YAHYA AFRIDI, J.---Through this single judgment, we propose to dispose of six writ petitions, as they all have common questions of law involved therein. The particulars of the writ petitions are:--
(1) Writ Petition No,3036/2011, (Messrs Al-Imdad General Trading do. Shah Shopping Centre, H- Floor, BlockA, Jamrud Road, Peshawar v. Pakistan, through Secretary, Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).
(2) Writ Petition No,3274/2011, (Messrs MPK Traders, 5C-Ist Floor, Cantonment Plaza, Saddar Road, Peshawar through its Managing Partner Mr. Mubashir Pervez Khan v. Pakistan, through Secretary, Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).
(3) Writ Petition No,3275-P/2011, (Messrs Keen Agencies, Suit No,4, 1st Floor, Block C, Cantt: Plaza, Peshawar through its Partner Mr. Mudassir Pervez Keen v. Pakistan, through Secretary, Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).
(4) Writ Petition No,3276/2011, (Messrs Style Fabrics v. Pakistan, through Secretary, Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).
(5) Writ Petition No,1173-P/2012, (Messrs Wadud Woollen Mills Ltd., Plot No,26, Industrial Estate, Jamrud Road, Peshawar v. Pakistan, through Secretary, Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).
(6) Writ Petition No,1174-P/2012, (Messrs Frontier Woollen Mills (Pvt.) Ltd., 98-98A Industrial Estate, Jmrud Road, Peshawar v. Pakistan, through Secretary, Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).
The petitioners in the aforementioned six petitions, have invoked the constitutional jurisdiction of this Court seeking a common prayer that:-- "The petitioner, being situated in most affected area of the Province of Khyber Pakhtunkhwa, therefore, entitled to the benefit of S.R.O. 180(I)/2011 dated 5-3-2011 and S.R.O. .283(1)/2011 dated 1-4-2011 and the Board letter C.No,1(155)101(RGST)/2011 dated 7-7-2011 being arbitrary, illegal, thus, of no legal effect and ineffective upon the rights of the petitioner accrued under S.R.O.
180(J)/2011 dated 5-3-2011."
2. In two of the aforementioned petitions (Writ Petitions Nos. 1173, 117 of 2012), the petitioners have also sought alternative relief in terms that:-- "To declare that very issuance of S.R.O. 180(1)/2011 dated 5-3-2011 is mala fide and colourable exercise of power of power thus, void and of no legal effect upon the rights of the petitioner accrued under S.R.O. 165(1)/2010 dated 10-3-2010".
3. The petitioners are business concerns, mainly engaged in import or manufacture of textile products, having their registered offices in Peshawar.
4. It all started, when the Federal Government, in pursuance of the Financial Package announced by worthy Prime Minister ("Package"), exercising its powers under subsection (2) of section 13 of the Sales Tax Act, 1990 ("Act"), issued S.R.O. 165(1)/2010 dated 10-3-2010 ("S.R.O. 165"), provided exemption of 50% of leviable rate of sale tax on taxable supplies made other than certain specified goods in "most affected areas in war on terrorism" twelve districts of Khyber Pukhtunkhwa, including District Peshawar ("Affected Areas"). S.R.O. 165 reads as under:-- "In exercise of the powers conferred by clause (a) of subsection (2) of section 13 of the Sales Tax Act, 1990, the Federal Government is pleased to exempt fifty percent of leviable rate of sales tax on supplies made of goods, other than cement, sugar, beverages and cigarettes, by the registered persons located in districts of Hangu, Bannu, Tank, Kohat, Chitral, Charsadda, Peshawar, Dera Ismail Khan, Batagram, Lakki Marwat, Swabi and Mardan."
5. Later, the Federal Government, while exercising its authority under subsection (2) of section 3 of the Act and in supersession of the exemption provided under S.R.O. 165, was pleased vide S.R.O.
180(I)/ 2011 dated 5-3-2011 ("S.R.O. 180") to specify that the sales tax was to be charged at a lower rate of 50% of the rate leviable under subsection (1) of Section 3 of the Act on taxable supplies made in the Affected Areas. S.R.O. 180 reads as follows:-- "In exercise of the powers conferred by clause (b) of subsection (2) of section 3 of the Sales Tax Act, 1990 and in supersession of its Notification No, S. R. O. 165(1)/2010, dated 10th March 2010, the Federal Government is pleased to specify that sales tax shall be charged at the lower rate of fifty per cent of the rate leviable under subsection (1) of the said section on the supplies made of goods, other than cement, sugar, beverages and cigarettes, by the registered persons located in districts of Hangu, Bannu, Tank, Kohat, Chitral, Charsadda, Peshawar, Dera Ismail Khan, Batagram, Lakki Marwat, Swabi, Nowshera and Mardan.
The notification shall take effect on and from the 10th March, 2010."
6. The only but crucial difference between the 'benefits' provided under S.R.O. 165 and S.R.O. 180, was that the later was restricted to 50% of the leviable rate of sales tax specified under subsection (1) of section 3 of the Act, while the former had no such restriction. However, the incidence of sales tax in both the SROs was the same.
7. The petitioners, who are mainly importers or manufacturers of textile products, were since 2005 governed by a 'zero rated sales tax regime' introduced under section 4 of the Act. However, there was a shift in policy, when the Federal Government introduced a 'composite sales tax regime' vide S.R.O. 283(1)/2011 dated 1-4-2011 (S.R.O. 283). Under the said regime, both at import and manufacture stages, the petitioners' goods were subjected to 'zero rate' of sales tax. However, at the retail stage, the petitioners were made liable to pay sales tax on the rates specified in the S.R.O.
Itself, which were much lower than the standard rate of sales tax provided under subsection (1) of section 3 of the Act. The essential and relevant provisions of S.R.O. 283 reads:- "In exercise of the powers conferred by clause (c) of section 4 read with clause (b) of subsection
(2) and subsection (6) of section 3, clause (b) of subsection (1) of section 8, clause (a) of subsection (2) of section 13 and section 71 of the Sales Tax Act, 1990, and subsection (2) of section 16 read with section 3A of the Federal Excise Act, 2005 and in supersession of its Notification No, S. R.O.509(1)12007, dated the 9th June, 2007, the Federal Government is pleased to notify the goods specified in column (2) of the Table below under PCT heading numbers mentioned in column (3) of the said Table, to be the goods on which sales tax shall, subject to the conditions stated in this notification, be charged at the rate of zero percent on the supply and import thereof, or at reduced rate of sales tax of six percent or, as the case may be, at four percent as specified in the said conditions, namely:- S.No,Description of goods PCT heading No,
(1) ...................... .................
1. .................. .......................
2. Textile and articles thereofChapter 50 to Chapter 63 and other respective headings.
CONDITIONS
(a) Textile Sector:-
(i) The facility of zero-rating shall be available to every such person engaged in manufacturing of trading in textile sector (including Carpets and jute) who is registered for the purpose of sales tax other than retailer. No tax shall be payable at any stage of the supply chain if goods are sold by a registered person to a registered person till the stage of processing where sales tax shall be charged as specified hereunder;
(ii) The benefit of this notification shall be available to registered importers, traders, manufactures and exporters. In case where a commercial importer sells any imported goods to unregistered person, he shall charge and pay sale tax a 6% of value of supply, if the goods are usable in textile sector up to the stage of spinning including the product of spinning such as yarn and its by-products, whereafter such importer shall charge and pay sales tax @ 4% of value of supply.
(iii) No sales tax shall be payable at ginning of man-made and synthetic fiber manufacturing stage;
(iv) In case of registered manufactures importing their inputs or acquiring their inputs from commercial importers or registered manufactures, such manufactures shall charge and pay sales tax @ 6% of value of supply only at the spinning stage, i,e, yarn and its by-products if these goods are supplied to any unregistered person provided that if such goods relate to the stages after spinning, sales tax shall be charged and paid @ 4% of the value of supply.
(v) In case of yarn purchases on payment of sales tax @ 6% of value of supply from spinning mills by unregistered persons i,e, traders or persons engaged in activities like sizing, warping, weaving, intermediary and other ancillary processes etc. Before processing of finished fabric, no further amount of sales tax shall be charged or demanded;
(vi) In case of registered persons engaged in providing processing services of any kind in respect of textile goods, such person shall charge from the person who owns the goods but is not a registered person, sales tax @ 4% of service charges; (vii)In case of stages after weaving, if the fabric is sold by a registered manufacturer to an unregistered person, sales tax shall be charged @ 4% of value of supply, if such manufacturer has availed zero-rate facility at previous stages of the production chain;
(viii) At the stage of processing or finishing of any kind of fabric or stitching of such fabric, if any registered person supplies the goods including finished products like finished, dyed/ processed/printed fabric, textile apparel, home textile and clothing including garments and all non-woven products etc. To an unregistered buyer, he shall charge and pay sales tax @ 4% of the value of supply; and
(ix) The registered persons who have acquired goods at zero-rate under this notification shall pay sales tax @ 4% of value of supply on their supplies of all kinds of finished products to retailers, regardless of the registration of such retailers."
8. The petitioners, claiming to be entitled to 'benefits' provided under S.R.O. 180 and S.R.O. 283, sought clarification in this regard from the Federal Board of Revenue ("FBR"). The said request of the petitioners was not positively responded to by the FBR vide its letter dated 7-7-2011, which stated that:-- "GOVERNMENT OF PAKISAN REVENUE DIVISION FEDERAL BOARD OF REVENUE C.No,1 (155)/C(RGST)/2011 Islamabad the 7th July, 2011 Mr. Irshad Ahmad Advocate, A-105, Town Towers, University Road, Peshawar.
Subject: Ambiguities/Anomolies in Notification No, S. R. O. 283(1)/2011 viz-a-viz Notification No,S.R.O. 165(1)/2010.
I am directed to refer to your letter dated 30-6-2011 on the above subject and to state that S.R.O.
165(1)/2010 dated 10th March 2010 superseded by S.R.O. 180(1)/2011 dated 5th March 2011 (copy enclosed) issued under clause (b) of subsection (2) of section 3 of the Sales Tax Act, 1990 had in fact reduced the standard rate of sales tax by 50% on goods supplied by the registered persons within the territorial jurisdiction of 13 Districts of Khyber Pakhtunkhwa. The scope of the aforesaid notification is thus limited to the standard rate of tax charged and levied under subsection (1) of section 3 of the Sales Tax Act, 1990 and therefore cannot be extended to reduce rate of sales tax notified under clause (b) of subsection (2) of the section 3 of the Sales Tax Act, 1990 through S.R.O. 283(1)/2011 dated 1-4-2011. Sd/- (Muhammad Zarif)
Second Secretary (RGST)
Copy to Chief Commissioner, RTO, Peshawar."
9. Feeling aggrieved, the petitioners have filed the instant writ petitions.
10. The valuable arguments of the learned counsel of the parties were heard on 26-11-2014, but at the time of writing judgment, certain factual and legal issues required further clarification, as such, the case was fixed for re-hearing on 23-12-2014.
11. Learned counsel for the petitioners contended that S.R.O. 180 is against the letter and spirit of the benefits announced by Prime Minister for the "Affected areas" and thus without lawful authority; that the classification made through the impugned superseding S.R.O. 180 is unreasonable; that delegated legislative authority as the delegatee has no jurisdiction or authority to pass an order or regulation to prohibit a lawful business; that the impugned executive act to exclude the petitioners from the benefit of S.R.O. 180 is violative of the petitioners business rights guaranteed under Article 18 of Islamic Republic of Pakistan, 1973 ("Constitution"); the same being violative of the right of the freedom of trade and business and hence, merits to be judicially reviewed; that impugned letter of FBR and the impugned S.R.O. Being discriminatory in nature is violative of the petitioners rights guaranteed under Articles 3, 18, 35 and 37 of the Constitution, hence, merits to be judicially reviewed; that continuous denial of the demanded benefit is detrimental to the business of the petitioners; and that the actions impugned and all proceeding connected therewith have done away with the constitutional protection available to the petitioner and are, therefore, hit by provisions of Articles 4 and 25 of the Constitution.
12. The learned counsel for the Revenue vehemently refuted the contentions raised by the learned counsel for the petitioners and defended the legality of S.R.O. 180 and the impugned letter dated 7- 7-2011 being 'intra vires' and based on policy of the Federal Government, which according to the worthy counsel was non- justiciable.
13. Valuable arguments of the learned counsel for the parties heard and the record perused with their able assistance.
JURISDICTIONAL CHALLENGE.
14. At, the outset, this Court shall consider the jurisdictional challenge made by the petitioners to the impugned actions of the Federal Government. The powers of the Federal Government to exempt sales tax on taxable supply made by a person is clearly provided under section 13 of the Act, while its authority to vary the rate, manner of charging and collecting the same is also vested under subsection (2) of section 3 ("Supra"). Let us review these power vesting provisions of the Act, they read as follows:-- Authority to Vary rate of Sales Tax "Section 3(2)(b), Notwithstanding the provisions of subsection (1),--
(a) taxable supplies specified in the Third Schedule shall be charged to tax at the rate of [seventeen] per cent of the retail price which along with the amount of sales tax shall be legibly, prominently and indelibly printed or embossed by the manufacturer on each article, packet, container, package, cover or label, as the case may be: Provided that the Federal Government, may, by notification in the official Gazette, exclude any taxable supply from the said Schedule or include any taxable supply therein,
(aa) goods specified in the Eight Schedule shall be charged to tax at such rates and subject to such conditions and limitations as specified therein; and
(b) The Federal Government may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, declare that in respect of any goods or class of goods imported into or produced; and or any taxable supplies made by a registered person or a class of registered persons, the tax shall be charged, collected and paid in such manner and at such higher or lower rate or rates as may be specified in the said notification.
Power to grant Exemption "Section 13.-Notwithstanding the provisions of subsection (1)---(a) the Federal Government may, by notification in the official Gazette, exempt any taxable supplies made or [import or supply of] any goods or class of goods, from the whole or any part of the tax chargeable under this Act, subject to the conditions and limitations specified therein; and
(b) the Board may, by special order in each case stating the reasons, exempt any [import or supply of goods of such description or class, as may be specified] from the payment of the whole or any part of the tax chargeable under this Act)"
15. It is apparent from the bare reading of the aforementioned provisions of the Act, that a clear authority is vested in the Federal Government to exempt payment of sales tax under Section 13 and to change the rate, manner and mode of collection and payment thereof, under section 3 of the Act.
16. In view of the clear mandate of the Act, this Court is in consonance with the submissions made by the learned counsel for the Revenue that SRO 180 was 'intra vires', and thus with lawful authority, as the Federal Government had express jurisdiction to issue the same.
17. As far as the contention of the learned counsel for the petitioners, that S.R.O. 165 being an exemption, could only be withdrawn under section 13 of the Act, and the same could not be withdrawn in any other manner, is not the correct appreciation of the law. The authority to grant an exemption from the payment of sales tax is vested in the Federal Government and thus could also be recalled by the said authority, as it did vide S.R.O.180. In this regard, section 21 of The West Pakistan General Clauses Act, 1897, is clear and relevant to the issue in hand, which reads:- "Power to make to include, power to add to amend, vary, or rescind orders, rules or bye-laws,- Where by any [Central Act], or Regulation, a power to [issue notifications], order, rules, or bye- laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind, any [notifications], orders, rules, scheme, form, bye-laws so [issued]."
18. This Court is also alive to the fact, that while withdrawing the exemption granted under S.R.O. 165, section 13 of the Act was not mentioned in S.R.O.
180. When admittedly, the authority granting the exemption had withdrawn the same, then 'substantial compliance' had been made. Not mentioning the provision of law at the time of withdrawing any exemption would not make the action of a competent authority passing the said order illegal or without lawful authority. In similar circumstances, the superior Courts have upheld such actions in Abdul Ghani's case (PLD 2007 SC 308), Osman Khan's case (2010 CLC 475), Muhammad Naseem Khan's case (2013 PTD 2005), Muhammad Ajmal's case (2009 CLC 647), and Hasnat Ahmad Khan's case (2010 SCMR 354).
CONTESTED CLAIMS ON MERITS
19. In essence, the petitioners contend that the rate of sales tax leviable under S.R.O. 180, should be construed from the rate specified under S.R.O.
283. While, the Revenue insist that the rate of sales tax stated in S.R.O. 180, relate to the standard rate of tax charged under subsection (1) of Section 3 of the Act and not that stated in S.R.O.283.
20. It is pertinent to state that S.R.O. 180 extended a 'territory specific benefit', to person engaged in business in the "Affected Areas". Whereas, S.R.O. 283 provided a 'sector specific benefit' to textile sector, throughout the country. Admittedly, the petitioners fall within the purview of those entitled to. 'benefits' under both the SROs, as they are registered and carrying on business in the "Affected Areas" and that too in 'textile sector'.
However, the crucial fact remains that S.R.O. 180 has restricted the 'benefit' to 50% of the rate of sales tax leviable under subsection (1) of Section 3 of the Act.
21. The petitioners' claim to be granted the benefits provided under S.R.O.
180. Revenue, on the other hand, is not declining the same but restricting it to 50% of the rate of sales tax leviable under subsection (1) of Section 3 of the Act, as expressly provided therein. This stance of the Revenue is in accord with the clear terms stated in S.R.O.180.
22. Thus, the impugned letter of FBR dated 7-7-2011 is the correct appreciation of the provisions of S.R.O.180. Accordingly, this Court is not inclined to accept the mail: claim of the petitioners challenging the interpretation of SROs taken by the Revenue in its impugned letter dated 7-7-2011.
ALI ERNATIVE AND MOULDING OF RELIEF.
23. As this Court has declined to accept the main prayer in the instant petitions, it would then proceed to examine the alternative relief sought by the petitioners in two of the petitions. The main thrust in the said relief is the challenge made to S.R.O. 180 being illegal on the ground of 'main fide' and for revival of the 'benefits' provided to the petitioners under S.R.O.165.
24. This Court is adjudicating the present petitioners, while exercising its jurisdiction under Article 199 of the Constitution. In appropriate cases, this Constitutional Court may mould relief already sought in the four petitions or even grant fresh relief appropriate for just and equitable resolution of the dispute pending adjudication. The authority of this Court to do so was initially discussed by the Apex Court in Salahuddin's case (Pi .D 1975 SC 244) in terms:- "It is indeed true that in the High Court the relief claimed by the> appellants was so worded as to fall under clauses (2)(a)(i) and (2) (a)(ii) of Article 201 of Interim Constitution, and attention was not directed to the provisions contained in clause (2)(b)(ii) thereof, but this failure on the part of the appellants did not relieve the High Court of its constitutional duty to afford relief where it was lawfully due. The appellants had invoked the extraordinary jurisdiction of the High Court, and it mattered little whether the relief claimed by them fell under one clause or the other of the relevant provision of the Constitution. To dem, relief to the citizen on such a hypertechnical ground would, in our view, amount to a negation of the beneficial jurisdiction conferred by the Constitution on the High Court in the larger public interest. In any case, the question was indeed one of law touching the interpretation of the Constitution permission to raise such a question has invariably been a-corded by this Court even though the matter was not agitated in the Courts below. We consider, therefore, that relief cannot be refused to the appellants only on the ground that they did not invoke clause (2)(b)(ii) of Article 201 in the High Court."
(Emphasis is added)
The ratio decidendi of the aforementioned case has been consistently followed in various other pronouncements of the Superior Courts including Messrs Facto Belarus Tractors Limited Karachi's case (PLD 2006 Karachi 479), All Pakistan Textile Mills Association's case (PLD 2009 Lahore 494), Mst. Amina Begum's case (PLD 1978 SC 220), Marghub Siddiqi's case (1974 SCMR 519), Mehrab Khan's case (2005 CLC 441).
As circumstances leading to filing of all the petitions are common, this Court would also consider the alternative relief sought in the two petitions, for remaining four petitions.
CHALLENGE ON THE BASIS OF 'MALA FIDE'.
25. Let us consider the alternative relief. The impugned action of the Federal Government is challenged on the touchstone of 'mala fide'. Before we proceed to do the same, it would be important to first understand the true meaning of the term 'mala fide'.
26. The term 'mala fide' has two facets; 'mala fide in fact' or 'malice in fact' and 'mala fide in law' or 'malice in law'. These two terms have been defined in various judicial dictionaries and commentaries, some of the leading observations on the issue in hand are as follows:-- BLACK'S LAW DICTIONARY (NINTH EDITION)
Malice in the legal sense imports:
(1) The absence of all elements of justification, excuse or recognized mitigation, and
(2) The presence of either
(a) an actual intent to cause the particular harm which is produced or harm of the same general nature, or
(b) the wanton and wilful doing of an act with awareness of a plain and strong likelihood that such harm may result .The Model Penal Code does not use 'malice' because those who formulated the Code had a blind prejudice against the word. This is very regrettable because it represents a useful concept despite some unfortunate language employed at times in the effort to express it. "Rollin M.
Perkins & Ronaid N. Boyce, Criminal Law 860 (3d ed, 1982).
THE LAW OF LEXICON (SECOND EDITION (REPRINT) 2002).
Malice in fact.---"Malice in Fact" means express malice. MALICE IN FACT OR ACTUAL MALICE, relates to the actual state or condition of the mind of the person who did the act.
Malice in fact is where the malice is not established by legal presumption or proof of certain facts, but is to be found from the evidence in the case.
Malice in fact implies a desire or intention to injure, while malice in law is not necessarily inconsistent with an honest purpose.
Malice in law, "Malice in law" means implied malice. "MALICE IN LAW" simply means a depraved inclination on the part of a person to disregard the rights of others, which intent is manifested by his injurious acts.
"Malice in law" means an act done wrongfully and willfully without reasonable or probable cause, and not necessarily an act done from ill feeling and spite , or a desire to injure another.
Mala fide action or "malice in law" are not to be easily presumed. The mere non-adherence to the strict procedure followed by a judicial tribunal does not amount to either acting mala fide or acting contrary to natural justice. Bireshwar Chakravarti v. L.N. Kaula, AIR 1957 All 671, 677.
(Evidence Act, 1872, S.114)
Malice in law denotes absence of legal excuse. N.C.Jute Mills v. Finance Ministry, AIR 1966 Cal 151,
159. Malice in its legal sense means malice such as may be assumed from the doing of a wrongful act intentionally but without just cause or excuse, or for want of reasonable or probable cause. S.R Venkataraman v. Union of India, AIR 1979 SC 49,51.
CORPUS JURIS SECUNDUM. A COMPLETE RESTATEMENT OF THE ENTIRE AMERICAN LAW (VOLUME 54).
In General.
The word "malice" is derived from the Latin root "malus". It is an ambiguous term, variously prompted and variously manifested, and difficult to define. There have been many and various definitions or descriptions of the word "malice," and so many varying attributes have been accredited to it, depending on the connection in which the word is used, the nature of the litigation in which it is sought to be established, the subject to which it is applied, the object sought to be obtained, and the consequences depending on its use, that there has been much confusion regarding its use and meaning.
Popular sense compared with legal sense.
The word "malice," as ordinarily and popularly used, has a general and definite meaning, while in law it is a term of art. The legal sense of malice differs from its sense in common speech, and in law the term has a broader meaning than that which is applied to it in ordinary use. In its legal sense it may be wantonness or a reckless disregard of the rights of others, importing wickedness, and excluding a just cause or excuse, extending to evil design or corrupt or wicked motive against someone at the time of the act, and referring to that state of mind which is reckless of law and of the legal rights of the citizen in a person's conduct toward that citizen. It implies an act done without legal justification or excuse, and in this, the legal sense, it characterizes all acts done with an evil disposition, a wrong and unlawful motive or purpose.
Malice in law exists where a wrongful act is intentionally done without just cause or excuse, but since malice in law is predicated on the doing of an unlawful manner, it cannot exist where the thing done is lawful and the means employed are lawful. Actual or express malice, as distinguished from malice in law, exists when one with a sedate, deliberate mind and formed design injures another, as where the person is actuated by ill will in what he does and says, with a design willfully or wantonly to injure another.
Malice in law may exist with malice in fact, or it may exist quite independently of it. Malice in law may exist with malice in fact since malice in law may include, or be motivated by, anger, animosity, hatred, ill will, corrupt design, actual malevolence, spite, and every other unlawful and unjustifiable motive or act and all acts wantonly or willfully done, that is, which any man of reason, knowledge, and ability must know to be contrary to his duty. However, malice in law may exist where there is an entire absence of malice in fact, since malice in law does not mean, and need not be actuated by, or proceed from, actual malice and need not be actuated by, or proceed from, anger, animosity, desire to injure another, dislike, hatred, ill feeling, ill will, malevolence, passion, resentment, revenge, spite, temper, vindictiveness, or wrath.
MITRA'S LEGAL and COMMERCIAL DICTIONARY (SIXTH EDITION).
Malice in Law.
Malice in law not necessarily personal hate or ill will, but it is that state of mind which is reckless of law and of the legal rights of the citizen.
It means the intentional doing of a wrongful act without just cause or excuse, (Lyons v. St.
Joseph Belt Ry. Co. 84 SW 2d 933, 934)
Malice in law means the doing of a wrongful act intentionally without just cause or excuse, (Bromage v. Prosser (1825)4 B & C 247)
Note: A person who inflicts an injury upon another in contravention of the law is not allowed to say that he did it with an innocent mind. He is taken to know the law, and he must act within the law. He may, therefore, be guilty of malice in law; although so far as the state of mind is concerned, he acts ignorantly, and in that sense innocently. (Shearer v. State of J&K 1982 Sri LJ 138, 142).
Acting on a legally extraneous or obviously misconceived ground of action is a case of malice in law. (Regional Manager v. Pawan Kumar Dubey AIR 1976 SC 1766: (1976)3 SCC 334: (1976)3 SCR 540).
The phrase denotes absence of legal excuse. (N.C. Jute Mills v. Finance Ministry AIR 1966 Cal 151: 70 CWN 290: (1965)2 Comp LJ 152).
It is also called implied malice.
The most apt observation on the matter has been expounded by Mr. Justice (R) Fazal Karim, in his treatise 'Judicial Review of Public Actions', in terms that:- Malice in law. is said to mean the intentional doing of a wrongful act without just cause or excuse. It is also called implied, inferred or legal malice. In Bromage v. Prosser, quoted in Ghulam Mustafa Khar v. Pakistan, Bayley J. Said: "Malice in common acceptation means ill- will against a person, but in its legal sense it means a wrongful act done intentionally without just cause or excuse...."
This was quoted with approval by the House of Lords in Allan v. Flood, where Lord Watson said: "...The root of the principle is that, in any legal question, malice depends, not upon evil motive which influenced the mind of the actor, but upon the illegal character of the act which he contemplated and committed...."
27. Reviewing the aforementioned legal discourse on the true import of the term 'mala fide', it would be safe to state that:--
(i) Generally, the term 'mala fide' can be divided into two; 'mala fide in fact' and 'mala fide in law'.
Mala fide in fact' attributes an actual malice upon the "maker" of the impugned action,
(iii) 'Mala fide in law' does not attribute any personal or actual malice upon the "maker" but the action is wrongful or without any reason or justification.
28. We have earlier in the judgment, discussed and confirmed the jurisdiction of the Federal Government to issue S.R.O. 180, and thereby withdraw the exemption provided to the petitioners under S.R.O. 165 and also to vary the rate of sales tax leviable under the law. However, the judicial review of the impugned subordinate legislation would not end there.
29. In order to maintain the balance in the 'trichotomy of power' of a State, 'legislature' through legislation vests authority in the 'executive' and while exercising its vested jurisdiction it has to proceed in a lawful, 'bona fide' and fair manner. Never is the 'executive' given authority under any statute to exercise its jurisdiction in a 'colourable' manner excessively on 'mala fide'. Any action or order passed by even a competent authority, without the essential attributes of fairness or 'bona fide ' , would render the said action justiciable and can be struck down by the 'judiciary'
(constitutional Court) in judicial review. There is no dearth of judicial precedent in this regard. The leading cases include Abdul Rauf's case (PLD 1965 SC 671), Begum Agha Shoraish Kashmiri's case (PLD 1965 SC 623), Ziaur Rehman's case (PLD 1973 SC 49) and Saeed Ahmad's case (PLD 1973 SC 151). MALA FIDE IN FACT
30. Let us consider the challenge made to the impugned action on the ground of it being based on 'mala fide in fact'. This matter was discussed by to be apex Court in its judgment rendered in Dr. Akhtar Hussain Khan's case (2012 SCMR 455), wherein, relying on Saeed Ahmad Khan's case (PLD 1974 SC 151) and Begum Agha Abdul Karim Shorish Kashmiri's case (PLD 1969 SC 14) it was reiterated that:-- "Mala fides is one of the most difficult things to prove and the onus is entirely upon the person alleging mala fides to establish it, because, there is, to start with, a presumption of regularity with regard to all official acts, and until that presumption is rebutted, the action cannot be challenged merely upon a vague allegation of mala fides. As has been pointed out by this Court in the case of the Government of West Pakistan v. Begum Agha Abdul Karim Shorish Kashmiri (PLD 1969 SC 14), mala fides must be pleaded with particularity, and once one kind of mala fides is alleged, no one should be allowed to adduce proof of any other kind of mala fides nor should any enquiry be launched upon merely on the basis of vague and indefinite allegations, nor should the person alleging mala fides be allowed a roving enquiry into the files of the Government for the purposes of fishing out some kind of a case.
"Mala fides" literally means "in bad faith". Action taken in bad faith is usually action taken maliciously in fact, that is to say, in which the person taking the action does so out of personal motives".
31. Keeping in view of the settled principle on adjudging 'mala fide in fact', as discussed by the Apex Court in Dr. Akhtar Hussain's case (supra), the impugned action in the present petitions cannot be struck down on the basis of it being 'mala fide in fact', as the essential ingredients and conditions precedent of actual personal malice of the "maker" of the S.R.O. 180 could not be adjudged from the available record.
MALA FIDE IN LAW.
32. It is an admitted position that 'rights' had accrued in favour of the petitioners, when the Prime Minister announced the Package for providing incentives to businesses in "Affected Areas". These 'rights' matured into 'vested rights', when the Federal Government issued S.R.O. 165 under section 13 of the Act, exempting 50% of the leviable sales tax. As the said exemption was not time bound and was withdrawn by the competent authority, the same was intra vires. However, this would not absolve the Federal Government to ignore the cumulative effect of the striking features protecting the 'benefits' to the petitioners provided in the Package and clearly reflected in the SROs 165 and 180, particularly the following:-
(i) The petitioners are admittedly carrying on their business in the "Affected Areas" expressly stated in S.R.O.180.
(ii) S.R.O. 180 does not declare 'textile', as other sectors, have been expressly excluded from the 'benefits' extended therein.
(iii) S.R.O. 283 does not supersede the 'benefits' of S.R.O.180.
Essentially, the 'rationale' behind the Package and S.R.O. 165 was aimed to give persons, such as the petitioners, an advantage over others engaged in the same business, elsewhere in the country.
33. It is also a settled principle of interpreting fiscal provisions relating to grant of 'benefits', that the same have to be positively and liberally construed in order to ensure that the 'benefits' intended to be granted are actually given effect to in a meaningful manner.
34. Now, when we compare the incidence of sale tax flowing out of S.R.O. 165 and S.R.O. 180, it is noted that the effect therefrom is the same. S.R.O. 165 is granting an exemption of 50% of the leviable sales tax, while S.R.O. 180 is imposing sales tax at a rate of 50% of the rate of sales tax under subsection (1) of section 3 of the Act. The incidence of sales tax on the person making taxable supplies under both the SROs, as stated earlier, would have been the same.
35. To clarify this crucial issue, the representative and the learned counsel for the Revenue were confronted to explain the need for superseding S.R.O. 165 by issuance of S.R.O. 180, when the incidence of sales tax flowing from both the SROs was the same, they had no explanation. However, they insisted that though the incidence of sales tax flowing from both SROs was the same, they were validly issued by the competent authority under the policy of the Federal Government, which was non justiciable.
36. Another striking feature to note is the timing of issuance of SROs. On 5-3-2011, S.R.O. 180 superseded S.R.O. 165 and less than a month later S.R.O. 283 was issued. Had S.R.O. 180 not superseded S.R.O. 165, the petitioners would have availed exemption of 50% of sales tax, without it being restricted to the standard rate of subsection (1) of section 3 of the Act. When the learned counsel and representative of the Revenue were further asked to explain, if any sector other than textile was affected by the restriction imposed in S.R.O. 180 to the standard rate of sales tax under subsection (1) of section 3 of the Act, their response was again in the negative.
37. There being no reason, muchless justifiable, forthcoming fro the Revenue for the issuance, timing and the final affect of S.R.O. 180 in superseding the exemption provided to the petitioners under S.R.O. 165, throws a very negative light on the basis and 'rationale' behind the impugned action of the Federal Government. This conspicuous silence of the Revenue to provide any justifiable reason, for the issuance, timing and the exclusive affect upon the 'textile sector' carrying on their businesses in the "Affected Areas" made by S.R.O. 180 would surely expose the impugned action of the Revenue to come within the mischief of being declared "mala fide in law".
38. Before parting with this judgment, this Court would like to emphasis that, earlier while rendering its decision in Messrs Saif Textile Mills' case (Writ Petition No,2011/2012), wherein the S.R.O. 180 was under challenge, the judicial review did not consider the ground of 'mala fide in law', and hence, upheld the validity of S.R.O.
180. The said decision warrants review. As one of us (Justice Yahya Afridi) was the author of the said decision, hence these petitions have not been referred to a Larger Bench.
39. Accordingly, for the reasons stated hereinabove, this Court would:--
(i) Declare that S.R.O. 180 to be illegal, being based on 'mala fide in law'.
(ii) The petitioners being entitled to benefits provided under S.R.O. 165 and S.R.O. 283 and the effect thereto has to be duly extended to the petitioners.
(iii) The petitioners from 1-4-2011 are to be charged 50% of the rate of sales tax provided under S.R.O.283.
These Writ Petitions are disposed of in the above terms.