Swat Sarena Hotel Saidu Sharif, through its Manger has filed this revision petition against the judgment and decree of the learned District Judge/Zilla Qazi Swat dated 17-4-1995 whereby he accepted the appeal of the defendants-respondents and while setting aside the judgment and decree of the learned Senior Civil Judge. Swat dated 5-6-1994, dismissed the suit of the plaintiff/petitioner.
2. Brief facts of the case are that the plaintiff-petitioner brought a suit against Government of N.W.F.P. Through Secretary Finance and others for perpetual injunction restraining the defendants- respondents from realization of the tax including Development Cess which they have been realising since 1-8-1985. The plaintiff also prayed for the recovery of Rs.26,67.546.52 which have allegedly been realized from him since 1-8-1985 illegally alongwith its profits. It was averred in the plaint that Government levied tax as development cess under Finance Act, 1975 which was not extended to PATA, however, the same was withdrawn in the year 1985 but the defendants in spite of its non-extension to PATA and withdrawal have been receiving the same that the defendants Nos. 1 to 3 were asked to restrain from realizing the same but they refused to accede to the request and continued to realize it without lawful justification and recovered an amount of Rs.26,67,546.52 from the plaintiff and that the defendant were asked time and again to restrain from realizing the said unlawful tax and return the amount illegally realized by them from the plaintiff but they, refused.
3. The defendants contested the suit both on legal and factual premises and in view of the pleadings of the parties the learned Trial Judge framed as many as seven issues including the relief. Both the parties produced their evidence in support of their respective claims. After hearing the learned counsel for the parties the learned Senior Civil Judge, Swat vide his judgment and decree dated 5-6-1994 decreed the suit for perpetual injunction against the defendants directing them not to demand and realize any development cess from the plaintiff in future. However, the claim of the plaintiff in respect of the recovery of the suit amount was dismissed. Feeling dissatisfied with the above judgment and decree of the Trial Court, the defendants/respondents preferred an appeal before the Appellate Court which was accepted by the learned District Judge/Zilla Qazi Swat vide his judgment and decree dated 17-4-1995 and dismissed the suit of the plaintiff. Hence the instant revision petition.
4. Learned counsel for the petitioner contended that vide section 8 of N.W.F.P. Finance Act, 1975, Development cess on hotels was levied w.e.f. Ist July, 1975, but due to its non-extension to PATA, it had no application in that area. Further contended that by virtue of section 4 of the N.W.F.P. Finance Act I of 1985, section 8 of the N.W.F.P. Finance Act of 1975 was deleted w.e.f. 1st July, 1985, therefore, after the deletion of section 8 aforesaid from the said Act, its extension to PATA vide Regulation I of 1985 on 8th September, 1985 would be without section 8 and thus, respondents had no jurisdiction to demand and realize development cess from the petitioner. He submitted that Appellate Court had no pecuniary jurisdiction to adjudicate the appeal beyond Rs. Five lacs, therefore, the judgment and decree of the Appellate Court is without jurisdiction. He further submitted that section 8 of the Act-II of 1975 stood deleted on 1st July, 1985 and firstly it could not be extended to PATA after its deletion and secondly taxing law could not be made applicable with retrospective effect. He further submitted that under section 3 of Regulation-I of 1985 the 'laws specified in Column No.2 of the Schedule as in force in N.W.F.P. Immediately before the commencement of the Regulation were extended to PATA subject to modification specified in the Schedule. He argued that after deletion of section 8 of the Act-II of 1975, no such law was in existence on the date when Regulation was promulgated.
5. On the other hand learned counsel for the respondents while supporting the impugned judgment argued that respondent challenged in appeal the decree of permanent injunction granted by the Trial Court as the suit was decreed to the extent of prayer (Alif) only, whereas prayer
(Bay) for the recovery of amount was dismissed, therefore the Appellate Court had the jurisdiction to adjudicate appeal against permanent injunction. He further submitted that suit for recovery of amount as prayed for in prayer (Bay) was dismissed which has attained finality as no appeal against it was filed by the petitioner, hence he cannot press into service prayer (Bay) at this stage.
He referred to section 12 of the N.W.F.P. Finance Act, 1975 and submitted that no civil suit could lie against any assessm ent; levy or collection of tax, cess or surcharge--- therefore, civil suit was not competent which has rightly been dismissed by the Appellate Court.
6. For the proper appreciation of the issue in question, it would be appropriate to reproduce section 8 of N.W.F.P. Finance Act, 1975 section 4 of .The N.W.F.P. Finance Act, 1985 and rule 3 of Regulation-I of 1985.
Section 8 of N.W.F.P. Finance Act, 1975 (Act-II of 1975)
"8. Development cess on hotels.---With effect from 1st July, 1975, there shall be levied and collected from all hotels classified as first and second class hotels under any law for the time being in force a development cess for the services, facilities and utilities, including catering, supplies and merchandise, provided or rendered by such hotels, at the following rates:---
(a) in the case of a hotel10% of the charges. classed as a first class hotel.
(b) in the case of a hotel classed5 % of the charges. as a second class hotel Section 4 of N W F P Finance Act 1985 (Act-I of 1985
4. Deletion of section 8 of N.W.F.P. Act-II of 1975:--In the North- West Frontier Province Finance Act, N.W.F.P. Act-II of 1975), section 8 shall be deleted.
Rule 3 of Regulation I of 1985
3. Application of certain laws to Chitral Dir Kalam Swat and Malakand Protected Area.---The laws specified in column 2 of the Schedule as in force in the North-West Frontier Province immediately before the commencement of this Regulation, subject to modifications herein specified and modifications and exceptions, if any set out in column 3 thereof, and so far as may be, all rules, notifications and orders made or issued thereunder shall apply to the Provincially Administered Tribal Areas of Chitral. Dir, Kaiam, Swat and Malakad Protected Area and shall take effect from such dates as are respectively mentioned against each such law in column 4 of the Schedule."
7. Bare reading of the aforesaid provisions of law would show that section 8 of Act-II of 1975 was valid law and held the field in N.W.F.P. Till 30th June, 1985 and after its deletion vide section 4 of Act-I of 1985, it stood non-existent for N.W.F.P. With effect from 1st July, 1985. Act-II of 1975 was extended to PATA through Regulation-I of 1985 on 8 September, 1985 when its section 8 was non-existing and as per rule 3 of the Regulation, the laws specified in the Schedule as in force in N.W.F.P.
Immediately before the commencement of the Regulation, subject to modifications, were made applicable to PATA with effect from such dates as mentioned against each law to column 4 of the Schedule. According to Schedule N.W.F.P. Finance Act, 1975 except its sections 3 and 7 was extended to PATA which was given effect from 1st July, 1975. It is manifest that immediately before the commencement of Regulation-I of 1985, section 8 of Act-II of 1975 had been deleted and the Act did not contain section 8, hence after its deletion for N.W.F.P. It could not be extended to DATA through the said Regulation. Moreover, it has not been specifically mentioned in column 3 of the Schedule that despite deletion of section 8 of Act-II of 1975, the same was extended to PATA.
8. As for application of Act-II of 1975 in PATA with retrospective effect i.e. From 1st July, 1975, is concerned, suffice would be to say that it is well-settled law that Notifications and Regulations cannot be given retrospective effect specially the law, relating to the levy of taxes and cesses.
According to Bennion's Statutory Interpretation 1984 Edn. Pp.151-152 Regulations cannot be applied retrospectively and according to Corpus Juris Secendum Vol. LIX pp.1131,1135, as a general rule revenue laws such as laws imposing taxes and licences, are neither remedial laws, nor laws founded upon any permanent public policy, but, on the contrary, operate to impose burden upon the public, or to restrict them in the enjoyment of their property and the pursuit of their occupation, and, when they are ambiguous or doubtful will be construed strictly in favour of the tax-payer and against the taxing power. The general rule is that statutes are to be construed prospectively unless it is otherwise specifically given in the statute itself, but that construction would apply to remedial statutes only. Whenever substantive or revenue laws are made they take effect from the date they are enacted and would effect future transaction and not the past ones. In "Messrs Army Welfare Sugar Mills Ltd., and others v. Federation of Pakistan (1991 SCMR 1652), Supreme Court of Pakistan has held that "a notification which purports to impair on existing or vested rights or imposes a new liability or obligation, cannot operate retrospectively in the absence of legal sanction." Learned counsel appearing for the respondents could not controvert the aforesaid legal proposition.