Summary: (Against order dated 17.01.2025 of the High Court of Sindh, Karachi passed in S.C.R.A. No. 1518 of 2023). (a) Customs Act (IV of 1969)--- ----S. 179(4)---Sales Tax Act (VII of 1990), S. 74---Adjudication of cases in custom matters---Extension of time, granting of---Board of Revenue, powers of---Scope---Extension of time can only be granted by FBR in "exceptional circumstances"---The case arose under the Customs Act, 1969, involving the issue of whether the Federal Board of Revenue (FBR) had validly extended the time limit for adjudication under section 179(4) of the said Act---The petitioner sought to rely on the case reported as ‘2017 SCMR 1427’ concerning Section 74 of the Sales Tax Act, 1990, arguing that a similar principle of extension applied---Validity---Firstly, the present matter had arisen under the Customs Act, 1969 and the relevant statutory power which was claimed was exercised by the Board (FBR) was conferred by subsection (4) of Section 179 of the said Act, which provided that; “The Board shall have the powers to regulate the system of adjudication including transfer of cases and extension of time- limit in exceptional circumstances”---It was clear from a perusal of the said provision that the power to grant an extension was circumscribed, and was to be exercised only in “exceptional circumstances”---Section 74 of the 1990 Act on the other hand provided that the Board (FBR) was empowered to grant an extension to the extent found “appropriate”---There was an obvious and clear difference between the two provisions and, as relevant in the present case, the power under Section 179(4) was much narrower and circumscribed---Therefore, the case reported as ‘2017 SCMR 1427’ which was sought to be relied upon by the petitioner had no relevance---Petition was dismissed, in circumstances. (b) Customs Act (IV of 1969)--- ----S. 179(4)---Sales Tax Act (VII of 1990), S. 74---Adjudication of cases in custom matters---Extension of time by FBR---Scope---Letter granting extension of time was not submitted before the Appellate Tribunal---Effect---Since the FBR’s extension letter was not produced before the Tribunal, it could not be considered by higher courts---After the appellate tribunal stage, only legal questions could be raised before the High Court and Supreme Court---The matter before the Supreme Court originated from a tax reference and it was well established that beyond the stage of the appellate tribunal (at any rate, in terms of the law as it stood at the relevant time), it was only questions of law that could be taken to the High Court---It was well settled that (again with reference to the law as it stood at the relevant time) the record on the basis of which the questions of law could be decided was in terms of the record as it stood before the Appellate Tribunal and that record could not be added to and certainly not on a point that required factual determination (here, the existence and content of any extension granted by the Board)---Since the position was that the letter by which it was claimed the extension of time was granted by the Board/FBR was never placed on the record before the Appellate Tribunal, it was impermissible for any reliance to be placed on the same before the Supreme Court (or indeed, for that matter, before the High Court)---Any departure from the well settled position would allow a party to a tax reference to alter the record either before the High Court or the Supreme Court which was not permissible---Petition was accordingly dismissed, in circumstances. Dr. Farhat Zafar, Advocate Supreme Court (at Islamabad) for Petitioner. Imran Afzal, Additional Director for Petitioner (via video link Karachi). Nemo for Respondents. Date of hearing: 29th May, 2025.

Summary: (Against order dated 17.01.2025 of the High Court of Sindh, Karachi passed in S.C.R.A. No. 1518 of 2023). (a) Customs Act (IV of 1969)--- ----S. 179(4)---Sales Tax Act (VII of 1990), S. 74---Adjudication of cases in custom matters---Extension of time, granting of---Board of Revenue, powers of---Scope---Extension of time can only be granted by FBR in "exceptional circumstances"---The case arose under the Customs Act, 1969, involving the issue of whether the Federal Board of Revenue (FBR) had validly extended the time limit for adjudication under section 179(4) of the said Act---The petitioner sought to rely on the case reported as ‘2017 SCMR 1427’ concerning Section 74 of the Sales Tax Act, 1990, arguing that a similar principle of extension applied---Validity---Firstly, the present matter had arisen under the Customs Act, 1969 and the relevant statutory power which was claimed was exercised by the Board (FBR) was conferred by subsection (4) of Section 179 of the said Act, which provided that; “The Board shall have the powers to regulate the system of adjudication including transfer of cases and extension of time- limit in exceptional circumstances”---It was clear from a perusal of the said provision that the power to grant an extension was circumscribed, and was to be exercised only in “exceptional circumstances”---Section 74 of the 1990 Act on the other hand provided that the Board (FBR) was empowered to grant an extension to the extent found “appropriate”---There was an obvious and clear difference between the two provisions and, as relevant in the present case, the power under Section 179(4) was much narrower and circumscribed---Therefore, the case reported as ‘2017 SCMR 1427’ which was sought to be relied upon by the petitioner had no relevance---Petition was dismissed, in circumstances. (b) Customs Act (IV of 1969)--- ----S. 179(4)---Sales Tax Act (VII of 1990), S. 74---Adjudication of cases in custom matters---Extension of time by FBR---Scope---Letter granting extension of time was not submitted before the Appellate Tribunal---Effect---Since the FBR’s extension letter was not produced before the Tribunal, it could not be considered by higher courts---After the appellate tribunal stage, only legal questions could be raised before the High Court and Supreme Court---The matter before the Supreme Court originated from a tax reference and it was well established that beyond the stage of the appellate tribunal (at any rate, in terms of the law as it stood at the relevant time), it was only questions of law that could be taken to the High Court---It was well settled that (again with reference to the law as it stood at the relevant time) the record on the basis of which the questions of law could be decided was in terms of the record as it stood before the Appellate Tribunal and that record could not be added to and certainly not on a point that required factual determination (here, the existence and content of any extension granted by the Board)---Since the position was that the letter by which it was claimed the extension of time was granted by the Board/FBR was never placed on the record before the Appellate Tribunal, it was impermissible for any reliance to be placed on the same before the Supreme Court (or indeed, for that matter, before the High Court)---Any departure from the well settled position would allow a party to a tax reference to alter the record either before the High Court or the Supreme Court which was not permissible---Petition was accordingly dismissed, in circumstances. Dr. Farhat Zafar, Advocate Supreme Court (at Islamabad) for Petitioner. Imran Afzal, Additional Director for Petitioner (via video link Karachi). Nemo for Respondents. Date of hearing: 29th May, 2025.

Summary: Sales Tax Act ( VII of 1990)--- ----S. 3(1A)---Taxable supplies made to an entity whose registration has been suspended / blacklisted---Further tax, levy of---Scope---Petitioner was a subsidiary of a multinational company engaged in the business of sale of various food products---Adverse orders were passed against the Petitioner for its alleged failure to pay further tax at the rate of 1% in respect of supplies made to persons who were “un-registered”---Validity---Section 3(1A) of the Act 1990 forms part of charging Section 3 of the Act 1990---While interpreting charging section of a fiscal statute, the Court is obliged to interpret what is clearly said and there is no possibility for any intendment---Thus, in a situation where taxable supplies made to an entity whose registration is either suspended or consequently blacklisted, it is apparently not seen as the requirement of Section 3(1A)---Said provision calls for an additional tax of 1% only in a situation where the person to whom taxable supplies were made “has not obtained registration”---Did he or did he not obtain registration is a simple question and the answer would serve the situation---The supplies made to the person was registered and this alone fulfilled the prerequisites of Section 3(1A)---Any consequential event, which in any case had not “cancelled the registration” would not attract the situation of levying further tax of 1% and nothing more could be extracted by applying the above jurisprudence---Supreme Court set-aside impugned order passed by the High Court---Petition for leave was converted into an appeal and allowed. Cape Brandy Syndicate v. Inland Revenue Commissioners (1921) 1 K.B. 65(71); Hirjina and Co. (Pakistan) Ltd. Karachi v. Commissioner of Sales Tax Central 1971 SCMR 128; Government of West Pakistan v. Jabees Limited PLD 1991 SC 870; Government of Pakistan v. Hashwani Hotel Ltd. PLD 1990 SC 68 and Commissioner Inland Revenue Zone-IV v. Al-Abid Silk Mills Ltd. 2023 SCMR 1797 ref. Muhammad Ajmal Khan, Advocate Supreme Court for Petitioner (via video-link from Lahore). Muhammad Yahya, Advocate Supreme Court for Respondents. Date of hearing: 27th May, 2025.

Summary: (Against the order dated 15.10.2024 of the Lahore High Court, Multan Bench passed in Sales Tax Reference No. 43 of 2023). Sales Tax Act (VII of 1990)--- ----S. 3(1A)---Taxable supplies made to an entity whose registration has been suspended / blacklisted---Further tax, levy of---Scope---Petitioner was a subsidiary of a multinational company engaged in the business of sale of various food products---Adverse orders were passed against the petitioner for its alleged failure to pay further tax at the rate of 1% in respect of supplies made to persons who were “un-registered”---Validity---Section 3(1A) of the Act 1990 forms part of charging Section 3 of the Act, 1990---While interpreting charging section of a fiscal statute, the Court is obliged to interpret what is clearly said and there is no possibility for any intendment---Thus, in a situation where taxable supplies made to an entity whose registration is either suspended or consequently blacklisted, it is apparently not seen as the requirement of Section 3(1A)---Said provision calls for an additional tax of 1% only in a situation where the person to whom taxable supplies were made “has not obtained registration”---Did he or did he not obtain registration is a simple question and the answer would serve the situation---The supplies made to the person was registered and this alone fulfilled the prerequisites of Section 3(1A)---Any consequential event, which in any case had not “cancelled the registration” would not attract the situation of levying further tax of 1% and nothing more could be extracted by applying the above jurisprudence---Supreme Court set-aside impugned order passed by the High Court---Petition for leave was converted into an appeal and allowed. Cape Brandy Syndicate v. Inland Revenue Commissioners (1921) 1 K.B. 65(71); Hirjina and Co. (Pakistan) Ltd. Karachi v. Commissioner of Sales Tax Central 1971 SCMR 128; Government of West Pakistan v. Jabees Limited PLD 1991 SC 870; Government of Pakistan v. Hashwani Hotel Ltd. PLD 1990 SC 68 and Commissioner Inland Revenue Zone-IV v. Al-Abid Silk Mills Ltd. 2023 SCMR 1797 ref. Muhammad Ajmal Khan, Advocate Supreme Court for Petitioner (via video-link from Lahore). Muhammad Yahya, Advocate Supreme Court for Respondents. Date of hearing: 27th May, 2025.

Summary: (a) Sales Tax Act, 1990—Ss. 3(1A), 2(14), 6, 7, 22, 23, 26, 11(2), 33, 34—Charging section—Interpretation—Further tax—Supplies to registered persons with suspended or blacklisted status—Effect—Scope— Section 3(1A) of the Sales Tax Act, 1990 imposes an additional 1% tax only where taxable supplies are made to a person who has not obtained registration. The Court held that the application of further tax under S. 3(1A) is limited to unregistered persons and cannot be extended to cases involving persons who are registered but whose registration status is suspended or blacklisted, unless the registration is actually cancelled. Any ambiguity in a taxing statute must be resolved in favor of the taxpayer, and fiscal statutes must be interpreted strictly without importing assumptions or implied meanings. Since the recipients of supplies were registered, further tax could not be levied under S. 3(1A), and the interpretation adopted by the High Court was declared inconsistent with the established principles of interpreting taxing statutes. Cited Cases: Cape Brandy Syndicate v. Inland Revenue Commissioners [(1921) 1 K.B. 65] Hirjina and Co. (Pakistan) Ltd. v. Commissioner of Sales Tax Central (1971 SCMR 128) Govt. of West Pakistan v. Jabees Ltd. (PLD 1991 SC 870) Govt. of Pakistan v. Hashwani Hotel Ltd. (PLD 1990 SC 68) Commissioner Inland Revenue v. Al-Abid Silk Mills Ltd. (2023 SCMR 1797) (b) Constitution of Pakistan—Art. 199 & 212—Tax Reference—Remand jurisdiction—High Court's duty to determine legal questions—Failure to answer framed question of law—Effect— Where a taxpayer raises valid legal questions under S. 47 of the Sales Tax Act, it is the obligation of the High Court to adjudicate upon those questions in the reference proceedings. In the present case, the High Court failed to address whether registered persons with suspended or blacklisted status could attract S. 3(1A), and also failed to explain the legal effect of retroactive application of amendments made in 2022 to tax periods of 2013–2014. Such omission led to an erroneous interpretation and unjust result, warranting intervention by the Supreme Court. Disposition: Appeal allowed. Petition converted into appeal. Judgment of the Lahore High Court dated 15.10.2024 set aside. Supreme Court held that supplies made to registered persons—even if suspended or blacklisted—do not fall within the scope of S. 3(1A) of the Sales Tax Act, 1990.

Summary: (a) Controller-General of Accounts (Appointment, Functions and Powers) Ordinance (XXIV of 2001)--- ----S.6---Constitution of Pakistan, Art.201---Rules of Business, 1973, R.8(2)---Controller General of Accounts of Pakistan, administrative control and authority of---Matters pertaining to terms and conditions of service of employees of Accounts Department of Pakistan Post Office---Executive interference---Attempt to reinterpret binding judicial precedent through Cabinet Division minutes and notification---Legality and effect---Separation of powers, doctrine of---Exclusive domain of judiciary to interpret law---Executive encroachment, impermissibility of---No authority to override judicial interpretation of statutes---Binding effect of High Court judgments---Scope and enforcement---Implementation of precedents---Duty of executive to comply with binding judgments---Scope---The challenge raised in the present Constitutional petition revolved around the legality of the executive’s attempt to reinterpret S. 6 of the Controller-General of Accounts (Appointment, Functions and Powers) Ordinance, 2001 (the Ordinance ), despite a binding precedent of the High Court reported as (PLD 2003 Lahore 726)---The High Court had already conclusively held that exclusive administrative control, including postings, transfers, and decentralization of accounting offices, vested in the Controller General of Accounts---However, by relying on minutes of a meeting dated 16.03.2016 and subsequent Cabinet Division notification of 17.03.2016, the executive sought to override that judicial interpretation rendered in PLD 2003 Lahore 726 under the guise of Rule 8 of the Rules of Business, 1973---The core issue, therefore, was “whether the executive could lawfully sit over, reinterpret, or disregard a binding judicial precedent, thereby encroaching upon the domain of judicial authority and violating the constitutional principle of separation of powers?”---Held: Bare reading of the observations made in para 4 of order dated 25.01.2012 earlier passed by High Court in another petition led to an ineluctable conclusion that no window was available with the executive to sit over a binding decision of a Constitutional Court; such a course was a mere misconception of the observations made vide order dated 25.01.2012, which order, in essence, directed implementation of the judgment reported as PLD 2003 Lahore 726---Impugned minutes and action of according a different interpretation to S. 6 of the Ordinance than the one made by the High Court, was clearly a contraption of abuse of settled principles of separation of power embodied in the spirit and essence of the Constitution---Rule 8 of the Rules of Business, 1973 made it clear that in case of a dispute amongst two divisions, the matter could be referred to the Prime Minister or Cabinet, whereas, if a legal question was posed, involving interpretation of a statutory provision of a particular statute and such interpretation had been accorded by a Constitutional Court, having attained finality, as was the case in hand, no question of decision or interpretation by the executive branch could arise---Interpretation of S. 6 of the Ordinance, as accorded by the judgment reported as PLD 2003 Lahore 726 supra, still held the field and the same was binding precedent for all intents and purpose, consequently, impugned minutes and consequent recommendations and decision thereof notified by Cabinet Division were set aside---The respondents were directed to implement the judgment reported as PLD 2003 Lahore 726 in letter and spirit---Constitutional petition was allowed, in circumstances. Fazal-e-Haq and another v. Director of Accounts, Pakistan Post Office Department, Lahore and 2 others PLD 2003 Lah. 726 rel. (b) Precedent--- ----Judicial precedents---Binding effect of earlier decision by bench of equal strength---Departure---Proper course of action for reconsideration through reference to Chief Justice for constitution of larger bench explained---No doubt, the earlier decision of a bench of a High Court, or of the Supreme Court, on a question of law is binding on another bench of equal numeric strength when dealing with the same question, in the sense that the latter bench cannot decide the same question contrary to the first decision---However, the latter bench is not precluded from examining the correctness of the earlier decision or forming a different view---In such a case, the proper course of action is to refer the matter to the Chief Justice of the High Court, or in the case of the Supreme Court to the Bench-Constitution Committee, with a request for the constitution of a larger bench to examine the correctness of the earlier decision. Commissioner Inland Revenue v. Mekotex (Pvt.) Limited and others 2024 SCMR 1168 rel. (c) Precedent--- ----Vertical and horizontal precedents--- Principle--- Scope--- Four statements can sum up the principles of vertical and horizontal precedents: (i) If an applicable precedent is issued from a court hierarchically superior to the one deciding a new case, then the decision must follow the vertical precedent; (ii) If an applicable precedent is issued from the very court deciding a new case, then the court should follow it, but in certain circumstances may depart from it; (iii) If a seemingly applicable precedent is issued from a court hierarchically inferior to the one deciding a new case, then the decision need not (but may) adopt the reasoning and decision; (iv) If a seemingly applicable precedent is issued from a court outside the jurisdiction, and there is no hierarchical relationship to the deciding court, it may be considered persuasive if it is cogently reasoned but never binding. Ardeshir Cowasjee and 10 others v. Karachi Building Control Authority (KMC) Karachi and 4 others 1999 SCMR 2883; Ameer Zeb v. The State PLD 2012 SC 380; Multiline Associates v. Ardeshir Cowasjee and others 1995 SCMR 362; Messrs WAK Limited, Multan Road, Lahore v. Collector Central Excise and Sales Tax, Lahore (Now Commissioner Inland Revenue, LTU, Lahore) and others 2018 SCMR 1474; Muhammad Aamir Khan v. Government of Khyber Pakhtunkhwa through Senior Member Board of Revenue, KP and others 2019 SCMR 1021 and Mst. Samrana Nawaz and others v. M.C.B. Bank Ltd. and others PLD 2021 SC 581 rel. (d) Separation of powers, doctrine of--- ----Scope---To interpret law is the exclusive judicial sphere and once an interpretation is rendered, the same is final---At first sight, the protection which an entrench separation of powers might afford, finality seems obvious and uncontroversial; that is, an absolute protection against interference by executive branch, intolerant of exception or qualification---This is not to deny the inherent jurisdiction in the courts themselves to reopen or revise final judgments in certain very limited circumstances, a jurisdiction, of course, which is perfectly consistent with the separation of powers because it is the judicial branch itself which is exercising this discretion, not the non-judicial branches---The interference in a final judgment by the legislature also has definite circumspections---Constitutional limitations on legislative competence over final judgments have clear civil liberties implications, in particular, the objective that legal disputes be resolved by adjudication according to law by independent judges ‘free from potential domination by the legislative and executive branches of government, and that the fruits of litigation are not denied to a successful litigant---The Rule of Law implications are also obvious in these circumstances---Prima facie, the protection of final judgments must constitute a basic minimum protection afforded by the separation of powers, even if it were to protect nothing else---One thing is settled: there is no scope of any authority of the executive to ignore a binding judgment of a Constitutional Court---Three organs have to act within the bounds specified in the Constitution, any transgression or encroachment by one organ over the sphere of the other will result in chaos and uncertainty---It is, therefore, paramount that an equilibrium is to be maintained inter se between the three organs of the State within the limits delineated by the Constitution---Separation of power does not only mean that Judges are independent; it also means that judiciary would effectively yield the power to review the legality, and eventually the constitutionality of the acts of other public and private power. Syed Masroor Ahsan and others v. Ardeshir Cowasjee and others PLD 1998 SC 823 rel. Harris v Caladine (1991) 172 CLR 84 at 159; Myers v. US, (1926) 272 US 52; Morrison v. Olson (1988) 487 US 564; Huddart, Parker & Co Pty Ltd. v. Moorhead (11909) 8 CLR 330 at 357 and R v. Trade Practices Tribunal; Ex Parte Tasmanian Breweries Pty Ltd. (1970) 123 CLR 361 at 374 ref. Ch. Muhammad Sharif Arain and Jabran Munir Awan for Petitioners (in W.P No. 220388 of 2018). Khawaja Umer Masood for Petitioners (in W.P No. 18296 of 2019). Muhammad Hassan Anwaar Pannun for Petitioner (in W.P No. 25359 of 2024). Mohsin Raza Bhatti, Assistant Attorney General for Pakistan assisted by Muhammad Zahid, Assistant Director (Litigation-II), Office of Director General, Pakistan Post Office, Islamabad and Muhammad Shahzad, Senior Auditor, Office of Director Accounts, Pakistan Post Office Department, Lahore for Respondents. Date of hearing: 22nd May, 2025. KHALID ISHAQ, J.--- Through this single judgment, I intend to decide the instant petition as well as the W.Ps. Nos. 18296 of 2019 and 25359 of 2024 as all three petitions involve the interpretation of section 6 of Controller General of Accounts (Appointment, Functions and Powers) Ordinance, 2001 (Ordinance).

Summary: Civil Peetition No. 312 of 2025, decided on 22nd May, 2025. (Against the judgment dated 17.12.2024 of the Lahore High Court, Lahore passed in S.T.R. No. 39113 of 2019). Sales Tax Act (VII of 1990)--- ----S. 57---Rectification of order---Scope---Appellate Tribunal Inland Revenue---Powers---Registered person (appellant) filed an application for fixation of appeal before the Appellate Tribunal Inland Revenue (Tribunal)---Tribunal treated said application (for fixation of appeal) as an application for rectification and passed order in favour of registered person---High Court in reference jurisdiction set-aside said favourable order---Validity---Petitioner (registered person), on its own, moved an application for fixation of the appeal before the Appellate Tribunal Inland Revenue, which appeal was never in existence, as the same was already disposed of in its totality---When the application for fixation of appeal was filed , there was no lis pending and nothing could have been fixed for any leftover issue and, hence, the only way the Tribunal conceived it was by way of rectification application---Even section 57 of the Sales Tax Act, 1990 had its limitation in terms of the rectification sought---A rectification of mistake, indeed, can be amended/rectified by an order passed by the Tribunal which mistake is apparent on the face of the record, however, it does not enlarge the scope of the Tribunal to render a complete and altogether different decision, independent of the earlier "view"---In the present case, although it was an application for fixation of the appeal, but essentially it sought further adjudication in the shape of rectification of an unanswered question which was not even remotely within the contours of section 57 of the Sales Tax Act, 1990---Tribunal acted as an appellate forum of its own order, which was not sustainable in law---No error in the setting-aside order passed by the High Court in reference jurisdiction had been noticed---Petition for leave to appeal filed by registered person was dismissed, in circumstances. Commissioner of Income Tax, Karachi v. Abdul Ghani 2007 PTD 967 ref. Muhammad Ali Raza, Advocate Supreme Court for Petitioner. Mrs. Kausar Parveen, Advocate Supreme Court and Dr. Ishtiaq Ahmed Khan, Director-General (Law), FBR for Respondent. Date of hearing: 22nd May, 2025.

Summary: (a) Sales Tax Act, 1990 ----S. 57—Rectification of mistake—Scope—Powers of Appellate Tribunal—Tribunal has no jurisdiction to revisit concluded appeal through a rectification application where no lis remains pending—Tribunal’s earlier order had disposed of the appeal in its entirety, and no remand was made by High Court—Subsequent application seeking fixation of appeal was erroneously entertained under rectification jurisdiction—Rectification cannot be used to introduce fresh adjudication or alter an already concluded view—Supreme Court held that the Tribunal overstepped its lawful bounds by assuming appellate authority over its prior decision—Such action is not sustainable in law. Case referred: Commissioner of Income Tax, Karachi v. Abdul Ghani 2007 PTD 967. (b) Constitution of Pakistan ----Art. 199—Sales Tax Reference jurisdiction—Remand not inferred—Where High Court declines to answer a question of law due to absence of findings from Tribunal, it does not amount to a remand unless explicitly stated—High Court’s judgment in STR No.11/2014 dated 11.05.2017 did not revive the original appeal nor direct Tribunal to rehear any matter—Petitioner's assumption of implied remand rejected by Supreme Court. (c) Civil Procedure ----Finality of appellate decisions—No revival of appeal—Once an appeal is conclusively disposed of and no further direction is given for rehearing, the matter attains finality—Filing a subsequent application for “fixation” before Tribunal does not revive the appeal nor create a pending lis—Supreme Court emphasized that Tribunal was functus officio and not competent to reopen or re-adjudicate the case through rectification or any procedural device. (d) Limitation—Rectification jurisdiction ----S. 57, Sales Tax Act, 1990—Scope of time-bound rectification—Rectification must relate to mistakes apparent from the record and cannot result in a new determination or a reversal of previously expressed view—Tribunal’s reliance on rectification to modify substantive outcome of prior decision held contrary to the object and intent of section 57. Disposition: Petition for leave to appeal dismissed; Supreme Court declined to interfere with High Court’s judgment passed in STR No.39113/2019.

Summary: (a) Interpretation of statutes--- ----Word "shall"---Scope---Generally Courts have more readily concluded that in appropriate circumstances a "shall" is to be read as "may" (i.e., that the provision seemingly mandatory was in actuality directory) rather than the other way round. (b) Sales Tax Act (VII of 1990)--- ----S. 74---Condonation of time limit---Scope---Matter was referred to Larger Bench of Supreme Court to consider whether judgment of three member Bench of Supreme Court given in case titled Collector of Sales Tax, Gujranwala and others v. Super Asia Mohammad Din and others, reported as 2017 SCMR 1427, 2017 PTD 1756 ('Super Asia Case') was correct---Validity---Double layer of protection accorded to the taxpayer shields him from unmeritorious claims and bogus show cause notices, which may be issued by concerned officer to harass and intimidate the former and/or for ulterior motives and purposes---Conclusion that the relevant provisions are mandatory help in ensuring that it is only a genuine case, based on substance and having (objectively) a reasonable prospect of success, of alleged non- or short payment of tax that is opened against the taxpayer---It is a bogus and false claim that concerned officer would wish to keep pending, for it to be as it were a Damocles' sword hanging over the taxpayer---Time bound closure of cases would help in reducing cases being brought for non-genuine reasons and purposes---For if the show cause notice is based on firm grounds and for lawful purposes then (subject of course to whatever reply the taxpayer may give thereto) it would be in the interest of the State (as represented by the adjudicating authority) to decide the same as expeditiously as possible, which would be well within the generous time periods allowed by the statute, as held in 'Super Asia Case'---If, in the end, a case is not made out then equally a responsible officer acting lawfully and truly motivated by public interest would wish to bring proceedings to a close as quickly as possible, which would again be within the time periods set out in the relevant provisions---Multi-layered protection, by way of mandatory periods of limitation, is not just well within the legislative power; it is the intent that is expressed in the relevant provisions, as rightly held in 'Super Asia Case'---Larger Bench of Supreme Court affirmed the decision of Supreme Court in case titled Collector of Sales Tax, Gujranwala and others v. Super Asia Mohammad Din and others, reported as 2017 SCMR 1427, 2017 PTD 1756, as it had correctly stated the law on all points. Collector of Sales Tax, Gujranwala and others v. Super Asia Mohammad Din and others 2017 SCMR 1427; 2017 PTD 1756; Wak Limited v. Collector Central Excise and Sales Tax and others 2018 SCMR 1474; Abbasi Enterprises Unilever Distributor Haripur v. Collector of Sales Tax and Federal Excise Duty 2019 SCMR 1989; Commissioner Inland Revenue and others v. Sarwaq Traders and others 2025 SCMR 341; A.J. Traders v. Collector of Customs and others PLD 2022 SC 817; Mujahid Soap and Chemical Industries Ltd. v. Customs Appellate Tribunal 2019 SCMR 1735; Commissioner Inland Revenue and another v. Sarwaq Traders and another 2022 SCMR 1333; 2022 PTD 1128; Federal Land Commission through Chairman v. Rais Habib Ahmed and others PLD 2011 SC 842 and Commissioner Inland Revenue v. Yasmeen Bano and others 2020 SCMR 1120 ref. (c) Sales Tax Act (VII of 1990)--- ----S. 74---Condonation of time limit---Period of extension---Scope---Like all statutory powers the one conferred by Section 74 of Sales Tax Act, 1990 has to be exercised objectively---What is the period of extension appropriate in a given case or class of cases is not to be determined subjectively by Federal Board of Revenue but objectively and in accordance with settled principles of law. (d) Discretion--- ----Statutory discretion---Applicability---Statutory discretion is to be exercised by the authority or officer on which it is conferred; most fundamentally, it must be exercised reasonably. (e) Sales Tax Act (VII of 1990)--- ----S. 74---Condonation of time limit---Period of extension---Exercise of discretion---Principle---Provision of Section 74 of Sales Tax Act, 1990 does not confer an open-ended power in such regard---Federal Board of Revenue cannot, on the basis of its own subjective assessment, grant an extension for however long a period it thinks fit---Matter must, and if it comes before a Court, certainly has to be looked at objectively---If the period is excessive (in the sense that it is not "appropriate" within the frame of the section) it may be declared to be unlawful and quashed. For the Private Parties Ali Sibtain Fazli, Advocate Supreme Court (in C.As. Nos. 634-636 of 2018). Ch. Hafeezullah Yaqoob, Advocate Supreme Court (in C.A. No. 1291 of 2018). Dl. Muhammad Khan Alizai, Advocate Supreme Court (in C.A. Nos. 1292-1294 of 2018). M. Ajmal Khan, Advocate Supreme Court (via video-link, Lahore) (in C.As. Nos. 1426 of 2019 and 1486 of 2021). Munawar-us-Salam, Advocate Supreme Court (via video-ink, Lahore). M. Shoaib Rashid, Advocate Supreme Court (via video-link, Lahore) (in C.A. No. 1128 of 2020). Ijaz Ahmed Awan, Advocate Supreme Court (via video-link, Lahore) (in C.As. Nos. 1388-1392 of 2017). Syed Naveed Amjad Indrabi, Advocate Supreme Court (in C.R.P. No. 154 of 2017). For Commissioner Inland / FBR Mrs. Kausar Parveen, Advocate Supreme Court (in C.As. Nos. 634-636 of 2018 and C.A. No. 1292 of 2018, 1428 of 2019, C.P.L.As. Nos. 2298-L, 2299-L of 2017, 2065-L of 2017 and 770-L of 2022).

Summary: (a) Constitution of Pakistan ----Art. 189 Binding effect of Supreme Court decisions—Larger Bench re-examined the correctness of the principles laid down in Collector of Sales Tax v. Super Asia Mohammad Din 2017 SCMR 1427 concerning time limits under indirect tax statutes—Court affirmed that findings in Super Asia applied not only to the Sales Tax Act, 1990 but also to similar provisions in the Customs Act, 1969 and Federal Excise Act, 2005, in view of their virtually identical language—Held, principles laid down in Super Asia have broader binding effect under Art. 189 of the Constitution. (b) Sales Tax Act, 1990 ----S. 11(5) [pre-2024], S. 11G(2) [post-2024] Assessment—Time limitation for passing adjudication order—Mandatory nature—Show cause notice under S. 11 must culminate in an adjudication order within 120 days or extended period not exceeding 90 days—Larger Bench held that both the original 120-day and the 90-day extended periods were mandatory—Failure to comply renders the adjudication order invalid—Statutory phrase “shall… in no case exceed ninety days” was held to convey a conclusive and unbreachable limit. (c) Sales Tax Act, 1990 ----S. 74 Condonation of delay—Scope and limitation—Held, S. 74 grants discretionary power to FBR to condone delay in “appropriate” cases—However, the term “appropriate” must be interpreted objectively and not open-ended—Super Asia rightly imposed a 6-month ceiling to ensure clarity and avoid arbitrary or prolonged extensions—Court reaffirmed that any extension beyond 6 months is impermissible. (d) Sales Tax Act, 1990 ----S. 36 (repealed) Historical legislative context—Court observed that insertion of time-bound adjudication clauses in 2000 through amendment of S. 36 indicated legislative intent to restrict discretion and avoid prolonged proceedings—Held, the use of “shall” coupled with negative phrasing “in no case” indicated a mandatory character—Court rejected arguments that absence of penal consequences implied a directory provision. (e) Interpretation of Statutes ----Mandatory vs. Directory provisions—Test—Court reaffirmed that ascertainment of legislative intent is key in determining whether a provision is mandatory—Use of “shall” may be read as “may” in limited cases, but only when context allows—Where legislative language contains hard prohibitory terms (“in no case”), interpretation as mandatory is justified—Court concluded that allowing directory reading would render Commissioner’s power to grant extension redundant. (f) Statutory Adjudication and Fiscal Due Process ----Protection of taxpayers—Larger Bench emphasized that layered statutory deadlines serve to protect taxpayers from harassment or indefinite proceedings—Held, adjudicating officers are bound by strict timelines to ensure transparency and fairness—State functionaries must conclude proceedings expeditiously or lose the legal authority to decide the matter—Prolonged pendency of adjudication beyond statutory deadlines defeats due process. (g) Judicial Precedent ----Super Asia case (2017 SCMR 1427)—Reaffirmed—Court held that observations in later referral order (Wak Ltd. v. Collector Central Excise, 2018 SCMR 1474) were misconceived—No contradiction found in Super Asia regarding S. 74—Appeals and review petitions seeking reconsideration of Super Asia principles were dismissed. Cited Cases: • Collector of Sales Tax v. Super Asia Mohammad Din 2017 SCMR 1427 • Abbasi Enterprises v. Collector of Sales Tax 2019 SCMR 1989 • Commissioner IR v. Sarwaq Traders 2025 SCMR 341 • A.J. Traders v. Collector of Customs PLD 2022 SC 817 • Mujahid Soap Industries v. Customs Tribunal 2019 SCMR 1735 • Federal Land Commission v. Rais Habib Ahmed PLD 2011 SC 842 • Commissioner IR v. Yasmeen Bano 2020 SCMR 1120 Disposition: Super Asia principles declared correct; all connected appeals and review petitions were remitted for decision in light of this judgment. Review petitions dismissed.