IN THE SUPREME COURT OF PAKISTAN

( Appellate Jurisdiction)

PRESENT:
Mr. Justice Iftikhar Muhammad Chaudhry
Mr. Justice Rana Bhagwandas
Mr. Justice Mian Shakirullah Jan

CR. ORIG. P. NO. 15 OF 2002 & Cr. Misc. A.179/2002

IN CIVIL REVIEW PETITION NO. 80 OF 1999.

Fecto Belarus Tractor Limited … … Petitioner

Versus
Govt. of Pakistan through M/o Finance … … Respondents
Economic Affairs and others.

For the petitioner : Mr. Khalid Anwar, Sr. ASC

Mr. M. A. Zaidi, AOR

For respondent No.1 : Mr. Makhdoom Ali Khan,

Attorney General for Pakistan.
Mr. Faisal Hussain Naqvi, Advocate.
Mr. Suleman Afridi, Advocate.
Mr. M. Ramzan Bhatti, Member Customs.
Mr. Shahid Ahmed, Member Sales Tax.

For respondents(2-10) : Mr. Abdul Hafeez Pirzada, Sr. ASC.

Mr. Afzal Siddiqui, ASC
Mian Gul Hasan Aurangzeb, Advocate.
Mr. Arshad Ali Chaudhry, AOR

Dates of hearing : 11th to 14th January 2005.

JUDGMENT

IFTIKHAR MUHAMMAD CHAUDHYR, J. – Petitioner seeks

indulgence of the Court for initiating suitable action for contempt of Court

in accordance with law against the persons or any other person is

mentioned in the list appended with the application or against any one else,

who is involved for violating the judgment dated 19th February 2001 passed

in Civil Review Petition No. 80 of 1999 by this Court.

Cr.O.P.15 of 2002 -2-

2. In view of the importance of the matter, we consider it appropriate

to look into the background of the case. It is significant to note that as far

back as 1994 the Government of Pakistan launched a scheme for providing

tractors to the agriculturists/farmers under the Awami Tractor Scheme,

through Agricultural Development Bank of Pakistan, at subsidized rates.

To achieve the object, the payment of Customs Duty and Sales Tax was

exempted in terms of SRO No.921(1)/1994 dated 22nd September 1994 and

SRO No.1189(1)/1994 dated 11th December 1994. Accordingly the scheme

was implemented and on the accomplishment thereof , the SROs referred to

herein before were substituted with SRO No.388(1)/1996 and SRO

414(1)/1996 dated 13th June 1996 respectively in pursuance whereof 10%

Customs Duty and 18% Sales Tax on the import of Tractors were imposed.

Subsequent thereto the Government of Pakistan launched Awami Tractor

Scheme No.II for importing 10,000 Tractors. As the petitioner succeeded in

fulfilling the specified conditions for the import of Tractors including the

one to sell a Tractor at a price of Rs.2,30,000/-, therefore, the letter of

authorization was issued to it on 26th June 1996 by the Ministry of Food,

Agriculture and Livestock Government of Pakistan [herein after referred to

as ‘MINFAL’]. The contents of letter expressly provided that all concession

provided under the first phase of scheme would be available to the

petitioner as well and directions were issued to it to open letter of credit

before 30th June 1996. This letter was followed by another letter dated 27th

June 1997, issued by the “MINFAL”, by way of a corrigendum, stating

therein that the authorization letter issued in favour of the petitioner for the

second phase of Awami Tractor Scheme was subject to amendment to the

extent that the fixed price of the Tractor would be enhanced in the event of

any fluctuation in the Exchange rate of US Dollars over Rs.35.72.

Cr.O.P.15 of 2002 -3-

Furthermore, it was clarified that price of Rs.230,000/- as agreed upon by

the petitioner, was on the assumption that no Sales Tax had been imposed

and that concession provided under SRO No. 921(1)/1994 dated 22nd

September 1994 would continue in favour of petitioner for the import of the

Tractors. It was the case of the petitioner that despite clear directions noted

herein above Ministry of Finance imposed upon it Sales Tax at the rate of

18%, Customs Duty at the rate of 10% and the Service Charges at 2%

respectively, therefore, it invoked the jurisdiction of learned Lahore High

Court for the redressal of its grievance, by filing Constitution Petition

No. 21972 of 1996, but could not get relief as the petition was dismissed

having become infructuous in view of the statement made by learned

Deputy Attorney General, representing the Government of Pakistan that the

matter in issue was examined by the Economic Co-ordination Committee

(herein after referred to as “ECC”) and the attention of the Court was

drawn towards the approval granted by the competent authority whereby

certain adjustment had taken place for the Awami Tractor Scheme. Leaving

the petitioner at liberty to file fresh petition to question the adjustment

made by the ECC, the High Court disposed of the petition vide order dated

24th February 1997.

3. Petitioner preferred ICA, which was allowed on 4th August 1997

declaring that petitioner was entitled to avail all concessions like

exemption from the payment of Customs Duty and Sales Tax, in the same

manner and to the same extent, which were made available under the

original Awami Tractor Scheme qua the import of 10,000 Tractors by I t

under the authorization letter dated 26th June 1996 and respondents Nos.1

and 2 were restrained from withdrawing or amending the same to the

disadvantage of the petitioner.

Cr.O.P.15 of 2002 -4-

4. Against the order of ICA Bench, the respondents approached this

Court by filing petition for leave to appeal being No.1084-L of 1997

wherein on 9th October 1997, leave was granted and finally the appeal was

accepted on 1st September 1999. Contents of the concluding para read as

under thus:-

“In the result, there appears to be force in the

contentions raised by the learned Attorney General.
Resultantly, the appeal is allowed and the judgment of
the High Court is set aside. There will, however, be no
order as to costs in view of the questions raised by the
parties”

5. Petitioner preferred a Civil Review Petition being No.80 of 1999

wherein following prayer was made:-

“It is, therefore, respectfully prayed that the order and

judgment dated 01.09.1999 may graciously be reviewed
and the appeal of the Respondents may kindly be
dismissed.

The above noted review petition was allowed vide judgment dated

19th February 2001. Concluding para therefrom reads thus:---

“37. To sum up, it is crystal clear that withdrawal of

SRO exempting the payment of customs duties and the
sales tax would not be applicable to the second phase of
the scheme for the import of tractors because the
Government itself after the withdrawal of notification had
resiled from it to the extent of the import to be
undertaken by the petitioner. Secondly, relying upon Al-
Samrez case referred to herein above, the sales tax like
the customs duty could not be levied upon the import by
the petitioner because the petitioner is protected on the
doctrine of estoppel as well as under the Economic
Reforms Act, 1992.
For the foregoing reasons, we would review the
judgment with the result that the judgment of the Lahore
High Court dated 4th August 1997 is restored, earlier
judgment of this Court dated 1st of September 1999
rendered in CA No.1176 of 1997 recalled and appeal
dismissed with costs.”
Cr.O.P.15 of 2002 -5-

6. It appears that during pendency of the petition for leave to appeal, a

request was made by the official respondents that the operation of the

judgment 4th August 1997 passed by the learned High Court in ICA No.84

of 1997 may be suspended. Request so made was allowed by way of

granting interim relief in chamber on 1st September 1997. However, while

granting leave to appeal on 9th October 1997 the condition of interim order

was modified, thereby directing the petitioner to furnish Bank Guarantee or

Bank Guarantees of a Scheduled Bank to the satisfaction of the Collector

Customs concerned within a period of one month or earlier. Accordingly,

on acceptance of their Appeal No. 1176 of 1997, the Bank Guarantees were

got encashed by them.

7. However, after the decision of Civil Review Petition No. 80 of 1999

vide judgment dated 19th February 2001, petitioner approached the

Central Board of Revenue [herein after referred to as ‘CBR’] for refund of

the amount, paid towards the Customs Duty as well as Sales Tax and

Service Charges. As needful was not done, therefore, petitioner filed instant

petition for initiating action for contempt of Court against the respondents.

8. From the above facts following question emanates for

consideration:----

Whether respondents have committed contempt

of Court by not refunding the Customs Duty,
Sales Tax and the Service Charges to the
petitioner in view of the judgment dated
19th February 2001 in C.R.P. No.80 of 1999?

9. Learned counsel contended that as a matter of right petitioner was

entitled for refund of Customs Duty, Sales Tax and Service Charges

amounting to Rs.493,467,838/- (four hundred ninety three million, four

hundred sixty seven thousand and eight hundred and thirty eight) which

were illegally recovered from it by encashing its unconditional bank

Cr.O.P.15 of 2002 -6-

guarantees furnished by it in pursuance of order of this Court dated 9th

October 1997 but instead of doing needful the Customs Department vide

letter dated 11th May 2001, asked the petitioner to submit a certificate from

a Chartered Accountant, confirming whether the incidence of Sales Tax has

not been passed on to the consumers and reiterated this demand knowing

well that the bank guarantee had been furnished unconditionally. However,

petitioner without prejudice to its case in good faith obtained a certificate

from their Chartered Accountant and submitted the same clarifying that

during the period from 1st July 1996 to 30th June 2000, the Sales Tax has

not been charged on the invoices raised by the company but surprisingly

instead of fulfilling the requirement as aforesaid, the CBR, while defying

the order of this Court dated 19th February 2001, declined to accede to the

request of the petitioner on the plea that it had set up a committee to look

into the issue i.e. whether the burden of Sales Tax has been passed on or

not by the petitioner vide letter dated 9th April 2002. According to him this

device was adopted with a view to flout/violate/reverse the judgment of this

Court. He emphasized that the CBR had no legal authority to raise such

objection for the first time. Though this plea was available to them at the

time of hearing of CRP No.80 of 1999, thus the respondents were estopped

from raising this plea.

10. He argued that petitioner furnished bank guarantee equal to the

amount of Customs Duty, Sales Tax and Service Charges in pursuance of

leave granting order dated 9th October 1997 in Civil Petition

No.1084-L/1997, therefore, as soon as the judgment passed in Civil Appeal

No.1176 of 1997 dated 1st September 1999 was recalled on 19th February

2001, the petitioner as a matter of right was entitled to the refund of the

amount but CBR on one pretext or the other deferred the payment in clear
Cr.O.P.15 of 2002 -7-

violation of the judgment passed in Civil Review Petition No.80 of 1999,

dated 19th February 2001. According to him the CBR could not be allowed

on any ground, whatsoever, to non-implement the judgment, including the

questions which are now being raised for the first time.

11. On the other hand learned Attorney General for Pakistan assisted by

Mr. Muhammad Afzal Siddiqui, ASC contended that at the time of hearing

of the Review Petition before this Court and even in the earlier litigation

there was no question before the Court for determination “whether

incidence of Sales Tax has passed on to the consumer of Tractors or not”.

He emphasized that the burden of Sales Tax has to be shared ultimately by

the purchaser, therefore, to ascertain the correct position a committee was

constituted by the CBR, who had no intention to flout/violate/severe the

judgment of the Court, although judgment dated 19th February 2001

contained no directions for the refund of Customs Duty, Sales Tax and

Service Charges. Besides, in the meantime, respondents had received

evidence that Tractors had been sold by the petitioner at higher rate

ranging between Rs.399,000/- to Rs.435,000/-, inclusive of Sales Tax, etc.

qua the price fixed by the “MINFAL” i.e. Rs.230,000/-, therefore, it had

become all the more necessary to probe into the matter.

12. Learned Attorney General also contended that the principle of unjust

enrichment is fully invoked in the judicial system of this country

notwithstanding the fact whether adjustment of the tax has got the statutory

backing or not because if it is established that incidence of Customs Duty

and Sales Tax have been assed on to the consumers by the importer, then

latter is not entitled to the refund of the same.

13. It may be noted that instant proceedings have been instituted for

initiating action for contempt of Court against the CBR and its officers. A
Cr.O.P.15 of 2002 -8-

careful perusal of the judgment dated 19th February 2001, reveals that on

accepting the review petition, the judgment in Civil Appeal No. 1176 of

1997, dated 1st September 1999 was recalled as a result whereof the

judgment dated 4th August 1997 of Lahore High Court stood restored.

These two judgments do not contain any direction that petitioner would be

entitled to refund of Customs Duty and Sales Tax etc. automatically. For

convenience sake concluding para from the judgment of High Court dated

4th August 1997 is reproduced herein below:---

“18. For the foregoing reasons, we accept this appeal,

set aside order dated 24.02.1997 passed by the learned
Single Judge and hereby declare that the appellant is
entitled to avail all these concessions as regards
exemption from the payment of the customs duty, sales
tax, service charges and other taxes in the same manner
and to the same extent which were made available under
the original Awami Tractor Scheme in relation to import
of 10,000 Tractors by it under the authorization dated
26.6.1996 and respondents 1 and 2 are hereby restrained
from withdrawing or amending the same to the
disadvantage of the appellant. The parties are however
left to bear their own costs.”

14. Learned counsel for petitioner in order to substantiate his plea relied

upon the following judgments:--

1. Hadkinson v. Hadkinson
[(1952) 2 All E.R. 566]
In this case it is observed that it was the plain and
unqualified obligation of every person against, or in
respect of, whom an order was made by a Court of
competent jurisdiction to obey it unless and until it was
discharged.

2. The State v. Muhsin Tirmizey

(PLD 1964 (WP) Lahore 434)
In this case Court observed that the remarks made by an
authority in its administrative function amounts to contempt
of gross kind. In this case respondent Muhsin Tirmizey, the
then District and Sessions Judge, Dera Ghazi Khan wrote a
Cr.O.P.15 of 2002 -9-

letter to the Chief Secretary to the Government of West

Pakistan Lahore containing objectionable remarks against
the High Court which were not only read by the Chief
Secretary but it was also read by the others who dealt with
it in the course of their duties, as such respondent was
found guilty for the contempt of Court.

3. Dr. A.N.M.Mahmood v. DR. M.O. Ghani VC.

(PLD 1967 Dacca 67)
In this case, the High Court of East Pakistan (Dacca) has
held that the object of the discipline enforced by Court in
case of ‘contempt’ is not to vindicate the dignity of the
Judge in person, but to prevent undue interference with the
administration of justice or the doing of an act the tendency
of which is to deprive the Court of an unfettered course
with a view to dispense even handed and impartial justice
in accordance with law. It is a part of our legal system that
the Court should call upon the delinquents, if so found, to
answer for the impediment which they have caused to the
steady course of judicial administration….”

4. Ekka Tonga Mazdoor Union v. The Aligarh Municipal Board

(AIR 1967 Allahabad 93)
In this case it is held that the orders of Courts are to be
implemented and acted upon with promptitude. If their
implementation is unduly delayed, it would amount to
showing scant respect to the Court concerned and its
judicial process, which would obviously be a serious
contempt of that Court, even though the person sought to
be injuncted or restrained might have had no intention to
flout the order of the Court, for in many cases the very
object of obtaining the order of stay or restraint would be
rendered nugatory and the thing sought to be enforced or
restrained by the Court might be accomplished or
completed such as in the case of stay demolition etc.
Moreover, considerable delay in carrying out an order of
a Court after notice, without adequate explanation for
laches, would by itself constitute serious contempt of
Court inasmuch as it tends to undermine the prestige and
authority of a Court- of law and the efficacy of its judicial
process. A person who has obtained an order in his
favour from a Court is entitled to instant relief and its
delayed implementation would discredit the
administration of justice.
Cr.O.P.15 of 2002 -10-

5. Syed Aftab Ejaz v. The State

(PLD 1978 Lahore 361)

In this case the learned High Court held that in a case of

contempt of Court the plea of intention, however, good it
may be, cannot provide defence for flouting the order of
the Court, because the order of the Court is to be strictly
complied with and its compliance is a matter of strict
liability.

6. Sri Krishna Singh v. Mathura Ahir

[(1981) 4 SCC 421]
In this case a decree was passed against the petitioner
for delivering the possession of the property to the
plaintiff which was maintained ultimately by the Indian
High Court, adjudging that the petitioner Sri Krishna
Singh and others were trespasser and were directed to be
evicted from the property in question but despite of it,
possession was not delivered in utter disregard of
Supreme Court’s order and trying to delay or defeat the
Court’s decree for delivery of possession by adopting
ingenious devices and subterfuges, therefore,
proceedings were ordered to be taken against him for
contempt of Court.

7. Isaaca v. Robertson
[(1984) 3 All E.R. 140]
It is observed in this case that order made by the Court of
unlimited jurisdiction in the course of contentions
between orders that are ‘void’ in the sense that they can
be ignored with impunity by those persons to whom they
are addressed, and orders which are ‘voidable’, in the
sense that they may be enforced until set aside, since any
order must be obeyed unless and until it is set aside and
there are no orders which are void ipso facto without the
need for proceedings to set them aside.

8. X. Ltd. and another v. Morgan Grampian

(Publishers) Ltd. and others.
[(1990) 1 All E.R. 616]
In this case it is held that right of audience can be
declined to contemnor who not only refused to obey the
order made by the Court but also rejected the authority
of the Court to make an order binding on him.
Cr.O.P.15 of 2002 -11-

9. Rana Muhammad Akram Khan v. The State.

(1993 P. Cr. L.J. 2044)
In this case it is held that Disobedience or non-
compliance of an order passed by the High Court
whether intentionally or negligently and that too by a
public functionary amounts to a contempt of Court.

10. Anil Sharma v. Virmani

(1996 Cr. L.J. 3137)
Learned counsel contended that in this case the Court
has held that it is settled proposition of law that the
Contempt Court cannot go behind the order. The
opposite parties cannot be permitted to judge the merits
themselves of an order quashed by the High Court or
they cannot be permitted to defy the Court’s order on the
ground that the order is not correct. If this is to be
permitted, the entire judicial structure will fall down and
every person will defy the orders on the ground that the
order is not correct.”
Therefore, learned counsel’s submission was that in
instant case, the CBR had absolutely no authority to
appoint a Committee for the purpose of ascertaining as to
whether the incidence of burden of Sales Tax has been
passed on or not.

11. M.F.M.Y Industries Ltd. v. Collector of Customs

(PLD 1996 Karachi 542)
Learned counsel contended that in this judgment it has
been held that it is totally un-precedented that a
department would await the advice from the
administrative agency before the implementation of the
order, as it had happened in the instant case that the
concerned Collector instead of refunding the amount,
approached the CBR to avoid the effect of the judgment,
therefore, strictly in accordance with the observation
made in this reported judgment instant application has
been filed for the proceedings of contempt of Court.

12. Abhijit Tea Company Ltd. v. Terai Tea Co. (P) Ltd.
[(1996) 1 SCC 589]
In this case the Court observed that the arms of the Court
are long enough to reach in justice wherever it is found,
which should be dealt with appropriately.
Cr.O.P.15 of 2002 -12-

13. Naveed Nawazish Malik v. Ghulam Rasool Bhatti

(1997 SCMR 193)
It is held in this case that to disobey or disregard an
order, direction or process of Court which a person is
legally bound to obey, willful breach of any undertaking
given to a Court, any act intended to or which tends to
bring the authority of the Court or the administration of
law into disrespect or disrepute and to obstruct, interfere,
interrupt or prejudice the process of law or the due
course of any judicial proceeding fall within the category
of contempt of Court.

14. Al-Jehand Trust v. Federation of Pakistan.

(PLD 1997 SC 84)

In this case this Court held that if all the Executive and
Judicial authorities in Pakistan are unable to act in aid
of the Supreme Court and judgment is not implemented,
then such situation would be open to be construed as
impasse or deadlock and would amount to very unhappy
situation reflecting failure of Constitutional machinery …

15. Government of Sindh v. Muhammad Hussain

(2000 SCMR 1241)
In this case the concerned Officer instead of
implementing the order thought that filing of review
operates automatic stay but this Court observed that the
officials concerned, prima facie, found guilty for
contempt of Court for having failed to implement the
order of this Court.

16. M.Adil Hayat Khan v. Government of Sindh.

(PLD 2002 Karachi 131)
It is held in this case that the act of justifying the
disobedience of the Court’s Order, which is vary clear
and can be understood by any person who has passed the
High School Examination in Pakistan reflects his
stubborn and unreasonable attitude.

17. Wyatt Tee Walker et al v. City of Birmingham

[US Supreme Court Reports (388 US 307)]
In this case it is held that as a general rule, an
unconstitutional statute is an absolute nullity and may
not form the basis of any legal right or legal
Cr.O.P.15 of 2002 -13-

proceedings., yet until its unconstitutionality has been

judicially declared in appropriate proceedings, no person
charged with its observance under an order or decree
may disregard or violate the order or the decree with
immunity from a charge of contempt of Court; and he
may not raise the question of its unconstitutionality in
collateral proceedings on appeal from a judgment of
conviction for contempt of the order or decree………..”

15. Learned Attorney General contended that in absence of a specific

direction to refund Sales Tax to petitioner or for that matter Customs duty,

no criminal liability of contempt of Court can be imposed upon the CBR or

its Officers. He referred to the following judgments:----

1. Hayat Ahmed Khan v. Bashir Sadiq

(PLD 1952 Lahore 48).

In this case during pendency of a suit, an order was

passed on 14th March 1951 by a learned subordinate
Judge, directing to the respondents to take the delivery of
the machinery which had arrived at Karachi in presence
of the petitioner or his representative or at any rate, after
giving sufficient opportunity to the petitioner or his
representative to be present. If, in spite of it, the
petitioner was not present or represented the delivery
should be taken after informing the Court. Allegedly,
respondent took delivery of the machinery on 25th April
1951, without the order of the Court. Thus it was alleged
that the order dated 14th March 1951 had been
contravened. Ultimately, a petition was filed on original
side before the Lahore High Court under Section 3 of the
Contempt of Court Act, praying that the respondents be
proceeded against and adequate punishment according
to law for having committed contempt of Court of the
sub-ordinate Judge be passed. In view of these facts, the
Court formulated a question “whether in these
circumstances can it be said that there was a
contravention of any direction made by the learned
Judge, such as, could invite penalties of the nature
applicable in contempt? The learned Judge answered the
question as follows:-
“ -----------In my opinion answer must be in negative.
Firstly if contravention of an order is to be visited with
Cr.O.P.15 of 2002 -14-

penalties of a criminal nature that order may be in clear

and precise terms, setting out the obligations resting
upon the person affected in clear and unmistakable
language. The obligation must not rest upon any
implication to be derived from any words used in respect
of other matters by the Court, it must be couched in
express terms and must be brought directly to the notice
of the party”

2. State of Pakistan v. Mehrajuddin

[PLD 1959 SC (Pak.) 147]
In this judgment it has been held as follows:-
“It is true that the usual method of
enforcing a judgment granting an order
of mandamus is by commitment for
contempt but such a mandamus must be
of an absolute nature. An order directing
the reinstatement of a person in a great
public Department is not one which can
be executed on the instant. It involves a
great many considerations such as
seniority, suitability, salary, and
treatment of the period of absence etc.,
which are exclusively within the
competence of the relevant executive
authorities and can only be decided by
those authorities after a good deal of
examination and care, involving the
exercise of discretion and judgment in
regard to many complex matters.
Therefore, an order directing the
reinstatement of a person cannot be
regarded as an absolute order of
mandamus, non-compliance with which
may peremptorily be visited by a
proceeding in contempt. In the present
cases, the orders of mandamus were
themselves incompetent and therefore
for that reason as well, the High Court
should have hesitated before issuing the
notices in contempt which they did.
………………..”

Learned Attorney General in view of above observation

stated that firstly neither this Court nor the High Court
had issued absolute direction for the refund of the
Customs Duty and Sales Tax, etc., therefore, the CBR
acted within its jurisdiction and was competent in law to
ascertain as to whether incidence of Sales Tax had been
passed on or not.
Cr.O.P.15 of 2002 -15-

3. Qadeer Ahmad v. Punjab Labour Appellate Tribunal

(PLD 1990 SC 787)
In this case petitioner got an order from the High Court
at Bahawalpur in Writ Petition No. 185/1979-BWP, in
pursuance whereof the order of his dismissal from
service was set aside, leaving upon the respondents to
take fresh action against the petitioner in accordance
with law. However, he was not reinstated. Consequent
upon the order of the High Court, respondent issued him
an inquiry notice and suspended him for four days and
after holding inquiry, he was dismissed from service.
Before passing of the fresh order of dismissal, the
petitioner moved an application before the Lahore High
Court, Bahawalpur bench, seeking implementation of the
order dated 25th February 1980, reinstating him with
back benefits. It was further prayed that the respondent
be proceeded against under contempt of Court Act, for
deliberately avoiding the compliance of the order of this
Court or any other appropriate order may be passed. The
High Court dismissed the petition filed by him, as such
appeal was filed before this Court. Arguments were
heard and judgment was reserved. In the meantime,
petitioner filed a Misc. Application against the dismissal
order dated 27th March 1990 with the Labour Appellate
Court, who set aside the same vide order dated 18th
September 1990 and directed his reinstatement into
service with certain observation made therein. Against
such order, two appeals were filed which were disposed
of by Labour Appellate Tribunal on 30th January 1984.
Meanwhile, when the appeal came up for arguments with
reference to the contempt of Court, this Court observed
as under :-
“……….In order to make out a case for
contempt, it was necessary to establish a
specific direction and its breach by the party.
In the case in hand no express order was
passed in the judgment which was being
utilized by the appellants for claiming
payment of back benefits. Therefore, in fact
no breach had taken place for which the
respondent could be held in contempt.”

Learned Attorney General heavily placed reliance on this

judgment and argued that comparative study of the
Cr.O.P.15 of 2002 -16-

judgment of Lahore High Court dated 4th August 1997 as

well as the judgment of this Court in Review Petition,
clearly demonstrate that no directions were made for the
refund of the Customs Duty, Sales Tax and Service
Charges by any of these Courts.

4.Muhammad Sadiq Leghari Registrar High Court of Sindh

(PLD 2002 SC 1033)
In this case a larger bench of this Court dealt
with the case of contempt of Court wherein it was alleged
that the appellant being the Registrar of High Court of
Sindh (as then he was) violated the order of this Court
dated 28th March 2002 by submitted a report whether
Constitution Petition No.D-1062/94 (Feroze Akbar Khan
v. Government of Pakistan) was heard by a Division
Bench as reflected in the order, because ambiguity
surfaced on having seen the cause list of High Court of
Sindh, according to which the case noted therein was
fixed before the learned Chief Justice of the High Court
and the detailed order showed that the same had been
signed by two Hon’ble Judges as it was heard by a
Division Bench. When the case was taken up on 15th May
2002, it was found that the report had not been submitted
by the Registrar of the High Court of Sindh. Although in
addition to the original communication, a reminder was
also issued vide letter dated 4th May 2002 to submit the
report compliance of the order. However, on 15th May
2002 a Bench of this Court passed an order directing
personal appearance of the Registrar to appear in person
and explain as to why proceedings of contempt of Court
may not be initiated against him for non-compliance of
the order. He submitted requisite report and also filed a
reply to the notice and sought time to further probe into
the matter, as desired by this Court. The learned Bench
of this Court on having taking into consideration his
reply, concluded that he had committed contempt of
Court and had also interfered in the proceedings of
administration of justice, for which no sincere regrets or
unconditional apology had been tendered by him,
therefore, on the basis of such findings, he was held
guilty of contempt of Court and was accordingly
punished and awarded sentence. With this background,
ICA was filed and this Court formulated a question
Cr.O.P.15 of 2002 -17-

“whether the conduct of the appellant, if considered with

the attending circumstances and the facts established on
record, did constitute an act of contempt of Court, as
envisaged under Article 204 of the Constitution of
Islamic Republic of Pakistan and the provisions of
Contempt of Court Act, 1976? and the answer was as
follows:---
“We may observe here at the very outset
that a distinction has to be made
between a case of contempt of Court
based on defiance or violation of a
judicial order in the nature of temporary
injunction by a party whereby such party
was restrained from acting in a
particular manner but in spite of service
of notice or having come to know of the
passing of such order, acts in a manner
to alter the position to his advantage so
as to frustrate the temporary injunction
and an act of mere non-submission of a
report called for by the Court by an
Officer of the Court. In the former case,
the Court would take strict view and
mere act of defiance of the judicial order
would by itself justify raising of
presumption that the doer of the act was
guilty of contempt of Court unless he
proves otherwise whereas in the latter
case, it has to be determined on
application of judicial mind as to
whether the appellant deliberately did
not submit the report on account of
having personal interest in any of the
parties to cause damage to the other
party in the case in which the report was
called or had any personal interest
which, if proved or established would
make the act of non-submission of the
report mala fide. In the absence of any of
these factors and element of contumacy,
his conduct could not be held to have
suffered from mala fides or contempt of
Court. It has been held in the case of
Behawal v. The State PLD 1962 SC
476 that mere non-compliance of an
order, in the absence of contumacy,
would not amount to contempt of
Court.”

16. From the judgments relied upon by both the sides, inter alia,

following principles emanate:---

1. Orders made by a Court of unlimited

jurisdiction in the course of continuous litigation
are either regular or irregular. It is misleading
to draw distinction between orders that are
Cr.O.P.15 of 2002 -18-

“void”, in the sense that they can be ignored

with impunity by those persons to whom they are
addressed, and orders which are “voidable” in
the sense that they may be enforced until set
aside, since any order must be obeyed unless
and until it is set aside and there are no orders
which are void ipso facto without the need for
proceedings to set them aside. [1984 (3) AllER
140 (Issacs v. Roberton)].

2. If a contravention of an order is to be visited

with penalties of a criminal nature that order
must be in clear and precise terms, setting out
the obligations resting upon the person affected
in clear and unmistakable language. The
obligation must not rest upon any implication to
be derived from and words used in respect of
other matters by the Court; it must be couched
in express terms and must be brought directly to
the notice of the party. [Hayat Ahmed Khan v.
Bashir Sadiq (PLD 1952 Lahore 48)].

17. In view of the principles discussed in above judgments, it is contended

by the learned Attorney General that without prejudice to his other pleas, in

absence of any specific directions to refund Sales Tax and Customs Duty etc.

and for lack of contumacious acts by the CBR or its officers, no proceedings

for contempt of Court can be initiated against them, therefore, he prayed for

the rejection of the application.

18. We have considered the arguments of both the sides, keeping in view

the relevant record maintained by this Court, pertaining to CPSLA No.

1084-L/1997, CA.1176/1997 and CRP. No.80/1999 as well as judgment of

Lahore High Court, Lahore passed in ICA No.84 of 1997 in Writ Petition

No.1972 of 1996, concluding paras wherefrom have already been

reproduced herein above. A careful perusal of above orders indicates that

Cr.O.P.15 of 2002 -19-

vide order dated 9th October 1997, passed by this Court at the time of

granting leave to appeal, Bank Guarantee was furnished by the petitioner

but in the decision of Civil Review Petition No.80 of 1999 dated 19th

February 2001, no directions were made to refund Customs Duty or sales

Tax, therefore, it is held that the amount received by the respondents on

encashment of Bank Guarantee was not refundable automatically.

19. Learned counsel for petitioner vigorously insisted for initiating

contempt proceedings against the officers of CBR as according to him they

are responsible for violating the judgment dated 19th February 2001, but we

are not persuaded to subscribe to his view point; firstly for the reason that

the CBR or its Officers, in the letters, addressed to petitioner from time to

time including 10th, 11th May 2001, 9th April 2002, had not denied the refund

of Customs Duty, Sales Tax and Service Charges to petitioner; secondly in

the judgment passed Civil Review Petition No. 80 of 1999, dated 19th

February 2001, no directions were made to the respondent-government as

well as CBR for the refund of the amount immediately, as observed herein

above that on accepting the review petition, the judgment of the Lahore High

Court dated 24th August 1997 was restored wherein it has been held that

petitioner is entitled for exemption of Customs Duty, Sales Tax and Service

Charges in view of authorization letter dated 26th June 1996. It is important

to note that before the Lahore High Court the petitioner had not furnished

any bank guarantee for the purpose of release of Tractors nor the said Court

as well as this Court in the judgment passed in Civil Review Petition, dilated

upon the question whether the burden of Customs Duty and Sales Tax has

been passed on or not by the petitioner to end consumer of Tractors; thirdly;

the CBR had been insisting the petitioner to furnish its accounts, enabling it

to make the refund if permissible under the law but petitioner, instead of
Cr.O.P.15 of 2002 -20-

doing so, approached the Court with contempt proceedings for the purpose

of causing harassment to the CBR or its Officers; fourthly, entitlement of the

petitioner for the refund would be determined in accordance with law as

well as practice invoked, which have attained the status of law; fifthly power

of punishment for contempt is not used to cast slander or to ridicule any

person, but essentially to devise ways and means for doing complete justice

with utmost impartiality for the general benefit thereby, promoting public

good; so that aggrieved party could fearlessly invoke the jurisdiction of the

Court to avail all remedies which are permissible under the law, and to have

complete satisfaction of redress as regards wrong done to him. [Masroor

Ahsan v. Ardeshir Cowasjee (PLD 1998 SC 823)].

20. Now it remains to be examined as to whether the CBR after the

decision of Civil Review Petition No.80 of 1999 could legally ask the

petitioner to explain as to whether the incidence of Sales Tax had been

passed on to the end user of the Tractors or not?

21. Learned counsel having narrated the above facts contended that the

CBR or any other Officer, in law, is not competent/empowered to re-open

the issue, which had already been settled namely that petitioner being

importer of the Tractors is exempted from the payment of the Sales Tax, in

pursuance of letter dated 26th June 1996, which had been equated with a

notification in the judgment dated 19th February 2001, thus in view of

principle of constructive res judicata, the CBR was legally estopped to

demand details from the petitioner in respect of passing on the burden of

the Sales Tax.

22. In order to substantiate his plea learned counsel placed reliance on

the judgments reported in the cases of, Noor Muhammad v. Assistant

Commissioner Vehari (1986 SCMR 292), Pardool v. Gulzada (PLD

Cr.O.P.15 of 2002 -21-

1995 SC 410), Amanul Mulk v. Mian Ghafoor-ur-Rehman (1997 SCMR

1796) and Bashir Ahmed v. Allah Jawai (2000 SCMR 1112).

23. On the other hand learned Attorney General for Pakistan, assisted

by Mr. Muhammad Afzal Sidiqui, ASC contended that the argument so

raised on behalf of the petitioner is not available to it at all, in view of the

fact that in the earlier round of litigation, this Court had never decided the

question of passing on the burden, as it had never arisen at that time.

24. We have considered the arguments put forward by both the sides. In

this behalf, first of all it is to be noted that petitioner is claiming relief of

the refund of Customs Duty and Sales Tax as well as Service Charges, in

pursuance of the judgment dated 19th February 2001. A careful perusal of

the judgment persuades us to hold that no order has been passed for the

refund of these amounts. The relief, regarding exemption from the Customs

Duty and Sales Tax, has been given to petitioner, considering the letter

dated 26th June 1996, to be a notification, issued under Section 19 of the

Customs Act. There is no doubt in holding that this Court had not dilated

upon the question of refund of Customs Duty and Sales Tax, on taking into

consideration whether the burden of the Customs Duty and Sales Tax had

been passed on to the consumers or not? As it has been noted during the

arguments put forward by the Attorney General that even prior to passing

of the judgment by this Court, the question relating to passing on the

burden by the petitioner was never agitated by either of the parties before

this Court as well as before the High Court, where proceedings of ICA and

Writ Petition, filed by the petitioner, were pending. It is a well settled

principle of law that under the provisions of Section 11 Explanation IV

CPC, any matter which might or ought to have been made ground of
Cr.O.P.15 of 2002 -22-

defence or attack, in such former suit shall be deemed to have been a

matter directly and substantially in issue in such suit.

25. A careful perusal of the judgments relied upon by the learned

counsel for petitioner reveals that:-

1. In Pardool’s case (ibid) it was held that if a plea was

available to a party in an earlier round of litigation but
the same was not agitated then in subsequent
proceedings said party would be debarred to raise the
same question in view of the provisions of Section 11 and
Order II Rule (2) CPC, whereas in instant case, the
respondents had no occasion to plead the question
relating to incidence of passing on the burden of Sales
tax as at that time altogether a different question was
before the Court, particularly in view of the fact that they
were respondents before the High Court in the Writ
Petition and in ICA as well as in proceedings in Civil
Review Petition No.80 of 1999. However, so far as the
proceedings in Civil Appeal No.1176 of 1997 are
concerned, they were the appellants and their grievance
was only to the extent of judgment of the High Court
passed in ICA No. 84 of 1997, therefore, it was not
legally possible for the respondents to agitate this point.

2. In Amanul Mulk’s case this Court has held that the

rationale behind the constructive res judicata is that if
the parties have had an opportunity of asserting a ground
in support of their claim or defence in a former suit and
have not done so, they shall be deemed to have raised
such ground in the former suit and it shall be further
deemed that such ground had been heard and decided as
if such matter had been actually in issue. Thus, such
parties shall be precluded from raising these grounds in
a subsequent suit.

3. In Bashir Ahmed’s case, petitioner failed to establish

that mutation entry No.172 dated 30th July 1962 was
violative of MLR-64 and had been obtained and
sanctioned through fraud and misrepresentation and in
second round of litigation the same question was raised,
therefore, in this context it was held that the petitioner at
this stage cannot dare out to re-agitate the plea which
they out to have proved in the first round of litigation.
Cr.O.P.15 of 2002 -23-

26. In this context it is to be noted that this Court in the case of Province

of Punjab v. Ibrahim and Sons (2000 SCMR 1172),while examining the

question of constructive res judicata in accordance with Section 11 CPC

has laid down the following five principles :---

1. The matter directly and substantially in issue in the

subsequent suit or issue must be the same matter which
was directly and substantially in issue either actually or
constructively in the former suit.

2. The former suit must have been a suit between the same
parties or between parties under whom they or any one of
them claim.

3. The parties as aforesaid must have litigated under the

same title in the former suit.

4. The Court which decided the former suit must have been
a Court competent to try the subsequent suit in which
such issue is subsequently raised.

5. The matter directly and substantially in issue in the

subsequent suit must have been heard and finally decided
by the Court in the first suit.

27. Applying the principles noted above, to the facts of instant case, we

feel no hesitation in holding that under given facts and circumstances of the

case, the query by the CBR from petitioner “whether burden of Sales Tax

has been passed on to the actual consumers of the Tractors or not” is not

barred under the principle of constructive res judicata.

28. Learned counsel then emphatically argued that as the question of

passing on the burden of Sales Tax was not agitated during the hearing of

Civil Review Petition being No. 80 of 1999, or even prior to it, at the stage

when petition for leave to appeal No.1084-L of 1997 and in appeal arising

out of it being No.1176 of 1997, was pending, therefore, it being a new point

cannot be agitated at this stage. To substantiate his plea, he relied upon

Postmaster General, Eastern Circle (E.P.) Dacca v. Muhammad Hashim

Cr.O.P.15 of 2002 -24-

(PLD 1978 SC 61), Crescent Jute Products Ltd. Jaranwala v.

Muhammad Yaqub etc. (PLD 1978 SC 295), Molasses Trading & Export

(Pvt.) Ltd. v. Federation of Pakistan and others (1993 SCMR 1905) as

well as Shaheen Airport Services v. Nafees-ul-Hassan Siddiqui (2001

SCMR 1307) and Muhammad Hanif v. Muhammad Jamil Turk (2002

SCMR 429). In all these cases it was held that if a plea was not agitated in

the High Court nor there was any discussion on it, such plea cannot be

allowed to be raised for the first time before the Supreme Court.

29. In this behalf it may be noted that in order to attend this proposition,

it is necessary to observe that during the earlier hearing of the matter at

different stages, pointed out by the learned counsel, neither there was any

occasion to attend this aspect of the case nor CBR could have been allowed

to argue this point being irrelevant at that stage. As observed while

attending to the question of res judicata that instant question was never

agitated earlier, therefore, in view of such observation, it is held that the

CBR is not precluded under Order II Rule 2 CPC, to raise this point for the

reasons which will be assigned herein after.

30. It is to be noted that Sales Tax is an indirect tax, burden whereof is to

be borne by the purchaser and the vendor is bound to reimburse the amount

to the Federal Government in terms of Section 3-B of the Sales Tax Act,

1990. For convenience same is reproduced herein below:---

3B.Collection of excess sales tax etc. ---

(1) any person who has collected or collects any tax or
charge, whether under misapprehension of any provision
of this act or otherwise, which was not payable as tax or
charge or which is in excess of the tax or charge actually
payable and the incidence of which has been passed on to
the consumers, shall pay the amount of tax or charge so
collected to the Federal Government.
Cr.O.P.15 of 2002 -25-

(2) Any amount payable to the Federal Government

under sub-section (1) shall be deemed to be an arrears of
tax or charge payable under this act shall be recoverable
accordingly and no claim for refund in respect of such
amount shall be admissible.
(3) The burden of proof that the incidence of tax or
charge referred to in sub-section (1) has been or has not
been passed to the consumer shall be on the person
collecting the tax or charge.

31. Likewise, the Customs Duty is an indirect tax, burden of which has to

be borne by the purchaser, according to mandate of Section 64-A of the

Sales of Goods Act 1930. Reference in this behalf may be made to the case of

Army Welfare Sugar Mills Ltd. v. Federation of Pakistan (1992 SCMR

1652). Relevant para therefrom is reproduced herein below for

convenience:---

“54. It may also be observed that section 64-A of the

Sales of Goods Act, 1930, entitles a vendor to recover
from a purchaser any duty or custom or excise or tax on
any goods being imposed or increased after the
conclusion of any contract for sale of such goods, if the
contract does not contain any provision contrary to it.”

32. In view of above provisions of law, it may also be noted that the

petitioner had no right to claim refund of Customs Duty and Sales Tax,

which it had recovered from the end user as an agent of the Government, if

its burden had been passed on by it, being the property owning purchasers,

otherwise it will remain with the Government, who would spend it on the

welfare of general public. Reference in this behalf may be made to the case

of Orient Paper Mills v. State of Orissa (AIR 1961 SC 1438). Relevant

para therefrom is reproduced herein below for convenience:---

“(7). Article 19(1)(f) of the Constitution prescribes the

right to freedom of citizens to acquire, hold and dispose
of property; but the right is by cl.(5) subject to the
operation of any law, existing or prospective in so far as
it imposes reasonable restrictions on the exercise of that
Cr.O.P.15 of 2002 -26-

right in the interest of the general public. Assuming that

by enacting that refund of tax shall only be made to the
purchasers from whom the tax has been collect by the
dealers and no to the dealers who have paid the tax the
fundamental right under Art. 19(1)(f) is restricted, we are
unable to hold that the restriction imposed by S.14A of
the Act is not in the interest of the general public. The
Legislature by S.9B(1)of the Act authorized registered
dealers to collect tax from the purchasers which they may
have to pay on their turnover. The amounts collected by
the assesses therefore primarily belongs not to the
assesses but to the purchasers. On an erroneous
assumption that tax was payable, tax was collected by the
assesses and was paid over to the State. Under S.9B
Cl.(3) of the Act as it stood at the material time, the
amounts realized by any person as tax on sale of any
goods shall notwithstanding anything contained in any
other provision of the Act, be deposited by him in a
Government treasury within such period as may be
prescribed if the amount so realized exceeded the amount
payable as tax in respect of that sale or if no tax is
payable in respect thereof. As the tax collected by the
assesses was not exigible in respect of the sales from the
purchasers, a statutory obligation arose to deposit it with
the State and by paying the tax under the assessment, the
assesses must be deemed to have complied with this
requirement. But the amount of tax remained under
S.9Bof the Act with the Government of Orissa as a
deposit. If with a view to prevent the assesses who had no
beneficial interest in those amounts from making a profit
out of the tax collected, the Legislature enacted that the
amount so deposited shall be claimable only by the
persons who had paid the amounts to the dealer and not
by the dealer, it must be held that the restriction on the
right of the assesses to obtain refund was lawfully
circumscribed in the interest of the general public.”

33. The above principle has been reiterated in Amar Nath Om Prakash

v. State of Punjab [AIR 1985 SC 218].

Cr.O.P.15 of 2002 -27-

34. Thus entitlement of the vendor to claim refund of Customs Duty and

Sales Tax, depends upon producing evidence that burden of the same had

not been passed on. In addition to it, Section 3-B of the Sales Tax Act casts a

duty upon the vendor to return such amount to the Federal Government.

Although under the Customs Act, 1969, there is no identical provision but on

the principle of fair-play and equity, vendor having received indirect tax,

cannot pocket the same. To elaborate this view point, reliance is placed on

Mafatlal Industries Ltd. v. Union of India [(1997) 5 SCC 536]. Relevant

portion therefrom is reproduced herein below for convenience:---

(iv) A claim for refund, whether made under the

provisions of the Act as contemplated in proposition (i)
above or in a suit or writ petition in the situations
contemplated by proposition (ii) above, can succeed only
if the petitioner/plaintiff alleges and establishes that he
has not passed on the burden of duty to another
person/other persons. His refund claim shall be
allowed/decreed only when he establishes that he has not
passed on the burden of the duty or to the extent he has
not so passed on, as the case may be. Whether the claim
for restitution is treated as a constitutional imperative or
as a statutory requirement, it is neither an absolute right
nor an unconditional obligation but is subject to the
above requirement, as explained in the body of the
judgment. Where the burden of the duty has been passed
on, the claimant cannot say that he has suffered any real
loss or prejudice. The real loss or prejudice is suffered in
such a case by the person who has ultimately borne the
burden and it is only that person who can legitimately
claim its refund. But when such person does not come
forward or where it is not possible to refund the amount
to him for one or the other reason, it is just and
appropriate that that amount is retained by the State, i.e.
by the people. There is no immorality or impropriety
involved in such a proposition.
The doctrine of unjust enrichment is a just and
salutary doctrine. No person can seek to collect the duty
from both ends. In other words, he cannot collect the duty
from his purchaser at one end and also collect the same
Cr.O.P.15 of 2002 -28-

duty from the State on the ground that it has been

collected from him contrary to law. The power of the
Court is not meant to be exercised for unjustly enriching
a person. The doctrine of unjust enrichment is, however,
inapplicable to the State. State represents the people of
the country. No one can speak of the people being
unjustly enriched.”

35. The principle of passing on burden of indirect tax has nexus with the

doctrine of unjust enrichment, according to which windfalls are prohibited

to a person in respect of amount which is not owned by him nor it had

sustained any loss in respect thereof. In this behalf Prof. George C. Palmer

in his work “The Law of Restitution” [1986 Supplement, at page 255] made

following comments:----

“There is no doubt that if the tax authority retains a

payment to which it was not entitled it has been unjustly
enriched. It has not been enriched at the tax payer’s
expense, however, if he has shifted the economic burden
of the tax to others. Unless restitution for their benefit
can be worked out, it seems preferable to leave the
enrichment with the tax authority instead of putting the
judicial machinery in motion for the purpose of shifting
the same enrichment to the taxpayer.”

36. A perusal of above para, persuades us to hold that petitioner in its

own right had no legal authority to retain Customs Duty and Sales Tax with

it and it was its duty to have transferred the same to the CBR . However, to

resolve the controversy the CBR constituted a Committee, calling upon the

petitioner to substantiate as to whether burden of Sales Tax had been passed

on to the end user or not and in such situation, petitioner ought to have

established to the satisfaction of the Committee that the burden of Customs

Duty and Sales Tax, equal to the amount of bank guarantee, furnished by it,

had been passed on to the purchaser or not but it failed to do so with the

result that an adverse presumption may be drawn against it under Article

Cr.O.P.15 of 2002 -29-

129 of the Qanoon-e-Shahadat Order, 1984 that the incidence of Sales Tax

and Customs Duty had been passed on to the purchaser. Alternatively

petitioner instead of instituting proceedings for contempt of Court should

have invoked the equitable jurisdiction of the Courts, either by filing a suit

or a writ petition in terms of Section 72 of the Contract Act, for getting the

refund of Sales Tax and Customs Duty. Essentially petitioner did not invoke

the equitable jurisdiction of the Courts, presumably for the reason that it had

already passed on the incidence of Customs Duty and Sales Tax to a third

party. This Court in such like situation in a large number of cases declined

to refund the tax, burden whereof had been passed on to the consumer. In

this context, reference may be made to M/s Abbasi Textile Mills Ltd. v.

Federation of Pakistan (PLD 1958 SC Pak 187), Commissioner of Sales

Tax Rwp. v. M/s Sajjad Nabi Dar (PLD 1977 Lahore 75), M/s Sajjad

Nabi Dar & Co. v. Commissioner of Income Tax Rwp. (PLD 1977 SC

437), Commissioner of Sales Tax v. Messrs Zalin Ltd. (1985 SCMR

1292), M/s Army Welfare Sugar Mills Ltd. v. Federation of Pakistan

(1992 SCMR 1652) and M/s Air Home International v. Government of

Punjab (2002 CLC 780). Likewise, Indian Supreme Court has also

exhaustively dealt with the question of refund of Customs Duty and Sales

Tax, burden whereof had been passed on, in Mafatlal’s case, keeping in

view the principle discussed from time to time by Indian Supreme Court

itself. However, further reference may be made to the cases of Amar Nath

Om Parkash v. Food Corporation of India (AIR 1985 SC 218), State of

M.P. v. Vyankatlal (AIR 1985 SC 901), Entry Tax Officer, Banglore v.

Chandanmal Champalal & Co. [1994 (4) SCC 463], Collector of Central

Excise v. L.M.L. Limited [2000 (3) SCC 579], Union of India v. Raj

Industries and another [2000 (2) SCC 172], S.R.F. Ltd. v. Assistant
Cr.O.P.15 of 2002 -30-

Collector of Central Excise [2002 (1) SCC 480], Shree Digvijay Cement

Co. v. Union of India [2003 (2) SCC 614] may be made. Relevant para

from the last mentioned judgment for convenience reads thus:---

“28. The next question is: whether the appellants are

entitled to refund of the contribution made by them under
clause 9-A of the Control Order. There is no automatic
right of refund. In Mafatlal Industries Ltd. v. Union of
India, the Constitution Bench has held that the right to
refund of tax paid under an unconstitutional provision of
law is not an absolute or an unconditional right. Similar
is the position, even if Article 265 can be invoked . The
principles of unjust enrichment are applicable in the
claim of refund. The claimant has to allege and establish
that he has not passed on the burden to another person.
The Constitution Bench has held whether the claim for
restitution is treated as a constitutional imperative or as
a statutory requirement. It is neither an absolute right
nor an unconditional obligation but is subject to the
requirement as explained in the judgment. Where the
burden of duty has been passed on, the claimant cannot
say that he has suffered any real loss or prejudice. Real
loss or prejudice is suffered in such a case by the person
who has ultimately borne the burden and it is only that
person who can legitimately claim its refund. But where
such person does not come forward or where it is not
possible to refund the amount to him for one or the other
reason, it is just and appropriate that that amount is
retained by the State i.e. by the people. The doctrine of
unjust enrichment is a just and salutary doctrine. The
power of the court is not meant to be exercised for
unjustly enriching a person. The doctrine of unjust
enrichment is, however, inapplicable to the State
represents the people of the country. No one can speak of
the people being unjustly enriched.

37. We have thoroughly examined the record made available before us

and on the basis of the same, we are persuaded to hold that there is no iota

of evidence on record to substantiate that incidence of Customs Duty and

Sales Tax had not been passed on to the purchasers, therefore, it would be
Cr.O.P.15 of 2002 -31-

presumed that the burden had been passed on to the third party/end

consumer, as such petitioner would not be entitled to refund of the Customs

Duty and Sales Tax. Besides, in view of Section 3-B of the Sales Tax Act,

petitioner was even otherwise bound to reimburse the collected Sales Tax to

the Government. As far as the Customs Duty is concerned, the Government

was also entitled to recover the same from the petitioner on the principle of

equity as petitioner had no right to retain the same and it had also not

suffered any loss in respect of the tax, which belongs to a third person,

therefore, petitioner is not entitled to the same.

38. Learned counsel contended that the Government of Pakistan in utter

disregard of the judgment of this Court dated 19th February 2001 in Civil

Review Petition No. 80 of 1999 had promulgated two Ordinances i.e. The

Customs Amendment Ordinance (No. XXIV of 20002) and Sales Tax

Amendment Ordinance (No. XXV of 2002), on 7th June 2002 respectively.

The petitioner has not challenged the vires of both the Ordinances

separately except placing a statement on record in this behalf, in pursuance

of order dated 1st August 2003.

39. Lastly in this behalf he contended that the petitioner’s rights fall

within past and closed transaction, therefore, the same cannot be

re-opened in the absence of express language to that effect. In this behalf

he relied upon Income Tax Officer, Central Circle-II, Karachi v.

Cement Agencies. [Taxation (1969 Vol. XX) 1], Molasses Trading &

Export (Pvt) Ltd. v. Federation of Pakistan (1993 SCMR 1905) and

N.D.F.C. v. Anwar Zaid White Cement Ltd. (1999 MLD 1888).

Cr.O.P.15 of 2002 -32-

40. On the other hand, Mr. Muhammad Afzal Siddiqui, learned ASC

contended that Legislature can nullify or neutralize the effect of a judgment.

In this behalf he relied upon the following judgments:---

1. Tafazzal Hossain v. Province of East Pakistan.

(PLD 1963 SC 251)

In this case it is held that:---

“Some other arguments were put forward which have to
be noticed. It was urged that the amending Ordinance
was ultra vires of the Governor because he had no
jurisdiction to curtail the jurisdiction of the Supreme
Court and an amendment of the Act which nullifies a
decision given by the Supreme Court amounts to an
interference with the jurisdiction of the Supreme Court.
The argument is altogether misconceived. The
jurisdiction of this Court is the jurisdiction to decide and
the Ordinance does not provide that the Supreme Court
shall not have jurisdiction to decide any matter which it
was otherwise empowered to decide. A Legislature which
has power to make laws regarding rights of persons can
make such laws whether during the pendency of a
proceeding before a Court or after a decision has been
given by the Court and it cannot be said that the
Legislature has by exercising such power affected the
jurisdiction of the Court. A statute which changes rights
of parties and does not relate to any procedural matter
does not affect the jurisdiction of any Court. It affects
only rights of parties. The power of the Legislature is not
affected by the pendency of a proceeding before a Court
or the existence of judgment by a Court.”

2. Shri P.C. Mills v. Broach Municipality.

(AIR 1970 SC 192)
In this case it has been held that when a legislature sets
out to validate a tax declared by a Court to be illegally
collected under an ineffective or an invalid law, the
cause for ineffectiveness or invalidity must be removed
before validation can be said to take place effectively.
The most important condition of course is that the
legislature must posses the power to impose the tax, for,
if it does not, the action must ever remain ineffective and
illegal. Granted legislative competence, it is not
Cr.O.P.15 of 2002 -33-

sufficient to declare merely that the decision of the Court

shall not bind for that is tantamount to reversing the
decision in exercise of judicial power which the
legislature does not possess or exercise. A Court’s
decisions must always bind unless the conditions on
which it is based are so fundamentally altered that the
decision could not have been given in the altered
circumstances.
3. Tirath Ram v. State of U.P.
(AIR 1973 SC 405)
In this case it is held that this Court has pointed out in
several cases the distinction between encroachment on
the judicial power and the nullification of the effect of a
judicial decision by changing the law retrospectively.
The former is outside the competence of the legislature
but he latter is within its permissible limits. In the instant
case what the legislature has done is to amend the law
retrospectively and thereby remove the basis of the
decision rendered by the High Court. Such a course
cannot be considered as an encroachment on the judicial
power.

4. M/s Mamu Kanjan Cotton Factory v. The Punjab Province.

(PLD 1975 SC 50)
In this case the High Court declared the collection of the
Cotton fee to be ultra virus statute i.e. West Punjab
Cotton (Control) Act, 1949, which led to the
promulgation of Punjab Cotton Control (Validation of
Levy of Fees) Ordinance (Punjab Ordinance XIX of
1971), to undo the effect of the judgment of the High
court with the plain object of enabling the Provincial
Government to retain and claim, what according to the
judgments of the High Court, could not have at the
material time levied and collected. It was argued that the
validating Ordinance on the other hand is sub-
constitutional legislation, which cannot undo or destroy,
what he described as the “end product” of the
Constitutional jurisdiction and this Court, while rejecting
the argument of the petitioner’s counsel observed as
under:-
“The argument, in my opinion, is
without substance and which if accepted
would indeed lead to startling results. It
would strike at the very root of the
power of Legislature, otherwise
Cr.O.P.15 of 2002 -34-

competent to legislate on a particular

subject, to under take any remedial or
curative legislation after discovery of
defect in an existing law as a result of
the judgment of a superior Court in
exercise of its constitutional jurisdiction.
The argument overlooks the fact, that the
remedial or curative legislation is also
“the end product” of constitutional
jurisdiction in the cognate field. The
argument if accepted, would also seek to
throw into serious disarray the pivotal
arrangement in the Constitution
regarding the division of sovereign
power of the State among its principal
organs, namely the executive, the
Legislature and the judiciary, each being
the master in its own assigned field
under the Constitution.”

5. I.N.Saksena v. State of M.P.

(AIR 1976 SC 2250)

In this judgment following three principles were laid

down for validating a law:-
1. Whether the legislature possesses
competence over the subject matter.

2. Whether by validation, the legislature

has removed the defect, which the Courts
had found in the previous law.

3. Whether it is consistent with the

provisions of Part-III of the Constitution.

6. Misrilal Jain v. State of Orissa.

(AIR 1977 SC 1686)
In this case the Orissa Legislature enacted the Orissa
Taxation (on Goods Carried by Road or Inland
Waterways) Act, 7 of 1959, the Constitutionality of which
was challenged by the appellant on the ground that the Bill
leading to the Act was moved without previous sanction of
the President of India, as required by the Proviso to
Article 304 of the Constitution. The High Court accepted
the plea but dismissed the Writ Petition on the ground that
the appellants were not entitled to any relief as they had
not challenged the Act of 1962 which had validated the Act
of 1959. Accordingly the judgment of the High Court was
implemented and after the assessment of the tax, the
appellants filed another Writ Petitions challenging the Act
1962, which validated the Act, 1959. The petitions were
dismissed by the High Court but in appeal, the judgment of
the High Court was set aside by the Supreme Court. The
Supreme Court of India held that the validity of Act, 1962
Cr.O.P.15 of 2002 -35-

did not cure the defect from which the Act of 1950 suffered
and therefore, respondents were not entitled to recover any
tax from the appellants under the aforesaid Acts. Later on
the Legislature of Orissa got passed a bill, imposing the
same levy which it had unsuccessfully attempted to levy
under the Act, 1959 and to validate under the Act of 1962.
As such the persons from whom the State Government had
recovered taxes after the Act of 1962, claimed refund,
which were refused by the Government, therefore, again
Writ Petitions were filed in the High Court challenging the
validity of Act VIII of 1968. The Writ Petitions were
dismissed. In this background following observations were
made by the Supreme Court, which being highly instructive
are reproduced herein below:---
6. ……………Imposition of taxes or
validation of action taken under void
laws is not the function of the judiciary
and therefore, by taking these steps the
legislature cannot be accused of
trespassing on the preserve of the
judiciary. Courts have to be vigilant to
ensure that the nice balance of power so
thoughtfully conceived by our
Constitution is not allowed to be upset
but the concern for safeguarding the
judicial power does not justify conjuring
up trespasses for invalidating laws.
There is a large volume of authority
showing that if the vice from which an
enactment suffers is cured by due
compliance with the legal or
constitutional requirements, the
legislature has the competence to
validate the enactment and such
validation does not constitute an
encroachment on the functions of the
judiciary. The validity of a validating
taxing Law depends upon whether the
legislature possesses the competence
over the subject-matter of the law,
whether in making the validation it has
removed the defect from which the
earlier enactment suffered and whether
it has made due and adequate provision
in the validating law for a valid
imposition of the
tax…………………………”

7. M/s Hindustan Gum & Chemicals Ltd. v. State of Haryana

(AIR 1985 SC 1683)
In this case the Supreme Court of India has held that “a
Court’s decision must always bind unless the conditions
on which it is based are so fundamentally altered that
the decision could not have been given in the altered
circumstances.
Cr.O.P.15 of 2002 -36-

41. Besides the above Indian Cases, this Court has elaborately

discussed the validity of the laws, promulgated by the legislature in order

to annul the effect of the judgment, with retrospective effect in Molasses

Trading & Export (ibid), wherein the principles discussed in the above

judgments have been summarized.

42. Learned Attorney General also relied upon the judgments reported

as M/s Abbasi Textile Mills Ltd. v. Federation of Pakistan (PLD 1958

SC Pak 187), Commissioner of Sales Tax Rwp. v. M/s Sajjad Nabi Dar

(PLD 1977 Lahore 75), M/s Sajjad Nabi Dar & Co. v. Commissioner of

Income Tax Rawalpindi, (PLD 1977 SC 437), Commissioner of Sales Tax

v. Messrs Zalin Ltd. (1985 SCMR 1292), M/s Army Welfare Sugar Mills

Ltd. v. Federation of Pakistan (1992 SCMR 1652), M/s Air Home

International v. Government of Punjab (2002 CLC 780), and

Federation of Pakistan v. Metropolitan Steel Corporation (2002 PTD

87). For convenience relevant para from Commissioner of Sales Tax v.

Messrs Zalin Ltd.’s case is reproduced herein below:---

“…………… The second question is relatable to the
principle underlying the present controversy namely,
whether an assessee of sales tax after realization of the
tax, which admittedly was not realizable or was in excess
of the tax payable, could retain the same or claim refund
thereof; notwithstanding his position of an agent only for
deposit of the amount with the assessing authority. Prima
facie he cannot claim any right over the same, on any
principle. This also seemed to the learned counsel for the
respondent as the ratio in the two judgments of this Court
in the cases of Messrs Sajjad Nabi Dar & CO. and
Messrs Abbasi Textile Mills Ltd.”

Similarly, in M/s Army Welfare Sugar Mills Ltd. (ibid) this aspect of the

case has been dilated upon in the following terms:---

“55. In the present case, there is nothing on record to

indicate, whether factually the appellants had passed on
the additional burden to the purchasers under the above
section or otherwise. The amount of the public revenue
Cr.O.P.15 of 2002 -37-

involved is very heavy. We are, therefore, of the view that

it is a fit case in which the appeals are to be allowed but
the cases are to be remanded to the Central Board of
Revenue with the direction to inquire into the following
aspects:---
(i) How much quantity of sugar
manufactured by the appellants in the
financial year in question upto the date
of rescission of SRO 560(1)/82 on
3.6.1989, exceeded the average
production for the preceding two years
of the factories under reference.

(ii) Whether the appellants had passed on

the additional amount of the excise duty
or part thereof, which became due and
payable on the above excess quantity of
sugar on account of the rescission of
SRO 560(1)/82, to the purchasers and/or
to any other person or persons.

If the answer to the above second question is in the negative, the

Board of Revenue shall not charge any excise duty on the excess
quantity of sugar, as determined in terms of above sub-para (i) of
para 55.”

43. It may be noted that in the judgments relied upon by the learned

counsel for petitioner, power of the Legislature to remove the basis on

which the judgment has been founded, has not been disputed as would be

evident from the perusal of the judgments, which have been relied upon by

him.

44. Before dilating upon the respective contentions of parties counsel,

concerning the validity or otherwise of above noted Ordinances it is

necessary to point out that during pendency of instant petitions, on

30th May 2002 following order was passed, which reads thus : -

“Raja Irshad Ullah ASC has entered appearance on

behalf of respondents and seeks a short adjournment to
enable him to receive the comments from the Port Qasim
Authority because according to him the matter is being
looked into and the comments are essential for the
determination of the controversy.
We are afraid that this is merely a lame excuse because
what is to be complied with is crystal clear i.e. the refund
Cr.O.P.15 of 2002 -38-

of sales tax and customs duty. The bank guarantee

furnished by petitioner has been encashed and no steps
are beign taken for refund. There seems to be force in the
contention of Mr. Khalid Anwar ASC that attempt is
being made to frustrate the orders of this Court. In this
view of the matter, last opportunity is given to the
Departments to refund the dues before 10th of June
positively. On the said date Member Customs and Sales
Tax shall appear before this Court.

45. However, in the meantime petitioner filed Criminal Misc.

Application No.179/2002, alleging a fresh cause for contempt of Court,

merits whereof will be dealt with later on.

46. Learned counsel questioned the validity of the above Ordinances for

following reasons : -

i) Petitioner’s claim of refund would remain un-affected

despite promulgation of the Ordinances because they
have created a bar based on promissory estoppel
whereas petitioner is claiming refund on the basis of
Judgment in Civil Review Petition No.80 of 1999
dated 19th February 2001.

ii) The Ordinances shall be applicable to the cases of

exemptions which are not based on notification issued
by the competent authority whereas in petitioner’s
case, letter of authorization dated 26th June 1996 has
been treated to be as a notification, therefore,
Government cannot decline claim of the petitioner
for the reasons mentioned in the Ordinances.

iii) The Ordinances provide that claim of exemption

would be barred if it is based on a letter issued by a
Govt. Department or authority but in petitioner’s case
it is not the Agriculture Ministry who had issued the
letter because it is based on a Cabinet decision dated
24th June 1996 as such it would be deemed to be a
Cr.O.P.15 of 2002 -39-

Government decision for issuing authorization letter

for all intents and purposes.

iv) Petitioner’s case is also not hit by these Ordinances,

being a past and closed transaction, therefore, it can
not be re-opened, in view of the judgments reported
as Molasses Trading & Export (Pvt). Ltd. (ibid),
Income Tax Officer, Central Circle-II, Karachi
(ibid) and N.D.F.C. (ibid).

In support of his above submissions he also relied upon the following

judgments:-

1. Municipal Corporation of the City of Ahmedabad v.

The New Shrock Spg. And Wvg. Co.
(AIR 1970 SC 1292)
In this case it was held that the Legislatures under our
Constitution have, within the prescribed limits, power to
make laws prospectively as well as retrospectively. By
exercise of all those powers, the Legislature can remove
the basis of a decision rendered by the competent Court,
thereby rendering that decision ineffective.

2. Madan Mohan Pathak v. Union of India

[1978 (2) SCC 50]
Same principle has been discussed in this judgment.

3. Arcot N. Veeraswami v. M.G. Ramachandran

(AIR 1988 Madras 192)
In this judgment it has been held as under:---

“It is also now a well settled proposition

that once a competent Court has
exercised its jurisdiction and rendered a
decision determining the rights of
parties, that decision cannot be
interfered with or nullified by the
Legislature and the same can be got rid
of only by an appeal or a revision to a
higher court or by review or re-opening
by the Court which rendered the
decision, even through with reference to
persons not parties to the decision, the
legal basis on which the decision was
Cr.O.P.15 of 2002 -40-

rendered can be altered by the

legislature by amending the law with
retrospective effect. That is to say, the
basis of the decision could be nullified as
to its applicability to other cases. But so
far as the rights and obligations flowing
from that case are concerned, unless the
legislature specifically provides for re-
opening of that decision by the Court
which decided it, it will be binding on
the parties. That is, while the legislature
can nullify the basis of a decision, it
cannot override the decision of the
Court. Vide M.M. Patthak v. Union of
India AIR 1978 SC 803 and the decision
of a Division Bench of this Court in W.P.
Nos.2341 to 2344 of 1970 dated
20.07.1979. Thus, the judicial power is
not merely a power to decide or
adjudicate cases and controversies by
the methods established by the usages
and principles of law, but it also
includes certain incidental and inherent
attributes of such power namely the
ability to interpret the Constitution and
the other Acts of Parliament and
legislature, and the precedents and the
proper exercise of judicial precedents
and the proper exercise of judicial
power is inseparable from the
appropriate procedure. Therefore,
whenever an act undertakes to determine
a question of right or obligation and
property as the foundation on which it
proceeds, such act is to that extent a
judicial one and it is not a proper
exercise of legislative power. Gathering
of facts for the purpose of the legislature
is for the purpose of determination of a
policy and it could not be equated to the
judicial process of ascertaining facts for
the purpose of deciding a case.
Similarly, as held by the Supreme Court
Cr.O.P.15 of 2002 -41-

in Smt. Indira Nehru Gandhi v. Raj

Narain AIR 1975 SC 2299, even if it
records a finding that cannot take the
place of a judicial finding as it lacks the
expertise and the apparatus to decide
cases.”

4. R.P.S. Junior College, Maydukur v. R. Vaidyanatha Iyer

(AIR 1989 Andhra Perdesh 96)

The principle discussed in above judgment has been

reiterated in this case.
5. D.Cawasji & Co. v. State of Mysore
ITR 648 (Vol.150)

In this judgment by means of an amendment the judgment

of the High Court was sought to be nullified and with this
background following observation was made:---
“Thus, the only object of enacting the
Amendment Act was to nullify the effect
of the judgment and enable the State
Government to retain the amount
wrongfully and illegally collected as
sales tax and this object was sought to
be achieved by the Amendment Act,
which did not even purport to remedy or
remove the defect or lacuna but merely
raised the rate of sales tax from 6½ per
cent. to 45 per cent. and further
proceeded to nullify the judgment and
order of the High Court. The
enhancement of the rate of tax was,
therefore, clearly arbitrary and
unreasonable. To the extent that the Act
imposed the higher levy with
retrospective effect and sought to nullify
the judgment and order of the High
Court, the Act was invalid and
unconstitutional.”

47. Conversely, learned Attorney General contended that :----

i) Both the Ordinances have removed the basis on which

judgment dated 19th February 2001 (CRP.80/99) was
founded, therefore, petitioner could not claim relief of
refund of tax etc. as of right.

ii) The Legislation is competent to legislate such law

with a view to nullify effect of a judgment, thus on
promulgation of the Ordinances the Government had
achieved the object therefore, judgment dated 19th
Cr.O.P.15 of 2002 -42-

February 2001 cannot be implemented for the

purpose of refund of Sales Tax and Customs Duty.

iii) The authorization letter dated 26th June 1996 which

has been deemed to be a notification in the judgment
dated 19th February 2001 does not fulfill conditions of
its being published in official gazette and this Court
in the judgment dated 19th February 2001 has said
nothing in this behalf, therefore, for the purposes of
the Ordinances, authorization letter shall not be
deemed to be notification under Section 19 of the
Customs Act and Section 6 of the Sales Tax Act for
grant of exemption of Customs Duty and Sales Tax.

iv) The decision of the Cabinet does not create a right for
exemption of Customs Duty or Sales Tax, unless
Government’s Executive Branch had not implemented
the same by issuing a Gazette Notification.

v) The Ordinances refer distin0ctly to two rights i.e.

exemption and refund whereas judgment dated 29th
June 2000 only deals with exemption. The claim of
refund was not subject matter of the judgment passed
as such this question must be dealt with independently
keeping in view facts and circumstances of the case
under the law on the subject.

48. It may not be out of context to observe that petitioner has not

challenged the vires of both the Ordinances in any independent proceeding.

However, learned counsel filed a statement on 14th January 2003 in

pursuance of order dated 8th January 2003 which may be reproduced

herein below:----

“That the total mount of Customs Duty and Sales Tax

received from the petitioner Fecto Belarus Tractors
Limited, on account of Import of 6981 Belarus MTZ-50
tractors is Rs.493,467,838. This amount in its totality was
deposited with the Registrar of this Honourable Court on
09.07.2002 through crossed Cheque No.B970917 for
Cr.O.P.15 of 2002 -43-

Rs.152,070,111, Cheque No.B939834 for Rs.69,151369.

Cheque No.B939835 for Rs.38,956,338 and Cheque
No.B977916 for Rs.233,290,020 =all dated 8th June
2002. This deposit was made pursuant to and in
accordance with the orders dated 30.05.2002 and
09.07.2002 of this honourable Court.
That out of the aforesaid amount, the Customs
Duty received from the petitioner is Rs.19,10,26,449 and
the Sales Tax so received is Rs.30,24,41,389.”

49. It is equally important to note that prior to above statement, learned

counsel on 9th July 2002 got recorded following statement in Court

proceedings:----

“To the contrary, Mr. Khalid Anwar ASC has very ably
drawn our attention to the case reported as 1993 SCMR
1905 and it is contended that in the reported case as well
an Ordinance was promulgated to nullify the effect of the
judgment and the language of the Ordinance is pari
materia to the language of the two Ordinances issued in
this case. It was further argued by the learned counsel
that in the case reported above, the said Ordinance was
held to be inapplicable although it was made applicable
retrospectively, because it was held by this Court that
transaction was past and closed. It was thus argued that
in the case two Ordinances, which have been
promulgated would not bring about any change,
inasmuch as in the light of dictum laid down in Molasses
case, (1993 SCMR 1905), these Ordinances would not
help the petitioner.”

50. Perusal of above statement clearly demonstrates that petitioner

raised sole argument that in view of the judgment in the case of Molasses

Trading & Export (ibid), its claim falls within the category of past and

closed transaction, therefore, the Ordinances would not be applicable to its

case, whereas during the course of arguments he has expanded the scope of

his objections.
Cr.O.P.15 of 2002 -44-

51. In this behalf, it may be noted that in principle, without challenging

the Ordinances before the Court, having jurisdiction, the implications of

the Ordinances cannot be examined. Nevertheless, we have decided to do

so, firstly for the reason that while hearing instant petition on 9th July 2002

and 8th January 2003, notices were issued to learned Attorney General for

Pakistan to address the Court on the vires and applicability of the

Ordinances; secondly for the reason that presumably Federation had

promulgated these Ordinances with a view to defend the contempt petitions.

52. It is to be observed that the President of Pakistan issued both the

Ordinances on 7th June 2002 competently in exercise of powers conferred

upon him by the Constitution and the law, prevailing at that time. In

addition to it after passing of Constitution 17th Amendment Act, 2003 by the

Parliament vide Article 270-AA of the Constitution, both the Ordinances

have been saved and declared to be valid and legal for all intents and

purposes, thus their vires cannot be questioned for this reason as well.

53. A perusal of both the Ordinances indicates that they are declaratory

in nature and have been promulgated to remove certain doubts which have

been created by the authorization letter dated 26th June 1996 issued by the

“MINFAL” whereby exemption of Sales Tax and Customs Duty was

granted to petitioner contrary to the provisions of Section 6 of the Sales

Tax Act, 1990 and Section 19 of the Customs Act. 1969. It is well settled

that whenever there is any ambiguity or doubt, in respect of a law,

promulgated either by law makers or by the authority in exercise of

delegated powers to make subordinative legislation, such declaratory

legislation can be made. Reference in this behalf may be made to Abdul

Hamid and another v. The State (PLD 1963 Karachi 363). It is equally

important to note that the statutes of declaratory nature ordinarily operate

Cr.O.P.15 of 2002 -45-

retrospectively as laid down in the following para by renowned jurist

Bindra on “Interpretation of Statutes” 7th Edition (page 857):---

7. Presumption against retrospectivity.---- As a general

rule every statute is deemed to be prospective, unless by
express provision or necessary implication it is to have a
retrospective effect. Whether a statute is to have
retrospective effect depends upon its interpretation
having regard to well settled rules of construction.
Retrospection is not to be presumed; but many statutes
have been regarded as retrospective without declaring
so. Remedial statutes are always regarded as
prospective, but declaratory statutes, retrospective. The
statute would operate retrospectively when the intent that
it should so operate clearly appears from a consideration
of the Act as a whole, or from the terms thereof, which
unqualifiedly give the statute a retrospective operation or
imperatively require such a construction or negative the
idea that it is to apply only to future cases. If the Court is
in doubt whether the statute was intended to operate
retrospectively, it should resolve the doubt against such
operation………………………………………………………”

54. Besides, the language used in both the Ordinances manifests clear

intention of the law giver that it would apply with retrospective effect and

shall be deemed always to have been so inserted in respective statutes.

Identical language was used in Section 5 of the Finance Act 1988 in

pursuance whereof Section 31-A was inserted in the Customs Act, 1969

with retrospective effect. This Court had occasion to examine this provision

of law in Molasses Trading & Export (ibid). Relevant paras therefrom

read 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
statutes. It has been held that when a legislature intends
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
Cr.O.P.15 of 2002 -46-

validation can be said to take place effectively. It will not

be sufficient merely to pronounce in the statute by means
of a non-obstante clause that the decision of the Court
shall not bind the authorities, 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 fait”
make the new meaning binding upon Courts. It is in one
of these ways that the legislature can neutralise the effect
of the earlier decision of the Court. The legislature has
within the bounds of the Constitutional limitations, the
power to make such a law and give it retrospective effect
so as to bind even past transactions. In ultimate analysis
therefore the 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 is clear from the provisions of Section 5 of
the Finance Act, 1988 that by the device of the deeming
clause the newly-inserted Section 31-A is to be treated as
part and parcel of the Act since its enforcement in 1969.
Undoubtedly, therefore, the section is retrospective in
operation. It is agreed on all hands that the well-settled
principles of interpretation of statutes are that vested
rights cannot be taken away save by express words or
necessary intendment. It also cannot be disputed that the
legislature, which is competent to make a law, has full
plenary powers within its sphere of operation to legislate
retrospectively or retroactively. Therefore, vested rights
can be taken away by such a legislation and it cannot be
struck down on that ground. However, it has also been
Cr.O.P.15 of 2002 -47-

laid down in Province of East Pakistan v. Sharafatullah

PLD 1970 SC 514 that a 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. In that case the
following postulation has been made:

“In other words liabilities that are fixed

or rights that have been obtained by the
operation of law upon facts or events for
or perhaps it should be said against
which the existing law provided are not
to be disturbed by a general law
governing future rights and liabilities
unless the law so intends.”

This is an important principle which has to be kept in mind in the context of

the present case. Reference may also be made to another principle followed

in several decisions but to quote from Mehreen Zaibun Nisa v. Land

Commissioner, Multan (PLD 1975 SC 397) where it was observed:

“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
we are to assume as if it did exist. The
classic statement as to the effect of a
deeming clause is to be found in the
observations of Lord Asquith in East
End Dwelling Company Ltd v. Finsbury
Borough Council (1952) AC 109)
namely:
‘Where the statute says
that you must imagine the
state of affairs, it does not
say that having done so
you must cause or permit
your imagination to
boggle when it comes to
the inevitable corollaries
of that state of affairs.”

However, in that case aforesaid principle was subjected in its application

to a given case to a condition that the Court has to determine the limits

within which and the purposes for which the legislature has created the

fiction. It has been quoted from an English decision that “when a statute

enacts that something shall be deemed to have been done which in fact and
Cr.O.P.15 of 2002 -48-

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 to.

55. It may be noted that in above judgment the effect of Section 31-A

was examined by this Court in view of the background that in Al-Samrez

(ibid) [1986 SCMR 1917], it was held that the rate of duty will be assessed

with reference to the date on which bill of entry was presented; and

similarly benefit of exemption, if any, was also to take effect on the same

date because the liability is wiped of by virtue of exemption at the same

time. It is further held that the rights and liability of the importers attained

fixity on the said crucial date, therefore, Section 31-A was enacted in the

Customs Act 1969 by means of Finance Act 1988, and while examining its

vires, this Court observed that the language of Section 31-A of the Customs

Act clearly envisages and stipulates that the act of withdrawal or

modification of exemption notification shall take effect with reference to the

date of its issue, irrespective of the fact that contract for the import of

goods and LCs had come into existence prior to such date. However, it was

further observed that the insertion of Section 31-A of the Customs Act

though operating retroactively, it does not have the effect of destroying or

re-opening the past and closed transaction. It may be noted that in

Molasses Trading & Export (ibid), bills of entry were presented on the

dates prior to 1st July 1998, therefore, it was held that all these cases were

the cases which pertained to past and closed transaction and were not

affected by the provisions of Section 31-A of the Customs Act. With a view

to apply the test laid down in the judgment of Molasses Trading & Export
Cr.O.P.15 of 2002 -49-

(ibid) on the question of retrospective effect of the Ordinances, the test laid

down therein is reproduced herein below for convenience :---

“……….It also cannot be disputed that the

legislature, which is competent to make a law,
has full plenary powers within its sphere of
operation to legislate retrospectively or
retroactively…………………”

In this behalf learned counsel also relied upon the following judgments:---

1. Hotel Industries Ltd. v. Province of West Pakistan

(PLJ 1977 Lahore 237)

In this case the learned Single Judge of the Lahore High

Court relied upon Maxwell on the Interpretation of
Statutes, 1962 Edition, page 213, wherein it is held that
“whenever the intention is clear that the Act should have
a retrospective operation, it must unquestionably be so
construed., even though the consequences may appear
unjust and hard”.

2. Barkat Ali v. Administrator Thal Development Bhakkar

(PLD 1978 Lahore 867)

In this case it is held that in so far as affecting vested

rights, a statute will be construed as prospective only and
not as operating retroactively unless that intention is
made manifest either by express words or by a clear,
distinct, and unmistakable implication.

3. Muhammad Hussain v. Muhammad

(2000 SCMR 367)

In this judgment it is held that “the Legislature is

competent to give retrospective effect to a legislation and
in that process even it could take away vested rights of
the parties but for that it must use clear words in the
statute, or such a consequence must arise as a necessary
implication from the language of the legislation.

56. It may be noted that this Court in Molasses Trading & Export

(ibid), while examining the identical provisions of Section 31-A of the

Customs Act, which is in pari materia with Ordinances (No. XIV and XV of
Cr.O.P.15 of 2002 -50-

2002), has held that it would be applicable retrospectively. Applying the

same principle and also taking into consideration the discussion made by

the other Courts in the judgments referred to herein above, we feel no

hesitation in holding that in the Ordinances under discussion the

Legislature has shown its intendment in clear terms that they would be

applicable with retrospective effect.

57. It may be noted that learned counsel for petitioner has heavily relied

upon the judgment in the case of Income Tax Officer, Central Circle-II,

Karachi v. Cement Agencies. [Taxation (1969 Vol. XX) 1]. The Facts in

brief of this case are as under:--

That initially Income Tax Department issued notices to

the respondent-company for not filing of the returns but
ultimately in view of order of the Appellate Tribunal, the
proceedings were dropped. However, later on, in view of
the judgment pronounced by this Court in the case of
Octavius Steel and Company Limited v. The
Commissioner of Income-Tax Dacca (PLD 1960 SC 371),
the case of respondent was re-opened which was resisted
by them on the ground of being barred by time. However,
these proceedings were challenged in the Writ Petition
and the High Court found that notices issued against
them on 11th December 1962 were beyond time,
therefore, the assessment orders were made without
jurisdiction. Against this order, the Income Tax Officer
Central Circle-II, Karachi preferred Civil Appeals which
were dismissed in view of two principles:---
(1) On the basis of judgment of this
Court in Octavius Steel ‘s case (ibid),
past and closed transactions could not
be re-opened as they were finally
disposed of in their favour and until they
are set aside in accordance with law, no
fresh proceedings could be initiated.
(2). That even a legislative measure like
an Ordinance expressly given
retroactive effect could not operate so as
to annul a valid and existing judgment as
Cr.O.P.15 of 2002 -51-

between the parties whose rights had

been duly determined and according to
the law which existed before the new
Ordinance was passed.

58. A perusal of above principles tends to hold that there can be no

cavil with the proposition. As far as later principle is concerned, it may be

observed that unless the basis for judgment in favour of a party is not

removed, it could not affect the rights of a party in whose favour the same

was passed, but in the instant case, as discussed herein above that the

Legislature has promulgated two Ordinances in order to remove the basis

on which the judgment dated 19th February 2001 was founded, therefore,

this judgment has no bearing on the instant case.

59. It may be noted that the petitioner itself relied upon the case of

Molasses Trading & Export (ibid), the affect whereof has already been

discussed.

60. Learned counsel for petitioner also relied upon N.D.F.C. v.

Anwar Zaib White Cement Ltd. (1999 MLD 1888), which being entirely

distinguishable on facts of the case needs no discussion.

61. Admittedly letter of authorization was issued on 26th June 1996 with

permission to petitioner to open LC upto 30th June 1996, whereas in the

Molasses Trading & Export (ibid) bills of entry were presented in all the

cases before 1st July 1988 when Section 31-A was enacted and enforced,

therefore, for such reason it was pleaded that these cases fall within the

category of past and closed transaction.

62. It may also be noted for the purpose of quantification or assessment

of the Tax under Section 30 of the Customs Act, the date of submission of

bill of entry is considered crucial as held in Molasses case (ibid). Thus it is

held that date of opening of LCs would not be crucial under Section 30 of

the Customs Act to assess Tax as such examining from this angle as well, it
Cr.O.P.15 of 2002 -52-

can safely be concluded that, merely for the reason of opening LCs upto

30th June 1996, the case of petitioner would not fall within the category of

past and closed transaction.

63. Now stage is set to analyze both the Ordinances to ascertain whether

Legislature has achieved its object to nullify/dilute the effect of judgment

dated 19th February 2001. Both the Ordinances contain non-obstante

clauses, raising presumptions that the provisions of the Ordinance shall

prevail over any other law for the time being in force and including but not

limited to the Protection of Economic Reforms Act 1992 (XII of 1992) and

notwithstanding any decision or judgment of any forum, authority or Court,

no person shall in the absence of :----

a. A notification by the Federal Government published

in the official Gazette expressly granting and
affirming exemption from customs duty, be entitled to
or have any right to any such exemption from or
refund of Customs duty on the basis of

i. The doctrine of Promissory Estoppel; or

ii. On account of any correspondence; or
iii. Admission; or
iv. Promise; or
v. Commitment; or
vi. Concessionary order made or understanding
given whether in writing or otherwise; or

vii. By any government department or authority.

64. It is to be noted that the contents of the Ordinance No.XXV of 2002

are identical to that of Ordinance XXIV 2002 reproduced herein above,

except incorporation of the provisions of Section 31-A(I) of the Customs

Act 1969 with retrospective effect in the Sales Tax Act, 1990.
Cr.O.P.15 of 2002 -53-

65. A careful perusal of the judgment dated 19th February 2001

indicates that petitioner got relief on the following basis:---

1. Protection of Economic Reforms Act, 1992.

2. Authorization letter dated 26th June 1996 issued

by ‘MINFAL’.

3. Promissory Estoppel against Federal

Government as its Ministry of Food and
Agriculture had issued authorization letter.

66. Apparently the authorization letter was deemed to be a notification

granting exemption of Customs Duty and Sales Tax, etc., whereas fact

remains that it was not issued by the Federal Government with the

consultation of Finance Division.

67. At this very juncture it is considered appropriate to dispose of

contention of learned counsel that authorization letter dated 26th June 1996

had been issued on the basis of decision of Cabinet dated 24th June 1996,

therefore, it may be held that this letter was issued by the Federal

Government but actually no notification in terms of Section 19 of the

Customs Act 1969 and Section 6 of the Sales Tax Act, 1990, has been

issued. So far MINFAL is concerned it had no jurisdiction under the law to

issue such notification. Therefore, argument raised by the learned counsel

in this behalf has no substance.

68. The second reason for not granting relief to the petitioner is lack of

publication of authorization letter dated 26th June 1996 in official gazette

as held in Province of East Pakistan v. Hasan Askary (PLD 1971 SC

82) and Moosa and Co. v. Collector of Customs Karachi (PLD 1977

Karachi 710). Thus it can be conveniently held that authorization letter

dated 26th June 1996 was not issued by the relevant executive authorities of

the Federal Government in accordance with the provisions of Article 90 of

the Constitution of Islamic Republic of Pakistan read with Rule 12 of the

Cr.O.P.15 of 2002 -54-

Rules of Business 1973, coupled with the reasons that authorization letter

was not gazetted in order to make it public in light of the judgments noted

herein above, therefore, it could have not furnish basis for granting relief to

the petitioner vide judgment dated 19th February 2001. Besides it, learned

counsel himself conceded that the petitioner is not claiming relief on the

basis of promissory estoppel but in view of the judgment of this Court.

Suffice it to observe in this behalf that if the basis of the judgment i.e.

authorization letter has been successfully removed, how can the petitioner

be entitled to the relief on the basis thereof. So far as Protection of

Economic Reforms Act, 1992 is concerned, it would not provide any relief

to petitioner in the face of non-obstante clause therein.

69. It may further be noted that without prejudice to the earlier

arguments, there is yet another important thing which is to be borne in

mind i.e. the judgment dated 19th February 2001 has decided the question

of exemption of Customs Duty and Sales Tax but it has nothing to do with

the question of refund, therefore, for this additional reason as well, on the

basis of the judgment, the petitioner could not claim relief of refund of the

amount and for that matter it ought to have chosen another equitable

remedy as discussed herein above.

70. So far as the commission of Contempt of Court by the respondents

during the pendency of the proceedings, as alleged in Criminal Misc.

Application No.179 of 2002 is concerned, the respondents have submitted a

reply, explaining therein two reasons for non-compliance of the order

dated 30th May 2000, i.e.; firstly, two Ordinances were issued in the

meantime being No. XXIV and XXV of 2002 by the Legislature and;

secondly they had complied with the order of the Court by depositing the

amount by means of cheques in this Court, therefore, under these

Cr.O.P.15 of 2002 -55-

circumstances, prima facie, we are of the considered opinion that the

respondents, in view of the given facts and circumstances of the case,

cannot be charged for the contempt of Court, arising out of Criminal Misc.

application No.179 of 2002, as well.

71. There is yet another important point for consideration i.e. as to

whether petitioner is entitled to refund of the Service Charges because in

Collector of Customs v. Sheikh Spinning Mills (1999 SCMR 1402), this

Court has held that the imposition of Service Charges as imposed under

Section 18-B of the Customs Act 1969, towards the pre-shipment inspection

is ultra vires of the powers of the Federal Legislature. It is to be noted that

respondents have placed on record sufficient material which indicates that

the petitioner had neither deposited indirect tax i.e. Sales Tax and Customs

Duty nor had sold the Tractors at the agreed rate of Rs.230,000/-. They had

been selling the same at a much higher rate, ranging between Rs.399,000/-

to Rs.435,000/- and in this manner, they had been earning profit of more

than Rs.200,000/- per unit. This fact has not been denied by the petitioner

as no reply of Civil Misc. Application No.168 of 2000 was filed, as such

applying the principle of unjust enrichment, the petitioner is not found

entitled for the same as well. However, if upon furnishing documentary

evidence, petitioner satisfies the concerned authorities of the CBR that the

Tractors were sold by it at the agreed rate of Rs.230,000/- per unit,

inclusive of Customs Duty and Sales Tax, then it would be entitled to the

refund of Service charges, otherwise it would also be liable to pay the

balance of the amount acquired by it by selling the Tractors at a price

higher than Rs.230,000/- contrary to commitment made by it with the

Government.
Cr.O.P.15 of 2002 -56-

72. Above discussion persuades us to hold that petitioner is not entitled

to the refund of Customs Duty and Sales Tax. However, Service Charges

are refundable subject to observations made herein above.

Thus for the foregoing reasons, petition for contempt of Court as

well as Criminal Misc. Application No. 179 of 2002 are dismissed. Office is

directed to refund the amount of Rs.493,467,838/- (four hundred ninety

three million, four hundred sixty seven thousand and eight hundred and

thirty eight) to Collector of Customs concerned, in accordance with

Supreme Court Rules, 1980, alongwith accrued mark up, if any.

J.

J.

J.
Announced in Court on

______ day of May 2005.

J.

APPROVED FOR REPORTING.

Irshad /*
Cr.O.P.15 of 2002 -57-

IN THE SUPREME COURT OF PAKISTAN

( Appellate Jurisdiction)

PRESENT:
Mr. Justice Iftikhar Muhammad Chaudhry
Mr. Justice Rana Bhagwandas
Mr. Justice Mian Shakirullah Jan

CR. ORIG. P. NO.15 OF 2002 & Cr. Misc. A.179/2002

IN CIVIL REVIEW PETITION NO.80 OF 1999.

Fecto Belarus Tractor Limited … … Petitioner

Versus
Govt. of Pakistan through M/o Finance … … Respondents
Economic Affairs and others.

For the petitioner : Mr. Khalid Anwar, Sr. ASC

Mr. M. A. Zaidi, AOR

For respondent No.1 : Mr. Makhdoom Ali Khan,

Attorney General for Pakistan.
Mr. Faisal Hussain Naqvi, Advocate.
Mr. Suleman Afridi, Advocate.
Mr. M. Ramzan Bhatti, Member Customs.
Mr. Shahid Ahmed, Member Sales Tax.

For respondents(2-10) : Mr. Abdul Hafeez Pirzada, Sr. ASC.

Mr. Afzal Siddiqui, ASC
Mian Gul Hasan Aurangzeb, Advocate.
Mr. Arshad Ali Chaudhry, AOR

Dates of hearing : 11th to 14th January 2005.

**************
Kindly fix the above titled case for announcement of judgment before
the Court on 11th May 2005, as directed by HJ(1).

P.S. TO HJ(1).
CA(FIXTURE)