Shahid Jamil Khan, J. The petitioner, Lahore Tax Bar Association, assailed appointment of respondent No.5/Chairman, Appellate Tribunal, Inland Revenue ('ATIR') alongwith vires of existing Section 130 of the Income Tax Ordinance, 2001 ('Ordinance of 2001'), which is substituted through Tax Laws Amendment Act, 2020, earlier the same amendment was made by Tax Laws (Second Amendment) Ordinance, 2019. Appellate Tribunal Inland Revenue (Appointment of Chairperson and Members) Rules, 2020 inserted through SRO 1405(I)/2020 dated 29th December, 2020 ('Appointment Rules of 2020') are also assailed.
2. The case was argued, at length, from both sides, on various dates of hearing. Notices under Order XXVII-A of CPC were issued on 24.04.2023 by confronting constitutional validity of delegating powers to Prime Minister, to frame Rules for appointment of Members and Chairman of ATIR and appointments on contract against sanctioned posts, that too in violation of judgment Sh. Riaz-ul- Haq and another v. Federation of Pakistan through Ministry of Law and others (PLD 2013 SC 501).
The Attorney General for Pakistan appeared before the Court on 12.06.2023 and being confronted could not displace that the ATIR is a Judicial Tribunal. Relevant paragraph from order dated 12.06.2023 is reproduced:- "Though the question is already noted in order dated 20.04.2023 while issuing Notice under Order XXVII-A of CPC, however, taking advantage of learned Attorney General's presence before the Court, he is asked whether the respondent/Appellate Tribunal Inland Revenue ("Appellate Tribunal") is Judicial or Administrative Tribunal. He, keeping in view the judgments in Amanullah Khan and others v The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad and others (PLD 1990 SC 1092), Sh. Riaz-ul-Haq and another v. Federation of Pakistan through Ministry of Law and others (PLD 2013 SC 501) and LPG Association of Pakistan v Federation of Pakistan and others (2021 CLD 214), submits that it is a Judicial Tribunal in presence of the judgments, ibid.
2. Appointments in the Appellate Tribunal, which is admittedly, a Judicial Tribunal, has to be under the guidelines in the Sh. Riaz-ul-Haq's case, as reiterated and followed by this Court in LPG Association's case. There is no room for appointments of Judicial and Technical Members on contract basis against a permanent post as is held by the Apex Court in judgments Nemat Ullah and others v Chairman Governing Body, Worker Welfare Board/Secretary to Government of KPK, Labour Department and other (2016 SCMR 1299), Pakistan Railways through Chairman, Islamabad and another v Sajid Hussain and others (2020 SCMR 1664), Secretary, Ministry of Finance, Islamabad and others v Tayyaba Haleem Subhani and others (2022 SCMR 77) and Government of Khyber Pakhtunkhwa through Secretary Forest and others v Sher Aman and others (2022 SCMR 406).
Relevant part of the judgment in Sher Aman's case is reproduced:- "8.... Keeping these facts and circumstances in mind, the learned High Court could not have "adjusted" the said Respondent against the permanent post of a Forester, which was lying vacant in the Forest Department. Such posts are required to be filled in a transparent manner, after due advertisement, open competition, a level playing field for all eligible candidates, the best and most qualified of them being employed in accordance with a merit list prepared after fulfilling all necessary testing, interview and short-listing requirements. There is no concept of "adjusting" employees against permanent posts without following the process described above...."
Learned Attorney General is confronted through Notice under Order XXVII-A of CPC that the amendment in Section 130 of the Income Tax Ordinance, 2001 through Tax Laws Amendment Act, 2020 and Tax Laws (Second Amendment) Ordinance, 2019, assailed in this petition does not satisfy the test of the judgments, ibid."
3. The Attorney General for Pakistan, being occupied before the Apex Court could not appear himself on next date of hearing, however, through order dated 08.11.2023, his presence was requisitioned to obtain his opinion on behalf of the Federal Government, on the question regarding use of word 'Prime Minister' and its constitutional validity in presence of the judgment in Messrs Mustafa Impex Karachi and others versus The Government of Pakistan through Secretary Finance, Islamabad and others (PLD 2016 Supreme court 808). Relevant paragraph from order dated 08.11.2023 is reproduced:- "2. Let Attorney General for Federation of Pakistan to appear before this Court on next date and assist the Court that the role assigned to Prime Minister in this proviso commensurate with the Constitutional scheme which recognizes the Legislature, Executive and Judiciary as organs of the state. The Executive, after judgment by Hon'ble Supreme Court of Pakistan in Messrs Mustafa Impex, Karachi and others versus The Government of Pakistan through Secretary Finance, Islamabad and others (PLD 2016 Supreme Court 808), operates through Cabinet for any sanctioned post, budget allocation of which is to be made by Legislature. Spirit of the Constitution of Islamic Republic of Pakistan, 1973 ("the Constitution"), when Articles 240 and 242 are read, is that the posts in connection with the affairs of Federation and Province should be filled through competitive process.
3. Legal opinion of the Attorney General, on the piece of legislation, ibid, is essential; therefore, his presence is necessary. The Legislation itself shows that Architect of this Provision wanted to use it, apparently, for political purpose and exercise of power, thereafter, is supporting this view, when the Members are appointed on contract basis without any competitive process.
Appointment on a sanctioned post cannot be made on contract as is held by august Supreme Court in judgments Nemat Ullah and others v Chairman Governing Body, Worker Welfare Board/Secretary to Government of KPK, Labour Department and other (2016 SCMR 1299), Pakistan Railways through Chairman, Islamabad and another v. Sajid Hussain and others (2020 SCMR 1664), Secretary, Ministry of Finance, Islamabad and others v. Tayya ba Haleem Subhani and others (2022 SCMR 77) and Government of Khyber Pakhtunkhwa through Secretary Forest and others v. Sher Aman and others (2022 SCMR 406)."
4. Learned Attorney General for Pakistan was again busy before the Apex Court in the matters of national importance. However, Mirza Nasar Ahmad, Additional Attorney General for Federation of Pakistan was asked to seek instructions, telephonically, on the question; why phrase 'Prime Minister' should not be read as 'Federal Government' by invoking the doctrine of reading down, to save the vires of Section 130 of the Ordinance of 2001. He, after seeking instructions telephonically, from learned Attorney General for Pakistan has given statement on existing constitutional and legal position, without conceding to the prayer of this petition:- "In terms of the Articles of the Constitution of Islamic Republic of Pakistan, 1973, the executive authority of the Government vests exclusively with the Federal Government i.e. the Cabinet as interpreted by the Hon'ble Supreme Court of Pakistan in Mustafa Impex Case, hence, the authority of powers which comes within the scope of the executive authority of the Federation are in the exclusive domain of the Cabinet."
Learned Additional Attorney General has read paragraph 84 from the judgment in Mustafa Impex Case, to support the statement, which is reproduced:- "84. We may now summarize our conclusions:--
(i) The Rules of Business, 1973 are binding on the Government and a failure to follow them would lead to an order lacking any legal validity.
(ii) The Federal Government is the collective entity described as the Cabinet constituting the Prime Minister and Federal Ministers.
(iii) Neither a Secretary, nor a Minister and nor the Prime Minister are the Federal Government and the exercise, or purported exercise, of a statutory power exercisable by the Federal Government by any of them, especially, in relation to fiscal matters, is constitutionally invalid and a nullity in the eyes of the law. Similarly budgetary expenditure, or discretionary governmental expenditure can only be authorized by the Federal Government i.e. the Cabinet, and not the Prime Minister on his own.
(iv) Any Act, or statutory instrument (e.g. the Telecommunication (Re-Organisation) Act, 1996) purporting to describe any entity or organization other than the Cabinet as the Federal Government is ultra vires and a nullity.
(v) The ordinance making power can only be exercised after a prior consideration by the Cabinet.
An ordinance issued without the prior approval of the Cabinet is not valid. Similarly, no bill can be moved in Parliament on behalf of the Federal Government without having been approved in advance by the Cabinet. The Cabinet has to be given a reasonable opportunity to consider, deliberate on and take decisions in relation to all proposed legislation, including the Finance Bill or Ordinance or Act. Actions by the Prime Minister on his own, in this regard, are not valid and are declared ultra vires.
(vi) Rule 16(2) which apparently enables the Prime Minister to bypass the Cabinet is ultra vires and is so declared.
(vii) Fiscal notifications enhancing the levy of tax issued by the Secretary, Revenue Division, or the Minister, are ultra vires. (it is clarified, in passing, that this court has in the past consistently held that a greater latitude is allowed in relation to beneficial notifications and that principle still applies).
(viii) In consequence of the above findings the impugned notifications are declared ultra vires and are struck down.
Prior to concluding this judgment we would like to express our appreciation for the valuable assistance provided by the learned counsel who have appeared in this matter. We are grateful to each one of them."
[emphasis supplied]
5. In response, learned counsel for the petitioner submitted that the Appointment Rules of 2020 were framed by the Prime Minister, therefore, are ultra vires to the Constitution of Islamic Republic of Pakistan, 1973 ('Constitution') and in violation of Mustafa Impex Case. He contended that in presence of the legal position stated by the Attorney General Office, the Appointment Rules of 2020 cannot hold the field, therefore, the appointments made under these Rules may be declared illegal and without lawful authority.
6. Learned counsel for respondent No.5 has not denied that respondent No.5 was appointed under the Appointment Rules of 2020, however, submitted that appointment as Member (Judicial) was through Federal Public Service Commission. Further submitted that at the time of filing of this petition, the Chairman was appointed on Current Charge Basis, which has been regularized meanwhile, therefore, to the extent of challenge to the appointment of respondent No.5, the instant petition has become infructuous.
7. Arguments heard. Record perused.
8. After the statement, ibid, from Attorney General Office, read with the law laid down in Mustafa Impex Case, further interpretation is not required to hold that the words 'Prime Minister' as used in existing subsection (2) of Section 130 of the Ordinance of 2001 shall be read as 'Federal Government' from the date when this provision was brought in the statute book. The provision is hereby read down accordingly.
Admittedly, the Appointment Rules of 2020, were not approved by the Federal Cabinet, therefore, are declared ultra vires to the Constitution and provisions of Section 130(2), as read down. Though the appointments, under the Appointment Rules of 2020 are also illegal and without lawful authority, however, to save the continuity in system, the de facto doctrine is invoked to direct that the Members and Chairman appointed under the Appointment Rules of 2020 are allowed to continue their service, till the appointment of regular incumbents, under the Rules, to be framed and promulgated by the Federal Government, in consonance with the law, as laid down in Mustafa Impex Case. The Rules shall be framed within thirty (30) days from the date of judgment and process of recruitment shall be completed within forty five (45) days thereafter.
9. Learned Additional Attorney General has undertaken that fresh Rules under the law ensuring transparency, competition and security of tenure shall be framed within thirty (30) days. It is, however, observed that the existing Members (Judicial), appointed under the Appointment Rules of 2020 being declared ultra vires, if succeeded, through competitive process, may be given benefit of their length of service. Needless to say that the Chairman shall also be appointed under the Rules to be framed in accordance with law, soon after the Rules are notified.
10. It is important to sensitize, the framers of future Rules for appointments of Members and Chairman in ATIR, that the country is going through its worst economic condition. Only way out is economic stability and consequential tax collection. The economic stability cannot be achieved without certainty in decisions on tax and economic matters by judicial and quasi- judicial authorities. The investment has no nationality, therefore, migrates, like seasonal birds, to a place where conditions are conducive and certain for their survival and growth. Tax Tribunals, are last fact finding independent forum, which must pass prompt and consistent orders, in accordance with the law laid down by Superior Courts. The whole exercise of tax assessment and tax collection in Billions of Rupees, drains, when decision is passed by Members of the Tribunals incompetently or for extraneous consideration. A competent lawyer would never, leave his practice for appointment as Member on contract for few years, in absence of a career in the job and a chance of elevation.
To bring certainty in judicial decisions on commercial and taxation matter, the relevant Tribunals and Courts should be the nurseries for picking up, on merits, the Judges for Constitutional Courts.
For achieving this goal, the Constitutional Courts should have an overarching or supervisory role, in appointments of Members and Judges of the Commercial Courts and Tribunals. The Constitutional Courts can always gauge the competence of Member or a Judge, when decisions are brought before them in Appellate or Reference Jurisdiction, to elevate from them for Constitutional Courts, based on competence and integrity.
Unfortunately, these posts are being filled on political basis, by considering the allegiance, to a political party or a group of lawyers, as eligibility criteria.
11. There is no denial that the posts of Members and Chairman of ATIR are in connection with the affairs of the Federation, therefore, under Article 240 of the Constitution, appointments to the posts and the conditions of service should be or under the Act of Majlis-e-Shura (Parliament). Though not decided specifically, however, if it is presumed that Rules to be framed under the Section 130(2) are under the Act of Parliament, the framers of the Rules, has to comply with command of the Constitution. The competitive process, to determine capacity and capability based on eligibility, Public Service Commissions are constituted under Article 242 of the Constitution. The statutes under this mandate are providing an independent forum and procedure, thereunder. The tendency of bypassing this forum would not only deprive the deserving candidates from appointment on merits, but would instill mistrust in the candidates and those who are striving for the future and fortune. They would always look for 'SIFARISH' and pledge their ability and competence, in the hands of those who exploit them for political or extraneous purpose.
12. Preamble of the Constitution envisages equality in opportunities and social justice in the system of Governance under the Constitution. Article 27, safeguard against discrimination to a person qualified for appointment and Article 4 ensures treatment of the qualified person in accordance with law.
Article 5 imposes obligation of obedience to the Constitution and imposes duty of loyalty to the State upon every citizen. The framers of the Rules, in addition, are under an oath to protect and comply with the Constitution and its command. An oath, in substance, is a holly pledge or promise by keeping the Almighty Divine Authority as witness.
If the lawmakers are sensitized, there is no need for any direction by this Court to be followed, for framing the Rules.
13. Before parting with the judgment, it is also important to note that the important questions raised and noted, but not addressed and decided, may be looked into in another case.
The petition is allowed to the extent of this judgment.