Law: Constitution of Pakistan, 1973

Section: 90

Law: Sales Tax Act, 1990

Section: 3,3(2)(b),4,4c,74A

SALES TAX ACT, 1990 Sections 3 4

Amendment in Section 3(2)(b) read with Section 4(c) of the Sales Tax Act, 1990, through Finance Act, 2017, to the extent of substituting the words Board with the approval of Federal Minister Incharge, is ultra vires to Constitution, and contrary to law, hence of no legal effect.”Petitioners have mainly challenged the vires of SRO 584(I)/2017 dated 01.07.2017 as well as vires of the amendment in Section 3(2)(b) of the Sales Tax .Act, 1990, under which the said SRO was notified brought about through Finance Act, 2017, for being unconstitutional and an attempt to circumvent and defeat the spirit of law declared by the Honble Supreme Court in the case of Mustafa Impex, Karachi others vs. The Government of Pakistan others (PTCL 2017 CL. 456).

The amendment introduced through Finance Act, 2017 in Section 3(2)(b) and Section 4(c) of the Sales Tax Act, 1990, whereby, the word Federal Government has been omitted and substituted with Board with the approval of the Federal Minister Incharge is totally illegal and in violation of the of the Honble Supreme Court in the case of Mustafa Impex, as well as passed by a Divisional Bench of this Court in the case of Premier Systems v. Federation of Pakistan others (PTCL 2018 CL. 206).

While applying the ratio of the of Honble Supreme Court in the case of Mustafa Impex as well as the of passed by this Court in the case of Premier Systems v. Federation of Pakistan others (PTCL 2018 CL. 206) as well as the passed by the Lahore High Court in the case of Messrs T. U. Plastic Industry Co. (Pvt) Ltd. v. Federation of Pakistan and others (PTCL 2019 CL 161) to the facts and legal issue involved in the instant petitions, we are of the opinion that the controversy agitated through instant petition has already been decided by the Divisional Bench of this Court in the case of Premier Systems while placing reliance in the of the Honble Supreme Court in the case of Mustafa Impex.

Amendment in Section 3(2)(b) read with Section 4(c) of the Sales Tax Act, 1990, through Finance Act, 2017, to the extent of substituting the words Board with the approval of Federal Minister Incharge, is ultravires to Constitution, and contrary to law, hence of no legal effect.

S.R.O. 584(I)/2017 is ultra vires the Constitution and of no legal effect. Hence imposition of further tax under condition XIV to S.R.O. 1125(I)/2011, as was added by S.R.O. 584(I)/2017 with the approval of Federal Minister Incharge, is illegal.”The Petitioners have in fact challenged the vires of SRO 584(I)/2017 dated 01.07.2017, whereby, an amendment has been brought in SRO 1125(I)/2011 dated 31.12.2011, according to which, notwithstanding zero rating being claimed in terms of SRO 1125(I)/2011 dated 31.12.2011, the amount of 1% is to be paid in terms of Section 3(1 A) of the Sales Tax Act, 1990. According to learned counsel for the petitioners, the impugned SRO has been issued in violation of the passed by the Honble Supreme Court in the case of Mustafa Impex v. Federation of Pakistan others [PTCL 2017 CL. 456], as well as the recent of this Court in the case of M/s. Premier System (Pvt.) Ltd. [PTCL 2018 CL. 206]

From perusal of of the Honble Supreme Court in the case of Mustafa Impex, as well as the decision by a Divisional Bench of this Court case of M/s. Premier Systems (Pvt.) Ltd, further tax under Section 3(1 A) of the Sales Tax Act, 1990 cannot be charged in respect of supplies made to an unregistered person, by issuing a Notification with the approval of Federal Minister Incharge. Consequently, we are of the opinion that the impugned the SRO 584(I)/2017 dated 01.07.2017 has been issued without lawful authority, therefore, the said Notification has been declared to be illegal and without lawful authority, hence of no legal consequences.

SRO 584(I)/2017 dated 01.07.2017 issued in terms of and in purported exercise of powers conferred by, the amendment in Section 3(2)(b) and Section 4(c) of the Sales Tax Act, 1990, particularly adding of a new condition XIV to SRO 1125(I)/2011, is declared to be ultra vires the Constitution, and is of no legal effect. 

Section 74A

Section 74A is not retrospective in effect.”The amendment introduced through Finance Act, 2018 substituting the word Federal Government with the Board with the approval of the Federal Minister Incharge, whereby, an attempt has been made to correct the past deficiency in law, while introducing Section 74A of the Sales Tax Act, 1990 giving it retrospective effect is also illegal, contrary to law, more particularly, in view of the passed by the Honble Supreme Court in the case of PMDC v. Federation of Pakistan others (2018 SCMR 1956), wherein, the Honble Supreme Court has been pleased to hold that the case of Mustafa Impex would be prospective and not retrospective.

JUDGMENT:
MR. JUSTICE AQEEL AHMED ABBASI:---.---

(1). Through above captioned Constitutional Petitions, petitioners have mainly challenged the vires of SRO 584(I)/2017 dated 01.07.2017 as well as vires of the amendment in Section 3(2)(b) of the Sales Tax Act, 1990, under which the said SRO was notified brought about through Finance Act, 2017, for being unconstitutional and an attempt to circumvent and defeat the spirit of law declared by the Hon’ble Supreme Court in the case of Mustafa Impex, Karachi others vs. The Government of Pakistan others (PTCL 2017 CL. 456), whereas, following relief has been sought by the petitioners through above petitions:-

I. Declare that sub-section (2)(b) of Section 3 of the Sales Tax Act, 1990, is ultra vires the Constitution of Pakistan, 1973, as it purports to confer the legislative power of levy of further sales tax on the executive functionaries which could only be exercised by the Parliament under the Constitution of Pakistan, 1973.

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492