The COLLECTOR OF SALES TAX AND CENTRAL EXCISE, LTU, KARACHI VS PAK SUZUKI CO. LTD., KARACHI, 2016 PTD-SUPREME-COURT 867 (2015)

(On appeal from the Order dated 8-9-2005 of the High Court of Sindh, Karachi, passed in Sales Tax Appeal No.214 of 2001)

(a) Interpretation of statutes---

----Remedial and curative enactments/statutes---Liberal interpretation---Retroactive application---As a general rule, courts look with favour upon remedial and curative enactments, which were beneficial in nature and were interpreted in the context of the evil to be cured and the mischief to be remedied---Provisions of such enactments were to be liberally construed so as to advance the remedy and suppress the mischief and to ensure that the legislative intent, in such behalf, was not frustrated---Remedial and curative statutes generally were retroactive in their application and applied to pending proceedings---In the absence of the express words to the contrary, such enactments should not ordinarily be construed to destroy vested rights, create new liabilities and obligations or disturb past and closed transactions---With regard to judgments passed prior to enactment of a remedial or curative statute, the finality thereof may be disturbed and destroyed during the pendency of appeal there-against, if such was the intention of the Legislator, which could be fairly gathered from the express words employed in the remedial or curative enactment.

(b) Sales Tax Act (VII of 1990)---

----S. 47(11)---Section 47(11) of Sales Tax Act, 1990, remedial and curative effect---Appeals/references 'pending' before any Appellate forum or court---Section 47(11) of Sales Tax Act, 1990 in its application extended to "pending" appeals or references, before any court, including the Supreme Court.

(c) Sales Tax Act (VII of 1990)---

----S. 47(11)---Remedial and curative effect of S. 47(11) of Sales Tax Act, 1990 applied only to "pending" appeals or references, and not to appeals or references which were not pending on the date when S. 47(11) came into force i.e. 1-7-2006.

Plain reading of section 47(11) of the Sales Tax Act, 1990, revealed that two conditions must be fulfilled before said section could be applicable; firstly, the appeal or references ought to have been filed with the approval of the Commissioner and, secondly, the reference or appeal was pending before an Appellate Forum of the Court. Only upon the satisfaction of both said conditions was the remedial and curative effect of section 47(11) of Sales Tax Act, 1990 attracted. Hence, section 47(11) of Sales Tax Act, 1990 applied (only) to "pending" appeals and references and defect in any such appeals or references alone stood cured and remedied. Intention of the legislature was not to extend the remedial and curative effect of section 47(11) of the Sales Tax Act, 1990 to appeals or references, which were not pending on the date when the said subsection came into force i.e. 1-7-2006. Had the intention of the Legislature been to the contrary, appropriate words to such effect would have been employed.

Syed Arshad Hussain Shah, Advocate Supreme Court along with M.S. Khattak, Advocate-on-Record for Appellant.

Syed Naveed Andrabi, Advocate Supreme Court for Respondent.

Date of hearing: 6th November, 2015.

JUDGMENT

SH. AZMAT SAEED, J.---This Civil Appeal by the leave of the Court is directed against the Order dated 8-9-2005 passed by the learned High Court of Sindh, Karachi, whereby Sales Tax Appeal No.214 of 2001 filed by the present Appellant was dismissed.

2.The brief facts necessary for adjudication of the lis at hand are that the Respondent is a limited Company engaged, inter alia, in the business of sale of spare parts of Motor Cars. On 23.09.1997, the Respondent filed an application under section 66 of the Sales Tax Act, 1990, (hereinafter referred to as the Act of 1990) seeking refund of Input Tax on imported trading stock held by the said Respondent on 30.6.1997. In response, the Department raised the issue of additional tax and advised the Respondent to seek exemption, if available, under the law. Subsequently, a Show Cause Notice dated 28.4.1999 was served upon the Respondent, which was replied to. Whereafter, an Order-in-Original dated 04.11.1999 was passed by the Appellant rejecting the refund claimed by the Respondent. Aggrieved, the Respondent challenged the said Order dated 04.11.1999 by way of an Appeal before the Collector of Customs (Appeals-I), South Zone, Karachi, which was dismissed vide Order dated 20.5.2000.

3.In the above backdrop, the Respondent preferred an Appeal under Section 46 of the Act of 1990 before the learned Customs, Excise and Sales Tax Appellate Tribunal, Karachi, which was allowed vide Order dated 29.1.2001. Aggrieved, the Appellant filed an Appeal i.e. Sales Tax Appeal No.214 of 2001 under section 47 of the Act of 1990 before the learned High Court of Sindh, Karachi, which was dismissed vide Order impugned dated 08.9.2005 holding that the Appeal before the learned High Court was not maintainable having not been filed by an Officer of the Department authorized to do so. The questions of law raised by way of the said Appeal were not adverted to.

4.Consequently, the present Appellant filed Civil Petition No.798 of 2005 before this Court against the impugned Order dated 08.9.2005 of the learned High Court of Sindh, Karachi, wherein leave to appeal was granted vide Order dated 10.4.2006. Hence, this Civil Appeal.

5.It is contended by the learned counsel for the Appellant that subsection (11) of section 47 of the Act of 1990 was added vide Finance Act, 2006 (hereinafter referred to as the Act of 2006), as a consequence whereof, any Appeal or Reference filed under the Act of 1990, which had not been filed or signed by an Officer authorized to do so, such defect stood cured and remedied, therefore, the impugned Order is not sustainable. It is added that the provision of subsection (11) of section 47 of the Act of 1990 is both remedial and curative in nature, hence, as is the settled law, was required to be interpreted liberally and would operate retrospectively and, therefore, was applicable to the Appeal filed by the Department before the learned High Court and the defect stood cured, hence, the Order of the learned High Court is liable to be set aside.

6.The learned counsel for the Respondent, while controverting the contentions raised on behalf of the Appellant, contended that the provision of subsection (11) of Section 47 of the Act of 1990 did not have any retrospective effect and its application did not extend to the Appeal filed by the Department before the learned High Court, prior to enforcement of the said provision by way of the Act of 2006. It is further added that subsection (11) of section 47 of the Act of 1990 is limited in its application to the "Appeals" and "References" filed under the provisions of section 47 or the preceding section of the Act of 1990 and did not extend or apply to the Petitions and the Appeals filed before this Court, hence, it is urged that the instant Appeal is also not maintainable.

7.Heard and the available record perused.

8.It appears that prior to the promulgation of Act of 2006 various Appeals and References under the Act of 1990 had been filed on behalf of the Department admittedly by persons not authorized to do so under the Act of 1990 and the rules framed thereunder. In the above backdrop, to cure such defects, by way of the Act of 2006, subsection (11) was incorporated in section 47 of the Act of 1990, which, for ease of reference is reproduced hereunder:-

"Notwithstanding anything contained in any provision of this Act, where any reference or appeal was filed with the approval of [Commissioner] by the officer of lower rank than the [Commissioner], and the reference or appeal is pending before an appellate forum or the Court, such reference or appeal shall always be deemed to have been so filed by the [Commissioner]."

9.A bare perusal of the aforesaid provision reveals that in pith and substance, it falls in the category of statutory enactments, which are curative and remedial in nature and must be interpreted as such. The real matter in controversy inter se the parties requiring adjudication by this Court is whether the remedial and curative effect of the afore-quoted provision would extend to the Appeal under section 47 of the Act of 1990 filed by the Department before the learned High Court, whereupon the impugned Order was passed and also to the instant Appeal.

10.With regard to the interpretation of Remedial and Curative enactments, it has been observed in Corpus Juris Secondum Vol. 82), as follows:-

"In construing remedial statutes, regard should be had to the former law, the defects or evils to be cured or abolished, or the mischief to be remedied, and the remedy provided; and they should be interpreted liberally to embrace all cases fairly within their scope, so as to accomplish the object of the legislature, and to effectuate the purpose of the statute; by suppressing the mischief and advancing the remedy, provided it can be done by reasonable construction in furtherance of the object."

(emphases supplied)

In "Statutory Construction" by Crawford, 1940, it was observed as follows:-

"282. ... But there appears to be considerable confusion in the cases with reference to giving remedial acts retrospective effect through construction. If the rule of liberal construction is to be applied, as it obviously should, then any doubt should be resolved in favour of retrospective operation. If such operation does not destroy or disturb vested rights, impair the obligations of contracts, create new liabilities, violate due process of law or contravene some other constitutional provision, ..."

(emphasis supplied)

It is also noted that:-

"283. Curative Statutes.---Acts of this character are obviously retroactive, and hence entitled, as a general rule, to retrospective operation. Being retroactive in their very nature, they will not usually be given any prospective effect. Being subject to a liberal construction, any doubt should be resolved in favour of retrospective operation."

It is further stated that:-

"284. Judicial Proceedings.---While pending litigation may be exempted from the operation of curative statutes, in many instances it is not. But, in either case, however, a number of problems arise. Moreover, there is also considerable confusion in the decisions pertaining to their solutions. For instance, where pending litigation is not exempt, some Courts have held that the curative act will apply even after the case has been appealed, and others that it will not apply to any case wherein judgment has been rendered in the lower Court. Perhaps the best rule is that a final judgment cannot be affected. Or stated conversely, until the judgment is final, it is subject to the power of the Legislature to enact curative legislation."

11.Remedial and Curative enactments have repeatedly come up for interpretation before this Court. In the case of Divisional Superintendent, PWR, Karachi, and others v. Bashir Ahmad, and others (PLD 1973 SC 589), it was held as under:--

"... And it is well-established principle of interpretation that remedial statute should be construed in a manner so as to advance the remedy and suppress the mischief or else it would frustrate the legislative intendment."

12.In the judgment reported as Commissioner of Sales Tax (West), Karachi v. Messrs Kruddsons Ltd. (PLD 1974 SC 180), it was held as under:-

"It is important to point out that in the precedent case on the day when the appellant filed in this Court his petition for special leave by virtue of the law earlier laid down by this Court in Bardul Haque Khan's case, which was correctly applied by the High Court, the appellant in that case stood disqualified to contest the election and having been elected, to retain his seat in the Provincial Assembly. Nevertheless, because of the repealing Act which was given retrospective operation, the appellant was held to be entitled to take advantage of the removal of the bar, relieved of his disability ex post facto and declared to have been validly elected. It was observed in that case that there could be no doubt that it applied to the proceedings pending at the time when the Act came into force and this Court had no hesitation to grant the appellant's interest in accordance with law as it existed at the time of the hearing of the appeal, without discussing the law as it existed at time when the High Court had seizin of the case. It was further observed that once the appeal had been admitted against the Order of the High Court, the matter became sub judice again and thereafter this Court had the seizin of the whole case. On this view of the matter, therefore, this Court took into account and gave effect to the repealing Act, notwithstanding the fact that the judgment of the High Court was unassailable according to law as it then stood. In taking the above view this Court relied upon its own two previous judgments viz. The Province of East Pakistan v. Muhammad Mehdi Ali Khan and others (1) and Election Commissioner v. Sajjad Ali Khan (2) and also upon the Privy Council case in Mukharji v. Ram Narian (3). In the Privy Council case, effect was given to an Act passed during the pendency of the appeal which deprived the appellant of the right which he had sought to enforce by filing an appeal and the Judicial Committee found no difficulty in dismissing the appeal because of the change in law."

In the case of Commissioner of Income Tax v. Shahnawaz Ltd. and others (1993 SCMR 73), it was observed as follows:-

"The conclusion arrived at by the High Court on this question was expressed in the following words:

"In our view, as the amending provision under consideration had been inserted in subsection (6) of section 18-A to remedy a wrong that was being done to the assessee, and the amending provision does not affect any vested right or create any new obligations, the amending provision is to be given retrospective operation for extending benefit to the affected parties in pending cases, to give effect to the intent of the legislature. As observed earlier, a wrong was being done to the assesses by providing for an indefinite period during which they were made liable for payment of additional tax at the rate of 2% per mensem and this wrong was sought to be remedied by the remedial and curative amendment brought about by the Finance Act, 1973. If the intention of the Legislature had been that this remedy should be available only in respect of assessment for the year 1973-74 and subsequent years, the legislature would have used appropriate words to express such intention. No such appropriate words are mentioned in the amending provision. There is no reason why the remedial provision of the amending law should not be applied to pending proceedings. In fact, this appears to be the intent of legislature."

While applying its dictum, the High Court, however, felt that the retrospective operation visualized by the instant amendment could extend only to such "cases which were pending at the time the amending law was enacted i.e. cases which had not been finally determined or proceedings which had not attained finality. The retrospective effect of the amending law would, therefore, apply only to those cases where assessment had not been made by the I.T.Os. or where an appeal was pending before the Tribunal or a reference was sub judice before the High Court, at the time the amending law was enacted. The cases which had finally been determined or had attained finality i.e. which were past and closed transactions, could not be reopened under amending legislation as there are no express words to that effect employed in the amending law.

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However, nothing has been adduced before us in support of the last-mentioned submission. As explained in Crawford's "Statutory Construction" a statute relating to remedial law may properly, in several instances, be given retrospective operation and we are of the opinion that as the amendment in the instant case was introduced to redress an injury which in the words of Circular No.6 of 1973 (Income Tax) issued on 7th July, 1973 by the Central Board of Revenue itself was "designed to soften the law in favour of tax-payers who could previously be charged to additional tax up to the date of assessment even though the finalization of assessment was delayed due to no fault of theirs." This was a proper case in which retrospective operation, to the extent the High Court gave to it, could be given to the amending law."

In the case of Syed Wajid Ali and 4 others v. Globe Automobiles Ltd. and another (1993 SCMR 819), it was observed as follows:--

"13. ... Such validation statutes are curative and remedial. They operate in retrospect. They correct omissions and mistakes. They have to be given effect to in pending proceedings. A decision cannot be rendered oblivious to them."

13.It may be beneficial to refer to the case Rai Ram Taran Banerjee Bahadur and After Him Soshi Coomar Banerjee and another v. Mrs. D.J. Hill and others (AIR 1949 FC 135) of the Indian Supreme Court, wherein it was held as under:-

"... The words of a remedial statute must be construed so far as they reasonably admit so as to secure that the relief contemplated by the statute shall not be denied to the persons intended to be relieved."

14.An overview of the above reveals the legal position that as a general rule, the Courts look with favour upon Remedial and Curative enactments, which are beneficial in nature and are interpreted in the context of the evil to be cured and the mischief to be remedied. Its provisions are to be liberally construed so as to advance the remedy and suppress the mischief and to ensure that the legislative intent, in this behalf, is not frustrated. Remedial and Curative statutes generally are retroactive in their application and apply to pending proceedings. However, in the absence of the express words to the contrary, the enactment should not ordinarily be construed to destroy vested rights, create new liabilities and obligations or disturb past and closed transactions. Needless to say that any interpretation, which offends against any Constitutional provision, would not be acceptable. With regard to the judgments passed prior to the enactment of a remedial or curative statutes, the finality thereof may be disturbed and destroyed during the pendency of appeal there-against, if such is the intention of the Legislator, which can be fairly gathered from the express words employed in the remedial or curative enactment.

15.The close scrutiny of the provision of subsection (11) of section 47 of the Act of 1990 reproduced hereinabove reveals that upon a liberal and beneficial imputation thereof, its application exists to a Reference and/or Appeal pending before any Appellate Forum or Court and such Reference or Appeal shall be deemed to have been duly filed, subject to due fulfillment of the other conditions mentioned therein. The term "the Court" has not been defined the Act of 1990 so as to exclude this Court. Thus, leaving no matter of doubt that subsection (11) of section 47 of the Act of 1990 in its application extends to Appeals before any Court, including the Supreme Court. To interpret the provision of subsection (11) of section 47 of the Act of 1990 in a restricted manner, in this behalf, would obviously frustrate the remedy provided thereby and subvert the curative nature thereof.

16.However, it has been noticed that the impugned Order of the learned High Court was passed on 08.9.2005 in accordance with the law, as it existed on the said date. Subsection (11) of section 47 of the Act of 1990 was enacted by the Act of 2006 and came into effect on 1st of July, 2006 after passing of the impugned Order. The Appeal before the learned High Court was not pending on the date when subsection (11) of section 47 of the Act of 1990 came into force.

A plain reading of subsection (11) of section 47 of the Act of 1990, reveals that two conditions must be fulfilled before subsection (11) of section 47 of the Act of 1990 can be applicable; firstly, the Appeals or References ought to have been filed with the approval of the Commissioner and, secondly, the Reference or Appeal is pending before an Appellate Forum of the Court. It is only upon the satisfaction of both the aforesaid conditions that the remedial and curative effect of the provision will be attracted. No matter how liberally construed, upon a fair and reasonable construction it appears that it applies to "pending" Appeals and References and the defect in any "such" Appeals or References alone stands cured and remedied. To interpret the provision differently would make the phrase "and the Reference or Appeal is pending" a surplusage and redundancy cannot be attributed to the Legislature. It does not appear to be the intention of the Legislature to extend the remedial and curative effect of subsection (11) of section 47 of the Act of 1990 to Appeals or References, which were not pending on the date when the said subsection came into force. Had the intention of the Legislature been to the contrary, appropriate words to such effect would have been employed. In the absence of such express words and upon a fair interpretation of subsection (11) of section 47 of the Act of 1990, we find ourselves unable to hold that the defect in filing of the Appeal before the learned High Court stood cured or the intention of the Legislature was to remedy or cure such defect. Thus, the finality of the impugned Order is neither disturbed nor destroyed by the provision in question. In this view of the above, we find ourselves unable to interfere with the impugned Order.

17.In the above circumstances, this Civil Appeal is without merit and the same is dismissed with no Order as to cost.

MWA/C-1/SCAppeal dismissed.