Legal Principle & Question Decided

Ruling Summary: This decision was rendered by the Islamabad High Court, officially reported as 2026 PTD 816. In this matter between AJMAL AND BROTHERS and FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman FBRHonorable Justice Muhammad Azam KhanAdnan Haider,Raja Zubair Hussain Jarral, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.

Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.

Full Judgment Text & Judicial Ruling

305

2026 P T D 816 [Islamabad High Court] Before Muhammad Azam Khan, J AJMAL AND BROTHERS through Special Attorney Versus FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman FBR and others Writ Petition No.3124 of 2023, decided on 24th February, 2026. (a) Customs Act (IV of 1969)--- ----S. 156 [as amended by Finance Act, 2023]---Constitution of Pakistan, Arts. 77 & 199---Constitutional petition---Amendment, vires of---Fiscal matters---Legislative competency---Judicial review---Scope---Petitioner assailed vires of amendment introduced through Finance Act, 2023, whereby S.156 of Customs Act, 1969 was amended and minimum quantum of penalty for release of certain goods was enhanced---Validity---Question of legislative competence in fiscal matters must be examined within Constitutional framework that governs distribution and exercise of taxing powers in Pakistan---Constitution does not treat taxation as an incidental authority; rather, recognizes it as an essential attribute of sovereignty, subject only to Constitutional limitations---Fiscal and economic regulation lies within policy domain of the Legislature---Determination of rate, structure, and deterrent effect of penalties involves complex considerations of public interest, revenue protection, and regulatory discipline---Judicial review does not extend to reassessing wisdom or severity of such measures, so long as they are enacted within Constitutional competence and do not infringe specific Constitutional prohibition---Comprehensive appellate framework has been provided in Customs Act, 1969 against adjudication orders, including those relating to penalty---Petitioners had the opportunity to contest imposition and application of amended provision before competent authority and, if aggrieved, to pursue appeals provided by law---Statutory forum was fully competent to interpret amended provision, examine its applicability to the cases of petitioners and determine the extent of liability---By directly invoking Art. 199 of the Constitution, petitioner had sought to bypass such structured mechanism---In the absence of circumstances demonstrating that statutory remedy was inadequate, inefficacious, or illusory or that action in question was patently without jurisdiction, High Court would be slow to exercise its extraordinary jurisdiction---Principle that Constitutional relief was not available where an adequate alternate remedy existed was not merely procedural, it was a doctrine rooted in Constitutional balance, institutional propriety and orderly administration of justice---High Court in exercise of Constitutional jurisdiction declined to interfere in the amendment as the same did not suffer from any constitutional defect---Constitutional petition was dismissed, in circumstances. PLD 1997 SC 582; M/s D.G. Khan Cement Company Limited v. FBR and others 2018 PTD 287 and McCulloch v. Maryland (1819) rel. (b) Constitution of Pakistan--- ----Art. 199---Constitutional jurisdiction of High Court---Vires of law---Judicial review---Principle---If, in essence, the law falls outside Constitutional domain of the Legislature, it is ultra vires ab initio---Incidental encroachment does not invalidate a statute---Courts adopt liberal and pragmatic approach, sustaining legislation where its substance lies within competence. (c) Constitution of Pakistan--- ----Art. 199---Constitutional jurisdiction of High Court---Fiscal matters---Judicial review---Principle---In fiscal and regulatory matters, especially, Courts accord the Legislature a wide margin of appreciation, recognizing that economic policy involves complex assessments not suited to judicial substitution---Court intervenes only where the infringement is manifest, irreconcilable, and substantial. R.K. Garg v. Union of India (1981) 4 SCC 675; United States v. Harris 106 U.S. 629 (1883) and National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012) rel. (d) Interpretation of statutes--- ----Colorable legislation, doctrine of---Scope---Doctrine of colorable legislation embodies the principle that what cannot be done directly cannot be done indirectly. (e) Constitution of Pakistan--- ----Art. 199---Constitutional jurisdiction of High Court---Alternate and efficacious remedy, availability of---Scope---Jurisdiction under Art. 199 of the Constitution is discretionary and equitable in nature---Such jurisdiction is not intended to supplant statutory forums or to provide alternate avenue where the Legislature has already created a complete adjudicatory mechanism---Even where vires of a provision is challenged, existence of alternate remedy remains a relevant and weighty consideration---Mere insertion of a Constitutional challenge in pleadings does not automatically confer a right to bypass statutory remedies---Litigants cannot circumvent statutory route by simply framing the dispute as a Constitutional question---If grievance essentially relates to assessment, quantification of liability, imposition of penalty, or application of statutory provisions to particular facts, such matters must first be examined within the statutory hierarchy. Tariq Transport Company Lahore v. The Sargodha-Bhera Bus Service, Sargodha and others PLD 1958 SC 437 and Malik Basit v. Mst. Razia Sultana and others (W.P. No.1080 of 2025) rel. Adnan Haider for Petitioner (in W.Ps. Nos.3124 to 3137 of 2023). Tauqeer Akram for Petitioner (in W.Ps. Nos.3828, 3931, 3932, 4104 of 2023 and 465 and 472 of 2024). Shah Rukh Marwat for Petitioner (in W.P. No.3573 of 2023). Shah Rukh Marwat proxy counsel for Petitioner (in W.P. No.3858 of 2023). Raja Zubair Hussain Jarral for Respondent (in W.Ps. Nos.3124 to 3137 of 2023). Malik Nasir Abbas for Respondent (in W.Ps. Nos.3828, 3858, 3931, 3932, 4101 of 2023 and 465 and 472 of 2024). Ali Shahryar, proxy counsel on behalf of Customs (in all Writ Petitions). Date of hearing: 12th February, 2026. JUDGMENT MUHAMMAD AZAM KHAN, J.---This consolidated judgment shall dispose of Writ Petitions Nos. 3124, 3125, 3126, 3127, 3128, 3129, 3130, 3131, 3132, 3133, 3134, 3135, 3136, 3137, 3573, 3828, 3858, 3931, 3932 and 4104 of 2023 and 465 and 472 of 2024, as common questions of law and fact arise therein. The petitioners have assailed the vires of the amendment introduced through the Finance Act, 2023 to the Customs Act, 1969, whereby Section 156 was amended and the minimum quantum of penalty for release of certain goods was enhanced. For ready reference, the prayer clause contained in the instant writ petition is reproduced as under: - "It is, therefore, most respectfully prayed that an appropriate writ may graciously be issued: a. Declaring that the penalty Provision of the Second Column of Serial No. 9 of the Table of section 156(1) of the Customs Act, 1969 including the amendment inserted in it by the Finance Act, 2023 which has increased minimum penalty equal to the value of goods with respect to used auto parts to be ultra vires the Constitution and law to the extent of importers of used auto parts. b. In the alternative to prayer a, reading down the penalty provision of the Second Column of Serial No. 9 of the Table of section 156(1) of the Customs Act, 1969 including the amendment inserted in it by the Finance Act, 2023 which has increased minimum penalty equal to the value of goods with respect to used auto parts to the extent of importers of used auto pans. c. In the alternative to prayers a. and b., declaring the penalty provision of the Second Column of Serial No. 9 of the Table of section 156(1) of the Customs Act, 1969 including the amendment inserted in it by the Finance Act, 2023 which has increased minimum penalty equal to the value of goods with respect to used auto parts to be directory in nature to the extent of importer of used auto parts. d. Declaring that in view of CGO 11 of 2006 dated 19.09.2006, SRO 499(I)/2009 dated 13.06.2009 and Valuation Ruling 1714 of 2022 dated 21.12.2022, there is no mens rea on the part of importers of used auto pans which may warrant personal penalty of Second Column of Serial No. 9 of the Table of section 156(1) of the Customs Act, 1969 especially the enhanced penalty equal to the value of goods as inserted by Finance Act, 2023. e. Declaring that amendment in Second Column of Serial No. 9 of the Table of section 156(1) of the Customs Act, 1969 by Finance Act, 2023 will not apply retrospectively to the cases where vested interests had been created - Contracts/Performa Invoices were issued, Bills of Lading were prepared, L/Cs or Banking Contracts were made or GDs were filed - prior to 1st of July, 2023 which is the effective date of the Finance Act, 2023. f. Declaring that restriction under clause 11 of Appendix-C of the Import Policy Order, 2016 on import of used auto parts is contrary to CGO 11 of 2006 dated 19.09.2006, SRO 499(I)/2009 dated 13.06.2009 and Valuation Ruling 1714 of 2022 dated 21.12.2022 and has been de facto relaxed/lifted by the Federal Government. g. Suspending the operation of the Second Column of Serial No. 9 of the Table of section 156(1) of the Customs Act, 1969 including the amendment made by the Finance Act, 2023, which has imposed minimum penalty equal to the value of goods on used auto parts, till the decision of the instant Writ Petition. h. Directing, during the pendency of the instant Writ Petition, to provisionally release the Consignment of the Petitioner as an interim relief; and i. Granting any other inner or appropriate relief which is fit to compensate the Petitioner." 2. Learned counsel for the petitioners submits, with considerable emphasis, that the impugned action of the respondents is a violation of Articles 4, 8, 10-A, 12, 18, 23, 25, and 77 of the Constitution of the Islamic Republic of Pakistan, 1973 (the Constitution). By the combined and consistent operation of Customs General Order No. 11 of 2006 dated 19.09.2006, SRO 499(I)/2009 dated 13.06.2009 and Valuation Ruling No. 1714 of 2022 dated 21.12.2022, the petitioners have, for many years, been engaged in the regular import of used auto parts. These imports were neither clandestine nor concealed; they were processed openly through customs channels, assessed by the authorities themselves, and pleased upon payment of applicable duties. Learned counsel further pointed out that the uniform departmental practice was to assess customs duty in accordance with the relevant valuation ruling, impose a redemption fine equivalent to 20% of the customs value, and levy a nominal penalty of a few thousand rupees. He further contends that the present controversy has arisen solely due to the amendment introduced through the Finance Act, 2023 (the Act), whereby Serial No. 9 of Section 156(1) of the Customs Act was modified to include the words "not less than the value of the goods," in addition to "not exceeding twice the value of the goods." According to counsel, the respondents have adopted an overly rigid and literal interpretation of this amendment, treating it as mandating, in every case, a penalty equal to 100% of the value of the goods. It is forcefully argued that such a reading is divorced from legislative intent and commercial, reality. The petitioners' imports were conducted transparently, through letters of credit, banking channels, and formal customs declarations. To treat these regulated transactions at par with clandestine smuggling operations is, counsel submits, legally unsustainable. When customs duty, redemption fine, and a penalty equal to the full value of the goods are cumulatively imposed, the result is confiscatory in effect. The trade becomes economically nonviable. Counsel argues that this amounts to a constructive prohibition, achieved indirectly through excessive penalization, without any express statutory declaration banning the trade outright. 3. Learned counsel further submits that, although the Import Policy Order, 2016 contains restrictions concerning used auto parts, the customs regime has historically operated in a manner that permitted release of such goods upon payment of redemption fine and penalty instead of outright confiscation. This practice reflects a deliberate and pragmatic reconciliation between import policy restrictions and the adjudicatory powers vested under the Customs Act. He asserted that SRO 499(I)/2009, when read in its entirety, supports this approach by contemplating regulated release rather than automatic forfeiture. The Import Policy Order, the SRO, the Customs General Order, and the Valuation Rulings are all forms of delegated legislation. In the event of any perceived inconsistency among them, the settled principle of interpretation requires harmonization in a manner that preserves, rather than destroys, the constitutional right to carry on lawful trade and business. 4. Lastly, learned counsel advances the position that even assuming arguendo that the amendment validly enhances penalties, it cannot be applied retrospectively. The petitioners had opened letters of credit with the approval of the State Bank of Pakistan and entered into binding contractual commitments prior to the enactment of the Finance Act, 2023. The goods were ordered and shipped on the basis of the legal regime then prevailing. To subject such transactions to an enhanced and mandatory penalty regime would offend settled principle's governing retrospectively in fiscal legislation. Fiscal burdens cannot be imposed retrospectively in the absence of clear and unequivocal legislative intent. 5. Conversely, learned A.A.G. has submitted that the vires of a statutory provision can only be successfully assailed on limited constitutional grounds, namely, where it is demonstrated that the legislature lacked competence to enact or amend the law, or where the impugned provision is repugnant to, inconsistent with, or in direct conflict with any express provision of the Constitution. He contends that, absent such constitutional infirmity, a duly enacted statute enjoys a presumption of validity that cannot be displaced merely on grounds of perceived harshness or economic inconvenience. It is further urged that, in the present case, the petitioners' grievance is confined to the enhancement in the quantum of fine/penalty introduced through the Finance Act, 2023. According to learned A.A.G., such enhancement falls squarely within the legislative domain, particularly in matters of fiscal policy and regulatory enforcement. The determination of the extent, severity, or deterrent effect of penalties is a matter of legislative wisdom and policy, which lies exclusively within the province of Parliament. By seeking to question the quantum of the penalty, the petitioners have, in substance, invited this Court to reassess the wisdom and propriety of legislative judgment, an exercise which is impermissible within the scope of constitutional jurisdiction under Article 199. The Court cannot substitute its own view as to what constitutes an appropriate or proportionate penalty in fiscal matters. Unless it is shown that the amendment is constitutionally incompetent, discriminatory, manifestly arbitrary, or violative of a fundamental right, judicial interference is unwarranted. The mere fact that the amended provision imposes a higher financial burden does not render it unconstitutional. It is, therefore, contended that the petition is misconceived, as it challenges legislative policy rather than demonstrating any constitutional transgression. 6. Learned A.A.G. further contended that the petitioners cannot claim any vested right on the basis of an alleged past departmental practice, as release of goods upon payment of redemption fine was always discretionary and subject to the statutory framework in force at the relevant time. An administrative practice, even if consistently followed, cannot override or restrict the effect of an express amendment enacted by Parliament. Once Section 156(1) was amended through the Finance Act, 2023, the Department be come legally bound to implement the revised penalty structure. No principle of legitimate expectation or estoppel can operate against a clear legislative mandate, and commercial arrangements undertaken by the petitioners remain subject to the law as applicable at the time of import and assessment. 7. I have heard the learned counsel for the parties at length and have carefully considered the petition in light of the pars-wise comments filed by the respondents. 8. Apparently, the facts giving rise to the instant constitutional petitions are that the petitioner is engaged in the import of old and used auto parts. Certain consignments imported by the petitioner arrived at the Dry Port, Islamabad; however, the same have not been cleared by the concerned authorities. The reason conveyed to the petitioner for non-clearance is that, pursuant to the amendment introduced through the Finance Act, 2023, in Serial No. 9 of Section 156(1) of the Customs Act, the minimum penalty has been enhanced to an amount not less than 100% of the value of the goods. Aggrieved by the enhancement in the quantum of penalty/fine and the consequent action of the respondents, the petitioner has invoked the constitutional jurisdiction of this Court, seeking a declaration that the amendment brought about through the Finance Act, 2023, is ultra vires the Constitution and, therefore, of no Jegal effect. 9. In light of the submissions advanced by the parties, the foremost question that arises for determination in the present case is whether Parliament, in exercise of its constitutional authority, possesses the competence to enact and amend statutory provisions imposing general or special taxes and allied penalties, as has been done through the Finance Act, 2023. 10. The question of legislative competence in fiscal matters must be examined within the constitutional framework that governs the distribution and exercise of taking powers in Pakistan. The Constitution does not treat taxation as an incidental authority; rather, it recognizes it as an essential attribute of sovereignty, subject only to constitutional limitations. At the outset, Article 77 of the Constitution says: - "No tax shall be levied for the purposes of the Federation except by or under the authority of [Majlis-e-Shoora (Parliament)]." 11. This provision embodies a constitutional command of the highest order. It is both a grant of authority and a restraint. In language plain yet profound, it vests the taxing power in the elected legislature and simultaneously prohibits its exercise by any other organ of the State except pursuant to legislative sanction. The clause reflects the foundational democratic principle that the power to tax, the power to compel contribution from the citizen for public purposes, must reside in the representatives of the people. The phrase by or under the authority of is of particular significance. It contemplates two modes of valid taxation. First, Parliament may itself impose a tax directly through primary legislation, specifying its nature, rate, and incidence. Second, Parliament may authorize the imposition or operationalization of tax through delegated legislation, provided such relegation is grounded in and circumscribed by statute. The Constitution thus recognizes the practical necessity of delegation in complex fiscal regimes, while ensuring that the ultimate source of authority remains legislative. 12. The scope and nature of this power were authoritatively expounded by the august Supreme Court in PLD 1997 SC 582. The Court held that the power of taxation is an inherent and indispensable attribute of sovereignty. It does not arise from a constitutional grant; rather, constitutional provisions relating to taxation operate as limitations upon legislative authority. The Court emphasized that the State's power to tax is general, unlimited, and absolute within its jurisdiction, subject only to constitutional restraints. Importantly, the Supreme Court clarified that entries in the Legislative List are not restrictive in character but demarcate fields of legislation. Such entries must be given a broad and liberal interpretation to enable the State to effectively discharge its functions. The Court further recognized that modern fiscal policy may adopt diverse forms of taxation, including presumptive and minimum taxes, and that the Legislature enjoys plenary authority to structure liability, impose conditions, and determine the mode and extent of taxation, provided constitutional boundaries are not crossed. The Hon'ble Supreme Court held: - "The power of taxation rests on necessity, it is an essential and inherent attribute of sovereignty belonging as a matter of right to every independent State or Government. Such power is an inherent one, and is not dependent upon any grant by the Constitution, or the consent of the owners of property subject to taxation; Constitutional provisions with respect to taxation constitute a limitation on the legislative power and not a grant of power. The power to tax rests primarily in the State to be exercised by its legislature and the State may exercise the power directly or may delegate such power as political sub-divisions of the State. The exercise of the taxing power is a high Governmental function, in invitum in nature. Generally, the power of taxation is as extensive as the range of subjects over which the power of the Government extends. As to such subjects, and except in so far as it is limited or restrained by Constitutional provisions, a State's power of taxation, if exercised for public purposes, is general, unlimited, and absolute, extending to all persons, property, and business within its jurisdiction. Since this power is contained in the Constitution, one's approach while interpreting the same should be dynamic, progressive and oriented with the desire to meet the situation, which has arisen; effectively. The interpretation cannot be narrow and pedantic but the Court's efforts should be to construe the same broadly, so that it may be able to meet the requirement of ever changing society. The general words cannot be construed in isolation, but the same are to be construed in the context in which they are employed. In other words, their colour and contents are derived from their context. In a Federal Constitution like in Pakistan, the legislative power is distributed between the Provincial and the Federal Legislatures. With that view legislative lists are prepared. The entries contained therein indicate the subjects on which a particular Legislature is competent but they do not provide any restriction as to the power of the Legislature concerned. It can legislate on the subject mentioned in an entry so long as it does not transgress or encroach upon the power of the other Legislature and also does not violate any fundamental right as the legislative power is subject to constraints contained in the Constitution itself. It is also a well settled proposition of law that an entry in a legislative list cannot be construed narrowly or in a pedantic manner but it is to be given liberal construction." 13. In addition, the Hon'ble Supreme Court further added that: "34. Keeping in view the above case-law and the treatises and the aforesaid legal inferences drawn therefrom, we may now revert to the question of vires of the impugned sections. It may again be observed that the power to levy taxes is a sine qua non for a State. In fact it is an attribute of sovereignty of a State. It is mandatory requirement of a State as it generates financial resources which are needed for running a State and for achieving the cherished goal, namely, to establish a welfare State. In this view of the matter, the Legislature enjoys plenary power to impose taxes within the framework of the Constitution. It has prima facie power to tax whom it chooses, power to exempt whom it chooses, power to impose such conditions as to liability or as to exemption as it chooses so long as they do not exceed the mandate of the Constitution. It is also apparent that the entries in the Legislative List of the Constitution are not powers of legislation but only fields of legislative heads. The allocation of the subjects in the lists is not by way of scientific or logical definition but byway of simple enumeration of broad catalogue. A single tax may derive its sanction from one or more entries and many taxes may emanate from one single entry. It is needless to reiterate that it is a well-settled proposition of law that an entry in the Legislative List must be given a very wide and liberal interpretation. The word "income" is susceptible as to include not only what is in ordinary parlance it conveys or it is understood, but what is deemed to have arisen or accrued. It is also manifest that income-tax is not only levied in the conventional manner by working out the net income after adjusting admissible expenses and permissible deductions etc., but the same may also be levied on the basis of gross…

Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.

Related Legal Research & Directories

• Browse all judgments from Islamabad High Court
• Search Pakistani statutes: Constitution of Pakistan 1973, PPC, CrPC, CPC & Family Laws
• Analyze this case with Al Wakeelo AI Legal Assistant