Summary: Background: A group of individual and private limited companies operating in the erstwhile Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) challenged the Federal Board of Revenue (FBR) and the Government of Pakistan regarding tax exemptions. These companies were enjoying immunity from sales tax and income tax before the 25th amendment to the Constitution of Pakistan in 2018. Post-amendment, the exemptions continued through specific statutory regulatory orders (SROs). However, a change introduced by the Finance Act, 2024, requiring the presentation of a pay order instead of a post-dated cheque for tax exemption, created a dispute. ----Issues: 1- Whether the new requirement for a pay order instead of a post-dated cheque for tax exemption, introduced by the Finance Act, 2024, applies retrospectively. 2- Whether goods already imported and manifested before the enactment of the Finance Act, 2024, should be subject to the new requirement. ----Holding/Reasoning/Outcome: The court held that the amendment made by the Finance Act, 2024, does not apply retrospectively to goods that were already imported and had reached Pakistan’s territorial waters or were manifested before July 1, 2024. The court emphasized that, at common law, there is a presumption against retrospective application of statutes unless explicitly stated. It referred to precedents where the courts have ruled against the retrospective application of statutes unless it is clearly intended. The amendment requiring a pay order instead of a post-dated cheque is seen as a new condition that should not affect past transactions. The court cited the principle that fiscal statutes are to be construed strictly and are not to impose additional burdens retrospectively unless explicitly stated. All the writ petitions were allowed, providing relief to the petitioners by ruling that the new requirement does not apply to their previously imported goods. ----Citations/Precedents: Messrs Taj Packages Company (Pvt) Ltd vs. The Government of Pakistan (2016 PTD 203) Pakistan vs. Hazrat Hussain (2018 SCMR 939) Al-Samrez Enterprise vs. The Federation of Pakistan (1986 SCMR 1917) Gas & Oil Ltd. Pakistan vs. Collector, Model Customs Collectorate of Preventive & others (C.P No. D-1650 of 2020, decided on 29.10.2020) M/s Gadoon Textile Mills and others vs. Federation of Pakistan and others (WP No. 6127-P/2019, decided on 07.09.2023) M.Y. Electronic Industries (Pvt) Ltd. vs. Government of Pakistan (1998 SCMR 1404) Zila Council Jehlum vs. Messrs Pakistan Tobacco Company Ltd (PLD 2016 SC 398) Member (Taxes) Board of Revenue Punjab vs. Qaisar Abbas (2019 SCMR 446) Wainwright vs. Home Office [2002] QB 1334 Gustavson Drilling (1964) Ltd vs. Minister of National Revenue (1977 1 SCR 271) Collector of Central Excise and Land Customs vs. Azizuddin Industries Ltd, Chittagong (PLD 1970 SC 439) ----Quote: Legislature can legislate prospectively and retrospectively, such power is subject to certain constitutional and judicially recognised restrictions. According to the canons of construction, every statute including amendatory statutes is prima facie prospective, based on the principle of nova constitutio futuris formam imponere debet, non praeteritis (which means ‘a new law ought to regulate what is to follow, not the past’ as per Osborn: Concise Law Dictionary); unless it is given retrospective effect either expressly or by necessary implication. In other words, a 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 have already occurred. This principle (s) is 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). Furthermore, it is not only the wording/text of the statute which is to be considered in isolation; we are not to examine simpliciter whether such law has a retrospective effect or not, rather it has to be examined holistically by considering several factors such as, the dominant intention of the legislature which is to be gathered from the language used, the object indicated or the mischief meant to be cured, the nature of rights affected, and the circumstances under which the statute is passed. The law laid down in Zila Council’s case ibid was reaffirmed by the Apex Court in the case of Qaisar Abbas and others[1] , further elucidating the matter that retrospectivity can only be attributed to a statute where it is made explicit or can be inferred by necessary implications; it cannot be presumed. The close perusal of the Finance Act, 2024 does not give any impression that it applies to any transaction which has taken place prior to 1st July, 2024 nevertheless judgment of the Apex Court in the Al-Samrez Enterprise’s case (supra), in our humble view, is attracted to the present cases wherein it was held that “we are therefore, clearly of the opinion that if a binding contract was concluded between the appellants and the foreign exporter or steps were taken by the appellants created a vested right to the then existing notification granting exemption, the same could not be taken away and destroyed in modification of the earlier one, on the ground that under section 21 of the General Clauses Act, the government could exercise the power of modification”. ----------------------------------------------------------------------------------- Member (Taxes) Board of Revenue Punjab, Lahore and others Vs Qaisar Abbas and others (2019 SCMR 446)

Summary: Background:M/s Taj Wood Board Mills (Pvt) Ltd, M/s Al-Mashood Oil & Ghee Industries (Pvt) Ltd, and M/s Bara Ghee Mills (Pvt) Ltd ("Petitioners"), private companies operating in the erstwhile Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA), challenged the judgment of the Peshawar High Court dated 09.02.2022. The grievance arose from the change in the constitutional status of FATA and PATA following the Twenty-Fifth Amendment, leading to the extension of fiscal and tax laws to these areas, and the subsequent issuance of various orders and circulars by the Federal Board of Revenue (FBR) regulating imports and transhipment procedures.----Issues:1. Whether the Peshawar High Court correctly upheld the legality of Circular No. 1 of 2021 and its conditions, excluding condition v.2. Whether the preferential treatment provided under CGO No. 8 of 2021 to bulk-importing edible oil manufacturers is justifiable and non-discriminatory.-----Holding/Reasoning/Outcome:Legality of Circular No. 1 of 2021:The Supreme Court reviewed the Peshawar High Court's judgment, which upheld the legality of Circular No. 1 of 2021, excluding condition v, which was deemed ultra vires Sections 177 of the Income Tax Ordinance, 2001, and Section 25 of the Sales Tax Act, 1990. The Court concurred that the audit provision in condition V was illegal as it introduced a parallel system not envisioned by the existing legislative framework.2. Preferential Treatment Under CGO No. 8 of 2021:The petitioners contended that the preferential treatment for bulk-importing edible oil manufacturers under CGO No. 8 of 2021 was discriminatory. The Supreme Court referred to its earlier judgment in M/s AK Tariq Foundry Etc. v. Government of Pakistan, which struck down similar discriminatory classifications under the Sales Tax Act, 1990. The Court held that the preferential treatment in CGO No. 8 of 2021 lacked a rational basis and violated the equality clause of Article 25 of the Constitution. Therefore, the discriminatory provisions of CGO No. 8 of 2021 were also struck down.The Supreme Court converted the petitions into appeals and allowed them, setting aside the discriminatory provisions of CGO No. 8 of 2021 and upholding the legality of Circular No. 1 of 2021, excluding condition v.----Citations/Precedents:Hyderabad Development Authority v Karam Khan Shoro (1985 SCMR 45)Established the importance of compliance with procedural requirements under Section 9 of the Land Acquisition Act, 1894.Land Acquisition Collector, National Highway Authority, Lahore v Javed Malik (2009 SCMR 634)Affirmed that provisions limiting compensation cannot be invoked without strict compliance with procedural requirements.Malik Nasim Ahmad Aheer v WAPDA (PLD 2004 SC 897)Highlighted the necessity for courts to adhere to claimed compensation if procedural notices are served.Land Acquisition Officer, Hyderabad v Gul Muhammad (PLD 2005 SC 311)Reinforced the principle that compensation cannot exceed the claimed amount when procedural notices are duly served.M/s AK Tariq Foundry Etc. v. Government of Pakistan (Civil Petitions No. 159 to 178 of 2023)Struck down discriminatory classifications under the Sales Tax Act, 1990, violating Article 25 of the Constitution. This precedent was pivotal in the present case for addressing the issue of discriminatory treatment in CGO No. 8 of 2021.

Summary: Background: The petitioner sought declaratory reliefs regarding income tax exemptions applicable to the erstwhile Provincially Administered Tribal Areas (PATA) after their merger with Khyber Pakhtunkhwa province. The petitioner, a government carriage contractor, claimed that income from their carriage business within the territorial limits of the former PATA should be exempt from income tax and not subject to withholding tax under Section 153 of the Income Tax Ordinance, 2001, based on SRO No. 1213(1)/2018. ----Issues: 1- Whether the petitioner’s income from the carriage business within the former PATA is exempt from income tax. 2- Whether payments made to the petitioner by the Food Department are subject to withholding tax under Section 153 of the Income Tax Ordinance, 2001. 3- Whether the petitioner is required to provide an exemption certificate under Section 159 of the Income Tax Ordinance, 2001, to avail the exemption. 4- Whether any tax deducted under Section 153 of the Income Tax Ordinance, 2001, is liable to be refunded to the petitioner. ----Holding/Reasoning/Outcome: ---Income Tax Exemption: The court held that the petitioner's income from the carriage business within the former PATA is exempt from income tax as per SRO No. 1213(1)/2018, which provides tax relief to residents of the erstwhile PATA for a specified period. This exemption applies from 1st June 2018 to 30th June 2023. ---Withholding Tax: The court declared that payments made to the petitioner by the Food Department are not subject to withholding tax under Section 153 of the Income Tax Ordinance, 2001. The exemption provided under SRO No. 1213(1)/2018 covers the deduction or collection of withholding tax for residents of the former PATA. ---Exemption Certificate: The court stated that the petitioner is not required to provide an exemption certificate under Section 159 of the Income Tax Ordinance, 2001, to avail the exemption. The provisions of Division III of Part V of Chapter X, including Section 159, do not apply to individuals or entities domiciled in the former PATA during the exemption period. Tax Refund: The court ruled that any tax deducted under Section 153 of the Income Tax Ordinance, 2001, from the petitioner during the exemption period is liable to be refunded. The petitioner is entitled to a refund of any taxes collected in violation of the exemption granted under SRO No. 1213(1)/2018. ----Citations/Precedents: Article 199 of the Constitution of Islamic Republic of Pakistan 1973 SRO No. 1213(1)/2018 dated 05.10.2018 Second Schedule, Income Tax Ordinance, 2001, Part IV, Clause 110

Summary: UN Privileges Act, 1948.5th Schedule of the Sales Tax Act, 1990.Article 247 (repealed) of the Constitution of Islamic Republic of Pakistan, 1973.A.Norwegian Refugees Council was not found to be a privileged organization under the United Nations privileges Act, 1948, and therefore, not found exempt from payment of sales tax under 5th Schedule of the Sales Tax Act 1990.B.Immunity from payment of sales tax was area specific under repealed Article 247 of the Constitution and same could only be acailed by residents of Ex-FATA or Ex-PATA when the persons used to reside or carried on business in said area.

Summary: Background:M/s A.K Tariq Foundry and other petitioners, who are registered limited companies, partnerships, and sole proprietors with manufacturing units in the erstwhile Provincial Administered Tribal Area (PATA) and Federal Administered Tribal Area (FATA), challenged the imposition of sales tax on their electricity supply post the 25th Constitutional Amendment. This amendment merged FATA and PATA into Khyber Pakhtunkhwa, thus extending the federal fiscal and tax regimes to these areas. The petitioners contested the discriminatory treatment and exclusions under Entry No. 152 of the Sixth Schedule to the Sales Tax Act, 1990, which exempted certain industries from sales tax on electricity supply while excluding steel, ghee, and cooking oil industries, and industries established after May 31, 2018.---Issues:1. Whether the exclusion of certain industries from the sales tax exemption under Entry No. 152 of the Sixth Schedule to the Sales Tax Act, 1990, violates Articles 18 and 25 of the Constitution of Pakistan.2. Whether the legislative classification and sub-classification for tax exemption purposes are constitutionally permissible.----Holding/Reasoning/Outcome:Exclusion from Sales Tax Exemption:The Court examined whether the exclusion of steel, ghee, and cooking oil industries, as well as industries established after May 31, 2018, from the sales tax exemption on electricity supply violated the principles of equality and non-discrimination enshrined in Articles 18 and 25 of the Constitution.The Court held that the exclusion of industries established after May 31, 2018, created an unreasonable classification. Industries established before and after this date operated in the same market and faced similar conditions. Therefore, denying tax exemptions based solely on the establishment date was discriminatory and violated Article 25.Legislative Classification and Sub-Classification:The Court recognized that while the legislature has the authority to classify and differentiate between various classes of taxpayers, such classification must be based on an intelligible differentia with a rational nexus to the objective sought to be achieved.The Court found that the exclusion of steel, ghee, and cooking oil industries from the tax exemption was not arbitrary or unreasonable. These industries were treated as a separate class, and the differentiation was deemed constitutionally valid as it did not constitute discriminatory treatment under the established legal principles.The Court declared Entry No. 152 of the Sixth Schedule to the Sales Tax Act, 1990, as ultra vires to the extent that it discriminated against industries based on their establishment date. However, the exclusion of steel, ghee, and cooking oil industries from the tax exemption was upheld.----Citations/Precedents:Commissioner of Income Tax, Peshawar Vs. Gul Cooking Oil and Vegetable Ghee (Pvt) Ltd (2008 PTD 169)Affirmed the exemption of FATA and PATA industries from income tax and sales tax before the 25th Constitutional Amendment.Taj Packages Company (Pvt). Ltd Vs. Government of Pakistan (2016 PTD 203)Confirmed the immunity of goods imported for consumption in FATA from sales tax.Pakistan through Chairman FBR Vs. Hazrat Hussain (2018 SCMR 939)Reiterated the exemption of FATA industries from federal taxes.M/s Lucky Cement Ltd Vs. Khyber Pakhtunkhwa (2022 SCMR 1961)Discussed the principles of non-discrimination and equality in the context of tax laws.Pakcom Ltd Vs. Federation of Pakistan (PLD 2011 SC 44)Highlighted the principles of equal protection under the law.Messrs Elahi Cotton Mills LTD Vs. Federation of Pakistan (PLD 1997 SC 582)Elaborated on the legislative authority to classify for tax purposes and the constitutional limits on such classification.

Summary: The petitioner challenged an order that remanded his case to the District Judge, Malakand, under subsection (8) of section 10 of the Shariah Nizam-e-Adl Regulation, 2009 ('the Regulation'). This subsection stated that the appellate or revisional court should not remand a case and must decide it within thirty days without any remand. The interpretation of this provision was contested, and the matter was brought before the Supreme Court.During the hearing, the court noticed that the case involved the interpretation of a provincial law and its decision could impact other cases as well. The court also learned about the Twenty-fifth Constitutional Amendment, enacted on 4 June 2018, which deleted Article 247 of the Constitution, bringing an end to the executive's power to make laws for the erstwhile tribal areas, including the Regulation. However, certain laws were enacted after the amendment, which were later challenged and struck down by the Peshawar High Court as being incompatible with the Constitution.The court noted that there were appeals pending against the Peshawar High Court's judgment, and these cases had not been decided for several years. The court expressed concern about delayed decisions in cases that determine the rights of parties and affect the future rights of the people. It emphasized the importance of promptly listing and deciding such cases to uphold the rule of law and ensure people's knowledge of the legal landscape.The court directed the Registrar to seek orders from the Chief Justice to fix all the appeals and petitions related to erstwhile FATA and PATA (Provincially Administered Tribal Areas) together to avoid conflicting findings. The court stressed the importance of advancing the cause of justice and maintaining the court's independence, authority, and public respect.

Summary: Sections of law; Article 199 of the Constitution.(a)Salaries of Federal or Provincial civil servants working in erstwhile FATA or PATA have never been exempt from payment of income tax.

Summary: Sections of law; Article 199 of the Constitution, The Income Tax Ordinance, 2001 and Sales Tax Act, 1990(a) Individuals and association of persons residing in erstwhile FATA or PATA were declared exempt from levy and imposition of advance income tax payable under section 148 of the Income Tax Ordinance at import stage, till the period mentioned in Clause 146 of Part-1st of Second Schedule of the Ordinance, but for seeking such exemption they shall have to apply therefor, under section 159 of the Income Tax Ordinance, 2001.

Summary: During the proceedings, Article 247 of the Constitution was omitted through a constitutional amendment, causing changes in the legal regime governing the area formerly known as FATA/PATA. This amendment was challenged in various cases. However, the court decided that the omission of Article 247 did not affect the legality of the proceedings under the Regulation No. 1 of 2009 applicable in FATA/PATA areas. The court clarified that the repeal or omission of an Act under the Constitution would not affect any ongoing proceedings, legal remedies, or rights accrued under the repealed law.As a result, the court set aside the impugned order of the High Court and remanded the matters back to the High Court for further consideration in accordance with the prevailing legal regime under the Constitution and the Regulation of 2009. The court further disposed of all listed applications in the case.

Summary: 1. The Income/Profit and gain the individuals and the corporate entities located within the territorial limits of erstwhile PATA is exempt from the impost of income tax under the Ordinance. However, it is clarified that any income or profit or again if they derive from any source/business/activity outside the territorial limits of erstwhile PATA is neither immune nor exempt from impost of income tax in view laid down by August supreme court of Pakistan in 2008 PTD 169, 2018 SCMR 939, 2016 PTD 203.2. The very opening paragraph of section 159 envisages that this provision is applicable to that amount to which Division II or III of Part V or Chapter XII applies. Thus the income/ amount to which DIvision II or III of Chapter X or XII does not apply then in that case the provision of Section 159 envisaging for exemption certificate or lower certificate would not be applicable.