ordinance, 2001 ('the Ordinance 2001'), was issued to the respondent on 25.02.2021---Perusal of the Show-Cause Notice clearly indicated that audit proceedings were still pending and no audit report was issued by the Department till the amendments-in-question were made in S. 177 of the Ordinance, 2001 through Finance Act, 2019---There was nothing available on record to show what substantive right, if any, had accrued in favour of the applicant / department on 01.07.2019 when the amendment made through Finance Act, 2019, in S. 177 of the Ordinance, 2001 in the form of substitution of subsection (6) and insertion of subsection (6A) became effective which adversely affected the applicant / Department---Said provisions became effective from 01.07.2019; subsection (6) of S. 177 of the Ordinance 2001 made it mandatory for the Commissioner, upon completion of the audit, to obtain taxpayer's explanation on all the issues raised in the audit and after that issue an audit report containing audit observations and findings---There is nothing in the language of the said provision which suggests retrospective application of the same; it means that cases where vested rights have accrued or transaction has been closed because of completion of audit prior to the said amendment, the requirements stipulated through substituted subsection (6) cannot be pressed into service---However, there is nothing in the language of subsection (6) of S. 177 of the Ordinance, 2001, which restricts application of the said provision to cases where audit was pending completion or still underway on 01.07.2019, which is the case here---Likewise, there is nothing in the text of the said provision that restricts its application to the cases selected for audit after any particular tax year---Indeed, the date of selection for audit hardly provides any basis for regulating applicability of the amended subsection (6) of S. 177 of the Ordinance, 2001, which clearly would apply to all cases where audit was yet to be completed after the said enactment---Thus plea rendered by the applicant qua retrospective application of said subsection (6) was wholly misconceived and untenable---Questions raised by the applicant/department were answered against the applicant/department and in favour of the respondent / taxpayer---Reference application filed by the Department was dismissed.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 120, 122 & 177(6A) [as substituted / inserted/ amended through Finance Act, 2019]---Constitution of Pakistan, Art. 10-A---Audit proceedings---Audit report, non-issuance of---Effect---Substituted subsection (6) and newly inserted subsection (6A) of S.177 of the Income Tax Ordinance, 2001, applicability of---Retrospective effect---Scope---Subsection (6A) of S.177 of the Income Tax Ordinance, 2001 ('the Ordinance, 2001'), empowers the Commissioner to amend the assessment under subsection (1) or subsection (4) of S. 122 of the Ordinance, 2001, after issuing the audit report and providing an opportunity of being heard to the taxpayer under subsection (9) of S.122 of the Ordinance, 2001---Issuance of the audit report is a precondition or sine qua non for the exercise of authority to amend the assessment under said subsection (6A) and the requirement to grant opportunity of hearing is meant to ensure satisfaction of the due process requirement guaranteed under Art. 10A of the Constitution---There is nothing in the language of the said provision which suggests retrospective application of subsection (6A) of Section 177 of the Ordinance, 2001; which means that cases where audit exercise was already completed and proceedings to amend the assessment were completed or initiated with the issuance of Show Cause Notice prior to the said legislative enactment, subsection (6A) of the Ordinance, 2001 cannot arguably be pressed into service---There is, however, nothing in the language of said subsection (6A) which restricts application of the said provision to cases where audit was pending completion or still underway on 01.07.2019, which is the case here as manifest from the facts of the present case---There is nothing in the text of the said provision that restricts its application to the cases selected for audit after any particular tax year---Indeed, the date of selection for audit hardly provides any basis for regulating applicability of the amended subsection (6A) of S. 177 of the Ordinance, 2001 , which clearly would apply to all cases where audit was to be completed after the said enactment and proceedings for the amendment of assessment were yet to commence---Impugned order of the Appellate Tribunal Inland Revenue was based on the determination that no audit report was issued in the present case, and that the amended assessment order passed under S. 122(4) of the Ordinance, 2001 without issuance of audit report under S.177(6) of the Ordinance, 2001 was not sustainable in the eye of law, which finding was unexceptionable---Questions raised by the applicant/department were answered against the applicant/department and in favour of the respondent / taxpayer---Reference application filed by the Department was dismissed.

Commissioner Inland Revenue, Lahore v. Asif Kamal 2022 PTD 965 and Commissioner Inland Revenue, Sialkot and others v. Messrs Allah Din Steel and Rolling Mills and others 2018 SCMR 1328 ref.

----Retrospective effect---Scope---In absence of any stipulation to the contrary, any change in substantive law which adversely affects vested rights of the parties should always have prospective application---Courts lean against giving retrospective operation where the same would prejudicially affect vested rights or past transactions---A prospective statue operates from date of its enactment conferring new rights whereas a retrospective statute, on the other hand, operates backwards and takes away or impairs vested rights acquired under existing laws---However, a statutory provision cannot be termed to have been given retrospective effect merely because a part of the requisites for its action is drawn from a time antecedent to its passing or operation thereof is based upon the status that arose earlier.

Nagina Silk Mill, Lyallpur v. The Income Tax Officer, A-Ward Lyallpur and another PLD 1963 SC 322; Adnan Afzan v. Capt. Sher Afzal PLD 1969 SC 187; Nabi Ahmed and another v. Home Secretary. Government of West Pakistan, Lahore and 4 others PLD 1969 SC 599; Province of East Pakistan v. Sharafatullah and 87 others PLD 1970 SC 514; Sona and another v. The State and others PLD 1970 SC 264; Hassan and others v. Fancy Foundation PLD 1975 SC 1; The Collector, Customs and Central Excise, Peshawar and others v. Messrs Rais Khan Limited through Muhammad Hashim 1996 SCMR 83; Malik Gul Hasan and Co. and 5 others v. Allied Bank of Pakistan 1996 SCMR 237; Manzoor Ali and 39 others v. United Bank Limited through President 2005 SCMR 1785; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 PTD 1392; Muhammad Tariq Badr and another v. National Bank of Pakistan and others 2013 SCMR 314; Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa through Chief Secretary and others 2015 SCMR 43; Commissioner Inland Revenue, RTO, Rawalpindi v. Messrs Trillium Pakistan (Pvt.) Ltd., Rawalpindi and others 2019 SCMR 1643; The Commissioner Inland Revenue, Zone-II, Regional Tax Office, Lahore v. Shazia Zafar 2022 PTD 1942; Vineeta Sharma v. Rakesh Sharma (2020) 9 SCC 1 and Kashif Mahmood v. Additional District Judge and others 2022 MLD 1762 ref.

Agha Muhammad Akmal Khan for Applicant.

Niaz Ahmed Khan for Respondent.

PTD 2024 LAHORE HIGH COURT LAHORE 1051 #

2024 P T D 1051

[Lahore High Court]

Before Ahmad Nadeem Arshad, J

Messrs A&A PIPE INDUSTRIES and others

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.26907 of 2024, decided on 2nd May, 2024.

Anti-Dumping Duties Act (XIV of 2015)---

----Ss.39, 64 & 70---Constitution of Pakistan, Art. 199---Constitutional petition---Anti-Dumping Duties---Determination---Alternate and efficacious remedy---Factual controversy---Petitioners / companies assailed order of National Tariff Commission deciding to continue definitive Anti-Dumping Duties for another period of five years---Validity---Provision of S. 70 of Anti-Dumping Duties Act, 2015, is an exhaustive provision, which does not only provide substantive right of appeal and time limitation for preferring and decision of the same but it also lays down procedural requirements for carrying out whole appellate procedure---Comprehensive scheme of exercising Appellate Jurisdiction by Appellate Tribunal constituted under S.64 of Anti-Dumping Duties Act, 2015, has been provided in law against appeal preferred by an interested party either against initiation of investigation, preliminary determination or final determination and also provides limitation---It also provides procedure for hearing the same including chalking out requirements for a decision of Tribunal---Substantive right of appeal against decision of Appellate Tribunal to High Court has been laid down in S.70(13) of Anti-Dumping Duties Act, 2015---This whole scheme of remedial procedure is clearly suggestive of the fact that a Determination even though a Final Determination under S. 39 of Anti-Dumping Duties Act, 2015, is not absolute and is open for scrutiny before Appellate Tribunal if any interested party, dissatisfied with the same, prefers an appeal before it---High Court declined to interfere in the matter as adequate alternate remedy of appeal was available---Constitutional petition was dismissed, in circumstances.

Shaheen Merchant v. Federation of Pakistan/National Tarif Commission and others 2021 PTD 2126; Rana Aftab Ahmad Khan v. Muhammad Ajmal PLD 2010 SC 1066 and Mian Azam Waheed and 2 others v. The Collector of Customs through Additional Collector of Customs, Karachi 2023 PTD 1571 rel.

Muhammad Afzal Awan for Petitioners.

PTD 2024 LAHORE HIGH COURT LAHORE 1068 #

2024 P T D 1068

[Lahore High Court]

Before Rasaal Hasan Syed and Shahid Karim, JJ

FAUJI FRESH AND FREEZE LTD. through Executive Vice-President

Versus

COMMISSIONER INLAND REVENUE and 3 others

I.C.A. No.55195 of 2020, heard on 17th January, 2024.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 114 (6)(ba), third proviso [as inserted / amended by the Finance Act, 2015]---Revision of tax return---Commissioner, powers of---Scope---There was no reasonable cause to sustain the impugned order of Single Judge of High Court which proceeded on an erroneous view of the amendment brought about through insertion of third proviso to S. 114(6) of the Income Tax Ordinance, 2001---Said amendment was brought about by the Finance Act, 2015---Issue involved was relating to tax years 2010, 2012 and 2013---Application for revision of the assessment in respect of tax year 2010 was filed on 13.8.2015 whereas in respect of tax years 2012 and 2013 the applications were filed on 12.06.2015---Controversy turned on the retrospectivity of the amendment and as to whether the Commissioner was obliged to pass an order for revision of return before the expiration of 60 days for the date when the revision of date was sought---By the proviso it was laid down that where the Commissioner had not made the order of approval in writing for revision of a return within 60 days, the approval required under clause (ba) shall be deemed to have been granted by the Commissioner and the conditions specified in clause (ba) shall not apply---Single Judge of the High Court while holding that the amendment was substantive in nature refused to apply it retrospectively, however, while doing so, the Single Judge fell in error by holding that "tax years prior to 2015 shall be excluded from its operation"---Clearly, the amendment did not have any reference to the tax years and was merely related to the powers of the Commissioner to decide the revision of return expeditiously and not later than 60 days---Said amendment clearly applied to pending proceedings before the Commissioner and whether they related to the year 2015 or to prior tax years---Respondents had not been able to rebut said proposition---Division Bench of High Court set-aside the impugned order passed by the Single Judge of the High Court and held that since the Commissioner did not decide the revision of return of the appellant before the expiration of 60 days, it shall be deemed to have been granted by the Commissioner---Intra-Court appeal, filed by the taxpayer / company, was allowed, in circumstances.

Khurram Shahbaz Butt for Appellant.

Shahzad Ahmad Cheema for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 1112 #

2024 P T D 1112

[Lahore High Court (Rawalpindi Bench)]

Before Mirza Viqas Rauf and Jawad Hassan, JJ

ZUBAIR KHAN

Versus

COMMISSIONER INLAND REVENUE JHELUM ZONE and others

Income Tax Reference No.03 of 2023, heard on 2nd April, 2024.

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss.111, 2(29), 122 & 133---Income chargeable to tax---Inclusion of unexplained income/assets---Proceedings under S.122 of Income Tax Ordinance, 2001, conducting of---Issuance of separate notice under S.111 of Income Tax Ordinance, 2001---Mandatory requirement---Question was whether or not, before invoking the provisions of S. 122 of Income Tax Ordinance, 2001 ('the Ordinance, 2001'), a separate notice to the taxpayer in terms of S. 111 of the Ordinance, 2001 was a pre-requisite to include unexplained income/assets in income chargeable to tax or / and whether or not, a notice under S. 122(9) of the Ordinance, 2001 is enough to initiate proceedings for amendment of the assessment ?---Show-Cause Notice under S. 122(9) of the Ordinance, 2001 was issued against the taxpayer on the basis of definite information that he purchased property during the relevant year but did not disclose its source, and subsequently an Assessment Order was passed following proceedings---Applicant (taxpayer) filed Reference Application as an Assessment Order passed against him was maintained up to Appellant Tribunal Inland Revenue---Case of the applicant was that the Respondents/Department was required to issue a separate notice under S. 111 of the Ordinance, 2001---Stance of the Respondents/Department was that there was no need to issue a separate notice under the aforesaid section for proceeding under S. 122 of the Ordinance, 2001---Held, that the issuance of a separate notice under S.111 of the Ordinance, 2001 is mandatory for the purpose of addition on account of unexplained income or assets---Prior separate notice under S. 111 of the Ordinance, 2001 to confront the taxpayer for explaining his unexplained income and assets has to be issued prior to making of addition of income for tax purposes---High Court answered the proposed question in affirmative i.e. against the Respondents/Department and in favour of the applicant/taxpayer---Consequently the impugned judgments were set-aside---Reference Application, filed by the taxpayer, was allowed, in circumstances.

Commissioner Inland Revenue, T.R.O., Faisalabad v. Faqir Hussain and another 2019 PTD 1828; Commissioner Inland Revenue, Multan Zone v. Falah ud Din Qureshi 2021 PTD 192 and Civil Petition No.2447-L of 2022 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss.111, 2(29), 122 & 133---Constitution of Pakistan, Art. 189---Income chargeable to tax---Inclusion of unexplained income/assets---Proceedings under S. 122 of Income Tax Ordinance, 2001, conducting of---Issuance of notice under S. 111 of Income Tax Ordinance, 2001---Expression "definite information"---Connotation---Expression "definite information" will include factual information as well as information about the existence of a binding judgement of a competent Court of law/forum for the purposes of S.65 of the Ordinance, 2001, but any interpretation of a provision of law by a functionary which has not been entrusted with the functions to interpret such provision judicially, cannot be treated as a "definite information"---Expression definite information certainly meant much more than mere material so as to cause a reasonable belief or even such evidence which may lead to a definite belief---Unless there is definite direct information and there is no further need to put the said definite information to trial by putting in further supporting material the process of self-assessment could not be reopened---"Definite information" does not mean a re-analysis of existing information or an analyses of further information that was previously accessible but had not been taken into account---High Court answered to the proposed question in affirmative i.e. against the Respondents/Department and in favour of the applicant/taxpayer---Consequently the impugned judgments were set-aside---Reference Application, filed by the taxpayer, was allowed, in circumstances.

(Civil Petition No.2447-L of 2022); Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232; "Income Tax Officer and another v. M/s Chappal Builders 1993 PTD 1108 and Chief Commissioner Inland Revenue, RTO, Peshawar v. Messrs Sabrina Tent Services 2019 SCMR 1639 ref.

----Ss.111, 2(29), 122 & 133---Income chargeable to tax---Inclusion of unexplained income/assets---Proceedings under S. 122 of Income Tax Ordinance, 2001, conducting of---Issuance of notice under S. 111 of Income Tax Ordinance, 2001---Expression "definite information"---Revenue Officers, powers of---Federal Board of Revenue Inland Revenue, Revenue Division, Government of Pakistan had already issued instructions through Notification No. 2(22)Rev. Bud/2020 dated 25th May 2021 to the Chief Commissioners Inland Revenue , LTOs, MTOs, CTOs, RTOs, against recklessly issuing notices under S. 122(5) read with S. 122(9) of the Ordinance 2001, whereby purportedly the threshold of "definite information " as defined under S. 122(8) of the Ordinance, 2001 was not met---In the present case, instructions contained in the Notification No. 2(22)Rev. Bud/2020 dated 25th May 2021 had also been brushed aside while passing the impugned orders from Assessing Officer till the Appellate Tribunal Inland Revenue---High Court answered the proposed question in affirmative i.e. against the Respondents/Department and in favour of the applicant/taxpayer, consequently the impugned judgments were set-aside---Reference Application , filed by the taxpayer, was allowed, in circumstances.

Malik Hamzah Sarwar for Applicant.

Malik Itaat Hussain Awan for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 1227 #

2024 P T D 1227

[Lahore High Court (Rawalpindi Bench)]

Before Sadaqat Ali Khan, Mirza Viqas Rauf and Ch. Abdul Aziz, JJ

Messrs ASHFAQ BROTHERS and another

Versus

ANTI-DUMPING APPELLATE TRIBUNAL OF PAKISTAN through Registrar and 4 others

F.A.O. No. 74 of 2022, heard on 8th February, 2023.

(a) Anti-Dumping Duties Act (XIV of 2015)---

----S. 70 (13)---Orders passed by the Anti-Dumping Appellate Tribunal (Islamabad), assailing of---Lahore High Court, territorial jurisdiction of---Scope---Appellants were Importers of various commodities subjected to duties under the Anti-Dumping Duties Act, 2015 ('the Act 2015')---Appellants preferred appeal, before the Lahore High Court, against orders passed by the Anti-Dumping Appellate Tribunal, situated at Islamabad ("Appellate Tribunal")---Contention of the appellants was that since the "Appellate Tribunal" was performing functions in connection with affairs of the Federation, so appeal could be adjudicated by any of the High Courts against its decision while it was negligence on the part of the Federation that it failed to establish Benches at Lahore, Karachi, Quetta and Peshawar and the appellants could not be penalized on that score---Plea of the official respondents was that decision of the "Appellate Tribunal" could only be assailed before the Islamabad High Court and that not only order in original, but order in appeal were passed at Islamabad---Validity---Decision of the "Appellate Tribunal" is appealable under subsection (13) of S. 70 of the Act 2015, and it is evident from (the wordings of) said S. 70(13) that an appeal against the decision of the "Appellate Tribunal" lies before the High Court---However the term "High Court" is nowhere defined in the Act 2015---"Appellate Tribunal" is performing functions in connection with the affairs of the Federation---Admittedly, in the present case, initially investigation was started at Islamabad, which resulted into passing of order in original; the said order was assailed through an appeal before the "Appellate Tribunal" under Ss. 70(1)(2) & 70 of the Act 2015", which decided the same through impugned order---Thus, the word "High Court" used in subsection (13) of S. 70 of the Act 2015 corresponded to Islamabad High Court and, as such, the Lahore High Court lacked territorial jurisdiction to ponder upon the decision of the "Appellate Tribunal"---Resultantly, all the appeals were returned to the appellants to present the same to the Court of competent jurisdiction---Appeals were disposed of accordingly.

(b) Anti-Dumping Duties Act (XIV of 2015)---

----S. 70(13)---Orders passed by the Anti-Dumping Appellate Tribunal (Islamabad), assailing of---Lahore High Court, territorial jurisdiction of---Scope---Forum non conveniens, doctrine of---Appellants were importers of various commodities subjected to duties under the Anti-Dumping Duties Act, 2015 ('the Act 2015')---Appellants preferred appeal, before the Lahore High Court, against orders passed by the Anti-Dumping Appellate Tribunal situated at Islamabad ("Appellate Tribunal")---Contention of the appellants was that they were residing within the territorial jurisdiction of the Lahore High Court and it would be convenient for them to invoke its jurisdiction---Plea of the official respondents was that the appellants had changed their addresses with mala fide intent, so said jurisdiction could not be assumed on their convenience---Validity---Cause of action, in the present case, arose either at Islamabad or Karachi and even the present appellants while preferring their appeals before the "Appellate Tribunal" mentioned their addresses of places other than Rawalpindi city---Apparently, the appellants had now changed addresses for their convenience or for any other reason best known to them---Court cannot assume jurisdiction on the whims of the parties or to facilitate any of them---Doctrine of forum non conveniens is founded on the principle that if some other forum is more appropriate and the interest of justice would be served better, the Court may decline to exercise jurisdiction on the ground that a case could be suitably tried by another Court---However, said principle, being a discretionary power, allows courts to dismiss a case where another court, or forum, is much better suited to hear the case, having competent jurisdiction, which is the appropriate forum---Word "High Court" used in subsection (13) of S. 70 of the Act 2015 corresponds to Islamabad High Court and, as such, the Lahore High Court lacks territorial jurisdiction to ponder upon the decision of the "Appellate Tribunal"---Resultantly, all the appeals were returned to the appellants to present the same to the Court of competent jurisdiction---Appeals were disposed of accordingly.

Hassan Shahjehan v. FPSC through Chairman and others PLD 2017 Lah. 665; Sandalbar Enterprises (Pvt.) Ltd. v. Central Board of Revenue and others PLD 1997 SC 334; Let.-Gen.(R) Salahuddin Tirmizi v. Election Commission of Pakistan PLD 2008 SC 735 and Messrs Karachi Iron and Steel Mercants Association through Authorised Representative and 30 others v. Anti-Dumping Appellate Tribunal and 22 others 2021 PTD 1150 ref.

Trading Corporation of Pakistan (Private) Limited v. Pakistan Agro Forestry Corporation (Private) Limited and another 2000 SCMR 1703 and Muhammad Fayyaz v. Federation of Pakistan and others 2022 PTD 399 distinguished.

Naveed Zafar Khan, Muhammad Siddique Akbar and Ms. Nazma Parveen Malik for Appellants.

Malik Muhammad Saddique Awan, Additional Attorney-General for Pakistan, Arshad Mehmood Malik, Ch. Sajid Mehmood, Ch. Muhammad Rizwan and Ch. Tayyab Bilal, Assistant Attorney-Generals for Pakistan for Respondent No.1.

Waqas Amir and Ahmed Sheraz for Respondent No.2.

Ch. Muhammad Nawaz for Respondents Nos.3 and 4.

Saif Ullah Khan for counsel for Respondent No.5.

PTD 2024 LAHORE HIGH COURT LAHORE 1271 #

2024 P T D 1271

[Lahore High Court]

Before Shahid Karim and Rasaal Hasan Syed, JJ

SERVICE GLOBAL FOOTWEAR LIMITED through Director / Chief Executive Officer and another

Versus

FEDERATION OF PAKISTAN through Secretary Revenue Division and 2 others

I.C.A. No.48745 of 2023 in W.P. No.58683 of 2022, decided on 4th June, 2024.

(a) Constitution of Pakistan---

----Art. 4---Protection of law---Right to be dealt with in accordance with law---Scope---It is an unalienable right of every citizen to enjoy protection of law---No action detrimental to inter alia life and property of any person can be taken except in accordance with law---Provision of Art. 4 of the Constitution has raised bar of protection afforded to all citizens and persons to a constitutional pedestal.

(b) Constitution of Pakistan---

----Art. 23---Term 'reasonable restriction'---Applicability---Retrospective effect of law---Scope---Term 'reasonable restriction' does not include restrictions in the nature of retrospective laws which take away rights accrued to a person and in respect of actions which are past and closed---Law prescribing such a taking should be unambiguous and must by its words clearly state that it is intended to affect past and closed transactions without a manner of doubt.

----Ss. 4C [as inserted by Finance Act, 2022], 120, 122 & First Schedule-Part-I, Division IIB---Super tax on high earning persons---Retrospective effect---Applicability---Amendment of assessment---Appellants / taxpayers were aggrieved of applicability of S. 4C of Income Tax Ordinance, 2001, with retrospective effect---Appellants / taxpayers raised the plea that liability stood fixed on 30-06-2022 (for normal tax year) and what was left merely was furnishing of return of income which by law was deemed an assessment order---Validity---Assessment order was in respect of a taxable income for that year and tax due thereon---Amendment to assessment year could only be made under certain circumstances mentioned in S.122 of Income Tax Ordinance, 2001---Other than that the matters between the revenue and the taxpayer come to a close on filing of return of income and nothing more was required to be done---Issue at the heart of litigation in respect of discrimination was that different rates of taxation were provided in Division IIB of Part-I of First Schedule to Income Tax Ordinance, 2001---Proviso to S. 4C of Income Tax Ordinance, 2001, identified and narrowed down certain sectors of businesses which in the opinion of the Legislature had generated windfall profits and, therefore, must be taxed at a different rate---While doing so, the fact had been ignored that there might be a number of persons who earned income exceeding Rs.300 million and who might also be making windfall profits---Such persons were exempted from payment of tax at the rate of 10% and were happy to be dealt with a lesser rate of tax at 4%---This was discrimination writ large on the face of proviso to S. 4C of Income Tax Ordinance, 2001, and had been rectified by substitution through Finance Act, 2023, where income exceeding Rs.500 million was imposed to a rate of taxation at 10%---Anomaly was corrected by the Legislature and a rate of tax across the board in respect of a particular category of taxpayers was imposed---Such discrimination was unconstitutional and contrary to the rule of law---Certain sectors without any intelligible criteria could not be isolated from rest of the persons similarly placed and be taxed at a higher rate than those persons who earned an income in the same bracket---Division Bench of High Court set aside finding of Judge in Chambers of High Court upholding retrospective application of S. 4C of Income Tax Ordinance, 2001, by the use of the words "for the Tax Year 2022"---Division Bench of High Court declared that rights conferred on appellants / taxpayers for Tax Year 2022 on 30-06-2022 were past and closed transactions and could not be impaired or whittled away by the use of these words---Super tax under S. 4C of Income Tax Ordinance, 2001, could not be imposed on appellants / taxpayers for the Tax Year 2022 and special tax year---Intra Court Appeal was allowed accordingly.

Mehreen Zebun Nisa v. Land Commissioner Multan PLD 1975 SC 397; Muhammad Hussain v. Muhammad and others 2000 SCMR 367; H.M Extraction Ghee and Oil Industries (Pvt.) Ltd. v. FBR 2019 SCMR 1081; A Treatise on the Law of Taxation by Thomas M. Cooley (second edition); Bennion, Bailey and Norbury on Statutory Interpretation, Eighth Edition reweighs the subject in the section relating to retrospectivity (at pages 264 to 276); Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner ; Al-Samrez Enterprise v. Federation of Pakistan 1986 SCMR 1917; Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan and others 1993 SCMR 1905; Secretary of State for Social Security v. Tunnicliff [1991] 2 All ER 712; The House of Lords (1994) 1 AC 486; Tax as Public Law (J. Tiley and G. Loutzenhisey, Revenue Law, 7th ed, Oxford 2012); Compania General de Filipinas v. Collector of Internal Revenue (1927) 275 US 87, 100; Commissioner of Income Tax, Peshawar v. Messrs Islamic Investment Bank Ltd. 2016 SCMR 816; Fawad Ahmad Mukhtar and others v. Commissioner Inland Revenue (Zone-II), Regional Tax Office, Multan and another 2022 SCMR 426; Alan R. White, Ferens Professor of Philosophy in the University of Hull; Fundamental Legal Conceptions as Applied in Judicial Reasoning 23 Yale L.J. 16 (1913); Black's Law Dictionary, ninth edition by Bryan A. Garner and Shahnawaz (Pvt.) Ltd. through Director v. Pakistan through the Secretary, Ministry of Finance, Government of Pakistan, Islamabad and another 2011 PTD 1558 ref.

(d) Constitution of Pakistan---

----Arts. 4, 23 & 24---Protection of law---Property rights---Retrospective effect of any legislation---Scope---Merely relying on fundamental rights does not suffice for they are not absolute and do not draw a distinction on the basis of past transactions---Such rights cannot be abridged if the Legislature does not clearly express the intention of undoing past and closed transactions so as to take away those rights as well---Unless this is done, rights guaranteed by Arts. 4, 23 & 24 of the Constitution protect the transactions and keep them inviolate.

(e) Constitution of Pakistan---

----Art. 25---Discrimination---Reasonable classification, principle of---Scope---Classification can only be reasonable if it is based on intelligible criteria having nexus to the object sought to be achieved---Classifications created on the basis of a separate class of persons which are similarly placed should not offend fundamental right enshrined in Art. 25 of the Constitution.

Salman Akram Raja, Malik Ahsan Mehmood, Imtiaz Rasheed Siddiqui, Shahzad Ata Elahi, M. Ajmal Khan, Shahbaz Butt, Waseem Ahmad Malik, Shahryar Kasuri, M. Shoaib Rashid, Mustafa Kamal, M. Mansha Sukhera, Naveed A. Andrabi, Ali Sibtain Fazli, Shazib Masood, Hasham Ahmad Khan, Jawad Jamil Malik, Raza Imtiaz Siddiqui, Haris Irfan, Umair Ahmad, H.M. Majid Siddiqui, Jamshed Alam, M. Abubakar, Basharat Ali, Faisal Rasheed, Furqan Naveed Chaudhry, Khurram Shahbaz Butt, Nadir Ali Sherazi, Mian Abdul Bari Rashid, Usman Khalil, Asfandyar Khan Tareen, Javed Iqbal Qazi, Malik Bashir Ahmad Khalid, Hafiz M. Shahzad, Abdul Waheed, M. Hamzah, Sheikh Aqeel Ahmad, Waqas Ahmad Mir, Salman Zaheer Khan, Mudassar Shujauddin, Muhammad Ijaz Ali Bhatti, Hassan Kamran Bashir, Rafae Naguib Saigal, Shahid Pervez Jami, Muhammad Zulqarnain, Sumair Saeed Ahmad, Muhammad Asif, Qamar uz Zaman, Khalil ur Rehman, Farhan Shahzad, Muhammad Javed Arshad, Naeem Munawar, Ghulam Mujtaba, Muhammad Asif Rana, Muhammad Idrees Aslam, Muhammad Shaban, M. Mubashir Baig, Talib Hussain Chaudhry, Waleed Khalid, Adil Umar Bandial, Muhammad Arslan Raza, Muhammad Bilal Pervaiz, Mian Muhammad Arshad Iqbal, Uzair Sajid, Rana Muhammad Afzal Razzaq Khan, Mohsin Majeed, Hammad Khan, Hafeez Ullah Maan, Ch. Razzaq Ahmad Muhammad Rashid Ali, Syed Imtiaz Hussain Shah, Nazakat Abbas Bhatti, Tanveer Ahmad, Muhammad Usman Akram Sahi, Khawaja Omer Ghias, Muhammad Mussadiq Islam, Hassan Maqsood Ahmad, Nadeem Shahzad Hashmi, Barrister M. Bilal Ramzan, Malik Tanveer Ahmad Awan, Asad Rahim Khan, Muhammad Iftikhar Ali, Faiz-e-Azhar, Ms. Nimra Arshad, Khalil Ahmad Bhulla, Arslan Saleem Chaudhry, M. Siddique Butt, Dr. Murtaza Elahi, M.A Rizwan Kamboh, Mian Zulfiqar Ali, Azeem Ullah Virk, Omer Wahab, Rana Usman Habib, Ahsan Sial, Ms. Naureen Fauzia, Ray Mukhtar, Alamdar Hussain, Mahmood Arif, Asmar Tariq, Syed Nawazish Hussain, Hafiz M. Tanveer Nasir, Iftikhar Nawaz Gujjar, M. Waqar Akram, Sajjad Ali, Zohaib Hashim, Khurram Saleem, Ibrahim Hassan, Hammad Hussain, Muhammad Muqaddam Sukhera, Saqib Qadeer, Muhammad Shabbir Hussain, Asad Buttar, Touqeer Ahmad Ranjha, Raja Hamza Anwar, Abad ur Rehman, M. Umer Tariq Gill, Hamza Shahram Sarwar, Asad Zameer Tarar, Madiha Farooq Sheikh, Ashiq Ali Rana, Ali Hussain Gillani, Muhammad Hussain, Syed Fadil Hashmey, Jahangir Hassan Dogar, Ch. Waseem Akram, Zeeshan Asif Warraich, Mehar Saghir Ahmad, Saqib Qadeer, Muhammad Abrar, Yasir Hamid, Azeem Suleman, Jawwad Jamil Malik, Muhammad Hameed Bukhsh, Dr. Rizwan Ahmad, Hassan Pervaiz, Faisal Anwar Minhas, Asif Amin Goraya, Shahzaib ul Hassan Chattha, Malik Muhammad Zarif, Ghulam Abbas Haral, Ali Ijaz Shah and Zeeshan Ijaz for Appellants.

Ms. Asma Hamid, Syed Muazzam Ali Shah, Shahzad Ahmad Cheema, Malik Abdullah Raza, Ahmad Pervaiz, Ms. Scheherzade Shaharyar, Ch. Muhammad Zafar Iqbal, Muhammad Yahya Johar, Sohaib Aziz, Muhammad Bilal Munir, A.W. Butt, Imran Rasool, Shahjahan Khan, Ms. Riaz Begum, Sardar Muhammad Sadiq Tahir, Ms. Samra Malik, Mohsin Ali, Barrister Ahtsham Mukhtar, Omer Iqbal Khawaja, Muhammad Danish Zubairi, Anas Irtiza Awan, Muhammad Ashraf Nawaz Cheema, Qadeer Ahmad Kalyar, Jahanzeb Inam, Raja Abdul Qadeer, Muhammad Akram Awan, Ch. Imtiaz Elahi, Rana Irfan Ali, Humaira Bashir Chaudhry, Murad Ali Khan Marwat, Yasir Islam Chaudhry, Ali Umrao, Jawwad H. Tarar, Hassan Safdar Khan, Ahad Asif, Sidra Qamar, Ikhlaq Ahmad, Ahsan Ul Haq, Falak Sher Khan, Hassan Ali, Ms. Sana Azhar, Mustafa Khalid, Khadija Amjad Wazir, Shahram Anwar, Rana Muhammad Akram, Muhammad Haseeb Rana and Nasir Abbas Zafar Malik for Respondents.

Asad Ali Bajwa, D.A.G with Muhammad Majid Chaudhry, C.I.R Lahore and Tehsin Sadiq Tarar, Addl. Commissioner, RTO Gujranwala for the Federation.

PTD 2024 LAHORE HIGH COURT LAHORE 1469 #

2024 P T D 1469

[Lahore High Court]

Before Raheel Kamran, J

FAISALABAD ELECTRIC SUPPLY COMPANY LTD.

Versus

The CHAIRMAN PUNJAB REVENUE AUTHORITY and others

Writ Petition No.48782 of 2024, decided on 9th October, 2024.

(a) Punjab Sales Tax on Services Act (XLII of 2012)---

----S. 67A---Reference to High Court---Maintainability---Appellate Tribunal not communicating order---Effect---No tax Reference under S.67A of Punjab Sales Tax on Services Act, 2012 is maintainable against an order which is not required by law to be communicated by Appellate Tribunal.

Commissioner Inland Revenue, Zone-V v. Messrs T.N.W. Engineering Works 2019 PTD 46 rel.

(b) Constitution of Pakistan---

----Art. 199---Constitutional petition---Interlocutory order---Scope---There is no absolute bar on entertaining petition under Art. 199 of the Constitution against an order which is interlocutory in nature, if the same is coram non judice or without jurisdiction.

Khawaja Adnan Zafar v. Hina Bashir and others 2024 SCMR 1295 and Rashid Baig and others v. Muhammad Mansha and others 2024 SCMR 1385 rel.

----Ss. 67(3) & 68---Constitution of Pakistan, Art. 199---Constitutional petition---Staying of recovery---Conditional order---Petitioner / Company was aggrieved of conditional order by Appellate Tribunal directing deposit of 1/3rd of disputed amount before stay of recovery---Validity---Order staying recovery may be confirmed, varied or vacated as Appellate Tribunal deems fit---Such stay order remain operative for not more than ninety days including any period for which recovery may have been stayed prior to confirmation or variation of stay order---While imposing condition of deposit of 1/3rd amount of tax for any stay against recovery of remaining amount, no reason was advanced by Appellate Tribunal---There was nothing in the order explaining if such condition was inflicted on the basis of any admission or determination regarding tax liability of petitioner / company---Condition in question was imposed in slipshod manner that did not show any application of mind and fulfilment of requirements prescribed in section 68 of Punjab Sales Tax on Services Act, 2012---High Court set aside condition imposed by Appellate Tribunal as the same was foisted arbitrarily, without lawful authority and the same was of no legal effect---Constitutional petition was allowed in circumstances.

President, All Pakistan Women Association, Peshawar Cantt. v. Muhammad Akbar Awan and others 2020 SCMR 260; Messrs Pak Saudi Fertilizers v. Federation of Pakistan and others 2002 PTD 679; Z. N. Exporters (Pvt.) Ltd. v. Collector of Sales Tax 2003 PTD 1746; Brothers Engineering (Pvt.) Ltd. v. Appellate Tribunal Sales Tax 2003 PTD 1836; Messrs Fauji Oil Terminal and Distribution Company Ltd v. Pakistan through Secretary Revenue Division and 2 others 2012 PTD 1762; Messrs Islamabad Electric Supply Company Limited v. Additional Commissioner Inland Revenue and others 2024 PTD 30; Muhammad Arif Ice Factory and others v. Federation of Pakistan and others 2021 PTD 1608; Kunnathat Thathunni Moopil Nair v. State of Kerala and another AIR 1961 SC 552; State of Andhra Pradesh v. Nalla Raja Reddy AIR 1967 SC 1458; State Kerala v. Haji K. Kutty Naha and others AIR 1969 SC 378; Haji Tooti v. Federal Board of Revenue 2023 PTD 1617; Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal) LTU Islamabad 2017 PTD 1372; Kh. Muhammad Fazil v. Mumtaz Munawar Khan Niazi and another 2024 SCMR 1059; Mirza Shaukat Baig v. Shahid Jamil PLD 2005 SC 530; Lucky Cement v. Commission Income Tax 2015 SCMR 1494; Combined Investment (Pvt.) Ltd. v. Wali Bhai PLD 2016 SC 730; Waqar Zafar Bakhtawari and 6 others v. Haji Mazhar Hussain Shah and others PLD 2018 SC 81; Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582; Syed Mushahid Shah and others v. Federal Investigating Agency 2017 SCMR 1218 and Al-Karam CNG and others v. Federation of Pakistan and others 2011 PTD 01 rel.

Mumtaz-ul-Hasssan for Petitioner.

Abdul Muqtadir Khan for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 1520 #

2024 P T D 1520

[Lahore High Court]

Before Raheel Kamran, J

Messrs K&N's FOODS (PVT.) LTD.

Versus

FEDERATION OF PAKISTAN and others

Writ Petition No.43578 of 2024, decided on 30th September, 2024.

Income Tax Ordinance (XLIX of 2001)---

----S. 153 [as substituted by Finance Act, 2024]---Constitution of Pakistan, Art. 199---Constitutional petition---Tax exemption---Amendment in law---Retrospective effect---Petitioners / companies were aggrieved of revoking of tax exemption certificates on the basis of amendment in S. 153(4) of Income Tax Ordinance, 2001 incorporated by Finance Act, 2024---Validity---Legislature is competent to make law on a particular subject and also has power to legislate such law on a particular subject with retrospective effect and can by legislative authorization even take away vested rights---When legislature give retrospective effect to a law, either by express provision or by necessary implication, no protection can be afforded to vested rights contrary to that law---When legislature enacts a law with retrospective effect, the person affected cannot plead imposition of a previously non-existent civil obligation as a ground for declaring such law invalid---There was no provision of Finance Act, 2024 that expressly or by necessary implication had given any retrospective effect or application to amended S. 153(4) of Income Tax Ordinance, 2001---Amendment in question could not be construed to affect exemption certificates issued in favour of petitioners / companies in accordance with the law existing at the relevant time---Amendment introduced through Finance Act, 2024 was applicable on all exemption certificates issued after its effective date i.e. 01-07-2024---High Court set aside order passed by authorities and petitioners / companies were held entitled to avail benefit of exemption pursuant to exemption certificates issued in their favour---Constitutional petition was allowed accordingly.

Molasses Trading v. Federation of Pakistan 1993 SCMR 1905 and Muhammad Hussain and others v. Muhammad and others 2000 SCMR 367 rel.

Muhammad Ajmal Khan for Petitioner (in this petition).

Barrister Hamza Shehram Sarwar, Asad Zaman Tarar and Kamal Ali Khan for Petitioner (in W.P. No.49585 of 2024).

Muhammad Hamza Sheikh and Muhammad Mansoor Ali Sial, Assistant Attorneys General for the Federation.

Muhammad Bilal Munir for Respondents.

PTD 2024 LAHORE HIGH COURT LAHORE 1566 #

2024 P T D 1566

[Lahore High Court]

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE, PESHAWAR

Versus

MUHAMMAD ARIF and another

Customs References Nos.100-P to 108-P, 181-P and 182-P of 2020, decided on 31st May, 2023.

Customs Act (IV of 1969)---

----Ss.193 & 194-A---Reference---Appeal---Facts not considered---Effect---Authorities were aggrieved of order passed by Customs Appellate Tribunal setting aside extra duties and taxes imposed against respondents / importers---Validity---No issue relating to short levy of amount was adjudged by assessing officer, though, order-in-original passed by assessing officer was appealable to Collector Customs (Appeal) in terms of S.193 of Customs Act, 1969, as well as before Customs Appellate Tribunal under S. 194-A of Customs Act, 1969---Appeal could be filed on the issues which were directly and substantially an issue before adjudicating officer---Appeal was not only a statutory right, but was a continuation of proceedings initiated at lower forum and appellate fora could adjudicate upon an issue which had remained directly and substantially an issue before the first forum and had no authority to go beyond such issue---Customs Appellate Tribunal decided issue relating to assessment and levy of duties and taxes, which never remained subject of show cause notice---Adjudication in question was based on extraneous consideration and was illegal---High Court declined to interfere in order passed by Customs Appellate Tribunal---Reference was dismissed, in circumstances.

Collector Central Excise and Land Customs and another v. Rahm Din 1987 SCMR 1840; Commissioner Inland Revenue, Zone-II, Peshawar v. Messrs Pakistan Mineral Water Bottling (Pvt.) Limited, Swabi 2019 PTD 1219; Abu Bakar Siddique v. Collector of Customs and others 2002 CLC 1066; Dr. Muhammad Yousaf v. Commissioner of Income Tax 2006 PTD 590 and Commissioner Inland Revenue, Zone-II Regional Tax Office-II v. Messrs Sony Traders Wine Shop 2015 PTD 2287 rel.

Ishtiaq Ahmad (Junior) for Petitioner.

Aamir Bilal for Respondents.

PTD 2024 PESHAWAR HIGH COURT 374 #

2024 P T D 374

[Peshawar High Court]

Before Rooh-ul-Amin Khan and Syed Arshad Ali, JJ

COLLECTOR OF CUSTOMS (APPRAISEMENT), PESHAWAR

Versus

Messrs ALLIED ASSOCIATES, PESHAWAR and 4 others

Customs Reference No.14-P of 2023, decided on 7th March, 2023.

Customs Act (IV of 1969)---

----Ss.2(s), 156(1), Cls. (8) & (89), 179(3), 1st proviso & 196---Provisions relating to smuggling, invoking of ---Statutory period provided under S.179(3) of the Customs Act, 1969, for decision of such case by the Customs Officers---Scope and effect---Customs Appellate Tribunal set-aside the order-in-original on the basis that the same was passed by the Collector of Customs (Adjudication) beyond the statutory period provided under S. 179(3) of the Customs Act, 1969 ('the Act 1969')---Applicant (Customs Department) assailed findings of the Tribunal by filing reference contending that various adjournments were sought by the respondent (importer) itself and the proceedings for some time remained stayed by the High Court---Validity---First (1st) proviso of S. 179(3) of the Act, 1969, provided that the cases, wherein the provisions of clause (s) of S.2 of the Act 1969 had been invoked, the adjudication would be decided within a period of thirty (30) days of the issuance of Show-Cause Notice by excluding the period during which the proceedings were adjourned on account of stay order or Alternative Dispute Resolution proceedings or the time taken throughout by adjournment not exceeding thirty (30) days ---Thus, the total period in which the case was to be decided was thirty (30) days whereas, in the present case, Show Cause Notice was issued to the respondent / importer after one month of preparation of the Contravention Report ; and order-in-original was passed after more than three and half months of issuance of Show-Cause Notice---Order-in-original had been passed beyond the time-line of thirty (30) days provided under S. 179 of the Act, 1969---Record revealed that there was no stay order in the matter-in-question rather the High Court had actually declined the interim relief when its constitutional jurisdiction was invoked---High Court observed that the order-in-original, having been passed beyond the time prescribed under S. 179(3) of the Customs Act, 1969, was rightly set-aside by the Customs Appellate Tribunal---Customs reference was dismissed, in circumstances.

Messrs Mujahid Soap and Chemical Industries (Pvt.) Ltd. v. Customs Appellate Tribunal, Bench-I, Islamabad and others 2019 SCMR 1735; The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others 2017 PTD 1756 and Commissioner Inland Revenue, Zone-II, Regional Tax Officer (RTO), Mayo Road, Rawalpindi and another v. Messrs Sarwaq Traders, 216/1-A, Adamjee Road Rawalpindi and another 2022 SCMR 1333 ref.

Behzad Haider for Petitioner.

Farhat Nawaz Lodhi for Respondents.

PTD 2024 PESHAWAR HIGH COURT 584 #

2024 P T D 584

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COMMISSIONER OF INLAND REVENUE, MARDAN ZONE, REGIONAL TAX OFFICE, PESHAWAR

Versus

IMRAN AHMAD GREEN HILL CNG STATION MALAKAND

Tax Reference No.09-P of 2021, decided on 21st June, 2023.

Income Tax Ordinance (XLIX of 2001)---

----S.153 (3)(b), 234-A & Second Sched., Part I, Cl. 126-F [as inserted by Finance Act, 2010]---Circular No. 14 of 2011 dated 06-10-2011 issued by the Federal Board of Revenue---Exemption on profits/ gains derived by a taxpayer located in the most affected areas of Khyber Pakhtunkhwa etc. vide Cl. 126-F---Entitlement to---Taxpayer was deriving income from running CNG Filling Station located in Malakand---Taxpayer was issued refund on the basis of exemption under Clause 126-F, however, the Additional Commissioner Inland Revenue amended deemed assessment considering that the taxpayer was not entitled to exemption---Ground taken for amendment was that as the commission income fell under the Presumptive Tax Regime (PTR), hence, the provision of Cl. 126-F was not applicable---Commissioner Inland Revenue (Appeals) allowed appeal preferred by the taxpayer which order was maintained by the Appellate Tribunal Inland Revenue, against which order the Department filed Reference---Validity---Clause 126-F was inserted in Part I of the Second Schedule through Finance Act, 2010, to grant fiscal relief to the taxpayers whose business was adversely affected in the Province of Khyber Pakhtunkhwa Administrated Tribal Area and Provincial Administrated Tribal Area for a period of three years with effect from Tax Year 2010---In the present case, the respondent /taxpayer was issued adjustment / refund of income tax for certain amount for the tax period 2010 relating to tax deducted under S. 234-A of the Income Tax Ordinance, 2001, through an order of refund in terms of Clause/Entry 126-F, however, said order was amended by withdrawing the said refund from the respondent/taxpayer---High Court viewed that Income of the respondent/taxpayer for the tax year 2010 was exempt from payment of income tax in terms of Clause / Entry 126-F of Part I to the Second Schedule to the Income Tax Ordinance, 2001 and, thus, the respondent / taxpayer was entitled to the refund of the minimum tax charged under S. 153 subsection 3(b) of the Income Tax Ordinance, 2001---High Court declined to interfere in order passed by the Appellate Tribunal Inland Revenue---Reference application, filed by the Department, was dismissed, in circumstances.

Commissioner Inland Revenue v. The Secretary Revenue Division and others 2020 SCMR 2055 ref.

Messrs Sarwar Construction Co. (Pvt.) Ltd. v. The Appellate Tribunal Inland Revenue and others PTR No.71 of 2014 and Husnain Cotex Limited v. Commissioner Inland Revenue, Lahore 2017 SCMR 822 distinguished.

Barrister Asad-ul-Mulk for Petitioner.

Nemo. for Respondent.

PTD 2024 PESHAWAR HIGH COURT 747 #

2024 P T D 747

[Peshawar High Court]

Before Musarrat Hilali and Abdul Shakoor, JJ

COLLECTOR OF CUSTOMS, COLLECTORATE OF CUSTOMS (ENFORCEMENT), CUSTOM HOUSE, JAMRUD ROAD, PESHAWAR

Versus

Messrs SHAH WALI and 2 others

Customs Reference No.52-P of 2022, decided on 23rd November, 2022.

Customs Act (IV of 1969)---

----Ss. 2(s), 9, 16, 17, 80, 90, 139, 156(1) Cl. (8), 168 & 196---Imports and Exports (Control) Act (XXXIX of 1950), S. 3---Foreign Exchange Regulation Act (VII of 1947), Preamble---SRO No. 566(I)/2005, dated 06-06-2005---State Bank Notification No. F.E.2/2017-SB, dated 30-08-2017 issued by the State bank of Pakistan---Smuggling of Pakistani currency---Seizure---Scope---Allegation against the passenger (Afghan National) was that Pakistani currency of Rs.330,0000/= was recovered from his possession concealed in a pillow, for which he failed to produce documentary proof---Said currency, however, was released vide order-in-original, which order was maintained by the Appellate Tribunal---Validity---Record revealed that the Appellate Tribunal had upheld the judgment/order of the Adjudicating Officer only in view of the factual position of the case that nothing had been brought on record which could remotely suggest that the respondent/ accused had ever entered in the NLC Baggage Hall of the concerned Customs Station, since despite installation of CCTV Cameras therein, no photographs or film was brought on the record which could suggest that he was therein at the relevant time---Applicant / Customs Department could not bring on the record the copy of passport showing that a visa was imposed thereon by the concerned Consulate showing the respondent/ accused in fact was proceeding to Afghanistan with huge amount of currency which was not permitted to be taken along and amounted to smuggling in terms of provisions of the Customs Act, 1969---Thus, question of law had not arisen out of the impugned judgment / order passed by the Tribunal, for the determination of High Court---Reference application filed by the Customs Department was declined, in circumstances.

Javaid Akhtar for Petitioner.

Qazi Babar Irshad for Respondents.

PTD 2024 PESHAWAR HIGH COURT 776 #

2024 P T D 776

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COMMISSIONER INLAND REVENUE, PESHAWAR ZONE

Versus

Messrs MANERI INTERNATIONAL TOBACCO COMPANY, DISTRICT SWABI and another

Sales Tax References Nos.5-P, 6-P, 7-P and 8-P of 2020, decided on 21st June, 2023.

Federal Excise Act (VII of 2005)---

----Ss.19(11) & 26---Federal Excise Rules, 2005, R. 29---Sales Tax Act (VII of 1990), S.47---Criminal Procedure Code (V of 1898), Ss. 94, 103 & 529---Reference---Raid and search---Search warrants non-obtaining of---Requirement of recovery witnesses from locality---Scope---Authorities were aggrieved of order passed by Appellate Tribunal Inland Revenue setting aside assessment orders for conducting raid without obtaining arrest warrants and non-associating recovery witnesses of the locality---Validity---Obtaining search warrants and conducting raid / search in presence of two witnesses are meant and aimed to ensure that enormous powers of search by authorized officer is exercised honestly and judiciously---When authorized officer of revenue department has to conduct search of a place in terms of enabling provision of Federal Excise Act, 2005 and when he is prima facie of the opinion that if recourse is made to obtaining of search warrant, the valuable evidence can be destroyed by accused or a person involved in tax evasion, such officer may conduct search / raid of such premises in exceptional circumstances without obtaining search warrants from competent Court---Prime responsibility of revenue official is to protect state revenue---High Court set aside findings of Appellate Tribunal Inland Revenue---Reference was disposed of accordingly.

Collector of Customs, Model Customs Collectorate, Peshawar v. Noor Sher Ali and another 2021 PTD 822; Messrs Islam Soap Industries (Pvt.) Ltd., Sialkot v. The CIR, LTU, Lahore 2020 PTD 1520; Pakistan Chipboard (Pvt.) Ltd. through Chief Executive Officer v. Federation of Pakistan through Revenue Division and 5 others 2015 PTD 1520; Chairman, Central Board of Revenue and others v. Messrs Haq Cotton Mills (Pvt.) Ltd., Burewala 2007 SCMR 1039; Collector of Sales Tax and others v. Messrs Food Consults (Pvt.) Ltd. and another 2007 PTD 2356; Federation of Pakistan through Secretary, Ministry of Finance, Federal Secretariat, Islamabad and 4 others v. Messrs Master Enterprises (Pvt.) Ltd. through Managing Director 2003 PTD 1034 and Chief Commissioner Inland Revenue Regional (RTO) Peshawar v. Paper World (Pvt.) Ltd., Amangarh, Nowshera 2020 SCMR 105 ref.

Collector of Sales Tax and Central Excise (Enforcement) and another v. Messrs Mega Tech (Pvt.) Ltd. 2005 SCMR 1166 distinguished.

Mukhtar Ahmad Maneri along with Sharifullah Law Officer for the Petitioner.

Tajdar Faisal Khan Marwat for Respondents.

PTD 2024 PESHAWAR HIGH COURT 818 #

2024 P T D 818

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

Messrs SHAH STEEL INDUSTRY and others

Versus

FEDERATION OF PAKISTAN through Federal Secretary Finance and Revenue Division, Islamabad and others

Writ Petition No.505-P of 2023, decided on 25th May, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss. 53, 159, 235 & 109A [as inserted through Finance Act, 2019]---Sales Tax Act (VII of 1990), Ss. 3 & 14---Constitution of Pakistan, Art.247---Tax exemption---Electricity consumption---Petitioners / tax payers were running their industrial units in erstwhile Federally Administered Tribal Area and after 25th Constitutional Amendment, sought exemption from income tax---Authorities contended that petitioners' manufacturing units were involved in manufacturing of products which reached settled area, therefore, petitioners could not claim blanket exemption from levy of income tax unless their taxable activities relating to sale of products was verified by the authorities---Validity---This was a valid objection prior to promulgation of 25th Constitutional Amendment, as at the relevant time, persons, who were domiciled in erstwhile FATA, were enjoying immunity from income tax as the same was never extended to erstwhile FATA---Under new dispensation, exemption provided under S. 109A of Income Tax Ordinance, 2001 through Finance Act, 2019, was specific to the person, who was permanent resident of erstwhile FATA and was generating his income from business which was situated at erstwhile FATA or taxable activities which he carried there---High Court declared that demand of authorities of income tax/advance income under Income Tax Ordinance, 2001, from petitioners whose registered offices were situated in erstwhile FATA/PATA through their monthly electricity bills was illegal and without lawful authority---High Court further declared that demand of authorities for extra tax and further tax under Sales Tax Act, 1990, from petitioners who had established their manufacturing units at erstwhile FATA/PATA, and were registered with the authorities under S. 14 of Sales Tax Act, 1990 and had active tax profiles on relevant portal of FBR was illegal and without lawful authority---High Court directed electricity distribution companies PESCO/TESCO not to demand income tax under Income Tax Ordinance, 2001 and extra tax/further tax under Sales Tax Act, 1990, from petitioners who had fulfilled said two conditions---Constitutional petition was allowed accordingly.

Pakistan through Chairman FBR and others v. Hazrat Hussain and others 2018 SCMR 939; Commissioner Income Tax, Peshawar v. M/s. Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. 2008 PTD 169 and Messrs Taj Packages Company (Pvt.) Ltd. Through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203 ref.

Shumail Ahmad Butt for Petitioners.

Sanaullah DAG, Ishtiaq Ahmad (Junior) and Asad Jan for Respondents along with Sharifullah, Assistant Director (Legal).

PTD 2024 PESHAWAR HIGH COURT 1009 #

2024 P T D 1009

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COMMISSIONER OF INCOME TAX/WEALTH TAX COMPANIES ZONE, PESHAWAR

Versus

ISLAMIC INVESTMENT BANK LTD, PESHAWAR CANTT.

Tax Reference No.04 of 2006 (and other connected References), decided on 2nd May, 2023.

Income Tax Ordinance (XXXI of 1979)---

----Ss.11(1) & 133(5)---Reference---Word 'accrues or arises'---Sticky loan---Accounting system---Interest, maintaining of---Dispute was with regard to method of maintaining accounts by respondent / banks whereby interest against sticky loans were debited to a separate account (mark-up suspense account)---Plea raised by authorities was that same interest should be offered for calculating income tax liability as accrued income of that tax year---Validity---Mere fact that interest becomes receivable to a bank against its sticky loan does not necessarily become its income when banks are maintaining their accounts on mercantile base or even maintaining a hybrid method of accounting---Such interest becomes subject to impost of tax when it is offered for taxation by bank or lending institution as per mercantile practice---High Court declined to interfere in observation of Appellate Tribunal Inland Revenue that taxpayer had a choice to adopt or maintain a third system of maintaining its account i.e. hybrid method where elements of both the systems were present and was a recognized method of accounting---Word 'accrues or arises' as it occurred in S.11(1) (a) (ii) of Income Tax Ordinance, 1979, for the purpose of counting total income by a banking company or lending institution was to be applied keeping in view recognized accounting method adopted by the institution and thus interest entry debited in account of customer relating to non-performing assets would be subject to impost of tax when the same had actually become recoverable and as such was offered for taxation by the bank---Reference was disposed of accordingly.

Kerala Financial Corpn. v. CIT AIR 1994 SC 2416; Commissioner of Income Tax (Legal), Islamabad v. Messrs Askari Commercial Bank Limited, Rawalpindi 2018 PTD 1089 and Deputy Commissioner of Income Tax, Circle C-4, Karachi v. National Bank of Pakistan, Karachi 2019 SCMR 1011 rel.

Ghulam Shoaib Jally for Petitioner.

Barrister Syed Mudassir Ameer for Respondent.

PTD 2024 PESHAWAR HIGH COURT 1021 #

2024 P T D 1021

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

Messrs GADOON TEXTILE MILLS LTD.

Versus

DEPUTY COMMISSIONER IR (AUDIT-05), INLAND REVENUE, REGIONAL TAX OFFICE, PESHAWAR and another

S.T.R. No.26-P of 2023, decided on 19th September, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 3, 7, 8 & 47---Reference---Input tax---Adjustment---Packing material---Zero rated supply---Petitioner / company was aggrieved of bar imposed on input tax credit or refund on packing material purchased by registered person whose taxable supplies were zero rated---Validity---Provision of S. 3 of Sales Tax Act, 1990, is a charging section, whereas S. 7 of Sales Tax Act, 1990, allows input adjustment to a registered person for the purpose of determining tax liability in respect of taxable supplies, when such person has paid input tax for the purpose of taxable supplies made or to be made by him from the output tax i.e. due from him---Mandate of S. 7(l) of Sales Tax Act, 1990 is allowing input adjustment on such goods which are used for the purpose of taxable supplies---Federal Government, under S. 8(b) of Sales Tax Act, 1990, has been given power to notify any other goods in official Gazette against which input adjustment cannot be allowed---Federal Government has no jurisdiction to create and insert a new class in the regime of Sales Tax Act, 1990, which can disentitle input adjustment which is otherwise allowable to a registered person under a statutory dispensation i.e. S. 7 of Sales Tax Act, 1990---Input adjustment to a registered person against goods, which are or would be used for taxable activities, has been allowed under S. 7 of Sales Tax Act, 1990---Packing material purchased by petitioner / company was used for the purpose of taxable supplies, therefore, petitioner / company was entitled to adjust input tax against its output tax---Reference was disposed of accordingly.

Sheikhoo Sugar Mills Ltd. v. Government of Pakistan and another 2001 SCMR 1376; The Commissioner Inland Revenue, Karachi v. Messrs Attock Cement Pakistan Limited, Karachi 2023 SCMR 279; Ghandhara Nissan Diesel Ltd., through Sr. General Management Finance, Karachi v. Collector, Large Tax Payers Unit, Government of Pakistan, Karachi and 2 others 2006 PTD 2066; The Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Limited, Lahore and others 1999 SCMR 1442; Messrs Sheikh Spinning Limited v. Federation of Pakistan through Ministry of Finance, Federal Secretariat Islamabad through Secretary and 2 others 2002 PTD 2959; Pakistan through Secretary Finance, Islamabad 5 others v. Aryan Petro Chemical Industries (Pvt.) Ltd., Peshawar and others 2003 SCMR 370; National Electric Power Regulatory Authority v. Faisalabad Electric Supply Company Limited 2016 SCMR 550 and L.T-Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty and others PLD 1961 SC 119 ref.

Ishtiaq Ahmad for Petitioner.

Sharif Ullah, Assistant Director (Legal) for Respondents.

PTD 2024 PESHAWAR HIGH COURT 1095 #

2024 P T D 1095

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COMMISSIONER INLAND REVENUE, PESHAWAR

Versus

Messrs AL KHYBER TEA AND FOOD and 2 others

Writ Petition No.5077-P of 2020, decided on 13th June, 2023.

Income Tax Ordinance (XLIX of 2001)---

----Ss.148 & 170(4)---Establishment of the Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 9 & 10---Refund, claim for---Tax to be deducted on imported raw material---"Manufacturer"---Scope---Contention of the Department was that the taxpayer fell under the definition of "manufacture" while the taxpayer / firm submitted that it was simply involved in packing of imported tea/spices in retail packing through human resources, which could not be termed as manufacturing process---Refund applications of the taxpayer before the Department could not be entertained because the Department filed references before the High Court, whereas the taxpayer filed complaint before the Federal Tax Ombudsman ('the Ombudsman')---Ombudsman passed recommendations to dispose of refund applications after completing verification process---Department invoked constitutional jurisdiction of the High Court after its representation against Ombudsman's recommendations was dismissed by the Appellate Authority (President)---Validity---Record revealed that the High Court had now answered all the References previously filed by the petitioner / department in negative by holding that the issue of declaring the respondent / taxpayer as "manufacturer" had been adjudicated upon in favour of respondent /taxpayer---Even otherwise , no illegality, irregularity or jurisdictional error was noticed in the impugned recommendation of the Ombudsman followed by the order of the Appellate Authority---No case for interference by the High Court in its constitutional jurisdiction was made out---Constitutional petition, being merit-less, was dismissed, in circumstances.

Qaisar Abbas Bangash for Petitioner.

Attiq-ur-Rehman and Chaudhary Naeem ul Haq for Respondent.

PTD 2024 PESHAWAR HIGH COURT 1133 #

2024 P T D 1133

[Peshawar High Court]

Before Rooh-ul-Amin Khan and Syed Arshad Ali, JJ

Messrs APALLO PLASTIC AND CHEMICALS (PVT.) LTD., MALAKAND

Versus

GOVERNMENT OF PAKISTAN through Federal Secretary, Finance and Revenue Division, Islamabad and others

Writ Petition No. 5105-P of 2021 with C.M. No. 125-P of 2022, decided on 09th February, 2022.

(a) Federal Board of Revenue Act (IV of 2007)---

----S. 4---Constitution of Pakistan, Art. 199---Constitutional petition---Statutory circulars---Validity---Federal Board of Revenue has the authority to issue statutory circulars/instructions not in conflict with other fiscal laws including Sales Tax Act, 1990, Income Tax Ordinance, 2001 and Customs Act, 1969---Legality of statutory circulars on the touchstone of reasonability and whether same is in conflict to any other statutory dispensation can be looked into by Constitutional Court.

(b) Federal Board of Revenue Act (IV of 2007)---

----S. 4---Income Tax Ordinance (XLIX of 2001), S. 177---Sales Tax Act (VII of 1990), S. 25---Customs General Order No. 01 of 2021, dated 25.02.2021, vires of---Petitioners assailed Customs General Order No. 01 dated 25.02.2021 on the plea of it being ultra vires, unreasonable and suffering from excess of law and authority---Validity---In order to protect State interest i.e. leakage of Revenue, Federal Board of Revenue through Customs General Order No. 01 dated 25.02.2021, provided a mechanism for transportation of goods from Port of Karachi to its onward destination where industrial unit was situated---Conditions Nos. (i) to (iv) of Customs General Order No. 01 dated 25-02-2021 provided safe and supervised transportation of goods which were exempted from payment of duties and taxes---Federal Board of Revenue had the lawful authority to issue Circulars and Instructions as provided under S. 4 of Federal Board of Revenue Act, 2007 and issuance of Customs General Order No. 01 dated 25.02.2021 except condition No.(v) of the same---Authorizing the Revenue to subject importers for annual audit, under condition No. (v) of Customs General Order No. 01 dated 25.02.2021, was illegal and ultra vires to S. 177 of Income Tax Ordinance, 2001 and S. 25 of Sales Tax Act, 1990---High Court in exercise of Constitutional jurisdiction struck down condition No. (v) of Customs General Order No. 01 dated 25.02.2021---Constitutional petition was disposed of accordingly.

Messrs Taj Packages Company (Pvt.) Ltd. through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203; Pakistan through Chairman, FBR and others v. Hazrat Hussain 2018 SCMR 939; Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 6 others 2016 PTD 1555; Dossani Travels Pvt. Ltd. and others v. Messrs Travels Shop (Pvt.) Ltd. and others PLD 2014 SC 1; The Secretary Punjab Public Service Commission, Lahore and others v. Aamir Hayat and others 2019 SCMR 124 and S. G. Jaisinghani v. Union of India AIR 1967 SC 1427 rel.

----S. 177---Sales Tax Act (VII of 1990), S. 25---Audit---Object, purpose and scope---Purpose of audit is to ensure that taxpayer has complied with relevant fiscal laws and instructions issued by Fiscal Regulator i.e. Federal Board of Revenue---Audit is not meant to conduct a roving and fishing inquiry into the affairs of any taxpayer in order to fish for default.

Isaac Ali Qazi for Petitioner.

Aamir Javed, Addl. Attorney General and Ishtiaq Ahmad (Junior) Advocate along with Arshad Hilali, Law Officer Customs Department and Siraj Muhammad, Assistant Commissioner Inland Revenue for Respondents.

PTD 2024 PESHAWAR HIGH COURT 1174 #

2024 P T D 1174

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

COMMISSIONER INLAND REVENUE, REGIONAL TAX OFFICE, PESHAWAR

Versus

Messrs PESHAWAR ELECTRIC SUPPLY COMPANY (PESCO), SHAMI ROAD, PESHAWAR

S.T.R. No.03-P of 2015 with C.Ms. Nos.3, 5 of 2015, 40, 35 of 2019 and 12 of 2021, decided on 18th October, 2023.

(a) Sales Tax Act (VII of 1990)---

----Ss.3, 7, 47 & 74---Notification SRO 480(I)/2007 dated 09-06-2007---Reference---Input adjustment---Extension in time---Respondent / Peshawar Electric Supply Company was issued with show cause notice relating to inadmissible input adjustment by the Company---Matter was decided by Appellate Tribunal Inland Revenue in favour of respondent / Company---Validity---Notification SRO 480(I)/2007 dated 09-06-2007 was issued under S.74 of Sales Tax Act, 1990 and was not without jurisdiction---Extension of time as per verbiage of S.74 of Sales Tax Act, 1990 was time bound and the Legislature itself had not restricted jurisdiction of Federal Board of Revenue relating to extension of time even after the period which had lapsed---Input adjustment was linked with taxable supply which meant economic / taxable activities carried out by any person whether or not for profit and included an activity carried on by it that involved supply of goods and anything done or undertaken during commencement or termination of economic activity---Respondent / Electric Company paid sales tax at the time of purchasing taxable goods, therefore the tax remained with revenue as a trust which was adjustable by the company at the time of its output tax payable by respondent / Electric Company in course of taxable activities---Even if the electricity was lost either on account of pilferage or at the time of distribution which was a natural process as electricity passing through wires was certainly lost due to technical issues, however, such activity of respondent / Electric Company did not fall within the mischief of taxable activities---Respondent / Electric Company was entitled to input adjustment of sales tax paid at the time of purchasing taxable goods against electricity produced by it however the same was lost either on account of pilferage, distribution losses or technical reasons---High Court declined to interfere in judgment passed by Appellate Tribunal Inland Revenue---Reference was disposed of accordingly.

Asad Ali and others v. The Bank of Punjab and others PLD 2020 SC 736; Province of Punjab v. Muhammad Arif & Co. PLD 2022 Lah. 596; Subedar Sardar Khan through Legal heirs and others v. Muhammad Idrees through General Attorney and another PLD 2008 SC 591; Sheikh Akhtar Aziz v. Mst. Shabnam Begum and others 2019 SCMR 524; Pakistan through Chairman FBR and others v. Hazrat Hussain 2018 PTD 1204; WAK Ltd. Multan Road, Lahore v. Collector Central Excise and Sales Tax Lahore (Now Commissioner Inland Revenue 2018 SCMR 1474; M/s. Abbasi Enterprises Through Proprietor and another v. Collector of Sales Tax Peshawar 2008 PTD 2025; Assistant Collector of Customs AFU Airport Lahore v. M/s. Triple-M (Pvt.) Ltd. through Managing Director and others PLD 2006 SC 209; M/S Amin & Son Tailor Mianwali v. Secretary Revenue Division, Islamabad 2010 PTD 21; 2009 PLC 258; PLD 2008 Lah. 200; Dilbadshah v. S. Rehmat Shah and others PLD 2007 Pesh. 103; 2007 CLC 315; 2007 PTD 127; M/S Zamindara Paper and Board Mills v. Collector Central Excise and Sales Tax 2007 PTD 840; Investment Corporation of Pakistan and others v. Sun Shine Jute Mills Ltd. 2005 CLD 713; Collector of Sales Tax Gujranwala v. M/s. Super Asia Muhammad Din 2017 SCMR 1427 = 2017 PTD 1756; Mujahid Soap's case 2019 SCMR 1735 = 2019 PTD 1961; Messrs Sabir Daud Exports, Faisalabad v. Secretary, Revenue Division, Islamabad 2007 PTD 430; Commissioner Inland Revenue v. M/s Golden Pearl Cosmetics 2017 PTD 1485; M/s. Abbasi Enterprises Uniliver v. Collector of Sale Tax and Federal Excise, Peshawar PTCL 2020 CL 159; The Commissioner Inland Revenue, Karachi v. Messrs Attock Cement Pakistan Limited, Karachi 2023 SCMR 279; M/s. Taj Packages v. Government of Pakistan Company (Pvt.) Limited 2016 PTD 203; Pakistan through Chairman FBR and others v. Hazrat Hussain and others 2018 SCMR 939; Sheikhoo Sugar Mills v. Government of Pakistan 2001 SCMR 1376 and Collector of Customs Sales Tax and Central Excise v. Messrs Sanghar Sugar Mills Ltd. PLD 2007 SC 517 ref.

(b) Sales Tax Act (VII of 1990)---

----Ss. 2(35), 7 & 8---Determination of tax liability and tax credits---Scope---Where at any stage sales tax has been legitimately paid then refund of input tax cannot be claimed where such goods were used in manufacture of 'exempt supplies'---Where a registered person is exempt from liability of sales tax on its supplies, it does not mean that the tax that was paid on purchase of raw material used in making of such supplies would be liable to be refunded---There is no promise of the Legislature that sales tax paid on goods used to manufacture of 'exempt supplies' would be liable to be refunded---Section 7 of Sales Tax Act, 1990 being is only a beneficial and machinery provision, a registered person can claim input adjustment against output when the said output (including value added) also falls within the mischief of taxable supplies, and as per mandate of S. 2(35) of Sales Tax Act, 1990, the exempt supply does not constitute a taxable supply.

M/s Gul Cooking Oil's 2008 PTD 169; Pakistan through Chairman FAR and others v. Hazrat Hussain and others 2018 SCMR 939 and Messrs Mayfair Spinning Mills Ltd. Lahore v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore and others PTCL 2002 CL. 115 rel.

Ghulam Shoaib Jally along with Sharif Ullah (Assistant Director Legal) for Petitioners.

Hussain Ahmad Sherazi and Mouzzam Ali Butt for Respondent.

PTD 2024 PESHAWAR HIGH COURT 1214 #

2024 P T D 1214

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

The COMMISSIONER INLAND REVENUE (CORPORATE ZONE), PESHAWAR

Versus

Messrs TRIBAL AREAS ELECTRIC SUPPLY COMPANY LTD., PESHAWAR

S.T.R. No.33-P of 2022, decided on 10th October, 2023.

Sales Tax Act (VII of 1990)---

----Ss. 3, 25, 30 & 72-B---Sales tax audit---Director General Audit Inland Revenue Receipts, powers of---Department filed Sales Tax Reference as the Appellate Tribunal Inland Revenue, while accepting the appeal of the taxpayers, set-aside orders passed by both the fora of the Department---In the present matters /References, the Show Cause Notices were issued to the respondents (taxpayers/registered persons) on the basis of audit conducted by Director General Audit Inland Revenue Receipts (DGAIRR), who, as already held by the High Court in a similar case, does not fall within the categories of the officers as provided under S. 30 of the Sales Tax Act, 1990---Moreover, on the basis of said audit reports of (DGAIRR), the Department had not conducted any further audit under S. 25 of the Sales Tax Act, 1990 or in terms of S. 72-B of the Sales Tax Act, 1990---Keeping in view judicial discipline, the High Court was not inclined to hold a different view---Therefore, the present References were answered in negative---Sales Tax References, filed by the Department, was dismissed, in circumstances.

Collector of Sales Tax and Central Excise, Peshawar v. Makk Beverages (Pvt.) Ltd. Peshawar 2010 PTD 1355 ref.

Ms. Sehrish Munawar Bokhari along with Sharifullah Assistant Director (Legal) for Petitioner.

Hussain Ahmad Shirazi and Muazzam Ali Butt for Respondents.

PTD 2024 PESHAWAR HIGH COURT 1258 #

2024 P T D 1258

[Peshawar High Court]

Before S M Attique Shah and Syed Arshad Ali, JJ

Messrs YAR STEEL MILLS through Representative

Versus

The FEDERATION OF PAKISTAN through Federal Secretary, Islamabad and others

Writ Petition No. 4030-P of 2022, decided on 24th November, 2022.

(a) Negotiable Instruments Act (XXVI of 1881)---

----S.6---Cheque---Connotation---Cheque is a request of drawer to the bank where the drawer maintains an account to pay a specific sum of amount to the payee on presentation of the cheque or on the date fixed on the cheque---Under banking practice in our country, bank is supposed to make payment to payee if there is sufficient amount payable to the payee equal to the amount mentioned on the cheque.

Mitra's Legal and Commercial Dictionary; The Chambers 21st Century Dictionary; The Law Laxicon and The Black's Law Dictionary rel.

(b) Interpretation of statutes---

----Fiscal laws---Intendment---Scope---In a tax statute one has to look at what is clearly said---There is no room for any intendment; nothing is to be read and nothing is to be implied.

Commissioner of Income Tax Kanpur v. Upper Doab Sugar Mills (1978) All LJ 128 rel.

----Where law requires something to be done in a particular manner, it must be done in that manner---What cannot be done directly cannot be done indirectly.

Muhammad Hanif Abbasi v. Imran Khan Niazi and others PLD 2018 SC 189 rel.

(d) Sales Tax Act (VII of 1990)---

----Sixth Schedule, Entry No. 152---Post-dated cheques---Vires---Petitioner/importer assailed demand of respondents/authorities to provide post-dated cheque with endorsement "good for payment" from the banker---Validity---It was not the will of Legislature in Entry No.152 in Sixth Schedule to Sales Tax Act, 1990, which mandated that importer at the time of clearance of imported goods, destined for consumption at Erstwhile Tribal Area, to provide a post-dated Cheque for the amount of sales tax under Sales Tax Act, 1990, to be accompanied with a certificate "good for payment" from bank for its clearance---Such demand of respondents/authorities that post-dated cheque as required through Entry No.152 in Sixth Schedule to Sales Tax Act, 1990 shall be accompanied with the certificate "good for payment" was ultra-vires to Entry No.152 in Sixth Schedule to Sales Tax Act, 1990---High Court declared such demand as illegal and without lawful authority---Constitutional petition was disposed of accordingly.

Messrs Taj Packages Company (Pvt.) Ltd. through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203; Pakistan through Chairman, FBR and others v. Hazrat Hussain 2018 SCMR 939; Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 6 others 2016 PTD 1555; Sethi and Sethi Sons through Humayun Khan v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad 2012 PTD 1869; The Federal Government through Secretary Interior, Government of Pakistan v. Ms. Ayyan Ali and others 2017 SCMR 1179; Messrs Al-Iblagh Limited, Lahore v. The Copyright Board, Karachi and others 1985 SCMR 758; LPG Association of Pakistan through Chairman v. Federation of Pakistan through Secretary, Ministry of Petroleum

and Natural Resources, Islamabad and 8 others 2009 CLD 1498;

Khalid Saeed v. Shamim Rizwan and others 2003 SCMR 1505; Muhammad Ibrahim v. The State 2021 PCr.LJ 412; Hafiz Abdul Salam v. Hassan Din 2020 YLR 2297; Messrs Jet Green (Pvt.) Limited v. Federation of Pakistan and others PLD 2021 Lah. 770; National Bank of India Ltd., Lahore v. Dost Muhammad and Bros, the Mall, Lahore PLD 1957 Lah. 420; Punjab National Bank, Ltd. v.

Bank of Baroda Ltd and others AIR 1941 Cal. 372 and Bank of Baroda, Ltd. v. Punjab National Bank, Ltd, and others AIR 1944 Privy Council 58 ref.

Abdul Rahim Khan Jadoon for Petitioner.

Aamir Javed, Addl. Attorney General, Sanaullah, D.A.G. and Azhar Naeem Qarni for Respondents.

PTD 2024 PESHAWAR HIGH COURT 1335 #

2024 P T D 1335

[Peshawar High Court]

Before Lal Jan Khattak, S M Attique Shah and Syed Arshad Ali, JJ

Messr A.K. TARIQ FOUNDRY

Versus

GOVERNMENT OF PAKISTAN and others

Writ Petition No.1343-P of 2020, decided on 2nd December, 2022.

(a) Constitution of Pakistan---

----Arts. 8(2) & 199---Trichotomy of powers---Scope---Fundamental rights---Judicial review---Scope---Constitution is founded on the theory of trichotomy of powers between three limbs/organs of the State namely; the Legislature, the Executive and the Judiciary---Function of the Legislature is to make law, the Executive is to execute and the Judiciary is to interpret law---State has been prohibited under Art. 8(2) of the Constitution from making any law that takes away or abridges rights of citizens---Any law to the extent of violation of fundamental rights is void---Constitution expressly confers upon Courts, powers of judicial review of administrative action of the executive as well as laws passed by Parliament/Legislature to see as to whether the same is in conformity with the Constitution.

S.C.Advocates-on-Record Association v. Union of India AIR 1994 SC 268 rel.

(b) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction---Vires of any legislation---Determining factors---Vires of any legislation are to be struck down on two grounds: firstly, where the appropriate legislature did not have competency to make law; and secondly, where its enactment abridges any of the fundamental rights annunciated in the Constitution or any other Constitutional provision.

Mcdowell and Co. AIR 1966 SC 1627; State M.P v. Rakesh Kohli and another 2013 SCMR 34; Ashwath Narayana Setty, P.M v. State of Karnataka AIR 1989 SC 100; Ganga Sugar Corporation Ltd. v. The State of U.P AIR 1980 SC 286; The Commissioner Inland Revenue, Peshawar v. Tariq Mehmood 2021 SCMR 440; Khyerbari Tea Co. Ltd. v. State of Hassam AIR 1964 SC 925 and Pakcom Ltd. v. Federation of Pakistan PLD 2011 SC 44 rel.

----S.3 & Sixth Schedule, Entry No.152---Notifications SRO 1212(I)/2018, dated 05-10-2018 and SRO 1213(I)/2018 dated 05-10-2018---Constitution of Pakistan, Arts. 18 & 25---Supply of electricity---Tax exemption---Cut-off-date---Discrimination---Principle of intelligible differentia---Applicability---Petitioners/ industrialists were aggrieved of denial of exemption from taxes as their units were established after cut-off date of 31-05-2018---Validity---Allowing one set of industries concession in electricity supply i.e. exemption from sales tax and withholding such exemption from another group merely for the reason that it was setup after a particular date had serious effects on their earnings and they might in some circumstances would not be able to compete with each other---Such classification did not qualify test of intelligible differentia and was contrary to Arts. 25 and 18 of the Constitution---Law applying to one person or class of persons may be constitutionally valid if there is sufficient basis or reason for it, as there is always a presumption in favour of constitutionality of law made by Parliament or State legislature---Legislature is competent to classify persons or properties into categories and to subject them to different rates of taxes---Exception is that no one is to target incident of taxation in such a way that similarly placed persons are dealt with not only dissimilarly but discriminately---Through legislation in question, all Steel, Ghee and Cooking Oil industries were treated as a separate class and exemption was not extended to supplies of electricity, therefore, there was no element of discrimination in the matter---Provision of Entry No.152 in Sixth Schedule to Sales Tax Act, 1990, was ultra vires the Constitution to the extent of making classification among the industrial, residential and commercial consumers which were established after 31-05-2018---Exemption in supply of electricity was available to all residential, commercial and industrial consumers who had established their units in the Erstwhile FATA / PATA irrespective of date of establishment till the life of Entry No.152 in Sixth Schedule to Sales Tax Act, 1990, except Steel, Ghee or Cooking Oil Industries---Constitutional petition was disposed of accordingly.

Commissioner of Income Tax, Peshawar v. Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. 2008 PTD 169; Taj Packages Company (Pvt.) Ltd. v. Government of Pakistan through Federal Secretary Finance and Revenue Division 2016 PTD 203; Pakistan through Chairman FBR v. Hazrat Hussain 2018 SCMR 939; Habib Akram v. Federation of Pakistan through Ministry of Parliament Affairs, Islamabad and others PLD 2018 Lah. 641; Arshad Mehmood v. Commissioner / Delimitation Authority, Gujranwala PLD 2014 Lah. 221; Province of Sindh through Chief Secretary and others v. MQM through Deputy Convener and others PLD 2014 SC 531; Dr. Tariq Iqbal and 08 others v. Government of KP through Secretary Administration Peshawar and others 2019 SCMR 859; Saif-ur-Rehman v. Additional District Judge, Toba Tek Sindh and 02 others 2018 SCMR 1885; Messrs M.Y. Electronics Industries (Pvt.) Ltd. through Manager and others v. Government of Pakistan through Secretary Finance, Islamabad and others 1998 SCMR 1404; Messrs Chenone Stores Ltd. through Executive Director (Finance Accounts) v. Federal Board of Revenue through Chairman and 02 others 2012 PTD 1815; Gul Ayaz Plastic Industry v. Tribal Areas Electric Supply Company, WAPDA House through Chief Executive and 6 others 2021 PTD 795; Messrs Abid Foundry through authorized representative and another v. Pakistan through Federal Secretary, Finance and Revenue Division, Islamabad and 05 others 2019 PTD 1652; Government of Pakistan and others v. Muhammad Ashraf and others PLD 1993 SC 176; Messrs Infotech (Pvt.) Ltd. v. Federation of Pakistan and 4 others 2016 PTD 2839; Muhammad Khalid Qureshi v. Province of Punjab through Secretary, Excise and Taxation Department, Lahore and another 2017 CLC 523; Muhammad Khalid Qureshi v. Province of Punjab through Secretary, Excise and Taxation Department, Lahore and another 2017 PTD 805; Messrs Colony Sugar Mills Ltd. through Deputy Manager v. Province of Punjab and 5 others 2017 PTD 406; Zaman Cement Company (Pvt.) Ltd. v. Central Board of Revenue and others 2002 SCMR 312; Federation of Pakistan through Secretary, Ministry of Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance, Islamabad and 6 others 2016 PTD 1555; Interpretation of Statutes (7th Edition) at page No.771; P.K. Kutty Haji and others v. Union of India and others (1989) 176 ITR 481; Muhammad Hanif Qureshi and others v. The State of Bihar AIR 1958 SC 731 and Messrs Elahi Cotton Mills Limited and others v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 06 others PLD 1997 SC 582 ref.

M/s Lucky Cement Ltd. through its General Manager, Peshawar v. Khyber Pakhtunkhwa through Secretary Local Government and Rural Development, Peshawar and others 2022 SCMR 1961 fol.

Isaac Ali Qazi for Petitioner.

Sana Ullah, DAG and Amir Javed, Addl. Attorney General for the Federation.

Ishtiaq Ahmad, Rehman Ullah and Zia-ur-Rehman Tajik for the Respondents.

PTD 2024 PESHAWAR HIGH COURT 1422 #

2024 P T D 1422

[Peshawar High Court]

Before Abdul Shakoor and Syed Arshad Ali, JJ

Messrs FRONTIER GREEN WOOD INDUSTRIES (PVT.) LTD

Versus

COMMISSIONER INLAND REVENUE, WITHHOLDING ZONE, REGIONAL TAX OFFICE, PESHAWAR and others

S.T.R. No.06 -P of 2021, decided on 13th June, 2023.

(a) Words and phrases---

----Fiscal statute---Scientific or technical words---Where a word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature.

(1989)72 STC 280 (SC); (1989)1 SCC 150 and (1876) 1 Ex D 242 at 248 rel.

(b) Sales Tax Act (VII of 1990)---

----Ss.11(2), 47 & Sixth Schedule, Table-II, Entry No.10---Reference---Agriculture produce---Authorities sought recovery of tax under S. 11(2) of Sales Tax Act, 1990, for using cut wood for manufacturing its goods falling within the ambit of Entry No.10 of Table-II of Sixth Schedule to Sales Tax Act, 1990---Validity---Wood plank/tree for the purpose of sale, if cut in pieces did not attract manufacturing process as such process was neither combined with another article nor the cut wood was so changed or transformed to an article being distinctly used---Taxpayer was purchasing raw wood where standing trees of "poplar" and "eucalyptus" were cut into pieces (admittedly an agriculture produce), the same did not in any manner transform into another product and remained as agriculture produce as long as it was not subjected to further process of manufacture for manufacturing chipboard or laminated wood---At the point of purchasing raw "cut wood", it remained an agriculture produce and was exempt from incidence of sales tax in view of Entry No.10 of Table-II of Sixth Schedule to Sales Tax Act, 1990--- Sales Tax Reference was answered in positive.

Malik Shamas Din and Brothers v. The Income Tax and Sales Tax Officer and another 1959 PTD 718; (1824) 9 Wheaton (US) 430 at 438; Madanlal Manoharlal and others v. State of Haryana and another [Writ Petitions (Civil) Nos.1695 of 1987; and 284 and 513 of 1988 decided on 28.11.1989]; Messrs Pakistan WAPDA Foundation v. The Collector of Customs, Sales Tax, Lahore and others 2023 SCMR 79 and Chairman, Federal Board of Revenue, Islamabad v. Messrs Al-Technique Corporation of Pakistan Ltd. and others PLD 2017 SC 99 rel.

Isaac Ali Qazi, Saqib Khan and Saad Ali Qazi for Applicant.

Rehmanullah along with Sharifullah, Assistant Director (Legal) for Respondents.

PTD 2024 PESHAWAR HIGH COURT 1501 #

2024 P T D 1501

[Peshawar High Court]

Before Kamran Hayat Mian Khel and Fazal Subhan, JJ

Messrs AITIMAD POLYMA PIPE

Versus

CHIEF COMMISSIONER and others

Writ Petition No.5216-P of 2022, decided on 10th August, 2023.

Sales Tax Act (VII of 1990)---

---- Sixth Schedule, Entry No. 151---Federal Board of Revenue Act (IV of 2007), S. 4---Notifications CGO No.08/2021 dated 31-08-2021 & CGO No. 08/2022 dated 31-08-2022---Constitution of Pakistan, Art.199---Constitutional petition---Tax exemption---Federal Board of Revenue---Jurisdiction---Petitioner / importer sought benefit of CGO 08/2022 dated 31-08-2022 on the plea that it was a small industry having less than Rs.200 million annual imports---Validity---Federal Board of Revenue was competent under law to issue Customs General Orders / SROs--- Provision of CGO No. 08/2021, dated 31-08-2021, was a valid instrument adopted as a policy to benefit industrial units operating in erstwhile Federally Administered Tribal Area---Consignment of raw material was to be released, as petitioner / importer was a small industrialist having less than Rs.200 million annual import--- Petitioner / importer was willing and ready to comply with all conditionalities issued by authorities from time to time--- Authorities agreed to release the stuck up consignment of petitioner / importer, if it fulfilled all conditions mentioned in CGO No. 08/2021 dated 31-08-2021 and other circulars issued now and then--- Constitutional petition disposed of accordingly.

Nafees Plastic Industries v. The Commissioner, Sales Tax, Registered Tax Office, Peshawar (W.P No.4155-P/2021) fol.

Abdul Rauf Rohala for Petitioner.

Ishtiaq Ahmad for Respondents.

Quetta High Court Balochistan

PTD 2024 QUETTA HIGH COURT BALOCHISTAN 196 #

2024 P T D 196

[Balochistan High Court]

Before Muhammad Kamran Khan Mulakhail and Sardar Ahmed Haleemi, JJ

Messrs SARA ENTERPRISES GOVERNMENT CONTRACTORS through Proprietor

Versus

SECRETARY FINANCE, GOVERNMENT OF BALOCHISTAN, QUETTA and 2 others

C. P. No. 2026 of 2022, decided on 31st May, 2023.

(a) Balochistan Revenue Authority Act (VII of 2015)---

----S. 4(2)(a) & Preamble---Prospective/Retrospective application of a new law---Scope---Payment of works, done in the year 1998, by the petitioner (government contractor) was finally decreed in the year 2019, however, the decretal amount was released after deducting 15% tax under the provisions of Balochistan Revenue Authority Act, 2015---Petitioner invoked constitutional jurisdiction of the High Court against the said tax deduction---Validity---Balochistan Revenue Authority Act, 2015 ('the Act, 2015') came into force on 1st July 2015 whereas the matter-in-question was related to the works having already been done in the year 1998---According to the canons of constructions, every statute, including amendatory statute, is, prima facie, prospective, unless it is given retrospective effect either expressly or by necessary implication---Statute is not to be applied retrospectively in the absence of express enactment or necessary intendment, especially where the Statute is to affect vested rights, past and closed transactions or facts or events that had already occurred---Said principles are attracted to fiscal Statutes which have to be construed strictly, for they tend to impose liability and are, therefore, burdensome (as opposed to beneficial legislation)---The Act, 2015 had no retrospective effect whereas the dispute, in the present case, related to the fiscal year 1998---High Court set aside impugned order of deduction of 15% tax from the bill of the petitioner, declaring the same void ab initio for having been passed in the year 2019; and directed the Official respondents to refund the deducted amount to the petitioner---Constitutional petition was allowed, in circumstances.

Government of Khyber Pakhtunkhwa through Secretary Public Health Engineering, Peshawar and others v. Abdul Manan 2021 SCMR 1871; Sardar Sher Bahadar Khan v. Election Commission of Pakistan through Secretary, Election Commission, Islamabad and others PLD 2018 SC 97 and Mst. Sarwar Jan and others v. Mukhtar Ahmed and others PLD 2012 SC 217 ref.

(b) Maxim---

----'Nova constitutio futuris formam imponere debet, non praeteritis, principle of---Meaning---Said maxim means 'a new law ought to regulate what is to follow, not the past'.

----Fiscal statute---Charging section of a fiscal part of a Statute, is the key and pivotal provision which imposes a fiscal liability upon a taxpayer/person, thus it should be strictly construed and applied---If a person does not clearly fall within the four corners of the charging section of such a Statute he cannot be saddled with a tax liability.

Atif Faizan Usto for Petitioner.

Tahir Iqbal Khattak, Addl: A.G. for Official Respondent.

Jam Saka Dashti for Respondent No.3.

PTD 2024 QUETTA HIGH COURT BALOCHISTAN 331 #

2024 P T D 331

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar and Muhammad Aamir Nawaz Rana, JJ

Messrs CONSTRUCTION ASSOCIATION OF PAKISTAN through Authorized Representative and others

Versus

The GOVERNMENT OF BALOCHISTAN through Chief Secretary and others

Constitutional Petitions Nos.819 and 1312 of 2020, decided on 27th November, 2023.

Balochistan Sales Tax on Services Act (VI of 2015)---

----Ss.2(14), 2(86), 6 & 7---Sales tax on service---Rate---Economic activity---Petitioners/contractors assailed notifications charging sales tax on services and goods---Validity---Rates in question gave two options to petitioners / contractors, they either could opt for standard rate and get adjusted their input tax against their output tax or alternatively could go for lower rates and forgo adjustment of input tax against output tax---Notifications in question were merely explanation of provisions of Balochistan Sales Tax on Services Act, 2015, issued for information of general public and government departments---Such notifications had no binding force to override provisions of Balochistan Sales Tax on Services Act, 2015---Presence or absence of notifications did not make any difference to the application of Balochistan Sales Tax on Services Act, 2015---Each stage of economic activity involved purchase of goods and services and it was not an easy task to bifurcate contract into goods contract and services contract---If petitioners / contractors wanted to precisely work out burden of sales tax on services and sales tax on goods separately and then pass it on to end consumers from public at large, then they could opt for standard rate of sales tax on services---If contractors were filing both the returns of sales tax on goods with Federal Board of Revenue and return of sales tax on services with the Province, then they had to opt for standard rate of sales tax on services---Government of Balochistan was a withholding agent and one of the players in the chain of economic activity, who utilized the services of petitioners / contractors for furtherance of economic activity in terms of sales tax laws---High Court declined to interfere in the matter---Constitutional petition was dismissed, in circumstances.

Muhammad Ishaq Nasar for Petitioners (in C.P. No.819 of 2020).

Shai Haq Baloch, Additional Advocate General for Official Respondents (in C.P. No.819 of 2020).

Jam Saka, assisted by Noor-ul-Haq Baloch, Chairman, BRA for Respondent No.2 (in C.P. No.819 of 2020).

Nemo. for Petitioners (in C.P. No.1312 of 2020).

Shai Haq Baloch, Additional Advocate General for Official Respondents (in C.P. No.1312 of 2020).

Jam Saka, assisted by Noor-ul-Haq Baloch, Chairman, BRA for Respondent No.2 (in C.P. No.1312 of 2020).

PTD 2024 QUETTA HIGH COURT BALOCHISTAN 342 #

2024 P T D 342

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar and Abdul Hameed Baloch, JJ

Messrs NOOR UL HAQ through Abdul Samad

Versus

The GOVERNMENT OF BALOCHISTAN through Chief Secretary Balochistan an 2 others

Constitutional Petition No.1261 of 2019, decided on 11th August, 2022.

(a) Balochistan Revenue Authority Act (VII of 2015)---

----Ss.14 & 53---Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018, Rr.1(4) & 3---Taxing statute---Applicability---Sale tax, recovery of---Scope---Petitioner company was aggrieved of notice issued by Project Director for recovery of sales tax not deposited---Validity---Enforcement of provisions of Balochistan Revenue Authority Act, 2015, was in the exclusive jurisdiction of the Revenue Authority---Project Director had no power under Balochistan Revenue Authority Act, 2015, to initiate recovery proceedings for tax not withheld---Even if withholding agent had failed to deduct a deductible amount under Balochistan Revenue Authority Act, 2015, then an officer of the Authority only was authorized to initiate and enforce recovery of such withholding tax---Although power of Legislature to enact retrospective law was well recognized but in absence of express provision or necessary implication even the laws which had been made retrospectively applicable could neither be applied to transactions in question, which were past and closed nor could vested rights be taken away or destroyed---High Court set aside recovery notice issued to petitioner as the same was without lawful authority and was a result of misreading of relevant provision of Balochistan Revenue Authority Act, 2015---Constitutional petition was allowed, in circumstances.

Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan and others 1992 SCMR 1905 rel.

(b) Interpretation of statutes---

----Retrospective effect---Scope---Statute, which is procedural in nature, can operate retrospectively unless it affects an existing right on the date of promulgation or causes injustice or prejudice to a substantive right---If such statute is of such character that it may tend to promote justice without any consequential embarrassment or detriment to any of the parties concerned, Courts favourably incline towards giving effect to such procedural statute retrospectively.

Muhammad Ishaq Nasar for Petitioner.

Muhammad Ali Rakhshani, Additional Advocate General for Respondents Nos.1, 2 and 3.

Jam Saka Dashti for Respondent No.4.

PTD 2024 QUETTA HIGH COURT BALOCHISTAN 1542 #

2024 P T D 1542

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar and Shaukat Ali Rakhshani, JJ

COLLECTOR OF CUSTOMS (ENFORCEMENT), CUSTOM HOUSE AIRPORT ROAD, QUETTA

Versus

Messrs ABDUL MANAN and another

Customs Reference Application No.09 of 2023, decided on 12th March, 2023.

(a) Customs Act (IV of 1969)---

----Ss. 2(s), 15, 16, 156(1), (8) & (89), 157(2) & 168---Imports and Exports (Control) Act (XXXIX of 1950), S.3(1)---Foreign Exchange Regulation Act (VII of 1947 ), S. 8---Notification No. F.E.2/2017-SB dated 30-08-2017 issued by the State Bank of Pakistan---Foreign currency, possession of---Legality---Department filed Reference Application against the judgment passed by the Customs Appellate Tribunal whereby the foreign currency, along with vehicle, were ordered to be released to the respondent---Respondent was apprehended about 100 kms into the territory of Pakistan (at Yaro District Pishin) from Pak-Afghan border, with foreign currency of US dollars 200,000 and Saudi Riyal 930,000, which was recovered from his car---Plea of the respondent , denying the violation of any provision of law, was that he had sold out an ancestral property in Afghanistan, whereof he received the said foreign currency as proceeds of sale and that since there was no Counter of Declaration at the Pak-Afghan check-post, therefore, he was proceeding towards State Bank at Quetta to exchange the foreign currency with Pakistani currency---Validity---Admittedly, there was no Counter of Declaration at the Pak- Afghan border, which fact was evident from the record of a constitutional petition having been previously filed on behalf of a Chamber of Commerce before the Balochistan High Court regarding non-issuance of Certificate of Deposits (CDS) by the Customs Official and the State Bank of Pakistan and Ministry of Commerce had also issued letters for facilitation of the business community, but to no avail---Plea of the respondent seemed plausible since neither there was any Counter of Declaration and Facility of CDS at Pak-Afghan border nor there was any facility of State Bank of Pakistan for the exchange of foreign currency at border, therefore, the respondent had to proceed with and reach Quetta for the exchange of the seized foreign currency---State Bank of Pakistan, in terms of S. 8(2) of the Foreign Exchange Regulation Act, 1947, had also issued a Notification No. F.E.2/2017-SB dated 30-08-2017 allowing any person to bring into Pakistan any amount of foreign currency---Thus, in view of the said Notification, there is no embargo to bring any foreign currency notes without any limit except Indian currency within the stated limits---Even otherwise, the recovery had been affected far away from the border within the remits of Tehsil Yaro, District Pishin on a frequent route, which squared out the case of the respondent from the mischief of S. 2(s) of the Customs Act, 1969---Appellate Tribunal had rightly overturned the order-in-original passed by the Collector Customs (Adjudication)---Question raised by the Department was answered in negative i.e. against the Department---Customs Reference Application was dismissed, in circumstances.

(b) Customs Act (IV of 1969)---

----Ss. 168 ,2 (s ), 15, 16, 156(1),(8), (89), 157 (2) & 168---Imports and Exports (Control) Act (XXXIX of 1950), S. 3(1)---Foreign Exchange Regulation Act (VII of 1947 ), S. 8 ---Notification No. F.E.2/2017-SB dated 30-08-2017 issued by the State Bank of Pakistan--Foreign currency, possession of---Legality---Siezing Officer, powers of---Department filed Reference Application against the judgment passed by the Customs Appellate Tribunal whereby the foreign currency, along with vehicle, were ordered to be released to the respondent---Respondent was apprehended about 100 kms into the territory of Pakistan (at Yaro District Pishin) from Pak-Afghan border, with foreign currency of US dollars 200,000 and Saudi Riyal 930,000, which was recovered from his car---Held, that in view of S. 168 of the Customs Act, 1969, the seizure can only be made by an appropriate Gazetted officer, whereas in the present case, the seizing officer was an OPF inspector, who is a clerk by designation, but was delegated with the powers of an inspector---It was not permissible for said officer to make seizure, thus, the very recovery of the foreign currency became illegal from its inception---Appellate Tribunal had rightly overturned the order-in-original passed by the Collector Customs (Adjudication)---Question raised by the Department was answered in negative i.e. against the Department---Customs Reference Application was dismissed, in circumstances.

----S. 3(1)---Customs Act (IV of 1969), Ss. 2(s), 15, 16, 156(1), (8), (89), 157 (2) & 168---Foreign Exchange Regulation Act (VII of 1947), S. 8(2)---Foreign currency brought into Pakistan---Legality---Department filed Reference Application against the judgment passed by the Customs Appellate Tribunal , whereby the foreign currency along with vehicle were ordered to be released to the respondent ---Respondent was apprehended about 100 kms into the territory of Pakistan (at Yaro District Pishin ) from Pak-Afghan border, with foreign currency of US dollars 200,000 and Saudi Riyal 930,000, which was recovered from his car---Held, that S. 3(1) of the Imports and Exports (Control) Act, 1950, was not applicable in the present case as the import policy did not put an embargo on bringing into Pakistan foreign currency, as such, persecution of the respondent for violating the provisions of the Imports and Exports (Control) Act, 1950, was nothing but a malicious act on the part of the applicant /Department---Appellate Tribunal had rightly overturned the order-in-original passed by the Collector Customs (Adjudication)---Question raised by the Department was answered in negative i.e. against the Department---Customs Reference Application, was dismissed, in circumstances.

Abdul Qahir Khan for Applicant.

Mazhar Ali Khan, Muhammad Qaseem and Saddam Hussain for Respondents.

PTD 2024 QUETTA HIGH COURT BALOCHISTAN 1584 #

2024 P T D 1584

[Balochistan High Court]

Before Muhammad Hashim Khan Kakar, CJ and Muhammad Aamir Nawaz Rana, J

SARDAR MUHAMMAD SHAFIQ TAREEN

Versus

The COMMISSIONER-IR, ZONE I, RTO, QUETTA

Income Tax Reference No.30 of 2024, decided on 16th October, 2024.

(a) Income Tax Ordinance (XLIX of 2001)---

---Ss.111(1)(b) & 122(5)---Concealed income---Credit entries in the bank account/statement of taxpayer---Definite information---Scope---Term "definite information" means information which is complete and does not require further processing---Bank credit entries or bank deposits in itself do not constitute "definite information" as it requires further processing to relate it to net income of a taxpayer chargeable to tax---Only that part of the credit entries or bank deposits is chargeable to tax which can be termed as net profit or income---Whole of the credit entries or bank deposits in a bank account run by a businessman can never be his net profit or income chargeable to tax---Instead such credit entries or bank deposits may, at best, represent gross business receipts which after deduction of expenses will constitute net income or profit liable to tax---Thus, in the present case, the action of the Officer Inland Revenue (OIR) treating entire credit entries or bank deposits as amount liable to tax was neither lawful nor logical---High Court set-aside impugned order passed in favour of the Department by the Appellate Tribunal Inland Revenue whereby the findings of two Authorities were agreed upon---Reference Application, filed by taxpayer, was allowed.

Messrs E.F.U. General Insurance Co. Limited v. The Federation of Pakistan and others PLD 1997 SC 700; 2019 PTD 2001 and 2013 PTD 884 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----Ss. 122(5) & 111(1)(b)---Concealed income---Credit entries in the bank account/statement of taxpayer---Definite information---Scope---Officer Inland Revenue (OIR) treated taxpayer's bank credit entries as "definite information" in terms of S. 122(5) of Income Tax Ordinance, 2001 ('the Ordinance 2001') and added it to declared income of the taxpayer as concealed income, which findings were upheld upto the Appellate Tribunal Inland Revenue ('Tribunal')---Whether there was "definite information" in the possession of the OIR or not---Held, that record revealed that the OIR invoked S. 122(5) of the Ordinance 2001 to make addition of said bank credit entries of PKR 10,544,681/- to the declared income as concealed income---Provision of law under S.122(5) of the Ordinance, 2001 lays down that only such "definite information " is relevant which is obtained through audit or through a process similar to audit---In the present case , the OIR had not conducted any audit in the case of applicant/taxpayer, hence, the so-called "definite information" regarding bank credit entries could not be made a basis for invoking S. 122(5) of the Ordinance 2001---High Court set-aside impugned order passed in favour of the Department by the Appellate Tribunal Inland Revenue whereby the findings of two Authorities were agreed upon---Reference Application filed by taxpayer, was allowed.

----Ss. 111(1)(b) & 122(5) [as inserted /amended through Finance Act, 2020]---Concealed income---Proceedings for the relevant tax year, non-conducting of---Credit entries in the bank account/statement of taxpayer---Definite information ---Scope---Officer Inland Revenue (OIR) treated taxpayer's bank credit entries as "definite information" in terms of S.122(5) of Income Tax Ordinance, 2001 ('the Ordinance, 2001') and added it to declared income of the taxpayer as concealed income, which findings were upheld upto the Appellate Tribunal Inland Revenue ('Tribunal')---Validity---In the present case, for the (relevant) Tax Year 2015, the OIR had incorrectly applied amended provisions of S. 122(5) of the Income Tax Ordinance, 2001, which were brought on the statute through Finance Act, 2020---High Court set-aside impugned order passed in favour of the Department by the Appellate Tribunal Inland Revenue whereby the findings of two Authorities were agreed upon---Reference Application, filed by taxpayer, was allowed.

2023 SCMR 534 ref.

(d) Income Tax Ordinance (XLIX of 2001)---

---Ss. 122(5), 122(9), 111(1)(b) & 111(5), Explanation---Concealed income---Separate notice(s)---Scope---Officer Inland Revenue (OIR) treated taxpayer's bank credit entries as "definite information" in terms of S. 122(5) of Income Tax Ordinance, 2001 (' the Ordinance, 2001') and added it to declared income of the taxpayer as concealed income, which findings were upheld upto the Appellate Tribunal Inland Revenue ('Tribunal')---Validity---In the present case, the OIR had issued a combined notice under Ss. 122(5), 122(9) & 111(1)(b) of the Income Tax Ordinance , 2001 (' the Ordinance, 2001')---Prior to insertion of Explanation to S. 111(5) of the Income Tax Ordinance, 2001, separate notice under S. 111 of the Ordinance was mandatory---OIR was duty bound to issue separate notice under S. 111 of the Ordinance 2001 for the Tax Year 2015---Hence, the proceedings conducted were unlawful---High Court set-aside impugned order passed in favour of the Department by the Appellate Tribunal Inland Revenue whereby the findings of two Authorities were agreed upon---Reference Application filed by taxpayer, was allowed.

2024 SCMR 700 ref.

Usama Zaheer for Applicant.

Iftikhar Raza and Munawar Kasi for Respondents.

Supreme Court

PTD 2024 SUPREME COURT 221 #

2024 P T D 221

[Supreme Court of Pakistan]

Present: Qazi Faez Isa, C.J., Amin-ud-Din Khan and Athar Minallah, JJ

Messrs SPRINT OIL AND GAS SERVICES PAKISTAN FZC, ISLAMABAD

Versus

OIL AND GAS DEVELOPMENT COMPANY LIMITED (OGDCL), ISLAMABAD

Civil Petition No.740 of 2021, decided on 20th October, 2023.

(Against the judgment dated 21.01.2021 of the Islamabad High Court, Islamabad passed in I.C.A. No.115 of 2019)

(a) Constitution of Pakistan---

----Art. 199---Provincial laws on sales tax on services---Constitutional jurisdiction of (Islamabad) High Court---Scope---Constitutional petition filed before the Islamabad High Court---Maintainability---Petitioner-company had carried out cementation works for Oil and Gas Development Company Limited ('OGDCL') under certain contracts and the subject dispute pertains to the sales tax paid by it on the said works--- When the contracts were entered into the requisite notifications, which commenced the imposition of sales tax on services, had not been issued under the four applicable provincial laws, i.e. Sindh Sales Tax on Services Act, 2011, Punjab Sales Tax on Services Act, 2011, Khyber Pakhtunkhwa Finance Act, 2013, and Balochistan Sales Tax on Services Act, 2015---OGDCL refused to reimburse the sales tax paid by the petitioner, therefore, the petitioner invoked the constitutional jurisdiction of the Islamabad High Court, because according to the petitioner its registered office is at Islamabad andthe contracts were also executed at Islamabad---In its petition the petitioner claimed that under the four applicable provincial laws OGDCL was liable to reimburse the sales tax paid by the petitioner on behalf of OGDCL---Validity---Admittedly, the petitioner-company did not carry out any of the cementation works in the Islamabad Capital Territory, nor was the applicability and/or interpretation of a Federal law required, which may have required consideration by the Islamabad High Court---Islamabad High Court, therefore, lacked jurisdiction, and should not have entertained the writ petition filed by the petitioner on this ground alone---Furthermore Islamabad High Court's constitutional jurisdiction under Article 199 of the Constitution could only be invoked when 'no other adequate remedy is provided by law'---In the instant case the petitioner had other adequate remedy, either by invoking the arbitration clause in the contracts or by filing a suit---Islamabad High Court did not have the jurisdiction to entertain the writ petition filed by the petitioner, and therefore the same was not maintainable---Petition for leave to appeal was disposed of accordingly.

Federal Government Employees Housing Foundation v. Muhammad Akram Alizai PLD 2002 SC 1079; Petrosin Corporation (Pvt.) Ltd. v. Oil and Gas Company Ltd. 2007 Corporate Law Decisions 578 and Nasiruddin Ghori v. Federation of Pakistan 2010 Pakistan Labour Cases 323 distinguished.

(b) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of the High Court---Scope---Technical and complex contracts---High Court's jurisdiction under Article 199 of the Constitution may not be invoked when contracts have to be interpreted, and all the more so when they are technical and/or complex, nor when evidence is required to be recorded---In the exercise of its writ jurisdiction, under Article 199 of the Constitution, a High Court also does not enter into the realm of disputed facts.

----Parties cannot confer jurisdiction on a court when otherwise the court has no jurisdiction.

Eden Builders (Pvt.) Ltd. Lahore v. Muhammad Aslam 2022 SCMR 2044 ref.

Muhammad Ahmad Qayyum, Advocate Supreme Court for Petitioner.

Khurram Mumtaz Hashmi, Advocate Supreme Court for Respondent.

PTD 2024 SUPREME COURT 235 #

2024 P T D 235

[Supreme Court of Pakistan]

Present: Ijaz ul Ahsan, Munib Akhtar and Ayesha A. Malik, JJ

PROVINCE OF SINDH through Secretary, Agriculture Department, Government of Sindh and another

Versus

MULTILINE ENTERPRISES and another

Civil Appeals Nos. 477 and 478 of 2021, decided on 25th October, 2023.

(On appeal against judgment dated 24.04.2019 passed by the High Court of Sindh at Karachi in High Court Appeals Nos. 139 and 109 of 2019).

Sale of Goods Act (III of 1930)---

----S. 64A---Provincial Government tender for supply of imported tractors---Suit for recovery of advance income tax and sales tax paid by the supplier on import of tractors---Single Judge of the High Court dismissed the claim of supplier insofar as it related to the reimbursement of advance income tax at import stage at the enhanced rate, however, the claim for reimbursement of sales tax was sustained and decreed---Division Bench of the High Court dismissed both appeals filed by the supplier and the Provincial Government---Validity---Section 64A of the Sale of Goods Act, 1930 applies only in relation to three types of taxes: central excise duty, customs duty and sales tax---Said section makes no mention of income tax, thus, section 64A does not apply to income tax---In such circumstances both the Single Judge and the Division Bench rightly disallowed the supplier's claim with regard to income tax---With respect to sales tax, Clause 26.1 of the general conditions appended to the contract stipulated that the contract was on DDP basis, i.e., Delivery Duty Paid---'DDP' is a term that is part of "Incoterms", which is a well known and established system in international trade---In respect of the contract in the present case eighth version, Incoterms 2010, was applicable---Contract on DDP basis is most favorable for the buyer in that almost all the risks, costs and tasks are to the account of the seller---This includes any duties or taxes payable---Thus, a contract on DDP basis maximizes the risks and responsibilities of the seller and minimizes those of the buyer---Given this distribution, it is hardly surprising that in the present case the Provincial Government chose to incorporate this term in the general conditions of its contract---Clause 26, and the requirement that the contract was on DDP basis, was a stipulation that was precisely within the contemplation of section 64A of the Sale of Goods Act, 1930, i.e., it was an agreement between the parties as to what would happen if there was a change in the duties and taxes applicable after the contract had been entered into---That burden fell entirely upon, and was wholly and solely the responsibility of the supplier---Section 64A, on its own terms, did not have any application to the present case in such regard---Legal liability to pay the sales tax lay on the supplier, and clause 26 threw the financial burden also on it---Supplier therefore could not base a claim in these terms either---Appeals were disposed with the result that supplier's suit failed in its entirety and was liable to be dismissed.

Pakistan Beverage Ltd. v. Large Taxpayer Unit Karachi 2010 PTD 2673 distinguished.

For the Appellants:

Sibtain Mehmood, Addl. AG, Sindh.

Shahab ud Din Abro, D.G.

Zulfiqar Ali, Focal Person, Agriculture Department, Sindh

(via Video-Link, Karachi) (in C.A. No. 477 of 2021).

Ali Asad Gondal, Advocate Supreme Court

(via Video-Link, Karachi) (in C.A. No. 478 of 2021).

For the Respondents:

Sibtain Mehmood, Addl. AG, Sindh.

Shahab ud Din Abro, D.G.

Zulfiqar Ali, Focal Person, Agriculture Department, Sindh

(via Video-Link, Karachi) (in C.A. No. 478 of 2021).

Ali Asad Gondal, Advocate Supreme Court

(via Video-Link, Karachi) (in C.A. No. 477 of 2021).

PTD 2024 SUPREME COURT 306 #

2024 P T D 306

[Supreme Court of Pakistan]

Present: Ijaz ul Ahsan, Syed Hasan Azhar Rizvi and Irfan Saadat Khan, JJ

COLLECTOR OF CUSTOMS and another

Versus

Messrs YOUNG TECH PRIVATE LIMITED and others

Civil Petitions Nos.890-K to 909-K of 2023, decided on 22nd November, 2023.

(Against the Order dated 14.03.2023 passed by High Court of Sindh, Karachi in C.Ps. Nos. 5389, 5245, 5004, 6120, 47, 361, 529, 530, 583, 5069, 5689, 6028, 7470, 7668, 7771 of 2021 and 241, 242, 474, 966 of 2023)

Finance Act (XXX of 2018)---

----S. 10 [as amended by the Finance Act (XIII of 2022)]---Mobile handset levy on imported phones---Levy on ordinary phones other than smart phones---Legality---Respondents had imported mobile phones and were aggrieved by the imposition of mobile handset levy under section 10 of the Finance Act, 2018 ("Act") on mobile phones that were admittedly not smart phones---Section 10 of the Act imposed mobile handset levy on smart phones supported by a table which gave categories of smart phones and the rates of levy per set---Subsequently in the Finance Act, 2022, the table of section 10 was amended and the amended table replaced the words "category of smart phone" with the words "Mobile Phones having C&F Value (US Dollars)"---Stance of the department was that by changing the table, it had been conferred the power to recover the said levy not only on the smart phones but also on the ordinary phone which did not fall in the category of smart phones---High Court came to the conclusion that without amending the charging section, i.e. section 10 and merely by amending the table, the levy could not be recovered---Validity---Right to recover any levy rests in the charging section and not in the table that specifies the rates at which such charge is to be recovered---Power to recover a levy is anchored in the charging section and the table is merely meant to prescribe the rates at which such levy is to be recovered on various goods/items---Unless the charging section confers a power to recover a levy on an article or class of goods, mere mention of a different class, types or category of goods clearly goes beyond the scope of the charging section---This cannot be done---Schedule/table is merely a supplement of the charging section and cannot go beyond it and create a new and altogether different levy on a different class of goods not mentioned or contemplated by the charging section---Impugned order of the High Court was in-line with settled principles of law on interpretation of fiscal statutes and tax laws---Petitions were dismissed and leave to appeal was refused.

Dr. Farhat Zafar, Advocate Supreme Court (in all cases) along with Ms. Ume Kalsoom, D.C. Law East Karachi and Nabeel Siraj, D.C. Customs (both via video link, Karachi) for Petitioners.

Nemo for Respondents.

PTD 2024 SUPREME COURT 321 #

2024 P T D 321

[Supreme Court of Pakistan]

Present: Munib Akhtar, Shahid Waheed and Musarrat Hilali, JJ

COMMISSIONER INLAND REVENUE, LAHORE

Versus

Messrs ATTA CABLES (PVT.) LTD., LAHORE and others

Civil Appeal No.247 of 2021, decided on 2nd November, 2023.

(Against judgment dated 22.4.2019 passed by the Lahore High Court, Lahore in I.C.A. No. 18093 of 2019)

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 214D [since omitted]---Automatic selection for audit---Scope---In the ordinary course, and in terms of other provisions of the Income Tax Ordinance, 2001 ('the Ordinance'), selection for audit is not automatic but is a result that comes about after going through various statutory filters, including such as are set out in various circulars issued by the Federal Board of Revenue---Section 214D, inasmuch as it applied automatically (subject to certain exceptions contained in its subsections (3) & (4)) and therefore bypassed the filters otherwise built into the Ordinance before an audit could be undertaken, had therefore to be construed and applied strictly---More particularly, the conditions that had to exist for the section to be attracted had to apply precisely---Any deviation or discrepancy, howsoever minor, slight or even inconsequential it may otherwise appear to be would apply, and go, in favor of the taxpayer.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 214D [since omitted]---Automatic selection for audit---Scope---Taxpayer had not filed its return for tax year 2015 within the date required---Date for filing the return was 21.01.2016---On that date the respondent-taxpayer properly filed an application under section 119 of the Income Tax Ordinance, 2001 ('the Ordinance') for extension of time---Commissioner did not respond to said request---On such basis, the department claimed that the respondent came within the ambit of section 214D---Validity---In the present case, section 214D would have applied if the Commissioner had, under section 119, extended the period for filing the return (subject to a thirty day condition) and the return was not filed within such extended period---Now, the fact of the matter was that the Commissioner never took any action on the application, which was otherwise properly filed, for extension---Subsection (3) of section 119 specifically requires the Commissioner to grant the extension in writing---Since section 214D had to be applied exactly, this meant that for purposes of this provision the refusal of the Commissioner also had to be in writing---In other words, any inaction on the part of the Commissioner, or a failure to reject or refuse the application for extension in any manner other than in writing, would mean that for the purposes of section 214D the application would be regarded as pending---There could be no refusal or denial of extension by implication---For a provision as harsh and severe as section 214D to apply merely by way of implication or on a deemed basis would be incorrect---Clearly therefore, until the application for extension was actually disposed of by an order in writing the section would not become applicable---Furthermore, the condition of thirty days would have to apply, in the context of section 214D, not from the due date for the filing of the return, but the date of the order made by the Commissioner granting an extension---Of course, if the Commissioner refused the extension in writing, then the section would apply from the date of such order, subject to any remedies available to the taxpayer to challenge such refusal---Therefore, in the facts and circumstances presented in this case, section 214D never became applicable---Appeal filed by the department was dismissed.

Muhammad Mujahid Qureshi and others v. Federation of Pakistan and others 2019 PTD 535 declared to be incorrectly decided.

Ibrar Ahmed, Advocate Supreme Court (via video-link, Lahore) for Appellant.

Javed Iqbal Qazi, Advocate Supreme Court (via video-link, Lahore) for Respondent No. 1.

PTD 2024 SUPREME COURT 483 #

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PTD 2024 SUPREME COURT 637 #

2024 P T D 637

[Supreme Court of Pakistan]

Present: Munib Akhtar, Shahid Waheed and Musarrat Hilali, JJ

COMMISSIONER INLAND REVENUE, ISLAMABAD

Versus

Messrs FAUJI FOUNDATION and another

Civil Appeal No.2434 of 2016, decided on 1st November, 2023.

(On appeal against the judgment dated 25.11.2014 passed by the Islamabad High Court, Islamabad in Income Tax Reference No.04 of 2014).

(a) Income Tax Ordinance (XLIX of 2001)---

----Ss. 18(1)(d), 122(5) & 122(9)---Amendment of original assessment order---Pre-requisites---Income from business---Scope---Subsidiary company's shares---Increase in value---Whether the increase in the fair market value of the subsidiary company's shares held by the taxpayer-respondent as long-term investment was taxable under the head "income from business" in terms of section 18(1)(d) of the Income Tax Ordinance, 2001---Held, that section 18(1)(d) of the Income Tax Ordinance, 2001 prescribes a two-pronged test for bringing income under the head "income from business" ; first is that any benefit or perquisite must have a fair market value, not necessarily whether it can be converted into money; second is that a person may have received the value of that benefit or perquisite during or under a past, present, or prospective business relationship---Coexistence of both is necessary and the absence of one of them will not constitute income from a business---As regards the first constituent component of the test, the notional gain derived by the taxpayer from the increase in the fair market value of its shares may in appropriate circumstances be counted as "benefit"---However, no definite answer need be given on this, in the facts and circumstances of the present case---With respect to the second constituent component of the test, the principle to be applied for purposes of present case is whether the investment which led to the notional gain was connected with the carrying on of the taxpayer's business---It bears mentioning that enhanced fair market value of any benefit or prerequisite may be so assessable under Section 18(1)(d) of the Income Tax Ordinance, 2001, where what is done is not merely a realisation or change of investment, but an act done in what is truly the carrying on, or carrying out, of a business---In the present case, the Revenue has not brought any material on record which discloses definite information that the taxpayer had made the said investment in furtherance of its business or in connection therewith---Given this scenario, the relationship between the taxpayer and its subsidiary may be held to be contractual, and governed by articles of association---So viewed, the facts of this case do not meet the test for section 18(1)(d) of the Income Tax Ordinance, 2001, and thus, the taxpayer's gain from its investment cannot be treated as business income in terms of section 18(1)(d)---Furthermore, according to section 122(5) of the Income Tax Ordinance, 2001, two conditions have to be complied with before a Taxation Officer acquires jurisdiction to issue notice under section 122(9) in respect of an assessment beyond the period of five years from the end of the relevant financial year---These two conditions are: firstly, that the Taxation Officer must have obtained definite information from the audit or otherwise; and secondly, that on that basis he must also be satisfied that income chargeable to tax had escaped assessment or total income has been undervalued, or assessed at too low a rate, or has been the subject of excessive relief or refund or any amount under a head of income has been misclassified---In the present case the two conditions of section 122(5) were not adhered to while assuming jurisdiction to amend the original assessment order---Show cause notice and the order amending the original assessment speaks elaborately that the Taxation Officer had not acquired any definite information subsequent to the original assessment order---On the contrary, the Taxation Officer based on the information provided in the return and documents attached to it by the taxpayer, proceeded to amend the assessment---Taxation Officer had only made reanalysis of existing information and came to a conclusion that was different from the one that was drawn in the original assessment order---Notice issued under section 122(9) of the Income Tax Ordinance, 2001 was without jurisdiction, and the order passed in consequence of it was also void---Appeal was dismissed accordingly.

Californian Copper Syndicate (Limited and Reduced) v. Harris (Surveyor of Taxes) 5 TC 159 and United Liner Agencies of Pakistan (Pvt.) Ltd. Karachi v. Miss Mahenaee Agha 2003 SCMR 132 ref.

(b) Jurisdiction---

----Principle---Whenever jurisdiction is given by a statute and such jurisdiction is only given upon certain specified terms contained therein, it is a universal principle that those terms should be complied with, in order to create and raise the jurisdiction, and if they are not complied with, the jurisdiction does not arise.

Nusserwanjee Pestonjee and others v. Meer Mrioodeen Khan Wullud Meer Sudroodeen Khan Bahadoor (1885) UK PC 15 ref.

Dr. Farhat Zafar, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record for Appellant.

Syed Ali Zafar, Advocate Supreme Court for Respondents (via video link from Lahore)

PTD 2024 SUPREME COURT 662 #

2024 P T D 662

[Supreme Court of Pakistan]

Present: Syed Mansoor Ali Shah, Jamal Khan Mandokhail and Athar Minallah, JJ

COMMISSIONER INLAND REVENUE, ZONE-IV, KARACHI

Versus

Messrs A.P. MOLLER MAERSK and another

C.Ps. Nos. 560-K to 589-K of 2019, decided on 12th January, 2024.

(Against the consolidated judgment of High Court of Sindh at Karachi dated 31.05.2019, passed in ITRAs No.22 of 2014, etc.).

(a) Income Tax Ordinance (XLIX of 2001)---

----S.107---Treaties for the avoidance of double taxation, interpretation of---Scope---International tax treaties, conventions or agreements, given their unique nature, require a distinct interpretive approach compared to the one used while interpreting domestic legislation---These agreements being international treaties are governed by the rules of interpretation outlined in the Vienna Convention on the Law of Treaties---Tax treaties differ from domestic tax laws in language, application, and purpose---These treaties are relieving in nature and seek to avoid double taxation, while domestic tax law imposes tax in specific situations---Tax treaties require a broad purposive interpretation, and their interpretation may be more liberal than domestic law---Treaty interpretation is a separate subject from statutory interpretation, accentuating the need to interpret tax treaties independently of domestic law---Role of a State in a bilateral agreement is more of implementing the terms of such agreement rather than that of interpreting the same and that too in a unilateral manner---Given that the primary purpose of tax treaties is to avoid and relieve double taxation through equitable and acceptable distribution of tax claims between the countries, it is important that the provisions of these treaties are interpreted in a common and workable manner, taking into account international tax language, legal decisions of other countries, model treaties, along with their commentaries, developed by the Organization for Economic Cooperation and Development ("OECD") and the United Nations ("UN"), and scholarly academic works where appropriate.

Snamprogetti Engineering B.V. v. Commissioner of Inland Revenue 2023 SCMR 1055 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 107---Convention between the Islamic Republic of Pakistan and the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Art. 8---Convention between the Kingdom of Belgium and the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Art. 8---Income arising from container detention charges ("CDC"), container service charges ("CSC") and terminal handling charges ("THC")---Such income falls within the category of "profits from the operation of ships in international traffic" in the context of double taxation conventions concluded between Pakistan and Denmark, as well as between Pakistan and Belgium.

The Commentary on Article 8 of the OECD Model Convention ("OECD MC") provides guidance about qualifying activities and related profits with respect to income falling under the head of "profits from the operation of ships in international traffic". The expression "profits from the operation of ships in international traffic" also covers profits from activities directly connected with such operations as well as profits from activities which are not directly connected with the operation of the enterprise's ship in international traffic as long as they are ancillary to such operation - activities that the enterprise does not need to carry on for the purposes of its own operation of ships in international traffic but which make a minor contribution relative to such operation and are so closely related to such operation that they should not be regarded as a separate business or source of income of the enterprise should be considered to be ancillary to the operation of ships in international traffic.

The objective scope of Article 8 of the OECD MC and the UN Model Convention ("UN MC") with its reference to "profits from the operation of ships in international traffic" covers not only profits directly obtained by the enterprise from the transportation of passengers or cargo by ships that it operates in international traffic, but also, profits from activities directly connected with such operations as well as profits from activities which are not directly connected with the operation of the enterprise's ships in international traffic as long as they are ancillary to such operation. Activities are to be considered ancillary to the operation of ships in international traffic if (i) the enterprise does not need to undertake them for the purposes of its own operation of ships in international traffic but which otherwise (ii) make a minor contribution relative to such operation and (iii) are so closely related to such operation that they should not be regarded as a separate business or source of income. Article 8 OECD and UN MC therefore applies not only to profits directly obtained in international traffic e.g. transport of passengers or cargo, sales of tickets of the enterprise, leasing of ships, but also to profits directly connected with international traffic and to profits ancillary to international traffic e.g. inland transport, interest, code sharing and slot chartering, haulage services and catering services, provision of goods and services to other enterprises, sales of tickets on behalf of other enterprises, advertising on behalf of other enterprises, letting of immovable property, rental of containers.

Georg Kofler, in Reimer and Rust (eds), Klaus Vogel on Double Taxation Conventions (5th edn 2021) vol 1, art 8, paras 33, 35 ref.

Profits arising from short-term storage of containers or from detention charges for the late return of containers, are covered within the purview of "profits from the operation of ships in international traffic". Further, special remuneration for services ancillary to container operations are covered within the ambit of shipping income from international traffic. Income derived from services provided for cargo handling is also considered part of shipping income from international traffic when directly connected or ancillary to the operation of ships in international traffic.Thus, profits arising from container detention charges ("CDC"), container service charges ("CSC") and terminal handling charges ("THC") are connected with and ancillary to the operation of ships in international traffic. Consequently, these profits squarely fall within the purview of the expression "profits from the operation of ships in international traffic". Therefore, CDC, CSC, and THC collected by the respondents (non-resident cargo shipping companies incorporated in Denmark and Belgium) are part of the revenue earned in shipping in international traffic and are to be dealt with in accordance with the provisions of the Pakistan-Denmark Double Taxation Convention and the Pakistan-Belgium Double Taxation Convention, as the case may be.

Dr. Shahnawaz, Advocate Supreme Court and Abdul Wahid, Addl. Commissioner, FBR for Petitioner (in all cases).

Khalid Javed Khan, Advocate Supreme Court for Respondents (Through V.L. Karachi Registry) (In all cases).

PTD 2024 SUPREME COURT 772 #

2024 P T D 772

[Supreme Court of Pakistan]

Present: Munib Akhtar, Shahid Waheed and Irfan Saadat Khan, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs RIAZ BOTTLERS (PVT.) LTD. (Now Lotte Akhtar Beverages (Pvt.) Ltd.)

Civil Petition No.3200-L of 2019, decided on 19th February, 2024.

(Against the Order dated 12.9.2019 passed by the Lahore High Court, Lahore in P.T.R. No. 142 of 2009).

(a) Income Tax Ordinance (XXXI of 1979)[Since repealed]---

----S. 25(c)---Companies Profits (Workers' Participation) Act (XII of 1968), Ss. 2(c) & 9---Workers Profit Participation Fund (WPPF)---Amount transferred by a company to the WPPF---Not liable to tax under section 25(c) of the Income Tax Ordinance, 1979---Transferred amount to the WPPF could not be termed as arising out of a trade/trading rather the same is a statutory liability---Such amount was granted an exemption because a statute, in the present case, Companies Profits (Workers' Participation) Act, 1968, allowed for it---Hence, the amount transferred to the WPPF is nothing but a statutory liability and thus did not attract the provisions of section 25(c) of the Income Tax Ordinance, 1979---Petition was dismissed and leave to appeal was refused.

(b) Interpretation of statutes---

----Special law and general law---Preference---According to the principle of harmonious interpretation, special law would take precedence over the general law.

Gulistan Textile Mills Ltd. v. Soneri Bank 2018 CLD 203 ref.

Mian Yusuf Umar, Advocate Supreme Court for Petitioner (via Video link, Lhr.)

Ali Sibtain Fazli, Sr. Advocate Supreme Court for Respondent

(via Video link, Lhr.)

PTD 2024 SUPREME COURT 798 #

2024 P T D 798

[Supreme Court of Pakistan]

Present: Qazi Faez Isa, C.J., Amin-ud-Din Khan and Athar Minallah, JJ

Civil Appeals Nos. 1363 to 1365 of 2018

(Against the judgment dated 15.07.2017 of the High Court of Sindh, Karachi passed in Constitution Petitions Nos. D-2892/14, D- 1135 and D-3539 of 2016).

And

Civil Misc. Application No. 4728 of 2023

[For impleadment by Messrs Zubi International Private Limited, through its Assistant Manager, Hafiz Zahid Hassan]

In C.A. 1363 of 2018

CANTONMENT BOARD FAISAL and another---Appellants

Versus

HABIB BANK LIMITED, KARACHI and another---Respondents

And

In C.A. 1364 of 2018

CANTONMENT BOARD CLIFTON, KARACHI---Appellant

Versus

K & N FOODS (PVT.) LIMITED and others---Respondents

And

In C.A. 1365 of 2018

CANTONMENT BOARD CLIFTON, KARACHI

Versus

Messrs VENUS PAKISTAN (PVT.) LIMITED and others

Civil Appeals Nos. 1363 to 1365 of 2018 and Civil Misc. Application No. 4728 of 2023, decided on 13th October, 2023.

Cantonments Act (II of 1924)---

----S. 60(1) [as amended by the Cantonments (Amendment) Act (XLVII of 2023)] & Sched. VII---Cantonments (Amendment) Act (XLVII of 2023), S. 2(a)(i)---Constitution of Pakistan, Arts. 140A, 163 & Fourth Sched., Pt.1, Entry 2---Rules of Business, 1973, Second Sched., Entry 7(a)(ii)---Cantonment Boards---Professional tax---Cantonment Boards are not empowered to impose professional tax on those engaged in professions, trades, callings or employments in cantonment areas---Professional tax mentioned in Article 163 of the Constitution recovered by the Cantonment Boards is unconstitutional---Section 60(1) of the Cantonments Act, 1924 [as amended by the Cantonments (Amendment) Act, 2023] and its Schedule VII to the extent that they may authorize the imposition of the professional taxes are ultra vires the Constitution.

Section 60(1) of the Cantonments Act, 1924 dealing with general power of taxation was amended by the Cantonments (Amendment) Act, 2023, which also made additions to Schedule VII of the Cantonments Act, 1924 and included therein the professional taxes. The administrative division mentioned in section 60(1) of the Cantonments Act, 1924 is defined in section 2(a)(i) of the Cantonments (Amendment) Act, 2023, as: '"administrative division" means the division to which business of cantonments stands allocated.' The Second Schedule to the Rules of Business, 1973, stipulates that the business of cantonments stands allocated to the Defense Division. The aforesaid change meant that, previously the sanction of the Federal Government was required to be obtained for cantonment boards to impose taxes but now it has been delegated to a Division. This downgrading the power of the Federal Government does not seem to conform to democratic principles and obfuscates transparency.

Article 163 of the Constitution alone authorizes the provinces to impose the professional taxes, and the Supreme Court has already decided this very issue in the case reported as ICI Pakistan Ltd. v. Tehsil Council (PLD 2007 Supreme Court 428) ('the ICI case'). The attempt to distinguish the 'ICI case' on the ground that, after the insertion of Article 140A into the Constitution it changed the existing constitutional scheme, is not correct. Neither has Article 163 been made redundant nor has Article 140A empowered the Federation, including cantonment boards, to impose the professional taxes. It is also not correct to state that since the second entry of the Federal Legislative List mentions local self-government and cantonment areas the Federation has been authorized to impose the professional taxes. Article 163 of the Constitution specifically empowers the provinces to impose the professional taxes; it is the only provision in the Constitution which permits or authorizes this, and it must be given effect to; it cannot be disregarded or whittled down by untenable submissions.

ICI Pakistan Ltd. v. Tehsil Council PLD 2007 SC 428 fol.

Section 60(1) of the Cantonments Act, 1924 [as amended by the Cantonments (Amendment) Act, 2023] and its Schedule VII to the extent that they may authorize the imposition of the professional taxes are ultra vires the Constitution. The professional taxes mentioned in Article 163 of the Constitution recovered by the Cantonment Boards is unconstitutional, consequently, they cannot be retrained, which should be refunded and would have to be refunded. Appeals were dismissed with costs throughout.

Pfizer Laboratories Ltd. v. Federation of Pakistan PLD 1998 SC 64 ref.

For the Appellants:

(In all cases)

Muhammad Umer Riaz, Advocate Supreme Court.

Assisted by Ch. Abubakar.

Zaki Haider, CEO, Clifton.

Aamir Rashid, CEO, Faisal.

Tanveer Ashraf, Director, ML & C. and Javed Abbasi, Law Officer, ML & C.

(Through video-link from Karachi)

For the Applicant:

M. Naeem Sadiq, Advocate Supreme Court (in C.M.A. No. 4728 of 2023).

On Court's Notice:

Mansoor Usman Awan, Attorney-General for Pakistan and Ch. Aamir Rehman, Additional Attorney-General.

Respondents Nos. 1-2:

Ex-parte (in C.A. No. 1363 of 2018).

For Respondent No. 1:

Tahir Ishaq Mughal, Advocate Supreme Court and Mrs. Shaista Altaf, Advocate Supreme Court (in C.A. No. 1364 of 2018).

For Govt. of Sindh:

Zeeshan Adhi, Additional Advocate-General, Sindh.

Saifullah, Asst. Advocate-General, Sindh.

Ghulam Nabi Shah, Addl. Director Excise and Taxation.

Ayaz Ali Mangi, Dy. Director (P-II).

(Through video-link from Karachi) (in C.As. Nos. 1364 and 1365 of 2018)

Respondents Nos. 2, 3 and 5:

Ex-parte (in C.A. No. 1364 of 2018).

Respondents Nos. 1 and 3:

Ex-parte (in C.A. 1365 of 2018).

PTD 2024 SUPREME COURT 865 #

2024 P T D 865

[Supreme Court of Pakistan]

Present: Sardar Tariq Masood, ACJ, Syed Mansoor Ali Shah and Athar Minallah, JJ

CHIEF COMMISSIONER/COMMISSIONER IR ZONE-II/ZONE-III, RTO, PESHAWAR

Versus

Messrs AKBAR KHAN FILLING STATION and others

Civil Appeals Nos. 1314 to 1337 of 2014 and Civil Appeals Nos.1611 to 1624 of 2013, decided on 19th December, 2023.

(Against the judgment dated 26.05.2014 of the Peshawar High Court, Peshawar passed in T.Rs. Nos. 1-P to 23-P of 2013 and judgment dated 03.07.2013 of the Peshawar High Court, Mingora Bench (Dar ul Qaza) Swat passed in T.Rs. Nos.1-M to 13-M of 2011).

Income Tax Ordinance (XLIX of 2001)---

----S. 156A---Sale of petroleum products to petrol pump operators operating in Federally Administered Tribal Areas (FATA)---Deduction of tax from the amount of commission or discount allowed to the operator---Refund, claim for---Applicability of the Income Tax Ordinance, 2001---Enforcement of the Income Tax Ordinance, 2001 ('Ordinance of 2001') was not extended to the territorial limits of FATA and, therefore, its provisions were not attracted to the income arising therein---It is not disputed that the respondents are operating petrol pumps in FATA---Section 156 A of the Ordinance of 2001 provides that every person selling petroleum products to a petrol pump operator shall deduct tax from the amount of commission or discount allowed to the operator at the rates specified in Division VI A of Part III of the First Schedule---Tax deductible under subsection (1) shall be a final tax on the income arising from the sale of petroleum products---Obligation of deduction of tax is on the person selling the petroleum products to the operator of the petrol pump while the said deduction is relatable to the commission paid to or discount allowed by the latter---In the present case the respondents assert to be operators of petrol pumps and they were claiming refund of the tax deducted from their commission by the persons who had sold the petroleum products to them---Factum of income having been accrued was on account of the commission paid to the respondents for the sale of petroleum products and not the sale of the petroleum products to the consumers at the petrol pumps operated in FATA---Deduction of tax fell under the final tax regime---Admittedly, the contractual arrangement for the sale of petroleum products, the actual sale and payment as well as deduction of the tax had taken effect in the areas of Pakistan outside the territorial limits of FATA and, therefore, the transactions and the income arising from such sale were not immune from the enforcement of the provisions of the Ordinance of 2001---Income derived by the respondents was on account of commission paid to them by the seller companies outside FATA---Immunity from the payment of taxation under the Ordinance of 2001 shall not be claimed merely on the basis that the business premises have been established in FATA, rather the onus was on the tax payer to establish the fact that taxable income was not being derived from the area where the statute was enforced and applicable---This crucial factum could not be successfully established by the respondents and their refund claims were, therefore, justifiably rejected by the taxation officer---Claim of refund of the tax deducted under section 156A of the Ordinance of 2001 was not tenable and, therefore, rightly rejected---Appeals were allowed accordingly.

C.I.T. v. Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. 2008 PTD 169 ref.

Ghulam Shoaib Jally, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Appellant (in all cases).

Zulfiqar Khalid Maluka, Advocate Supreme Court for Respondents (in C.As. Nos. 1318, 1616-1624 of 2013).

Junaid Akhtar, Advocate Supreme Court for Respondents (in C.A. No. 1611 of 2013).

PTD 2024 SUPREME COURT 1070 #

2024 P T D 1070

[Supreme Court of Pakistan]

Present: Yahya Afridi, Amin-ud-Din Khan and Ayesha A. Malik, JJ

Messrs TAJ WOOD BOARD MILLS (PVT.) LIMITED and 2 others

Versus

GOVERNMENT OF PAKISTAN through Federal Secretary Finance and Revenue Division, Islamabad and others

Civil Petitions Nos. 1896, 1897 and 1900 of 2022, decided on 17th May, 2024.

(Against the judgment dated 09.02.2022 passed by the Peshawar High Court, Peshawar in Writ Petition No. 5184-P of 2021).

Sales Tax Act (VII of 1990)---

----Sixth Sched., Entry No. 152---Constitution of Pakistan, Art. 25---Customs General Order No. 08 of 2021 dated 31.08.2021 ("CGO No. 8 of 2021"), paras. (a) & (b)---Sales tax, exemption from---Manufacturing units in the erstwhile Federally Administered Tribal Areas ("FATA") and Provincially Administered Tribal Areas ("PATA")---Discriminatory treatment---Petitioners (manufacturing units) challenged discriminatory provisions in "CGO No. 8 of 2021", by which the petitioners were denied the beneficial mode of clearance and transshipment granted only to bulk importing edible oil manufacturers---Held, that impugned provisions of "CGO No. 8 of 2021" primarily offered preferential treatment in clearance and transshipment of imported goods to manufacturers of edible oil only in the erstwhile "FATA" and "PATA" which were merged as different districts ("Merged Districts") in the province of Khyber Pakhtunkhwa and, that too, to those who engaged in bulk imports, as compared to other business concerns therefrom---Such preferential treatment was not justifiable for edible oil manufacturers importing in bulk, particularly when compared to other businesses in the region, or for that matter manufacturers of edible oil not importing in bulk, who were not given such concession---Four-Member Bench of the Supreme Court in the case titled Messrs AK Tariq Foundry etc. v. Government of Pakistan through Federal Secretary Finance and Revenue Division, Islamabad, etc. (Civil Petitions Nos. 159 to 178 of 2023, etc.) has already adjudged a statutory provision, creating a sub-class within those carrying on businesses in the Merged Districts, and thereby executing a category of businesses being refused exemption from the fiscal and tax regime as enjoyed by other businesses in the Merged Districts, as discriminatory, offending Article 25 of the Constitution---Said pronouncement of the Supreme Court left little room for the present three-Member Bench to hold otherwise---Petitions were converted into appeals and allowed accordingly.

Messrs AK Tariq Foundry and others v. Government of Pakistan through Federal Secretary Finance and Revenue Division, Islamabad and others (Civil Petitions Nos. 159 to 178 of 2023, etc.) followed.

Isaac Ali Qazi, Advocate Supreme Court for Petitioners.

Dr. Farhat Zafar, Advocate Supreme Court for Respondent No. 4.

Ghulam Shoaib Jally, Advocate Supreme Court for Respondent No. 10.

Syed Fazle Samad, FBR, Najeeb Arjumand, D.C. Customs, Fahad, A.C. FBR and Sharif Ullah, Asst. Director, R.T.O. for Departments.

PTD 2024 SUPREME COURT 1085 #

2024 P T D 1085

[Supreme Court of Pakistan]

Present: Syed Mansoor Ali Shah, Jamal Khan Mandokhail and Athar Minallah, JJ

COMMISSIONER INLAND REVENUE, LARGE TAXPAYERS OFFICE, ISLAMABAD

Versus

PAKISTAN OILFIELDS LTD., RAWALPINDI and others

Civil Petitions Nos. 3472 to 3475 of 2023, decided on 29th February, 2024.

(Against the orders of Islamabad High Court, Islamabad, all dated 08.08.2023 passed in W.Ps. Nos. 2436 to 2439 of 2023).

(a) Constitution of Pakistan---

----Arts. 185(3) & 199---Interim order passed by the High Court---Interference by the Supreme Court---Scope---Established practice and policy of the Supreme Court is that it does not ordinarily intervene in the interim orders of the High Courts---Such intervention is warranted only in exceptional circumstances, such as cases involving a flagrant violation of law, a clear wrongful exercise of jurisdiction or a manifest grave injustice.

Attiq ur Rehman v. Tahir Mehmood 2023 SCMR 501 and Province of Sindh v. Sartaj Hyder 2023 SCMR 459 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 4C [as amended by the Finance Act 2023]---Constitution of Pakistan, Art. 199(4)---Supertax under Section 4C of the Income Tax Ordinance, 2001---Recovery of---High Court granting interim relief against collection of super tax---Constitutionality---Violation of the constitutional requirement of granting interim relief under Article 199(4) of the Constitution---Plain reading of Article 199(4) of the Constitution shows that where the making of an interim order would have the effect of impeding the assessment or collection of public revenues, the High Court shall not make an interim order unless: (i) the prescribed law officer has been given notice of the application for interim relief and he or any person authorized has had an opportunity of being heard; and (ii) the High Court, for reasons to be recorded in writing, is satisfied that the interim order would have the effect of suspending an order or proceeding which on the face of the record is without jurisdiction---Use of the negative language, i.e., "shall not", in Article 199(4) leaves no doubt that its provisions are mandatory and an interim order passed without adhering to the procedure provided therein will be illegal and without jurisdiction---In the present case, it is an admitted fact that the High Court did not give notice of the application for interim relief and provide an opportunity of hearing to the prescribed law officer, i.e., the Attorney-General, nor did the High Court record its finding, and the reasons therefor, that the interim order would have the effect of suspending an order or proceeding which on the face of the record is without jurisdiction---Both the mandatory requirements of Article 199(4) were not complied with by the High Court in making the impugned orders, which failure makes these orders illegal and without jurisdiction---Present case, thus, involves a flagrant violation of law and a clear wrongful exercise of jurisdiction, which warrants interference by the Supreme Court in the impugned interim order---Petitions were converted into appeals and allowed; the impugned orders were set aside with the directions that the respondents' (tax payers') applications for interim relief shall be decided by the High Court after affording a fair and reasonable opportunity of hearing as envisaged under Article 199(4) of the Constitution; that the High Court shall also identify the order or proceedings under challenge in terms of Article 199(4)(b)(ii) of the Constitution; that the High Court will also attend to the other contention of the counsel for the petitioner (tax department) regarding suspension of legislation through an interim order in the light of the law cited by her.

----Provision couched in a negative language---Where any provision couched in a negative language requires an act to be done in a particular manner then it should be done in the manner as required by the statute otherwise such act will be illegal and without jurisdiction.

Atta Muhammad v. Settlement Commissioner PLD 1971 SC 61; Shujat Hussain v. State 1995 SCMR 1249 and Province of Punjab v. Javed Iqbal 2021 SCMR 328 ref.

Ms. Asma Hamid, Advocate Supreme Court, assisted by Hassan Ali and Mustafa Khalid, Advocates and Ch. Akhtar Ali, Advocate-on-Record for Petitioner.

Salman Akram Raja, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Respondents.

PTD 2024 SUPREME COURT 1238 #

2024 P T D 1238

[Supreme Court of Pakistan]

Present: Qazi Faez Isa, CJ, Amin-ud-Din Khan and Athar Minallah, JJ

SHAHTAJ SUGAR MILLS LTD. and others

Versus

GOVERNMENT OF PAKISTAN through Secretary Finance and others

Civil Appeals Nos.749 to 758 of 2013, 900 of 2014, 918, 943 to 946 of 2018 and 1022 of 2019, decided on 25th July, 2024.

(Against the judgments dated 27.06.2011 of the Lahore High Court, Lahore passed in I.C.A. No.288/2011, dated 22.02.2013 of the High Court of Sindh, Karachi passed in C.Ps. Nos.D-2123, D-2124, D-2126, D-2156, D-2127, D-2128, D-2129, D-2130 and D-2131 of 2011, dated 23.12.2013 of the High Court of Sindh, Karachi passed in C.Ps. Nos.D-4011 of 2013, dated 11.08.2015 of the High Court of Sindh Karachi passed in D-1116 of 2014, dated 2.10.2017 of the High Court of Sindh, Karachi passed in Exc. Ref. Appl. No. 17 of 2013, Fed. Exc. Duty Spl. Ref. No.29 of 2013, Spl.F.E.R.A. No. 156 of 2013 and dated 25.10.2018 of the High Court of Sindh, Karachi passed in C.P. No. D-1094 of 2015)

Per Athar Minallah, J; Qazi Faez Isa, CJ and Amin-ud-Din Khan, J agreeing

(a) Constitution of Pakistan---

----Art. 77---Levy of taxes---Delegation of powers---Scope---Legislature merely delegates power to Federal Government so as to enable it to work out certain details and exercise its discretion in order to achieve object of the statute---Legislature, by no stretch of imagination, abdicates its power and authority expressly provided under Article 77 of the Constitution.

(b) Federal Excise Act (VII of 2005)---

----S. 3-A [as inserted by Finance Act, 2007]---Constitution of Pakistan, Art. 77---Special excise duty on goods, imposing of---Jurisdiction of Federal Government---Delegated powers---Principle---Doctrine of impermissible excessive legislative authority---Applicability---Dispute was with regard to imposing of special excise duty on goods by Federal Government---Held, that legislature delegated essential legislative functions to Federal Government and had merely delegated ancillary and incidental functions to Federal Government---Legislature empowered Federal Government to determine goods for the purposes of collection of special excise duty---Provision of section 3A of Federal Excise Act, 2005 did not delegate unfettered power in absence of standards set out by the Legislature prescribing intelligible guiding principles to be applied while exercising delegated authority---High Court based its reasoning on presumptions, rather on the apprehension, that the power vested in Federal Government could be abused---Such ground was in violation of the principles enunciated in the context of striking down a law promulgated by the Legislature---Legislature did not abdicate its essential legislative functions, rather, incidental and ancillary functions were delegated to Federal Government---Doctrine of impermissible excessive legislative authority was not attracted---Supreme Court set aside order passed by High Court whereby provision of section 3A of Federal Excise Act, 2005 was wrongly struck down---Claimants/taxpayers were not entitled to refund if the Authority had failed to discharge onus that burden of duty was not transferred to consumer---High Court was not justified nor competent to order refund of special excise duty collected under section 3A of Federal Excise Act, 2005, despite having struck down the provision---Even in such eventuality the only remedy available to claimants was to have filed an application for refund under the Federal Excise Act, 2005---Appeal was allowed.

Shakarganj Sugar Mills and others v. Government of Pakistan and others PTCL 2012 CL 604 ref.

----Scope---Organs of State---Object, purpose and scope---Constitution has clearly set out limits for each organ of the State---Crossing such limits amounts to encroaching upon domain of the other and consequently breaching provisions of supreme law---Making law falls exclusively within the domain of the Legislature---Judicial branch has no jurisdiction to promulgate laws---Stringent rules and principles have been laid down in such context of exercise of power of judicial review, relating to examining vires of law promulgated by Legislature---Foundational rule of interpretation is a presumption in favour of constitutionality---Burden to prove that promulgated law is invalid is on the person who challenges its vires---Law should be saved rather than destroyed and the Courts must lean in favour of upholding constitutionality of legislation---Function of Legislation is exclusive prerogative of the Legislature---Wisdom of the Legislature to promulgate a law and to achieve a particular object and purpose cannot be questioned---It is presumed that laws have been legally, validly and Constitutionally promulgated on the basis of its competence---Courts have no jurisdiction or power to rewrite laws and the Constitution---Promulgated laws or its provisions cannot be struck down lightly and it is duty of Courts to make every possible effort to reconcile statute to the Constitution and to strike it down when it becomes impossible to do so---Courts are not empowered to strike down a law or its provision on higher ethical notions or on the basis of philosophical concepts and no mala fide can be attributed to the Legislature---It is duty of Courts to give effect to the scheme of representative governance of the State which is the foundation and edifice of the Constitution is built on it---Supreme Court has laid down stringent and narrow grounds in the context of striking down a law or a provision while exercising power of judicial review.

Elahi Cotton Ltd. v. Federation of Pakistan and others PLD 1997 SC 582; Pakistan Lawyers Forum and others v. Federation of Pakistan and others PLD 2005 SC 719 and Lahore Development Authority and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739 rel.

(d) Constitution of Pakistan---

----Art. 50---Majilis-e-Shoora (Parliament)---Powers and limitations---Delegation of powers---Principle---Majilis-e-Shoora (Parliament) is a creation of the Constitution, therefore, it cannot exceed boundaries expressly set out therein---Power to exercise legislative authority expressly provided under the Constitution cannot be abdicated by the Legislature by way of delegation---Essential legislative functions cannot be delegated beyond reasonable limits because doing so would be in violation of the Constitution---Legislature being the creation of the Constitution, does not inherently possess absolute legislative power but the same can only be exercised in conformity with the powers granted by the Constitution---Legislature determines legislative policies and sets out principles and standards for guidance of delegated authority---Fundamental legislative responsibility cannot be delegated---Delegation must adhere to certain constraints---General principles set out for exercising power of legislation are met by Majlis-e-Shoora (Parliament) and once that has been done, delegation of authority is confined to making subordinate legislation or to attend to other matters of administration and details---Primary functions expressly stated in the Constitution have to be fulfilled by the Legislature itself while the latter may delegate ancillary and incidental functions to an outside agency or authority.

Federation of Pakistan and others v. Shaukat Ali Mian and others PLD 1999 SC 1026; Zaibtun Textile Mills Ltd. v. Central Board of Revenue PLD 1983 SC 358; Wayman v. Southard, 23 U.S. 1 (1825); The Province of East Pakistan and others v. Sirajul Haq Patwari and others PLD 1966 SC 854 and Mehran Ali and others v. Federation of Pakistan and others PLD 1998 SC 1445 rel.

Per Qazi Faez Isa, CJ; Amin-ud-Din Khan, J, agreeing

(e) Constitution of Pakistan---

----Arts. 1, 189 & 201---Federating units---Judgments of Supreme Court and High Court---Word "other" used in Article 189 of the Constitution---Binding effect of judgment passed by one High Court upon other High Court---Scope---Decisions of Supreme Court are binding on all other Courts, which includes all High Courts, but not the Supreme Court itself since the word "other" is used in Article 189 of the Constitution---Provision of Article 201 of the Constitution commences with the words "subject to Article 189" which removes all doubts (if at all there could be any) that decisions of High Court are only binding on all Courts subordinate to it, which are those within its territorial jurisdiction---Decision of a High Court is persuasive and may be followed by another High Court but it is not binding on it---Another High Court may make a different decision---Pakistan, as per Article 1 of the Constitution is a Federal Republic and 'territories of Pakistan' have been mentioned therein---High Court of each Federating Unit is independent, and a fortiori that it acts independently---Independence of Federating Units can only be curtailed to the extent that the Constitution itself may do so---There is no Constitutional provision which supports binding effect of judgment of one High Court upon the other as provision of Article 201 of the Constitution states so, which is iterated by Article 189 of the Constitution.

Hussain Raza v. Lahore High Court PLD 2022 SC 7 rel.

(f) Civil Procedure Code (V of 1908)---

----O. XX, R. 1(2)---Pronouncing of judgment---Reasonable time---Maxim 'justice delayed is justice denied'---Injunction of Islam---Scope---Law and good practice require that judgments be written soon after the hearing has concluded---Indispensable component of dispensing justice is to deliver judgments within a reasonable time---'To no one will we refuse or delay, right or justice' may be the first articulation of the oft quoted legal maxim - 'justice delayed is justice denied.'---As such the maxim has for hundreds of years been used in various forms, all of which signify the same thing.

MFMY Industries Ltd. v. Federation of Pakistan 2015 SCMR 1550; Magna Carta, 1215, clause 40; Fancis Bacon, Lord Chancellor of England, 1617; William Peny, 1693, Some Fruits of Solitude; William Ewart Gladstone, 1868, British Parliament; Warren E. Burger, Chief Justice of the United States Supreme Court, 1970; Marten Luther King, 1963, Letter from Birmingham Jail; 9 610-632; Al-Imran (3) verse 108; Al-Araaf (7) verse 181 and 12 Qazi Abu Yusuf, the first Chief Justice - Qazi al-Quzaat in Muslim history, Kitab al-Kharaj 795 rel.

For Appellant(s):

Rana Munir Hussain, Advocate Supreme Court (in C.A. No. 749 of 2013).

Irfan Mir Helepota, Advocate Supreme Court (in C.As. Nos. 750 to 758 of 2013, 900 of 2014, 943 and 946 of 2018 and 1022 of 2019).

Dr. Shah Nawaz, Advocate Supreme Court along with Usman Azam Bhatti, Dy. Commissioner, Abid Rasool, Addl. Commissioner. Abdul Wahid Shar, Addl. Commissioner (in C.As. Nos. 918 and 945 of 2018).

Ch.Muhammad Zafar Iqbal, Advocate Supreme Court (in C.A. No. 944 of 2018)

For the Federation:

Rana Asadullah Khan, Addl. Attorney General (in C.A. No.749 of 2013).

For respondent No.1:

Tariq Bilal, Advocate Supreme Court (in C.A. No. 900 of 2014).

Khalid Javed Khan, Advocate Supreme Court (in C.A. No. 918 of 2018) (via video link, Karachi).

Iqbal Salman Pasha, Advocate Supreme Court (in C.As. Nos.943 and 946 of 2018).

Arshad Shahzad, Advocate Supreme Court (in C.A. No. 945 of 2018) (via video link, Karachi).

Khalid Mahmood Siddiqui, Advocate Supreme Court (in C.A. No. 1022 of 2019)