SYED ARSHAD ALI, J. M/s Yar Steel Mills, which is a sole proprietorship of one Ameer Rahman, through the instant constitutional petition, has approached this Court praying that:- "It is therefore very humbly prayed that on acceptance of this Writ Petition, this Honorable Court may very magnanimously declare, Order and direct:-
(i) That the actions and inactions on the part of Respondents for not adhering to the Entry No. 151 of the Sixth Schedule to the Sales Tax, 1990 in letter and spirit and not clearing the imports of the Petitioner on obtaining the Post-dated Cheques (PDCs) in compliance to the said Entry and adding further condition of providing "Good for Payment Certificate" from the Banks for its clearance is wrong, illegal unconstitutional and highly unjustified.
(ii) The Respondents must at once withdraw the Condition of providing "Good for Payment Certificate" from the Banks on the imports of the Petitioner for onward clearance of the Goods/imports so destined for Erstwhile FATA/PATA".
2. It is averred in the petition that the petitioner, before 25th amendment in the Constitution through Act No. XXXVII of 2018 dated 05.06.2018 ("25th Amendment"), had established a Steel Re- Rolling Mills, thus, its income/activities were immune from the levy/charge of income tax as well as sales tax laws. The petitioner has been importing raw material for consumption at the erstwhile Federally Administered Tribal Area ("FATA") and in this regard, against the leviable duty, the petitioner would pay a post-dated cheque in view of the legal dispensation then in vogue. In this regard, the imports made by the petitioner and the post-dated cheques issued by him also remained subject to certain proceedings, however, in this regard, no final adjudication so far has taken place.
3. On 28.10.2022, in the present case, notice was issued to the other side and on the following hearing i.e. 03.11.2022 the representative of revenue-department appeared before the Court and sought time to file their requisite comments within three days and the case was posted for 11.11.2022. On the date of hearing, the respondents did not file any comments and, therefore, the case was argued at some length, however, at the end of the arguments, the learned counsel for the petitioner sought time to place on file the relevant documents that the petitioner's unit is in running condition and consume goods and has the means to pay the tax in case of any violation of the condition of import; thus, the case was adjourned. Accordingly, the petitioner has placed on file the electricity bill which shows that he has been paying electricity bill in millions of rupee and thus, he has the mean to pay the amount if any condition of import is violated according to the estimation of respondent-department.
4. It is pertinent to mention that prior to the 25th amendment in the Constitution, there was a separate dispensation/mechanism for extension of laws to the erstwhile FATA and Provincially Administered Tribal Area ("PATA") under the Constitution. The relevant provision of the Constitution i.e. Article 247(3) for ease reference is reproduced as under:- "247 (3). No Act of [Majlis-e-Shoora (Parliament) shall apply to any Federally Administered Tribal Area or to any part thereof, unless the President so directs, and no Act of [Majlis-e-Shoora (Parliament)] or a Provincial Assembly shall apply to a Provincially Administered Tribal Area, or to any part thereof, unless the Governor of the Province in which the Tribal Area is situate, with the approval of the President, so directs; and in giving such a direction with respect to any law, the President or, as the case may be, the Governor, may direct that the law shall, in its application to a Tribal Area, or to a specified part thereof, have effect subject to such exceptions and modifications as may be specified in the direction".
5. It has been remained a judicial consensus that the income tax as well as sales tax laws were never extended to the FATA, prior to the promulgation of 25th amendment thereby omitting Article 247 from the Constitution. However, there has been a long standing dispute between the Federal Board of Revenue ("FBR") and the trade community/business community of erstwhile tribal area regarding the imposition of income tax as well as sales tax on the import of raw material for the manufacturing units, which were located in the erstwhile FATA. This Court in its celebrated judgment authored by his Lordship Justice Yahya Afridi, as he then was, in the case of Messrs Taj Packages Company (Pvt) Ltd through Manager vs. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 other (2016 PTD 203), has elaborately dealt with the issue of taxing the raw material/goods which were imported for the purpose of its consumption in the erstwhile FATA. The said judgment was also upheld by the august Supreme Court of Pakistan in case titled Pakistan through Chairman, FBR and others vs. Hazrat Hussain (2018 SCMR 939), wherein it has been unequivocally held that the business concerns/manufacturing units located in the PATA are immune from the impost of both, the income tax as well as sales taxes; that similarly, the goods or machinery, which they are importing for their home consumption are equally immune from the impost of both taxes at the import stage, however, in order to ensure that the consumption of goods do not cross the limits of non-tariff area, the petitioners have to provide a security in form of post-dated cheques equal to the value of normal taxes on the imported goods.
6. The perusal of the aforesaid judgments would show that the main concern of the FBR was that there is no foolproof system ensuring that the goods which are imported for its consumption are actually consumed in the tribal area and for that reason, this Court in the case of Messrs Tai Packages Company (Pvt) Ltd (supra) issued the following directions:- "Accordingly, for the reasons stated hereinabove, this Court would hold and:-
(i) Declare that advance tax charged on import under section 148 of the Income Tax Ordinance, 2001, is not payable by petitioners importing goods for its utilization or consumption in Federally Administered Tribal Area or Provincially Administered Tribal Area;
(ii) Declare that Sales Tax charged under section 3(1)(b) of the Sales Tax Act, 1990, is not payable by the petitioners importing goods for its utilization or consumption in Federally Administered Tribal Area or Provincially Administered Tribal Area;
(iii) Direct the Federal Government to take appropriate steps to ensure that persons carrying on business in FATA or PATA are rendered immunity from the payment of taxes under Income Tax Ordinance, 2001, and the Sales Tax Act, 1990, as the said statutes have not been extended to the said areas within the contemplation of Article 247(3) of the Constitution;
(iv) Direct the Federal Government to take necessary steps to formulate a uniform policy for seeking securities from the persons importing goods for its consumption and utilization in FATA or PATA, so that the immunity provided under the Constitution is not abused and in case the imported goods are utilized or sold out side the said area, then the revenue of the State is recoverable from the securities, so provided.
(v) Direct that till the decision is taken by the Federal Government regarding the security mechanism stated hereinabove, the Board shall obtain from the petitioners post-dated cheques for the payment of taxes at import stage under the Act and the Ordinance, as security, for goods destined for utilization and consumption in FATA or PATA. The post-dated cheques shall be returned to the petitioners upon production of consumption certificates duly issued by the concerned commissioners, as specified in Notification dated 28.2.2011. It will be the liability of the petitioners to approach the respondents for the issuance of consumption certificates.
7. The apprehensions of the FBR in this regard were not without reason. Unfortunately, the menace of tax evasion in collaboration with the government official is a known secret. The Apex Court in the case of Messrs Elahi Cotton Mills LTD and others vs. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others (2016 PTD 1555) has also elaborately considered various aspect of this issue. The relevant paras for reference are reproduced as under:- "In the scenario of the corruption obtaining in Government and semi-Government Departments and so also to curb the dishonest tendency on the part of the tax-payers to evade the payment of lawful taxes by using unfair means, the Legislature is bound to adopt modern and progressive approach with the object to eliminate leakage of public revenues and to generate revenues which may be used for running of the State and welfare of the people".
8. After the 25th amendment in the Constitution, the trade community had raised voice for continuance of the said exemption from imposition of income tax and sales tax. The Federal Government through SRO.1212 (1)/2018 dated 05.10.2018 and SRO. 1213(1)/2018 dated 05.10.20218 had allowed the said exemption to the resident/domicile of the erstwhile FATA/PATA. Similarly, by inserting entry No. 151 and 152 in the 6th Schedule of the Sales Tax Act, 1990, a mechanism was provided for availing exemption of the sale tax on import of goods which were meant for its consumption in tribal areas. The said entries are reads as under:- "151. (a) Supplies; and
(b) imports of plant, machinery, equipment for installation in tribal areas and of industrial inputs by the industries located in the tribal areas, as defined in the Constitution of Islamic Republic of Pakistan,- as may till 30th June, 2023, to which the provisions of the Act or the notifications issued thereunder, would have not applied had Article 247 of the Constitution not been omitted under the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018): Provided that, in case of imports, the same shall be allowed clearance by the Customs authorities on presentation of a post-dated cheque for the amount of sales tax payable under the Sales Tax Act, 1990, and the same shall be returned to the importer after presentation of a consumption or installation certificate, as the case may be, in respect of goods imported as issued by the Commissioner Inland Revenue having jurisdiction: Provided further that if plant, machinery and equipment, on which exemption is availed under this serial number, is transferred or supplied outside the tribal areas, the tax exempted shall be paid at applicable rate on residual value.
152. Supplies of electricity, as made from the day of assent to the Constitution (Twenty-fifth Amendment) Act, 2018, till 30th June, 2023, to all residential and commercial consumers in tribal areas, and to such industries in the tribal areas which were set and started their industrial production before 31st May, 2018, but excluding steel and ghee or cooking oil industries".
9. Admittedly, the petitioner has its unit at erstwhile FATA and thus its taxable activities relating to the levy and charge of sales tax are exempt, provided that the goods produced by the petitioner are consumed in the erstwhile tribal territory. The petitioner/importer in order to secure the interest of revenue, i.e. leakage of revenue, has to provide a post-dated cheque equal to the amount of tax.
As mentioned earlier the said exemption is granted to the importers, who have industrial concern in the erstwhile FATA, through an Entry No. 151 in 6th Schedule of the Sales Tax Act, 1990. It is, however, imperative to mention that under Section 13(1) of the Sales Tax Act, 1990, the exemption is granted through legislation.
10. It is the case of learned counsel for the petitioner that when the law requires that against the amount of tax the petitioner is only required to provide a post-dated cheque to the FBR/revenue department then the demand of the FBR/ revenue department that the said post-dated cheque should be accompanied with a banker certificate (Good for Payment) is beyond the authority of the Revenue.
11. Mr. Aamir Javed, learned Additional Attorney General accompanied by representative of the revenue department, while rebutting the arguments, have produced an interim order passed by the Hon'ble Sindh High Court wherein similar circumstances the importers were allowed import subject to bank guarantee, however, he has argued that the demand by the Revenue for providing Good for Payment Certificate alongwith post-dated cheque from the importer is not without any reason as in good number of cases, the importers are violating the terms of import and this arrangement is made in order to protect the State revenue from leakage. The learned AAG has also raised an objection to the territorial jurisdiction of this Court by arguing that the consignment/shipment of the petitioner has arrived at Karachi port Qasim, Pakistan and thus the impugned demand was made at Karachi, therefore, this Court has no jurisdiction in the matter. In this regard, the learned counsel for the petitioner has relied upon the judgment of Hon'ble Lahore High Court passed in "Sethi and Sethi Sons through Humayun Khan Vs. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad (2012 PTD 1869)."
12. While rebutting the said arguments learned counsel for the petitioner has argued that in view of Sales Tax General Order No.14 of 2022, the petitioner is supposed to clear all his goods at Azakhel Dry Port, Peshawar which would ultimately be destined to its manufacturing unit which is situated at Provincial Administered Tribal Area of Malakand Division. Therefore, this Court has the territorial jurisdiction in the matter. In support of his contention, he has placed reliance on "The Federal Government through Secretary Interior, Government of Pakistan vs. Ms. Ayyan Ali & others (2017 SCMR 1179), Messrs Al-Iblagh Limited, Lahore vs. The Copyright Board, Karachi & others (1985 SCMR 758), LPG Association of Pakistan through Chairman vs. Federation of Pakistan through Secretary, Ministry of Petroleum and Natural Resources, Islamabad & 08 others (2009 CLD 1498), Khalid Saeed vs. Shamim Rizwan & others (2003 SCMR 1505), Muhammad Ibrahim vs. The State (2021 PCr.LJ 412), Hafiz Abdul Salam vs. Hassan Din (2020 YLR 2297), Messrs Jet Green
(Pvt) Limited vs. Federation of Pakistan & others (PLD 2021 Lahore 770), Messrs Sethi and Sethi Sons through Humayun Khan vs. Federation of Pakistan through Secretary Ministry of Finance, Islamabad & others (2012 PTD 1869)".
13. Admittedly, the manufacturing unit of the petitioner is situated at Malakand Division Erstwhile Provincially Administered Tribal Area ("PATA") and the imported goods would be cleared from Azakhel Dry Port in view of the Sales Tax General Order No.14 of 2022. Not only the Federal Board of Revenue being a Federal Authority resides throughout Pakistan but the grievances raised by the petitioner partly relates to the clearance of goods at Azakhel which would be consumed ultimately in PATA. Thus, the Dominant Object of such cause lies in the Province of Khyber Pakhtunkhwa.
14. As far as the law referred by the learned AAG in the case of Sethi and Sethi Sons (supra), the said judgment is obviously distinguishable because in the said case the petitioner had assailed the jurisdiction of Hon'ble Lahore High Court essentially challenging the registration of FIR at Karachi.
15. In the present case, the Dominant Object of the petitioner is to challenge the demand of the respondents asking the petitioner to provide a post-dated cheque accompanied with a certificate from the banker "good for payment" against the importation of goods which are though imported through customs port, Karachi but are parked there for a very limited period as the ultimate destination of the said goods is Provincially Administered Tribal Area and the goods would be cleared from Dry Port Azakhel, Peshawar, therefore, this Court has a territorial jurisdiction to entertain this petition and accordingly the objection of the respondents is overruled. The Hon'ble Supreme Court in the case of "The Federal Government through Secretary Interior, Government of Pakistan Vs. Ms. Ayya n Ali and others" (2017 SCMR 1179) has dilated upon similar question of maintainability of constitutional petition before the Sindh High Court in a matter where name of the Petitioner was placed in Exit Control List on the recommendation of Home Department Government of Punjab and the Court held as follows: - It is now well settled that the Federal Government, though may have exclusive residence or location at Islamabad, would still be deemed to function all over the country. In this regard the case of LPG Association of Pakistan through its Chairman v. Federation of Pakistan through Secretary Ministry of Petroleum and Natural Resources Islamabad and 8 others (2009 CLD 1498), may be referred to, whereby the Lahore High Court, after meticulously analyzing the judgments rendered by this Court, as well as of the High Courts on the question of territorial jurisdiction, with regard to the acts, deeds and the legislative instruments of/by the Federal Government, has deduced the jurisprudential principles as follows:- "(A) The Federal Government or any body politic or a corporation or a statutory authority having exclusive residence or location at Islamabad with no office at any other place in any of the Province, shall still be deemed to function all over the country.
(B) If such Government, body or authority passes any order or initiates an action at Islamabad, but it affects the "aggrieved party" at the place other than the Federal capital, such party shall have a cause of action to agitate about his grievance within the territorial jurisdiction of the High Court in which said order/action has affected him.
(C) This shall be more so in the cases where a party is aggrieved by a legislative instrument (including any rules, etc.) on the ground of it being ultra vires, because the cause to sue against that law shall accrue to a person at the place where his rights have been affected. For example, if a law is challenged on the ground that it is confiscatory in nature, violative of the fundamental rights to property; profession; association etc. and any curb has been placed upon such a right by a law enforced at Islamabad, besides there, it can also be challenged within the jurisdiction of the High Court, where the right is likely to be affected.
In this context, illustrations can be given, that if some duty/tax has been imposed upon the withdrawal of the amounts by the account holders from their bank account and the aggrieved party is, maintaining the account at Lahore though the Act/law has been passed at Islamabad, yet his right being affected where he maintained the account (Lahore), he also can competently initiate a writ petition in Lahore besides Islamabad; this shall also be true for the violation of any right to profession, if being conducted by a person at Lahore, obviously in the situation, he shall have a right to seek the enforcement of his right in any of the two High Courts."
16. Moving on to the essential issue in this case which is the interpretation of Entry No. 151 in 6th Schedule of the Sales Tax Act, 1990. In the said entry, the security which is demanded by the Legislation is a post-dated cheque whereas the FBR/revenue department demands that this post- dated cheque should be accompanied with a banker certificate (Good for Payment). Let us first understand the concept of cheque, post-dated cheque and a post-dated cheque accompanied with banker certificate (Good for Payment).
17. In ordinary meaning, cheque is a written order by the payer to a bank, where the payer maintains an account, to pay a specified sum from his account. However, the cheque has been defined in Section 6 of the Negotiable Instruments Act, 1881, according to which, a cheque is bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Whereas according to Mitra's Legal & Commercial Dictionary, cheque means a written order to a bank to pay the stated sum from the drawer's account; the printed form on which a written order to a bank to pay the stated sum from the drawer's account is written.
Similarly, cheque has also been defined in Section 73 of the Bills of Exchange Act, 1882 and Section 2 (7) of the Stamp Act, 1899, which reads as under:- Bill of Exchange Act, 1882 "73 (1). A cheque is a bill of exchange drawn on a banker payable on demand.
(2) Except as otherwise provided in this Part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque".
The Stamp Act, 1882 2 (7). "Cheque" means a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand".
Likewise, according to the Chambers 21st Century Dictionary, cheque means a printed form on which to fill in instructions to one's bank to pay a specified sum of money from one's account to another account. Similarly, according to the Law Laxicon, a cheque is a bill of exchange drawn on a banker payable on demand. It is an order on a bank purporting to be drawn upon a deposit of funds for the payment of a specified sum of money, one presentation, to the person named in the document, or to him on his order or to the bearer. It is made payable instantly on demand.
Whereas post-dated cheque has been defined in the Black's Law Dictionary and Mitra's Legal & Commercial Dictionary, which reads as under:- Black's Law Dictionary "Postdated Cheque". A cheque that bears a date after the date of its issue and is payable on or after the stated date.
Mitra's Legal & Commercial Dictionary One delivered prior to its date, generally payable at sight or on presentation on or after day of its date. (Black's Law Dictionary 5th Ed.)
A cheque which is dated subsequent to the actual date on which it is drawn, and which is issued before the date it bears, is called a post-dated cheque. (Thaomson's Dictionary of Banking 12th Ed.)
A post-dated cheque is the same thing as a bill of exchange at so many days' dated as intervene between the day of delivering the cheque and the date marked upon the cheque. The effect of issuing a post-dated cheque is equivalent to giving a promissory note not payable until the date written on the cheque. (Chalmers & Guest on Bills of Exchange, Cheques and Promissory Notes 15th Ed).
18. The essential attributes of a cheque and a post dated cheques are that it is a request of the drawer to the bank where the drawer maintains an account to pay a specific sum of amount to the payee on presentation of the cheque or on the date fixed on the cheque. Under the banking practice in our country, the bank is supposed to make payment to the payee if there is sufficient amount payable to the payee equal to the amount mentioned in the cheque. Even if a customer/drawer draws a cheque for a larger amount than what he has to his credit in the bank, he can make a request to the bank to pay the amount despite of insufficiency of fund. It is presumably a request for a loan and if the bank honestly believing that it is a request for an overdraft pays the amount, the customer/drawer cannot escape the liability by saying that he had no funds instead he knew that the cheque will be dishonoured and will not be paid, in other words when the customer/drawer issues a cheque he is fully aware of the consequences of issuing a cheque for a large sum of amount than the amount he has in his account. In this respect reliance is placed on National Bank of India, Ltd, Lahore vs. Dost Muhammad & Bros, the Mall, Lahore (PLD 1957 Lahore 420).
19. On the other hand, the certification of the cheque by the drawee bank may be termed as an acceptance of the cheque within the meaning of Section 7 of the Negotiable Instrument Act, 1881.
The signature of the certifying banker is thus an acceptance. Punjab National Bank, Ltd vs. Bank of Baroda Ltd and others (AIR 1941 Calcutta 372). However, in the case of a cheque, acceptance is not necessarily to create a liability to pay as between the drawer and the drawee bank. However, there is a difference of opinion of different Courts whether in such a circumstances, the bank can be made liable to pay the said amount or otherwise, however, this Court will not render any opinion on that aspect as the same is not issue before this Court. Even if the certification is construed, according to its terms, as a contract to pay, the certification of a post-dated cheque cannot be established be regarded as an enforceable contract. Bank of Baroda, Ltd vs. Punjab National Bank, Ltd, and others (AIR 1944 Privy Council 58).
20. In normal banking practice, when a customer requests the bank for certification "good for payment", normally, the bank imposts restriction on the transaction of account-holder by not allowing to utilize/draw the money from his account reducing the amount in his account from the amount against which the post-dated cheque was given. In the present case, asking the importer to provide a post-dated cheque with an endorsement "good for payment" from the banker is something more than an ordinary post-dated cheque which is presented in the normal course of business. In entry No. 151 of 6th Schedule to the Sales Tax Act, 1990, as stated above, what the legislature has prescribed is a security that the imported material would be utilized and consumed in Erstwhile Tribal Area i.e. in form of a post-dated cheque and not something more or less.
21. While interpreting a taxing/fiscal statute, it is well settled that in a tax statute one has to look at what is clearly said. There is no room for any intendment; there is equity about a tax; nothing is to be read and nothing is to be implied. Commissioner of Income tax Kanpur vs. Upper Doab Sugar Mills (1978) All LJ 128 Interpretation of Statute by N.S. Bindra, 10th Edition page-1094.
22. When the intention of legislature in entry No. 151 of 6th Schedule to the Sales Tax Act, 1990 in clear words has only asked the importer to present a post-dated cheque equal to the amount of his tax liability which prima facie appears to be as a security to the Revenue that the goods imported for home consumption would be utilized in a manner and mode as provided in the tax exemption under Entry No. 151/152; thus, asking the importer for something more than a post-dated cheque would be against the mandate of the taxing statute. In our legal dispensation the role of executive is to execute the will of legislature and not to add or subtract. It is settled law that where the law requires something to be done in a particular manner, it must be done in that manner.
Another important canon of law is that what cannot be done directly cannot be done indirectly.
"MUHAMMAD HANIF ABBASI-Versus IMRAN KHAN NIAZI and others Constitutional Petition No.35 of 2016, decided on 15th December, 201 (PLD 2018 Supreme Court 189)."
23. To be treated in accordance with law is the command of Article 4 and 25 of the Constitution and Article 18 of the Constitution protect and secure the rights of individuals to conduct any lawful trade or business. In the present case, the demand of the Revenue that the post-dated cheque should be accompanied with a certificate from the bank (good for payment) would amount to impose unreasonable restrictions on the business/activity of the petitioner depriving him to utilize a particular sum of amount which he has to maintain in the bank as essentially a bank while providing the required certificate would also secure the interest of the bank by directing the petitioner either to provide a guarantee or should maintain the account equal to the sum of post- dated cheque. This in our humble understanding was not the will of legislature as reflected in Entry No.151/152 ibid. beside this would amount to unreasonable restriction upon the importer to utilized his property and thus obviously would run counter to the mandate of Article 18 of the Constitution.
24. In view of the above, we hold;
(i) that it is not the will of legislature in Entry No.152 which mandates that importer at the time of clearance of imported goods; destined for consumption at Erstwhile Tribal Area; to provide a post- dated Cheque for the amount of sales tax under the Sales Tax Act, 1990; to be accompanied with a certificate "good for payment" from the bank for its clearance.
(ii) that the impugned demand of respondents that the post-dated cheque as required through Entry No.152 shall be accompanied with the certificate "good for payment" is ultra-vires to Entry No.152 ibid and as such is declared illegal and without lawful authority.
The Writ Petition stands disposed of accordingly.