This judgment shall dispose of W.Ps. Nos.285/98 and 21641/2000 in both of which common question of law is involved.
2. This petition under Article 199 of. Constitution of Islamic Republic of Pakistan, 1973 calls in question a Notification No,IND/P-III/3(1)72, Vol.II issued by the Government of Pakistan, Ministry of Industries on 20-2-1973 whereby the Rules under the Pay-As-You-Earn Scheme Act, 1973 have been framed.
3. The dispute only relates to Rule 4 thereof which reads as under:-- "If in any financial year, any industrial unit or enterprise is not in a position to meet any of its liabilities specified in clause 7 of the Scheme from within fifty per cent. Of the earnings specified in that clause, or from within such higher percentage of the said earnings as may have been allowed under the said clause, the Federal Government may allow payment, at the official rate of exchange, of the amount of foreign exchange required to meet the liabilities, subject to the condition of penalty equal to twenty-seven per cent. Of the value in Pakistani rupees of the amount of such foreign exchange."
2. Mr. Imtiaz Rashid Siddiqui learned counsel for the petitioner has contended that section 4(2)(b) of the Act on its plain language vests a discretion in the State Bank of Pakistan to levy the penalty at any rate not exceeding 27% of the value in Pakistani rupees of the amount of foreign exchange which has not been remitted. His grievance is that the respondents have framed Rule 4 as being mandatory in the sense that there is no power with State Bank of Pakistan, in the event of non- compliance of the Rule but to impose the penalty and that too at the rate of 27% per annum.
3. There is force in this contention of the learned counsel. From a reading of section 4(2)(b) of the Act two things which significantly emerge are that in the event of default the State Bank of Pakistan shall levy a penalty not exceeding 27% per annum and the other is that the words used in section 4(2)(b) are "shall be liable to pay" and not shall pay. The use of words "shall be liable to pay" calls for a determination by the State Bank of Pakistan that the petitioner has committed some violation of the Act for reasons in his control and then proceed to decide whether or not any penalty is liable to be paid, if so, at what rate. If any authority is needed reference may be made to Shamroz Khan and others v. Muhammad Amin and others PLD 1978 SC 89. In view of the above this petition is allowed. Rule 4 of the Pay-AsYou-Earn Scheme, 1973 is declared to be ultra vires of the main Act and his therefore, no legal effect. The amount imposed be refunded to the petitioner. No order as to costs.