' This judgment shall dispose of W.Ps. Nos.1058, 3369, 231, 3217, 3235, 1057, 457, 2677 and 565 of 1993, as in all these petitions a common question of law as to the interpretation of section 45(3) of the Saki Tax Act, 1990, is involved. This provision requires an appellant to deposit the tax demanded or penalty levied under the Act before filing an appeal under section 45 of the Sales Tax Act, 1990.
2. For resolution of this question, no detailed narration of facts is necessary. Suffice it to say that the petitioners in all these petitions being aggrieved of the orders of the Deputy Collector of Central Excise and Sales Tax, calling upon them to pay various amounts as sales tax and penalties filed appeals under section 45 of the Sales Tax Act, 1990, before the Collector of Customs, Central Excise and Sales Tax (Appeals), Lahore. On 28-12-1992, the Collector dismissed all these appeals on account of non-compliance with the provision of section 45(3) of the Act, observing that despite having been called upon to deposit the amounts of sales tax/penalties found due from the petitioners by the Deputy Collector/Sales Tax Officer, they had failed to make the deposit.
3. The arguments in all these connected petitions were in the main addressed by Mr. Muhammad Amin Butt, Advocate, the learned counsel for the petitioner in W.P. 1058 of 1993, Raja Muhammad Akram, Mr. Munir Ahmad Bhatti, Mr. Ashtar Ausaf Ali Khan, Mian Ashiq Hassan, Mr. Ali Sibtain Fazli, Mr. Imtiaz Javed Hashmi, and Mian Saqib Nisar, Advocates, were also heard. The other learned counsel adopted their arguments. The respondents were represented by Mr. Faqir Muhammad Khokhar, the learned Deputy Attorney-General for Pakistan.
4. Mr. Muhammad Amin Butt, Advocate, learned counsel for the petitioner, in the first instance, challenged the validity of the Sales Tax Act, 1990, by arguing that the manner, in which the same has been enacted amounts to fraud on the Constitution. It was pointed out that the Parliament, instead of repealing the Sales Tax Act, 1951, and re-enacting it resorted to an indirect device of replacing the entire Old Act with a new enactment while dubbing it as an amendment and placing it in Schedule to the Finance Act, 1989, so as to avoid debate or discussion in the Parliament.
5. The next contention of the learned counsel for the petitioner was that the provisions of section 45(3) of the Sales Tax Act, 1990, so far as they direct the deposit of the amounts of tax in dispute and the penalty before filing the appeal, are directory and not mandatory. It was emphasised by the learned counsel that neither the deposit of the amounts mentioned in section 45(3) can be directed as a matter of course nor can the appeal be dismissed simply on account of the non- deposit without examining the merits of the case. Reliance was placed by the learned counsel for the petitioner in support of this submission upon Messrs Eastern Rice Syndicate v. Central Board of Revenue PLD 1959 SC (Pak.) 364.
6. Mr. Faqir Muhammad Khokhar, the learned Deputy Attorney-General for Pakistan, however, argued that in face of clear language of section 45(3), there was no room for contending that the deposit of amount mentioned therein was not obligatory or was not in the nature of a condition precedent for filing the appeal. According to the learned Deputy Attorney-General, in case of non- deposit of the amounts aforesaid, the appeal cannot be heard or decided on merits. Reliance was placed by the learned Deputy Attorney-General on Craies on Statute Law (7th Edn., p.62), Atta Muhammad Qureshi v. The Settlement Commissioner, Lahore Division and 2 others PLD 1971 SC 61, Vijay Prakash D. Mehta v. Collector of Customs (Preventive), Bombay AIR 1988 SC 2010 and Navin Chandra Chhotelal v. The Central Board of Excise and Customs, New Delhi and others AIR 1971 SC 2280.
7. As regards the first contention of the learned counsel for the petitioners, no detailed discussion on the subject is necessary, as these petitions are liable to be accepted on the second ground urged by him. However, while on this subject it needs to be stated that the method adopted in enforcing the Sales Tax Act, 1990, not only appears to be unusual and novel but is also somewhat circuitous. As would appear from a comparison of the Sales Tax Act, 1951 with the Sales Tax Act, 1990, the intention of the Legislature was to do away with the Old Act in its entirety and to replace it by a new enactment. However, instead of repealing the Sales Tax Act, 1951, and re-enacting the Sales Tax Act, 1990, the Legislature adopted, if I may say so, a device. In the Finance Act, 1990, section 13 was enacted purportedly for amending the Sales Tax Act, 1951 as is evident from its heading. This section provided that for Chapters 1 to 16 of the Sales Tax Act, 1951, the Chapters set out in the Third Schedule shall be substituted. It is to be noted that the Sales Tax Act, 1951 had only 16 Chapters with the result that the effect of what was termed as an amendment of section 13 of the Finance Act, 1990 was that the entire Sales Tax Act, 1951 was replaced by new provision. It is also interesting to note that later on, by Finance Act, 1990, the nomenclature of the Act was also changed through the Sales Tax Act, 1990. It is thus evident that no provision whatsoever of the Old Act, 1951 remained in the field. This exercise cannot certainly be called as an amendment nor section 13 of the Finance Act, 1990 be termed as an amendatory provision. In Bindra's Interpretation of Statute (7th Edition, 1984), Chapter XX at page 687, while defining amendatory provision, it is stated that: "A law is amended when it is, in whole or in part, permitted to remain, and something is added to or taken from it, or it is in some way changed or altered to make it more complete or perfect, or to fit it the better to accomplish the object or purpose for which it was made, or some other object or purpose. It is an alteration or change of something established as law. Quotation U.S. V. La Franea, Sutherland says: "Any change of the scope or effect of an existing statute, whether by addition, omission, or substitution of provision, which does not wholly terminate its existence, whether by an Act purporting to amend, repeal, revise, or supplement, or by an Act independent and original in form, is treated as amendatory. And it is the effect, not the name given to an Act that determines its character. If a subsequent statute does in fact modify and change the proceedings to be had under a former Act, the latter Act is an amendment of the earlier Act and must be so regarded and treated, although it is not so called in the Act itself."
' It is clear from the above statement of law that if the existence of a Statute is completely terminated or none of its provisions remains in the field, the exercise undertaken cannot be termed as an amendment.
8. Before examining the merits of the second contention of the learned counsel for the petitioner regarding the interpretation of section 45(3) of the Sales Tax Act, 1990, section 45 thereof may usefully be reproduced: "45. Appeals.---(1) Any person including the Sales Tax Department aggrieved by any decision or order made under this Act by an officer of Sales Tax lower in rank than a Collector may, within thirty days of the date of communication of such decision or order, appeal to the ' Collector (Appeals): ' Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector (Appeals) if he is satisfied that the appellant has sufficient cause for not preferring the appeal within that period.
(2) The Collector (Appeals) may, after making such further inquiry as may be necessary and after giving the appellant an opportunity of being heard, pass such order as he thinks fit, remanding, confirming, altering or annulling the decision or order appealed against.
(3) Any person desirous of appealing under subsection (1) against any decision or order relating to any tax demanded or any penalty levied under the Act shall, before filing the appeal, deposit the tax demanded or the penalty levied or both the tax and penalty."
9. In the submission of the learned counsel for the petitioner, section 45(3) of the Sales Tax Act, 1990, is directory and permissive in nature and an appeal filed under section 45(1) thereof cannot be dismissed by the Collector (Appeals) merely on account of non-deposit of the amounts mentioned in subsection (3) thereof. It is also argued by Mr. Muhammad Amin Butt, Advocate, that the Collector cannot, without examining the merits of the case, direct the deposit of the entire amount demanded and in case of non-compliance, proceed to reject the appeal. Relying on Messrs Eastern Rice Syndicate's case (supra), it was argued that such an interpretation, as is being placed upon section 45(3) by the respondents would render the right of appeal as futile and illusory.
10. The learned Deputy Attorney-General for Pakistan has, on the other hand, argued that on its plain language, section 45(3) is mandatory in nature and, therefore, non-compliance with it must be visited with the penalty of dismissing the appeal.
11. Having heard learned counsel for the petitioners and the learned Deputy Attorney-General for Pakistan and given consideration to their arguments, I find myself unable to agree with the learned Deputy Attorney-General. Although section 45(3) while providing for deposit of the amounts in dispute uses the expression "shall", it is wholly silent about the consequences flowing out of its non- compliance. It is by now well-settled that every non compliance with a provision of law does not invalidate the Act nor can it be visited with penal consequences except when the command of the statute is mandatory and emphatic. However, in those cases where the prescription of the Statute is permissive or directory, notwithstanding non-compliance, no penalty can be imposed. In Statutory Interpretation by FA.R. Bennion (1984 Edition), it is stated at page 22 that: "It would be draconian to hold that in every case failure to comply with the relevant duty invalidates the thing done. So the Courts' answer has been to devise a distinction between mandatory and directory duties. Terms used instead of 'mandatory' include `absolute', 'obligatory', `imperative' and 'strict'. In place of 'directory' the term 'permissive' is sometimes used. Use of the term 'directory' in the sense of permissive has been justly criticised. (See Craies' Statute Law (7th Edition, 1971), p. 61 n. 74). However it is now firmly rooted."
' In Atta Muhammad Qureshi's case supra, it has been observed that: "It is well-settled that the neglect of the plain requirements of a statutory enactment which prescribes how something is to be done, will invalidate the thing being done in some other manner if the enactment is absolute but not if it is merely directory."
' It, therefore, becomes necessary to find out as 'to whether the provisions of section 45(3) of the Sales Tax Act, 1990 are directory or mandatory.
12. The only reason advanced by the learned Deputy Attorney-General for considering the above provisions as imperative and obligatory is that it uses the word "shall". Although it is correct that the use of words like "shall" or "must" are generally understood as making the provision mandatory but it is equally well-settled that the words "shall" and "may" depending upon the context in which they have been used are often interchangeable. Ii Muhammad Saleh v. The Chief Settlement Commissioner, Lahore and 2 other PLD 1972 SC 326), the Supreme Court was pleased to observe that: "It is now well-settled that the words "may" and "shall" in legs phraseology are interchangeable, depending on the context in whic they are used, and are not to be interpreted with the rigidity which attributed to them in ordinary parlance."
' In Crawford's Construction of Statutes, the rule at page 519 is stated as thus: "Ordinarily the words "shall" and "must" are mandatory, and the word "may" is directory, although they are often used interchangeably in legislation. This use without regard to their literal meaning generally makes it necessary for the Courts to resort to construction in order to discover the real intention of the legislation."
13. The question as to whether a particular provision is mandatory or directory is not free from difficulty. As observed by the Supreme Court in Dr. Sher Afghan v. Aamar Hayat and 2 others 1987 SCM R 1987, no universal rule can be laid down as to whether a particular enactment is mandatory or directory. There are, however, some well-accepted principles which have to be applied in order to find out the true intent of the Legislature. In Maxwell's Interpretation of Statutes (12th Edition), it is stated at page 314 that: "It is impossible to lay down any general rule for determining whether a provision is imperative or directory. 'No universal rule', said Lord Campbell L.C., 'can be laid down for the construction of statutes, as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of Courts of Justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed'. And Lord Penzance said: ' I believe, so far as any rule is concerned, you cannot safely go further than that in each case you must look to the subect-matter, consider the importance of the provision that has been disregarded, and the relation of that provision to the general object intended to be secured by the Act; and upon a review of the case in that aspect decide whether the matter is what is called imperative or only directory:"
' Similarly in Statutory Interpretation by F.A.R. Bennion (1984 Edition), it has been. stated at pages 22 and 23 that "there is no rule of thumb in this matter" and "the interpreter's task is always to scrutinize the Act and ietermine, in the light of its particular provisions, the legal consequence most Likely to have been intended for breach of the duty". The following observations A Lord Penzance in Liverpool Borough Bank v. Turner (1861) 30 LJ Ch. 379, it page 380) may also be cited with advantage: "I believe, as far as any rule is concerned, you cannot safely go further,, than that in each case you must look to the subject-matter, consider the importance of the provision and the relation of that provision to the general object intended to be secured by the Act, and upon a review of the case in that aspect decide whether the enactment is what is called imperative or only directory....
' I have been very carefully through all the principal cases, but upon reading them all the conclusion at which I am constrained to arrive is this, that you cannot glean a great deal that is very decisive from a perusal of these cases. They are on all sorts of objects. It is very difficult to group them together, and the tendency of my mind, after reading them, is to come to the conclusion which was expressed by Lord Campbell in the case of Liverpool Bank v. Turner."
' According to the Craies on Statute Law (7th Edition): "When a statute is passed for the purpose of enabling something to be done, and prescribes the formalities which are to attend its performance, those prescribed formalities which are essential to the validity of the thing when done are called imperative or absolute; but those which are not essential, and may be disregarded without invalidating the thing to be done, are called directory."
14. If section 45 of the Sales Tax Act, 1990 is analysed keeping the above principles in rend, it is to be seen that the primary objective in enacting this provision is to provide a right of appeal to the affected persons . This, in fact, is the essence of this provision and section 45(3) cannot be construed in a manner, which would take away or render the right of appeal nugatory or illusory. In Messrs Easter Rice Syndicate's case supra, the Supreme Court while interpreting section 189 of the Customs Act, 1878, which at the relevant time contained a provision akin to section 45(3) strongly deprecated the dismissal of the appeal only on the ground of non-deposit of the penalty. To the same effect is the judgment of the Karachi High Court in Maududur Rchman v. Central Board of Revenue and 2 others PLD 1975 Kar.
51.
15. I am, therefore, unable to agree with the learned Deputy Attorney-General that section 45(3) of the Sales Tax Act, 1990 is mandatory and imperative and in all cases the appellant must before filing the appeal deposit the tax demanded and the penalties levied. It is not difficult to visualise cases where the order impugned before the Collector may be wholly void, unlawful, unjust and even perverse. In some other matters, the order may be ex parte passed without affording any opportunity of being heard to the affected person. The amount of tax determined or the penalty levied may be such that it might well be impossible for an appellant to deposit the amount before filing the appeal. It would therefore be highly inequitable to hold that irrespective of the merits of the case, the appellant should, in the first instance, deposit the amount of tax demanded and the penalty levied, failing which his appeal would not be heard. Such an interpretation, which clearly leads to injustice in the absence of any compulsion cannot be accepted.
16. It is also to be noticed that section 45 confers the right of appeal upon the affected party and is, therefore, beneficial in nature. Any limitation on that right has to be strictly construed. In Bindra's Interpretation of Statutes (7th E Edition), the following statement of law appears at page 111: "Where the Court confers the general right of appeal and then imposes certain limitations on that right, the limitations have got to be strictly interpreted. Where however it is not so, the only question is whether on the terms of the section which creates the right of appeal, interpreted in its strict grammatical sense, there is a right of appeal."
17. As already observed, the consequences of non-deposit have not provided by section 45(3) of the Sales Tax Act, 1990 by the Legislature itself. This omission is not without significance, especially when this provision is compared with similar provisions existing in many other statutes like the Banking Companies (Recovery of Loans) Ordinance, 1979 and the Banking Tribunals Ordinance, 1984, which emphatically provided that no appeal shall be entertained or admitted to hearing unless the amount found due has been deposited.
18. Another well-accepted principle of interpretation which becomes applicable, is, that as the language of section 45(3) is in affirmative and not negative, it is deemed to be directory and not mandatory. Reference in this connection may be made to the pronouncement of the Supreme Court in Atta Muhammad Qureshi's case (supra), wherein it was observed that: "The real question which thus arises for consideration is when an enactment is to be considered as absolute and when as directory? It is not possible to lay down a general rule of universal application in this behalf, but the one which is suggested by reported authorities in this connection is the affirmative or negative character of the language in which the provision is couched. If it is negative, that is to say, if the statute enacts that certain action shall be taken in a certain manner and in no other manner, it has been held that the requirements are absolute and that neglect to attend them will invalidate the whole procedure. If, on the other hand, the language is affirmative, it may be considered as a directory provision."
19. In the last but not the least, it may be stated that in view of the command of Articles 2-A and 227 of the Constitution of Islamic Republic of Pakistan, 1973, the existing laws must be interpreted as far as possible keeping in view the Islamic principles of interpretation. This is more so in a case of fiscal statutes. It was ruled in Commissioner of Income Tax, Peshawar Zone, Peshawar v. Messrs Simen A.G. PLD 1991 SC 368 that "Courts arc bound to apply Islamic rules of Interpretation, unless excluded otherwise in preference to the contrary so-called accepted rules of interpretation under the other jurisprudential concepts and the fiscal laws were no exception in that behalf'.
20. In the Islamic polity and system of dispensation of justice, the importance of the right of appeal cannot be understated. It has been held to be a natural right vesting in an individual which cannot be taken away even by a provision in the enactment. It is ordained by Holy Qur'an and Sunnah of Holy Prophet that an affected person must have a right to go in appeal against the decision. In Pakistan through Secretary, Ministry of Defence v. The General Public PLD 1989 SC 6, the Supreme Court went to the extent of striking down the laws, which did not provide for a right of appeal.
21. In this view of the matter, it becomes difficult to agree to an interpretation of section 45(3) of the Sales Tax Act, 1990, which would render the right of appeal as nugatory and futile or subject to such onerous condition like deposit of amount of tax demanded or the penalty adjudged.
22. Reliance of the learned Deputy Attorney-General on Vijay Prakash D. Mehta's case and Navin Chandra Chhotelal's case (supra) is not apt, for in those two cases, the power to dispense with the deposit depending upon the facts of each case was not in dispute. The Supreme Court of India held that once an order has been passed by the Appellate Authority after examining the merits directing the deposit of the amounts in question, an appeal could be dismissed on account of non- compliance of such an order. The present cases stand on a different footing, for the Collector in these cases has, without application of mind to the facts of the case and without passing any specific order while acting on the assumption that the deposit of the amounts is mandatory, had proceeded to dismiss the appeals on account of non-deposit.
23. It emerges from the above that section 45 is directory and not mandatory in character. This, however, does not mean that this provision is to be abated at all. The correct interpretation of section 45(3) would appear to be that an Appellate Authority must examine the facts of each case and determine as to whether or not any deposit of the amounts demanded was called for as a condition for hearing the appeal on merits. In case such an order is passed, the Collector would be competent to dismiss the appeal on account of disobedience and non-compliance of his order.
' In view of what has been stated above, these petitions are allowed and the orders of the Collector of Central Excise and Sales Tax (Appeals), Custom House, Lahore, are without lawful authority and of no legal effect with the result that all these appeals shall be deemed to be pending before him and shall be decided afresh keeping in view the observations made above. No order as to costs.