ORDER CH. IRSHAD AHMAD, JUDICIAL MEMBER.-1. Subsection (1) of section 134 of the Income Tax Ordinance, 1979 (hereinafter referred to as the Ordinance), provides that an assessee objecting to an order passed by an Appellate Commissioner under Section 111 or 132 or sub-section (2) of section 148 or an order under section 156 having the effect of enhancing the assessment or reducing the refund or otherwise increasing the liability of the assessee, may appeal to the Income Tax Appellate Tribunal against such order. The proviso to sub-section (3) of section 134 (hereinafter referred to as the proviso) added to the 1979 Ordinance by Finance Act 1994 (Act XII of 1994) which came into force with effect from It July, 94, however, provides that no appeal except in the case of an appeal filed by the Commissioner, shall lie unless an amount not less than fifty percent of the amount of tax assessed has been paid.
2. An individual assessee, carrying on the business of import of chemical in the name and style of M/s. Ghafoor Chemicals being desirous to object to the order dated 2nd June, 94 of the Commissioner of Income Tax (Appeals), Lahore, passed in appeal against the assessm ent order relating to the assessment year 1990-91 but apprehending that the Tribunal may not, in the face of the language of the proviso, refuse to entertain the appeal unless he deposits fifty per cent of the amount of assessed tax, filed a constitutional petition (W.P.
No. 10782 of 1994) in the Lahore High Court seeking declaration from the High Court that the proviso shall not apply to his proposed appeal before the Tribunal for the reasons: (i) that the proviso was void being inconsistent with the fundamental rights guaranteed by Article 25 of the Constitution;
(ii) that the proviso has inhibited his right of appeal and as such its requirement of depositing the specified amount of the tax assessed before filing the appeal should not be considered as mandatory and in support of the above contention reliance was placed on the judgment dated 10th April, 93 of the said Court by which Writ . Petitions bearing No. 1058, 3300, 69231, 3217, 3235, 1057, 457, 2677 and 565 of 1993 were disposed of; and (iii) that the proviso is prospective and not retrospective and as such will apply to appeals arising out of assessments for the 1994-95 and onward and shall not apply to the appeals which pertain to the assessment year 1990-91. The writ petition filed by the assessee came up for hearing before the High Court on 19th September, 94 and the Court did not agree with the petitioner's contention that the right of appeal could not be subjected to any condition such as prior deposit of specified amount of assessed tax, but observed that the question as to the applicability of the proviso which came into force on It of July, 1994, to the assessee's proposed appeal before the Income Tax Appellate Tribunal relating to the assessm ent year 1990-91, was a question for serious consideration by the Tribunal. The High Court observed that certain precedents indicate that the law as it exists on the date of the assessment governs the appeal. The High Court, therefore, without expressing final opinion in the matter, advised the petitioner to prefer its appeal to the appropriate forum (this Tribunal) and agitate the question for prior deposit of the fixed percentage of assessed tax before the said forum.
Accordingly, M/s. Ghafoor Chemicals has presented the memo, of appeal in this Tribunal's office without depositing fifty percent of the assessed tax and has requested that payment of the fifty percent of the assessed tax as the condition precedent for filing the appeal may be dispensed with as the appellant has no funds available to make the payment and his appeal may be entertained and disposed of on merits.
3. Mr. Ali Bukhsh, another assessee being desirous to object to the order dated 23rd August, 1994 of the Commissioner of Income Tax (Appeals), Bahawalpur, passed in appeal against the assessm ent order relating to the assessment year 1992-93 too has presented the memorandum of appeal in this Tribunal's office without 'depositing the specified amount of the assessed tax as required by the proviso and along with the memo of the appeal has presented a miscellaneous application to submit that the proviso does not oblige the assessee to deposit the required percentage of the assessed tax before filing the appeal, therefore, his appeal may be entertained. But if it does oblige him to deposit the tax the requirement may be dispensed with as the provision of the proviso is directory and not mandatory in its nature. The precise grounds for the submissions are: (i) that the proviso shall not operate retrospectively to defect the assessee's vested right of appeal; (ii) that in matter of appeal the law as it existed at the time of making of assessm ent not as it exists at the time of filing of the appeal shall apply. (iii) that the proviso is directory and not mandatory, therefore, in view of the Lahore High Court's judgment dated 10th April, 1993 in Writ Petition No. 1058 the requirement of prior deposit of assessed tax can be dispensed with by this Tribunal; and the assessee's case was a fit case where the Tribunal should dispense with the requirement; (iv) that the proviso is void being inconsistent with constitutionally guaranteed right of equality before law; it discriminates between "haves and have nots"; (v) that if the proviso is treated as mandatory it would spoil the right of appeal which is a natural right in Islamic polity and system of dispensation of justice and is against Injunctions of Islam; and (vi) that, the proviso, if treated mandatory would impinge upon constitutional guaranteed fundamental rights.
4. Since the assessee's contentions raised substantial questions of law of public importance, this Larger Bench has been constituted to dispose them of and Mr. Mohammad Iqbal Nadeem Pasha, Advocate, Karachi, Mr. Mansoor Ahmad Khan, Advocate Karachi, Mr. Masood Naqvi, Advocate, Karachi, Mr. Sirajul Haq, Advocate Karachi, Mr. Z.H. Jaferi, Advocate Karachi were requested to assist this Bench their valuable arguments amicus curioe.
5. We have heard Dr. IIyas Zafar, Advocate, Mr. Fayyaz Ahmed Chaudhry and Mr. Abdul Hamid Qureshi ITP for the assessee, Mr. Shahbaz Butt, Legal Adviser of the Department and Mr. Mansoor Ahmad Khan, Advocate Karachi, Mr. Iqbal Nadeem Pasha, Advocate Karachi, Mr. Lique Shahid, Advocate as amicus curioe.
6. The submissions that notwithstanding anything in the proviso the assessee are entitled to i.e the appeals in the Tribunal without depositing the specified percentage of assessed tax can broadly be put in three categories. Firstly, that the proviso is not retrospective in its application in the sense that it will not apply to any appeal relating to any assessment for any year prior to the assessment year 1994-95; secondly, that the proviso is not good law as it is inconsistent with the various more valuable rights of the assessee; and thirdly, that the provisions of the proviso are not mandatory and the Tribunal can entertain an appeal without insisting upon the prior deposit of the tax as a condition precedent for filing the appeal. PROSPECnVE/RETROSPECTIVE APPLICATION OF THE PROVISO
7. Mr. Mohammad Iqbal Nadeem Pasha, Advocate, Karachi appearing as amicus curioe submitted that there is a strong presumption supported by high judicial authority that the statutes are construed as operating only to cases or facts which come into existence after the statutes are passed unless retrospective effect is clearly intended. The counsel submitted that there is no indication that the proviso was intended to take effect retrospectively According to Mr. Pasha the proviso shall apply only to appeals arising out of assessments relating to the assessment year 1994-95 or thereafter. In support of his submission Mr. Pasha relied on a decision of the erstwhile High Court of West Pakistan in case of Essential Commodity Industries Model Town, Lahore Vs. Central Board of Revenue reported 1968 Taxation 247 and the decision of the erstwhile High Court of East Pakistan in case . 1 nsaruddin Vs. Appellate Assistant Commissioner of Income Tax Dacca reported 1972 PTD 118. By Finance Art of 1967 a proviso was added to sub-section (1) of section 30 of the Income Tax Act, 1922 (hereinafter referred to as the Act) which provided that no appeal shall lie against any order under this sub-section unless the tax payable under section 22A or one half of the sum demanded under section 29 after regular assessment under section 23 which ever is greater has been paid. The High Court of West Pakistan and the East Pakistan in the above cited cases had held that the proviso shall not apply to any appeal relating to any assessment made before the year in which the proviso was added to the Act. The precise reasoning of the said High Courts was that where a statute affects a substantive right in the absence of express words or necessary intendment, it had to be construed prospectively and not retrospectively and the right of appeal in this country being the creation of statute is a substantive right and it can only be conferred or taken away retrospectively by express words or necessary implication. Fortunately the language of the proviso added to sub-section (3) of Section 134 of the Ordinance and of the proviso added to sub-section (1) of section 30 of the Act is qui#te similar. The Finance Act, 1994, by which the proviso has own added to the Ordinance does not give any indication that the proviso was intended to be applied to all appeals coming before this Tribunal after the It of July, 1994 irrespective of the fact that the said appeals arise out of any assessment order relating to any earlier assessm ent years. There is a strong presumption that the legislature is presumed to be aware of the law laid down by the superior courts. Thus it is presumed that while adding the proviso to sub-section (3) of section 134 of the Ordinance the legislature was presumed to know that on the basis of the above High Court judgments it will apply only to appeals arising out of assessm ents relating to the assessment year 1994-95 or thereafter.
8. It will be quite relevant to point out that the CBR in its Circular No. 129(l)DTP-94/PL-l dated the October 19, 1994 has also clarified that the provisions relating to mandatory payment introduced through Finance Act, 1994 and the Income Tax (4th amendment) Ordinance, 1994 are applicable to proceedings relating to assessm ent years 1994-95 and onward. Although the CBR's letter does not debar us to examine whether the proviso would or would not apply to any appeal relating to an assessment for any year earlier than the year 1994-95 but the said letter does affect the force of the submissions made by the Departmental Representative or the Legal Adviser of the Department that any assessee filing an appeal after the It day of July, 1994 will be required to deposit the specified amount of assessed tax before, his appeal is entertained notwithstanding the fact that the appeal arises out of the assessm ent even relating to year earlier than the year 1994-95. No judicial authority has been cited at the bar to show that the view expressed in the Judgments of the West Pakistan or East Pakistan High Court was not good law.
9. In the subject of construction of statute the most intriguing chapter is regarding the retrospectivity or retrospectivity of statutes. The starting point is that there is presumption against retrospectivity. The leading English textbooks are agreed that the rule has a place in English law. Bennion, 2nd ed. (1992), Statutory Interpretation, p. 214, states: "Unless the contrary intention appears, an enactment is presumed not to be intended to have a retrospective operation". Maxwell on Interpretation of Statutes, 12th ed. (1959), at p. 215, states the principle in a way described by Scarman, J. In Carson v. Carson and Stoyek (1964) 1 W.L.R. 511, 516, as "so frequently quoted with approval that it now itself enjoys almost judicial authority". "Upon the presumption that the legislature docs not intend what is unjust rests the leaning against giving certain statutes a retrospective operation. They are construed as operating only in cases or on facts which come into existence after the statutes were passed unless a retrospective effect is clearly intended. It is a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication." Cases on Statute Law, 7th ed. (1971), at p. 387 describes as retrospective a statute: "which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attached a new disability in respect to transactions or considerations already past". This text cites Lindley L.J. In Lauri V. Renad (1892) 3 Ch. 402, 421: "It is a fundamental rule of English law that no statute shall be construed so as to have a retrospective operation unless its language is such as plainly to require such a construction; and the same rule involves another and subordinate .Rule to the effect that a statute is not to be construed so as to have a greater retrospective operation than its language renders necessary." In modern times the above passages, principles or statements have received high judicial endorsement; for example in Yew Bon Tew V Kenderaan Bas Mara (1983) 1 AC 553, 588, the Judicial Committee of the Privy Council stated: "Apart from the provisions of the interpretations statutes, there is at common law a prima fade rule of construction that a statute should not be interpreted retrospectively so as to impair an existing right or obligation unless that result is unavoidable on the language used. A statute is retrospective if it takes away or impairs a vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attached a new disability, in regard to events already past. There is however, said to be an exception in the ease of a statute which is purely procedural, because no person has a vested right in any particular course of procedure, but only a right to prosecute or defend a suit according to the rules for the conduct of an action for the time being prescribed." In Arnold V. Central .Electricity Generating Board (1987) 3 All ER 694 (H.L.) Lord Bridge said: "Consistently with the presumption that a statute affecting substantive rights is not to be construed as having retrospective operation unless it clearly appears to have been so intended, it seems to me entirely proper, in a case where some retrospective operation was clearly intended, equally to presume that the retrospective operation of the statute extends no further than is necessary to give effect either to its clear language or to its manifest purpose". Certain authorities have drawn distinction between statutes affecting substantive rights and those which only affect the procedure. In writ v. Hale (1860) 30 L.J.
Exch. 40 Pollock C.B. Said:- "I always understood that there is considerable difference between laws which affect the vested rights and interests of parties, and those laws which merely affect the proceedings of Courts". In Cardner v. Lucas (1878) 3 Appeals Cases 582 Lord Blackburn said: "Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not be." Bennion in Statutory Interpretation (2nd ed., P,218) suggests that the reason for the exception in favour of procedural law may be that:-- "a procedural change is expected to improve matters for everyone concerned." Or it may be that suggested by Mellish L.J. In Republic of Costa Rica v. Erlanger (1876) 3 Ch. D.62: "Ko suitor has any vested interest in the course of procedure, nor any right to complain, if during the litigation the procedure is changed, provided, of course, that no injustice is done." The Courts have, however, found that the expressions, vested right, matter of procedure and impairment or*taking away of vested right, though useful in a context, are equivocal and therefore can be misleading. The distintion between a right and matter of procedure generally overlaps. In Yew Bon Tew v. Kenderaan Bas Mara (1983) 1 AC 553 Lord Brightman said: "an act which is procedural in one sense may in particular circumstances do far more than to regulate the course of proceedings because it may, on one interpretation, be reviewing or destroying the cause of action itself'. His Lordship further stated: "a statute which is retrospective in relation to one aspect of a case (e.g. Because it applies to a pre-statute cause of action) may at the same time be prospective in relation to another aspect of the same case (e.g. Because it applies only the post-statute commencement of proceedings to enforce that cause of action)". The Courts having found that the statement: "that a statute is retrospective if it takes away or impairs a vested right acquired under existing laws, or creates a new laws, or creates a new obligation, or imposes a new duty, or attached a new disability, in regard to events already past" as equivocal have started to approach the question regarding retrospectivity of statute on the basis of fairness. In a quite recent decision of the Court of Appeal Reg. V. Secretary of State ex parte Mundowa (1992) 3 All ER 606-613 Staughton L. J. Stated: "the statement seems to me, if I say so, an excellent description of the general motion of retrospectivity, but I doubt if it was intended to be treated as the language of a statute. If one does that, one becomes involved in discussion as to what precisely is a vested right, and whether it has been taken away or impaired". Staughton L. J.
Adhering to the principle that he had earlier expounded in Secretary of State V Tunnicliffe (1991) 2 All ER 712 said: "that the true principle is that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matter of degree -- the greater the unfairness, the more it is to be respected that Parliament will make it clear if that is intended". The House of Lords in L, Office Cherifieri V Yamashista Ltd. (1994) 1 All ER 20 has also examined the question regarding retrospection of a statute. In the above case Lord Mustill recognised that the Courts are required to approach questions of statutory interpretation with a disposition that a statute is not intended to have retrospective effect. But, his Lordship owned reservations about the reliability of generalised presumptions and maxims when engaged in the task of finding out what Parliament intended by a particular form of words for they too readily confine the Court to a perspective which treats all statutes, and all situations to which they apply as they were the same.
His Lordship stated that "this is misleading, for the basis of the rule is no more than simple fairness, which ought to be the basis of every legal rule. True it is that to change the legal character of a person's acts or omissions after an event will very often be unfair; and since it is rightly taken for granted that Parliament will rarely wish to act in a way which seems unfair it is sensible to look very had at a statute which appears to have this effect to make sure that this is what Parliament really intended. This is, however, no more than common sense, the application of which may be impeded rather than helped by recourse to formulate which do not adapt themselves to individual circumstances, and which tend themselves to become the subject of minute analysis, whereas what ought to be analysed is the statute itself. According to his Lordship the approach to the problems of retrospection by reference to a distinction between vested right and procedural rights unnecessarily calls up a discussion of whether a right affected by a statute is vested or procedural.
His Lordship remarked that "I believe that such a discussion would be unprofitable, partly because the distinction just mentioned is misleading, since it leaves out of the account the fact that some procedural rights are more valuable than some substantive rights, and partly because I doubt whether it is possible to assign rights such as the present unequivocally to one category rather than another. Thus, whilst keeping the distinction well in view, I prefer to look to the practical value and nature of the rights presently involved as a step towards an assessment of the unfairness of taking them away after the event".
10. The conclusion, therefore, is that the answer to the question regarding the retrospection of a statute is to be found in the principle of fairness rather than by reference to whether the statute affects vested or substantive rights or only it relates to the procedure of the Court.
11. The question that would arise is whether it is fair that the proviso should apply to the appeals relating to any assessment year earlier than 1994-95. It is clear that the other assessee have been availing this right of appeal without depositing the specified amount of assessed tax whereas the assessee's before us have been obliged to deposit the same. It appears to be a case of unfairness to oblige an assessee objecting to an order of an AAC to deposit the specified amount of tax before he could avail that right whereas numerous other assessee have availed that right without depositing the tax. There being a prima facie element of unfairness for those assessee who could not avail that right before 1-7-94 for one reason or the other including the fault of the Appeal Commissioners to dispose of their appeals earlier if the requirement of the proviso was intended to be applied retrospectively the statute by which it was added was required to state clearly. In our view, therefore, the proviso would not affect the right of appeal of the assessee before this Tribunal.
12. The next question is whether or not we should record our findings on the submissions falling in the second and third categories. In our view the said submissions are by and large of academic nature so far these two appeals are concerned and we should avoid to answer academic questions. The reasons are that our any view on any of the said submissions would affect any such submission that might be addressed on the objections by the assessee who approaches us through appeal relating to the assessment year 1994-95 or thereafter. We, therefore, direct that the assessee's appeals may be admitted and registered for disposal by the Tribunal.