IN THE HIGH COURT OF SINDH AT KARACHI

IN THE HIGH COURT OF SINDH AT KARACHI

Constitutional Petition No. D-750 of 2009

Present:

Mr. Justice Gulzar Ahmed &

Mr. Justice Irfan Saadat Khan.

J U D G M E N T

Date of hearing : 26^th January 2010.

Petitioner through : Dr. Farough Naseem, Advocate.

Respondent Department through : Mr. Mohsin Imam, Advocate.

Respondent through : Mr. Ashiq Raza, D.A.G.

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GULZAR AHMED, J.:- In this petition, petitioner has made the following prayer:-

“ a) declare the second proviso to section 4 of the Sales Tax Act, 1990, SRO 389(I)/2006 and SRO 391(I)/2006 (both dated 27.4.2006) and the show-cause notice dated 16.1.2009 alongwith any subsequent proceeding or orders to be completely without jurisdiction, illegal, void ab initio and of no legal effect;

b) declare that SRO 1212(I)/2006 dated 2.12.2006 is retroactive in nature being a beneficial notification;

c) permanently and pending disposal of the main petition suspend the operation of the show cause notice dated 16.1.2009 so also other proceedings or order in pursuance of the latter, while restraining the respondents, their officers and agents, from enforcing any demand in pursuance of the said show cause notice in any manner whatsoever;

d) award costs and special costs;

e) award any other relief deemed fit.”

Brief facts of the matter are that petitioner is a public limited company and is engaged in manufacturing and sale of cement. Petitioner is also a cement exporter and claims that sales tax on export of cement is zero-rated. The respondent No.1 issued SRO No.389(I)/2006 dated 27.4.2006 under section 8(1)(b) and second proviso of section 4 of Sales Tax Act, 1990 (the Act), whereby no input tax credit could be availed on the export of cement. On 27.4.2006 another SRO No. 391(I)/2006 was issued under the second proviso of section 10(1) of the Act prohibiting the refund on export of cement. It is alleged that combined effect of both these SROs was that zero rated export of cement was nullified and a person was liable to pay sales tax on the export of cement. Both these SROs are claimed by the petitioner to have been illegally issued being contrary to the provisions of the Act. It is further alleged that subsequently SRO No. 1212(I)/2006 dated 2.12.2006 under section 8(1)(b) and second proviso of section 4 of the Act was issued by which SRO 389(I)/2006 dated 27.4.2006 was rescinded. It is claimed that the effect of SRO No.1212(I)/2006 dated 02.12.2006 was that input tax credit could be availed on export of cement though no refund could be taken under SRO No. 391(I)/2006 dated 27.4.2006 which remained in the field. It is further alleged that during the tax period from 24.4.2006 to 2.12.2006 petitioner exported cement falling under PCT 25.23 (HS) and for such purpose it took input tax. The petitioner has been filing tax returns regularly and no objection was taken but suddenly a show cause notice dated 16.1.2009 was issued by respondent No.2 questioning the input tax credit adjustment availed by the petitioner on export of cement for the period of 27.4.2006 to 2.12.2006. The petitioner has filed this petition with the prayer as noted above.

Dr. Farough Naseem, learned counsel for the petitioner has contended that though in terms of show cause notice order-in-original has been passed but such being the decision of Federal Board of Revenue, the petitioner cannot avail effectual remedy in the hierarchy of Sales Tax authority as the SROs will be binding on them and no contrary decision can be given by them. He contended that even the Tribunal cannot go behind the SROs. He further contended that the present petition is purely based upon fiscal right on pure question of law and Constitutional Petition is maintainable. He further contended that even a Constitutional Petition against show cause notice is maintainable. He contended that SRO No. 1212(I)/2006 dated 2.12.2006 being beneficial has retroactive effect and while such SRO is in the field, the show cause notice could not have been issued. He contended that SRO No. 389(I)/2006 dated 27.4.2006 is ultra vires the zero rating tax under section 4 of the Act while SRO No. 391(I)/2006 dated 27.4.2006 is ultra vires section 10(1) of the Act. He further contended that in any case SRO No. 389(I)/2006 having been rescinded through a beneficial SRO No. 1212(I)/2006 and being beneficial, be given retroactive effect and its benefit is extended to the petitioner. He has relied upon large number of case law which he has given to the Court in the shape of six bounded books.

Mr. Mohsin Imam, learned counsel for the department stated that he relies upon the comments filed by the department. He further contended that in terms of section 8(1)(b) of the Act the Federal Government has power to issue SROs and such SROs are not ultra vires the Act. He, however, admitted that Tribunal has no jurisdiction to declare the SROs ultra vires. He further contended that petitioner ought to avail remedy against the order-in-original as petitioner has contested the show cause notice. He further contended that the SROs being law the same is binding upon the department and department cannot take stand contrary to the SROs.

Mr. Ashiq Raza, learned D.A.G. also contended that in terms of Article 77 of the Constitution, parliament is competent to levy tax and pursuant to such power SROs have been issued by the Federal Government and that petition has been filed after three years of issuance of show cause notice which is based upon afterthought. He has further contended that there are many manufacturers and exporters of cement but only petitioner has challenged the SROs. He has contended that both SROs are valid and not ultra vires the Act.

We have considered the submissions made by learned counsel for the parties and have gone through the record.

We will take up the question of maintainability of the petition first. On close examination, we find that petitioner has challenged the vires of two SROs and seeks benefit of SRO No. 1212(I)/2006 with retroactive effect and claims that these are questions of fiscal rights in respect of which Constitutional Petition will be maintainable.

Mr. Mohsin Imam counsel for the department has conceded that the Tribunal has no power to declare the SROs ultra vires the Act. In this view of the matter, we have examined the various case laws relied upon by the counsel for the petitioner and in this regard will make reference to the case of COLLECTOR OF CUSTOMS, CUSTOMS HOUSE, LAHORE and 3 others V/S Messrs S.M. AHMAD & COMPANY (PVT.) LIMITED, ISLAMABAD (1999 SCMR 138) where the Hon’ble Supreme Court in para 9 has observed as follows :

“9. As regards the maintainability of writ petition in the presence of alternate remedy, it is a settled proposition of law that it is no bar if such remedy is only illusory in nature, as observed in Gulistan Textile Mills Ltd. v. Pakistan (1983 CLC 1474). No useful purpose would have been served if the respondent had been required to avail of the remedy of the appeal or revision because the highest body i.e. the C.B.R. had already expressed its opinion against the respondent. A reference may be made to Messrs Usmania Glass Sheet Factory Limited, Chittagong v. Sales Tax Officer, Chittagong (PLD 1971 SC 205) wherein it was observed that where a dispute arises between the parties in respect of fiscal right based on a statutory instrument, it can be determined in writ jurisdiction. After the decision given by the C.B.R. it would have been difficult for the Federal Government to take a contrary view about the assessment/evaluation of the wood imported by the respondent, and in these circumstances no exception could be taken to the respondent's invoking Constitutional jurisdiction of the High Court. Classification of goods is not always a pure question of fact and being a mixed question of fact and law, the High Court is possessed of jurisdiction to adjudicate upon such question in Constitutional jurisdiction in the light of dictum of the Supreme Court in M.Y. Khan v. M.M. Aslam and 2 others (1974 SCMR 196) and Messrs Delite House Ltd., v. Assistant Collector, Customs (1988 CLC 5).”

Further, reference is also made to the case of Messrs JULIAN HOSHANG DINSHAW TRUST and others V/S INCOME‑TAX OFFICER, CIRCLE XVIII SOUTH ZONE, KARACHI and others (1992 SCMR 250), where the Hon’ble Supreme Court has observed as follows:

“The superior Courts have repeatedly exercised the writ jurisdiction in appropriate cases, involving fiscal rights and on the allegation of misapplication of law or abuse of power stepped in to examine whether or not public functionary concerned acted in accordance with the powers conferred on him by the Statute. In M/s. Usmania Glass Sheet Factory Ltd., Chittagong v. Sales Tax Officer, Chittagong (PLD 1971 SC 205) this Court examined in detail whether the glass sheets manufactured by the assessee were covered by exemption from payability of tax granted through a notification issued under the Sale Tax Act, and repelled the argument against the reviewability of the orders of the Sale Tax Authorities by the High Court. In a recent case Eduljee Dinshaw v. Income Tax Officer 1990 PTD 155, this Court discussed at some length the case law on the subject and noticed that the High Courts have made frequent interventions, in the fiscal disputes, in exercise of writ jurisdiction. Upon careful consideration of the facts of the case before, us, we are of the view that it was not necessary for the appellants to have travelled through grooves of the procedure laid down in the Statutes to approach the High Court.”

On careful examination of the record it appears that show cause notice was issued by the Sales Tax Department to the petitioner where it was claimed that during the period 27.4.2006 to 2.12.2006 petitioner has exported cement falling under PCT heading 25.23 and by ignoring provisions of SRO 389(I)/2006 dated 27.4.2006 had claimed input tax credit/adjustment which was not allowed by the said SRO. Pursuant to said show cause notice order-in-original No. 26 /2009 dated 26.5.2009 seems to have been passed by Additional Collector (Adjudication) whereby petitioner has been made liable for payment of sales tax, additional tax/default surcharge penalty etc. The petitioner having challenged the very legality of the SROs on which Sales Tax Department has initiated proceeding against the petitioner and the appellate authority and the Tribunal has no jurisdiction to make determination on the vires of the SROs, we are of the considered view that such being pure question of law of fiscal rights, this Constitutional Petition will be maintainable.

Although, learned counsel for the petitioner has argued that SRO No. 389(I)/2006 dated 27.4.2006 is ultra vires zero rating tax under section 4 of the Act while SRO No. 391(I)/2006 dated 27.4.2006 is ultra vires section 10(1) of the Act but incidentally he did not cite any case law in support of such submissions.

In order to appreciate the arguments of learned counsel for the petitioner, it will be advantageous to reproduce the two SROs which are as follows:

GOVERNMENT OF PAKISTAN

MINISTRY OF FINANCE, ECONOMIC AFFAIRS,

STATISTICS AND REVENUE

(REVENUE DIVISION)

Islamabad, the 27^th April, 2006.

NOTIFICATION

(Sales Tax)

S.R.O.389(I)/2006.-In exercise of the powers conferred by clause (b) of sub-section (1) of section 8 of the Sales Tax Act, 1990, read with the second proviso to section 4 thereof, the Federal Government is pleased to direct that no input tax credit of sales tax paid on account of manufacture or import of cement falling under PCT heading 25.23 shall be allowed if the cement so manufactured or imported into Pakistan is exported out of Pakistan via land, air or sea route.

[C.No.1(5)FED/2005

(Shahid Ahmad)

Additional Secretary

GOVERNMENT OF PAKISTAN

CENTRAL BOARD OF REVENUE

Islamabad, the 27^th April, 2006.

NOTIFICATION

(Sales Tax)

S.R.O.391(I)/2006.-In exercise of the powers conferred by the second proviso to sub-section (1) of section 10 of the Sales Tax Act, 1990, the Central Board of Revenue is pleased to direct that no refund of tax accrued in connection with export of cement falling under PCT heading 25.23, shall be allowed if the cement is exported out of Pakistan via land, air or sea route.

[C.No.1(5)FED/2005

(Wajid Ali)

Secretary(ST & FE- Budget.)

It will the seen that SRO No.389(I)/2006 dated 27.4.2006 has been issued by Government of Pakistan under clause (b) of subsection (1) of section 8 read with second proviso of section 4 of the Act, by which the Federal Government has directed that no input tax credit of sales tax paid on account of manufacture or import of cement falling under PCT heading 25.23 shall be allowed if the cement so manufactured or imported into Pakistan is exported out of Pakistan via land, air or sea route.

The second notification SRO No. 391(I)/2006 dated 27.4.2006 has been issued by Government of Pakistan under the second proviso to subsection (1) of section 10 of the Act, by which the Central Board of Revenue has directed that no refund of tax accrued in connection with export of cement falling under PCT heading 25.23, shall be allowed if the cement is exported out of Pakistan via land, air or sea route.

In order to examine the legality of first SRO No. 389(I)/2006 dated 27.4.2006, it will be necessary to reproduce the provision of section 4 and section 8 of the Act, which are as follows:

4. Zero rating.--Notwithstanding the provisions of section 3, the following goods shall be charged to tax at the rate of zero per cent:--

(a) goods exported, or the goods specified in the Fifth Schedule;

(b) supply of stores and provisions for consumption aboard a conveyance proceeding to a destination outside Pakistan as specified in section 24 of the Customs Act, 1969 (IV of 1969);

Provided that nothing in this section shall apply in respect of a supply of goods which--

(i) are exported, but have been or are intended to be re-imported into Pakistan; or

(ii) have been entered for export under Section 131 of the Customs Act, 1969 (IV of 1969), but are not exported; or

(iii) have been exported to a country specified by the Federal Government, by Notification in the official Gazette

Provided further that the Federal Government may, by a notification in the official Gazette, restrict the amount of credit for input tax actually paid and claimed by a person making a zero rated supply of goods otherwise chargeable to sales tax.

(d) such other goods as may be specified by the Federal Board of Revenue through a general order as are supplied to a registered person or class of registered persons engaged in the manufacture and supply of zero-rated goods.

8. Tax credit not allowed.--(1) Notwithstanding anything contained in this Act, a registered person shall not be entitled to reclaim or deduct input tax paid on --

(a) the goods [or services] used or to be used for any purpose other than for taxable supplies made or to be made by him;

(b) any other goods [or services] which the Federal Government may, by a notification in the official Gazette, specify;

(ca) the goods [or services] in respect of which sales tax has not been deposited in the Government treasury by the respective supplier

(d) fake invoices; and

(e) purchases made by such registered person, in case he fails to furnish the information required by the Board through a notification issued under sub-section (5) of section 26.

(2) If a registered person deals in taxable and non-taxable supplies, he can reclaim only such proportion of the input tax as is attributable to taxable supplies in such manner as may be specified by the Board.

(3) No person other than a registered person shall make any deduction or reclaim input tax in respect of taxable supplies made or to be made by him.

(4) [Omitted]

(5) Notwithstanding anything contained in any other law for the time being in force or any decision of any Court, for the purposes of this section, no input tax credit shall be allowed to the persons who paid fixed tax under any provisions of this Act as it existed at any time prior to the first day of December, 1998.

(6) Notwithstanding anything contained in any other law for the time being in force or any provision of this Act, the Federal Government may, by notification in the Official Gazette, specify any goods or class of goods which a registered person cannot supply to any person who is not registered under this Act.

From reading of above provision of section 4 of the Act, it appears that goods specified in the said provisions are charged to tax at the rate of zero percent. The concept of charging of tax at zero rate apparently has been introduced only for the purpose of claiming adjustment or refund of input tax under the Act and although it includes supply of goods chargeable to tax at zero percent, yet the expression zero per cent is nothing but total exemption on the goods exported. The second proviso to this section was added by Finance Act, 1996 where the concept of total exemption apparently was restricted by the legislature, who gave powers to Federal Government by notification in the Official Gazette to restrict the amount of credit for input tax actually paid and claimed by a person making zero rated supply of goods otherwise chargeable to sales tax.

Sub-section (1) of section 8 starts with words ‘notwithstanding’ which means that it is non-obstinate clause and provides that a registered person shall not be entitled to reclaim or deduct input tax paid and clause (b) of it provides that it will apply on any goods or services which the Federal Government may by notification in the official Gazette specify. It has already been noted above that the second proviso of section 4 gives power to Federal Government by notification to restrict the amount of credit for input tax actually paid and claimed by a person making zero rated supply of goods otherwise chargeable to sales tax and in similar fashion section 8(1)(b) also gives power to Federal Government by notification in Official Gazette disentitling a registered person to reclaim or deduct input tax paid on any goods or services specified.

Although, two provisions are independent but their purpose seems to be common of restricting the amount of credit for input tax actually paid and claimed by a person making zero rated supply of goods or disentitling a registered person to reclaim or deduct input tax paid on any goods or services specified in the notification in the official gazette. There is no challenge to the second proviso to section 4 nor to the provision of section 8(1)(b) of the Act. The only thing that is to be seen is whether SRO No. 389(I)/2006 dated 27.4.2006 is ultra vires the provision under which it is made. In order to sustain the claim that the said SRO is ultra vires the provision under which it is made, it has to be shown that it is in excess of the provisions of the statute or is in contravention of or inconsistent or repugnant to the provisions of the statute or the power to issue said SRO did not exist in the Federal Government. Now, on reading of the provisions of section 8(1)(b) read with the second proviso of section 4 of the Act manifestly and in clear terms shows that express power is given to the Federal Government to issue the notification in the official gazette not entitling the registered person to reclaim or deduct input tax paid on goods specified therein and restrict the amount of credit for input tax actually paid and claimed by a person making a zero rated supply of goods otherwise chargeable to sales tax. The said SRO directs that no input tax credit of sales tax paid on account of manufacture or import of cement falling under PCT heading 25.23 shall be allowed if the cement so manufactured or imported into Pakistan is exported out of Pakistan via land, air or sea route. The provision of section 8(1)(b) read with second proviso to section 4 of the Act specifically gives power to the Federal Government to deny input tax credit paid on zero rated supply of goods specified otherwise chargeable to tax. The said SRO seems to achieve this very mandate of law specifying the goods to be cement under PCT heading 25.23 manufactured or imported into Pakistan and exported out of Pakistan via land, air or sea rout. On plain reading of the provisions of the statute and the said SRO, we do not find that the said SRO is ultra vires the provisions of the Act under which it is made.

We will now take up the second SRO No.391(I)/2006 dated 27.4.2006, which has been issued by the Federal Government in exercise of power of second proviso to sub-section (1) of section 10 of the Act, by which the Central Board of Revenue has directed that no refund of tax accrued in connection with export of cement falling under PCT heading 25.23, shall be allowed if the cement is exported out of Pakistan via land, air or sea route. Section 10 of the Act as it was existing on 27.4.2006 is as follows:

10. Excess amount to be refunded -- (1) Subject to the provisions of sub-section (2), if in relation to a tax period, the total deduction of input tax and other adjustments as specified in section 9 exceed the output tax, the excess amount shall be refunded to the registered person.

Provided that any excess amount of tax shall be refunded to the registered person subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify:

Provided further that the Board may, by notification in the official Gazette, restrict or regulate the amount of refund claimed by a registered person as input tax credit to such extent and in such manner as it may specify therein.

(2) Notwithstanding anything contained in sub-section (1), the input tax incurred shall be refunded not later than thirty days of filing of return in such manner and subject to such conditions as the Board may, by notification in the Official Gazette, specify.

(3) If a registered person is liable to pay any tax, [default surcharge] or penalty payable under any law administered by the Board, the refund of input tax shall be made after adjustment of unpaid outstanding amount of tax or, as the case may, [default surcharge] and penalty.

(4) Where there is reason to believe that a person has claimed input tax credit or refund which was not admissible to him, the provisions regarding time limit shall not apply till the investigation, including the verification of the deposit of tax claimed as refund, is completed and the claim is either accepted or rejected.

Sub-section (1) of this section provides that it in relation to a tax period the total deduction of input tax and other adjustments as specified in section 9 exceed the output tax, the excess amount shall be refunded to the registered person. Second proviso, however, gives power to Board by notification in official Gazette to restrict or regulate the amount of refund claimed by a registered person as input tax credit to such extent and in such manner as it may specify therein.

On reading of SRO No. 391(I)/2006 dated 27.4.2006 in context of second proviso to sub-section (1) of section 10 shows that Board has restricted by denying refund of tax accrued in connection with export of cement falling under PCT heading 25.23, exported out of Pakistan via land, air or sea route. The SRO No. 391(I)/2006 dated 27.4.2006 apparently does not violate nor is in excess of the provision of second proviso of section 10 (1) of the Act and we do not find as to how it is ultra vires such provision or any other provision of the Act. We, therefore, are unable to hold the SRO No. 391(I)/2006 dated 27.4.2006 is ultra vires the provision of the Act as submitted by the learned counsel for the petitioner.

The next submission of the learned counsel for the petitioner was that SRO No. 1212(I)/2006 dated 02.12.2006 being in the nature of remedial provision and beneficial to the assessee, it should be interpreted retrospectively and its benefit extended to the petitioner. In support of his this submission learned counsel has relied upon the case of COMMISSIONER OF INCOME TAX V/S OLYMPIA (1987 PTD 739), STATE BANK OF PAKISTAN V/S M/S FAISAL SPINNING MILLS LIMITED (1997 SCMR 1244), DAWOOD COTTON MILLS V/S COMMISSIONER OF INCOME TAX (2000 PTD 285), M/S KAMALIA SUGAR MILLS LTD. V/S SUPERINTENDENT, INTELLIGENCE AND INVESTIGATION(CUSTOMS AND CENTRAL EXCISE), REGIONAL OFFICE LAHORE and another (2002 PTD 632), COLLECTOR OF INCOME TAX V/S A.A.CORPORATION, LAHORE (2004 PTD 2738), ARMY WELFARE SUGAR MILLS LTD. & OTHERS V/S FEDERATION OF PAKISTAN & OTHERS (1992 SCMR 1652), COMMISSIONER OF INCOME TAX V/S SHAH NAWAZ LTD. (1993 SCMR 73) and M/S ILAHI COTTON MILLS LTD & OTHERS V/S FEDERATION OF PAKISTAN & 6 OTHERS (PLD 1997 SC 582).

In order to appreciate the arguments of learned counsel, it is necessary to reproduce the said SRO which has been published in PTCL 2007 St.1205(i) and is as follows:

RESCINDMENT OF NOTIFICATION NO. SRO NO. 389(I)/2006 DATED THE 27^TH APRIL, 2006.

Notification No. S.R.O.1212(I)/2006 dated 2^nd December, 2006.—In exercise of powers conferred by clause (b) of sub-section (1) of section 8 of the Sales Tax Act, 1990, read with the second proviso to section 4 thereof, the Federal Government is pleased to rescind its Notification No. S.R.O.389(I)/2006, dated the 27th April, 2006, with immediate effect.

[Issued by the federal Government, under the signature of Ms. Musarrat Jabeen, Additional Secretary vide Ex.Ord.Gaz.of Pak.2006 Pt.II.P.3547.fileC.No.1(5)FED/2005.]

As the above SRO reads, it simply rescinds the earlier notification No. SRO No. 389(I)/2006 dated 27.4.2006 with immediate effect, which has already been considered above.

In the first cited case of Commissioner of Income Tax (supra), which is Division Bench judgment of this Court, the Court, inter alia, was examining the contention raised by counsel for the respondent/assessee that amendment in section 18-A(6) of Income Tax Act, 1922 made by the Finance Act, 1993 was remedial and curative legislation and thus should be given retrospective effect. After examining the treatise on the interpretation, the Court came to the conclusion that the provision was amended to remedy a wrong that was being done to the assessee and the amending provision does not effect any vested right or create any new obligations and thus it was given retrospective operation for extending benefit to the affected parties in the pending cases to give effect to the intent of the legislature.

In the second cited case of State Bank of Pakistan (supra), which is judgment of Hon’ble Supreme Court of Pakistan, the Court has made an observation that a notification which purports to impair existing or vested rights or creates new liabilities or obligations retrospectively and a notification which purports to confer benefit retrospectively the former is not legally permissible whereas there is no legal bar to the latter.

In the third cited case of Dawood Cotton Mills (supra) which is judgment of Division Bench of this Court, the Court has examined the provision of section 10(4)(bb) of the Income Tax Act, 1922 which was amended by Finance Act, 1978. It was noted that the amendment removed burden which was imposed on the applicant/assessee for claiming payment as an admissible expenditure resulting in providing substantial benefit or relief to the applicant/assessee. It was further noted that the amending Ordinance neither provided nor imposed new burden or fresh obligation on the applicant/assessee nor deprived it of any vested right and it having changed procedure allowed retrospective operation to the amendment.

The fourth case cited by learned counsel for the petitioner is M/S Kamalia Sugar Mills Ltd. (supra), a judgment of Division Bench of Lahore High Court. In this case Court has noted that S.R.0.751(1)2000 was merely an amending SRO which brought about amendment in the S.R.0.207(I)98 which was a beneficial notification. No fresh liability or obligation was brought into being nor it had shaken or impaired any vested right of either of the parties. Therefore, it was permissible to make it retrospective.

The next cited case is that of Collector of Income Tax V/S A.A.Corporation, Lahore (supra), a judgment of Division Bench of Lahore High Court where it was noted that concessionary SRO could be given retrospective effect if it goes to the comfort of tax payer. The impugned order of confiscation of goods was recorded at a time when concessionary SRO was already in the field which was beneficial to tax payer should have been invoked to allow the relief to the importers.

Next case cited by petitioner counsel is of Army Welfare Sugar Mills Ltd. (supra), a judgment of Hon’ble Supreme Court of Pakistan where it was observed that a notification which purports to impair an existing or vested right or imposes new liability or obligation cannot operate retrospectively in the absence of legal sanction. Notification which confers benefits can operate retrospectively.

The next case cited by petitioner’s counsel is Commissioner of Income Tax V/S Shahnawaz Ltd.(supra) by which the first cited judgment of Division Bench of this Court in case of Commissioner of Income Tax V/S Olympia was upheld.

Learned counsel for petitioner has lastly cited the case of M/s Elahi Cotton Mills Ltd & others (supra) wherein the Hon’ble Supreme Court has observed that notification which is detrimental or prejudicial to the interest of a person cannot operate retrospectively. Beneficial Executive order/notification issued by Executive functionary can be given retrospective effect.

The overall view of above cited judgments on the point of beneficial legislation, being given retrospective effect, is that it should be remedial and curative and that its purpose should be to correct the existing law, redressing an existing grievance or introducing regulations conducive to public good and remedies defect in the pre-existing law. The remedial statutes are usually looked upon with favour by the Courts and liberally construed. The law is to be given retrospective operation if such operation does not destroy or disturb the vested right, impair the obligations of contract create new liabilities, violate due process of law or contravene some other constitutional provisions. Thus, it has to be seen for application of beneficial notification being given retrospective effect that it should not disturb vested right, impair obligations of contract, create new liabilities, violate due process of law or contravene some other constitutional provisions. If these rights/obligations, liabilities and law are not disturbed or violated, the notification can be given retrospective effect.

Examining the notification SRO No. 1212(I)/2006 dated 02.12.2006 on the principles as enunciated above, it may be noted that in the first place it simply rescinds the SRO No. 389(I)/2006 dated 27.4.2006 with immediate effect. In order to consider this notification as a beneficial and remedial and given retrospective effect, in the first place Court will have to come to conclusion that previous notification which was rescinded by this notification was not correct law or was not conducive to public good. We have already in our discussion while considering the vires of SRO No. 389(I)/2006 dated 27.4.2006 have come to conclusion that it was a lawfully made instrument. By SRO No.1212(I)/2006 dated 02.12.2006, it seems that the burden imposed by SRO No.389(I)/2006 has been rescinded but incidentally SRO No. 1212(I)/2006 has been made operational with immediate effect that is from the date of its making and this has been expressly stated in the SRO itself. Secondly, SRO No.1212(I)/2006 cannot be given retrospective effect for the reason that it will amount to destroying and disturbing or impairing the obligation and right that have been created while SRO No. 389(I)/2006 remained in the field. Such being the state of law, we are of the considered view that the arguments of beneficial construction and retroactive effect of SRO No. 1212(I)/2006 dated 02.12.2006 is not available to the petitioner in the fact and circumstances of the present case.

For the foregoing reasons, we do not find merit in this petition. The same is, therefore, dismissed. Listed applications are also disposed off.

J U D G E

Aamir/PS

J U D G E