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Petitioner: M/s Searle IV Solution (Pvt) Ltd and Others VS Respondent: Federation of Pakistan and others
Court Name: Supreme Court of Pakistan Judge(s): Ijaz-ul-Ahsan, Mian Saqib Nisar, Umar Ata Bandial Title:M/s Searle IV Solution (Pvt) Ltd and Others vs Federation of Pakistan and
others Case No.:CIVIL APPEALS NO.1171, 1179 TO 1187, 1190 TO 1192, 1198 TO 1236, 1242, 1255, 1274 TO 1276, 1502 TO 1515 OF 2017 AND 114 OF 2013 AND CIVIL MISC. APPLICATIONS NO.6517, 6204, 6207, 6936 TO 6940, 8195, 8196, 6723, 6725, 6727, 6729, 6731, 6735, 6747, 6721, 6733, 6737, 6741, 6743, 6745, 8394, 8395, 6739 OF 2017 Date of Judgment:2018-06-27 Reported As: 2018 P.C.T.L.R. 919, 2018 SCMR 1444, 2018 SCP 1239 Result: Appeal allowed Judgment MIAN SAQIB NISAR, CJ.- The questions of law and fact involved in all the civil appeals in the instant matter are similar thus the same are being disposed of through this single judgment. Appellants, being importers of different raw materials, had earlier claimed exemption of sales tax/customs duties under certain SRO(s) issued in terms of the Customs Act 1969 (Customs Act) and the Sales Act, 1990 (Sales Act), or in some cases under certain Schedules in the Sales Tax Act which the relevant authorities/Assessment Officer(s) under the relevant taxing statutes denied them, thereby passing adverse orders to this extent/ef fect. Amongst other things, in some of these appeals the parties are also in dispute as to the legal provision under which these orders were passed; whether they were passed under Section 32 or Section 80 of the Customs Act. Although Section 9 of the Civil Procedure Code, 1908 (CPC) places a limitation on the pecuniary jurisdiction of the civil courts in terms whereof the cognizance to try a suit of civil nature is expressly or even impliedly barred by the governing law or Statute in the matter concerned, and there being an express bar of this nature in Section 217(2) of the Customs Act, yet the appellants proceeded to approach the Single Bench of the Sindh High Court at Karachi in exercise of its civil jurisdiction for the redressal of their grievance against these adverse orders, despite the fact that other forums for redressal of their grievances (and subse quent appeals) were available with regards to such orders within the mechanism/scheme of the Statute (the Customs Act). In doing so the appellants mainly claimed that they fell under the exemption(s) laid out in a plethora of judgments of this Court whereby inter alia an order tainted with mala fide or one made beyond jurisdiction conferred could be challenged through a civil suit despite there being an express bar to the cognizance of the same by a civil court. These suits were decreed in favor of the respondents by the
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learned Single Bench of the High Court at Karachi in exercise of its civil jurisdiction, on merits, holding that the same were maintainable on account of falling within the exemptions carved out by the law laid down by this Court on the matter, whereas the Division Bench, without going into the merits, held that the said suits of the appellants were not maintainable and in the same breath held that no suit lay against any order, notification etc. relating to a taxing statute, including the Sales Tax Act, the Income Tax Ordinance 2001, the Federal Excise Act 2005 and the Sindh Sales Tax on Services Act 2011, unless all the grievance redressal remedies provided therein had been exhausted. An ancillary observation made by the learned High Court in the judgment impugned is that the bar of jurisdiction under the taxing statutes including Section 217(2) of the Customs Act is only to the extent of the exercise of the original civil jurisdiction by "civil courts", which it held, includes the Single Bench of the High Court in its exercise of the same, however, the Division Bench of the High Court can exercise jurisdiction in respect of disputes arising or relatable to special laws of taxation under its reference jurisdiction as conferred by law under Section 217 of the Customs Act, 1969, Section 51 of the Sales Act, Section 227 of the Income tax Ordinance, 2001, and Section 41 of the Federal Excise Act 2005 under lawful instituted proceedings, and also in appropriate cases, under its extra ordinary constitutional jurisdiction under Article 199 of the Constitution. The appellants now include those in appeal against the impugned judgment as well as those affected thereby under the blanket bar of civil suits from orders/notifications etc. of all taxing statutes. Amongst other contentions, the counsels for the appellants in unanimity submit that the Division Bench, through this blanket bar to civil jurisdiction against actions of authorities under all taxing statutes, has gone beyond the scope of the relief sought by considering laws other than the issue under consideration before it, thus in consonance with the principle laid down in H.M. Saya & Co. Karachi Vs. Wazir Ali Industries Ltd. Karachi and another (PLD 1969 SC 65), their applications for permission to file the appeals are allowed. The following questions of law arose which shall be considered in this judgment: I. Whether the appellants fall within the exceptions created by the case law to a bar to jurisdiction of civil courts in light of the ouster clause in Section 217(2) of the Customs Act, read with the limitation to the jurisdiction of civil courts in Section 9 of the CPC? Whether the suits of the appellants in the civil jurisdiction were maintainable? II. Whether the exercise of the original civil jurisdiction by the Single Bench of the Sindh High Court is ultra vires of the Constitution of the Islamic Republic of Pakistan (Constitution) in light of Article 25 thereof? And further , whether the exercise of this civil jurisdiction by the Single Bench of the Sindh High Court will render it a 'civil court' for the purposes of the ouster clause in Section 217(2) of the Customs Act? III. Whether the appellants are entitled to the relief sought? The questions of law formulated hereina bove are individually addressed below and for purposes of convenience and comprehension the arguments of the learned counsel of the parties as well as the issues chalked out by them have been incorporated therein: I. Whether the appellants fall within the exceptions created by a plethora of case law to a bar to jurisdiction of civil courts in light of the ouster clause in Section 217(2) of the Customs Act, read with the limitation to the jurisdiction of civil courts in Section 9 of the CPC? Whether the suits of the appellants in the civil jurisdiction were maintainable? 2. Mr. Khalid Anwar Sr. ASC, appearing on behalf of the appellants, at the outset submits that even though, undoubtedly, there is a bar against the civil courts taking cognizance of the issue concerned in light of Section 217(2) of the Customs Act read with Section 9 of the CPC, however, certain exceptions have been carved out against a bar of such nature. The settled law in the judgments reported as Punjab Province v. The Federation of Pakistan (PLD 1956 FC 72), The Burmah Oil Company (Pakistan Trading) Ltd. Chitagong v. The Trustees of the Port of Chitagong (PLD 1962 SC 113), Abdul Rauf and others v. Abdul Hamid Khan and others (PLD 1965 SC 671), Muhammad Jamil Asghar v. The Improvement Trust, Rawalpindi (PLD 1965 SC 698) Mian Muhammad Latif v. Province of West Pakistan (PLD 1970 SC 180), and particularly in Abbassia Cooperative Bank v. Hakeem Hafiz Muhammad Ghaus and 5 others (PLD 1997 SC 3) is that where the jurisdiction of the Civil court is challenged on the ground of ouster of jurisdiction it must be shown that, (a) the authority or tribunal in the Statute creating such a bar is validly constituted (b) where the order passed or action
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taken by the authority is not tainted with mala fide; (c) where the order or action taken was such which could be passed or taken under the law which conferred exclusive jurisdiction on the authority or tribunal; or (d) where in passing the order or taking the action, the principles of natural justice were not violated. If one or more of these four conditions are violated an exception is carved out for the Civil Court to assume jurisdiction. According to him, in the present appeals ground (b) and (c) have been attracted, as in passing the adverse order(s) the authority/Assessment Officer acted beyond the jurisdiction conferred upon it and the same was tainted with mala fide since the corruption prevalent in the Customs House/departments leads its officers to discriminate against those not willing to pay over and above what is due under the law . 3. Mr. Makhdoom Ali Khan, Sr. ASC, while concurring with the above submission further relied upon the judgments of this Court in Chalna Fibre Company Limited, Khulna and others v. Abdul Jabbar and others (PLD 1968 SC 381) at page 387(B), Samiullah v. Fazle Malik (PLD 1996 SC 827) at page 830(A), Azra Masood v. Noshaba Moeen (2007 SCMR 914) at page 918(A) and particularly Hamid Hussain v. Government of West Pakistan (1974 SCMR 356) at page 359(B) which fortifies the exceptions created where special laws entail ouster clauses to jurisdiction of civil courts, providing in its concluding paragraph that "It is a well settled principle that even where the jurisdiction of civil (courts is) barred and conferred upon special tribunals, Civil courts being courts of ultimate jurisdiction will have the jurisdiction to examine acts of such forums to see whether their acts are in accordance with law or are illegal and even mala fide". Furthermore, he stated that the learned Division Bench in impugned judgment with regard to the finding that such an exemption from bar to jurisdiction has only so far been granted in non-tax law related judgments, has failed to take notice of the fact that the judgments of Mian Mohammad Latif v. Province of West Pakistan (supra) and The Province of Punjab v. Federation of Pakistan (supra) are in fact tax cases wherein it was specifically held that where an act of an income tax officer is extraneous to what was mandated under the statute, a suit shall lie despite an ouster clause. Thus, there being no cavil with the interpretation of this ouster clause, the contentions of the learned counsel for the appellants in unanimity dilated upon the illegality of the adverse orders on account of not having being made in consonance with the provisions of the Custom Act and on account of the mala fide of the authorized officials (Collector Customs and Additional Collector Customs, respondents No. 3 and 4 respectively) , and thus they claimed that the suits filed by them were maintainable since the appellate forum provided within the Customs Act is only the forum for appeal where the orders made are not tainted with mala fide or illegality . Although these judgments have been referred to in the impugned judgment, learned counsel submitted that this has only been done in passing and without explaining as to why the present cases do not fall under the exceptions carved out in the precedents above which clearly provided that in certain circumstances a suit in the Civil Court is maintainable, notwithstanding the existence of an ouster clause in this regard. On the other hand, Mr. Khalid Anwar took strong exception to the fact that the impugned judgment outrightly does away with the idea of even entertaining the possibility of an exemption to be granted where an ouster clause exists, instead stating that even if an issue of mala fide etc is to be raised, the same should be done after the hierarchy provided in the statute itself is exhausted and even then the learned Division Bench can take cognizance of the same. This approach, he submitted, renders the entire purpose of raising a claim of mala fide in the decisions of the authorized officials, redundant. It is only upon an examination of the merits of the present case that the Court below could have determined whether it fell under any of the exemptions carved out by the judgments of the Supreme Court and the Division Bench of the same court, but not only did the said Court refrain from going into the merits of the case, at the very outset in paragraph 5 of the impugned judgment, the Court had limite d the very scope of the case to merely the questions of maintainability of the suits. This in effect, deprived the appellants of the exceptions provided by the precedents cited hereinabove. Another plea raised by the counsel for the appellants was that if the SRO' s and/or Schedules of the Sales tax Act relied on by the appellants were to be interpreted correctly, the appellants would have been found to be entitled to the same. According to the learned counsel, it is perhaps only the inability or rather the lack of willingness of the authority passing the adverse orders denying such exemption, that the benefit of the same was not extended to the appellants. Fortifying this argument, the learned counsel emphasized that it was customary in the past decade or so that such exemptions were extended to the products imported by the appellants.
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4. Mr. Farogh Naseem, learned ASC, strenuously argued that in light of the judgments cited above, there can be no two opinions that where an impugned order or notice of a statutory authority is in breach of natural justice, premised upon mala fides or is extraneous to the statute, be it in a tax statute or otherwise, a suit would be maintainable. He emphasized that even under taxing statutes, what is protected by an ouster clause is an action "under the statute". Obviously then, when an action is beyond the parameters of the statute or is mala fide or without jurisdiction or in breach of natural justice, the action cannot be reckoned to be one "under the statute" and thus cannot be saved under the garb of the ouster clause. He also relied on the judgment of Muhammad Jamil Asghar 's case (supra) although the facts of the same are not similar to the present appeals. Mr. Farogh Naseem, concurred with the above submissions, additionally submitting that the Division Bench also missed the elementary principle that there are two types of mala fide, i.e. mala fide in law and mala fide in fact, and it is the former that the appellants rely on since the act of the authorities in not extending the benefit of an exemption to the appellants, which is clearly provided under the law is an action extraneous to the law and thus a mala fide in law, for which a civil suit should be maintainable and relied on the principle of 'Boni Judicis est Ampliare Jurisdictionem' which means that it is the duty of a good Judge to extend his jurisdiction, in which regard he cited River Steam Navigation Co v. The Commissioners for the Port of Chittagong (PLD 1961 Dacca 412). Concluding his arguments he stated that the Division Bench further erred in law in holding that in light of the clarification by the Federal Board of Revenue (FBR) to the effect that the appellants were not entitled to the claimed exemptions, resort to departmental proceedings would not be an exercise in futility despite the fact that departmental proceedings could not possibly go against such clarification from a forum much higher in the hierarchy. 5. Mr. Salman Akram Raja, learned ASC appearing on behalf of the Respondent-FBR, focused his arguments mainly on the contention of the appellants' counsel that the adverse orders of the Respondent Collectorate were without jurisdiction. In this context he strenuously relied on Justice Kaikaus' words in Badrul Haque Khan v. The Election Tribunal, Dacca and others (PLD 1963 SC 704) that where there is jurisdiction to decide a particular matter then there is jurisdiction to decide it rightly or wrongly and the fact that the decision is incorrect, does in no manner render it without jurisdiction . The customs officials therefore, in passing the concerned adverse orders/decisions, cannot be held to have acted without jurisdiction merely becaus e they may have committed an error in interpretation of the law. In this regard he relied on the judgment in Badrul Haque Khan' s case (supra) , wherein at page 736 it was held that "Unless a case of mala fides or a mere colorable exercise of jurisdiction could be made out, the decision cannot be without lawful authority " and a mere error in law or fact alone cannot render a decision without jurisdiction. In Muhammad Hussain Munir and others v. Sikandar and others (PLD 1974 SC 139) at page 142, in consonance with the judgment in Badrul Haque Khan' s case (supra), and quoting it with approval it was held that "it will be going too far to say that every little breach of a rule by allowing, evidence to coming, which in strict law might not be thought admissible, would constitute an act without jurisdiction". The same was this Court's view in Zulfikar Khan Awan v. Secretary, Industries and Mineral Development, Gov. of Punjab & others (1974 SCMR 530) as well as Raunaq Ali etc. v. Chief Settlement Commissioner and others (PLD 1973 SC 236), Abdul Rehman Bajwa v. Sultan and others (PLD 1981 SC 522). However, he further clarified in this context that where a decision made is held to be made without the proper application of the law in place, the remedy for such a defect can only be sought by taking such decision to the prescribed grievance redressal forum, which in the present case is to be found in the appeal to the Collector under Section 193 or the Appellate Tribunal under Section 194 (as the case may be) since any determination under a special law such as the Customs Act, requires a certain level of knowledge and expertise which must be taken advantage of by approaching the abovesaid forums first and only after exhausting these remedies can the High Court be approached under Section 196 of the Customs Act. In support of this argument he relied on the judgements of Ms. Binaco Traders v. Federation of Pakistan (2006 PTD 1491), as well as Ms. Rohi Ghee Industries (Pvt.) Ltd. v. Collector of Customs (2007 PTD 878). To jump the gun by filing a civil suit directly would render such forums redundant. On the other hand he submitted that the decision with regards to the entitlement of exemption from duty and taxes or reduction in tax liability in respect of a person or establishment, otherwise, includes scrutiny and determination of disputed facts by the specialized forums and the authorities provided under the taxing statutes, including Customs
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Act, hence, it does not fall within the domain of original civil jurisdiction of the Civil Court particularly, in view of the specific bar in terms of Section 217 of the Customs Act. 6. Barrister Sarfaraz Ali Metlo, ASC, learned counsel for the FBR submitted a list of judgments specific to tax law wherein in the presence of a statutory remedy, a suit on the civil side was held to be barred which include; Raleigh Investment v. Governor General (PLD 1947 Privy Council 19) at page 25(G), CIT v. The Tribune Trust (PLD 1947 Privy Council 247) at para 3 on page 255, The Batala Eng. V. I.T.O. (1973 SCMR 282) page 283(A), Tahir A. Khan v. CBR Sindh (2003 YLR 196) at page 199 (C, D, E & G), Chemitex Ind. V. Sup. S.T. (1999 PTD 1184) at page 1187(A), Aluminum Processing v. FOP (2003 PTD 1411) at page 1428(G), Binaco Traders' case (supra) at page 1499(E & H), Rohi Ghee Industries' case (supra) at page 885(C), Malik A Qayyum v. DG Int. (SBLR 2015 Sindh 969), Collector v. Universal Gateway (2005 SCMR 37) at page 44(A&B) Amin Textile Mills v. CIT (2000 SCMR 201) at page 203 para 3, Federation of Pakistan v. M/s Millenniu m Pharma (2011 PTD 690) etc. However , learned counsel largely adopted the arguments of Mr . Salman Akram Raja, ASC. 7. In order the appreciate the minutiae of the issue of maintainability of the civil suits filed by the appellants against the decisions of the taxing authorities/As sessing Officer under the special law of the Customs Act, it would be advantageous to reproduce the pivotal provisions viz. Section 217(2) of the Customs Act which bars the cognizance of the same by the civil courts under Section 9 of the CPC as well as Section 9 (ibid.) itself: "Section 9 of the CPC: 9. The Courts shall (subject to the provi sions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. Section 217(2) of the Customs Act: S.217. (2) No suit shall be brought in any civil court to set aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of any tax made under this Act." There is not an iota of doubt that Section 9 of the CPC provides that the civil courts shall have jurisdiction to entertain any suit in relation to any civil matter except when the same is expressly or impliedly barred by the law. A plain reading of Section 217(2) reflects that the jurisdiction of the "civil courts" has in fact been barred for any assessment made, any tax levied, any penalty imposed or collection of any tax made "under the Act". The two operative terms to determine such a bar of jurisdiction, therefore, are "civil court" and "under this Act". The gist of the contentions of the counsel for the appellants boils down to just one aspect; that the actions of the statutory authorities being challenged are not made "under the Act" and hence the ouster clause does not apply. This is where the exceptions carved out from the bar to jurisdiction of the civil courts under the various judgments of this Court come into play. The judgments in Punjab Province v. The Federation of Pakistan (supra) Burmah Oil Company's case (supra), Abdul Rauf's case (supra), Jamil Asghar v. The Improvement Trust (supra), Mian Muhammad Latif's case (supra), Hakeem Hafiz Muhammad Ghaus' (supra) Chalna Fibre v. Abdul Jabbaru (supra), Samiullah's case (supra), Azra Masood's case (supra) and Hamid Hussain's case (supra) categorically provide exemptions to such a bar to jurisdiction. An articulate illustration of these exceptions can be found in the judgment of Hakeem Hafiz Muhammad Ghaus' case (supra) in the following words: "It is also well-settled law that where the jurisdiction of the Civil court to examine the validity of an action or an order of executive authority or a special tribunal is challenged on the ground of ouster of jurisdiction of the Civil court, it must be shown (a) that the authority or the tribunal was validly constituted under the Act; (b) that the order passed or action taken by the authority or the tribunal was not mala fide; (c) that the order passed or action taken was such which could be passed or taken under the law which conferred exclusive jurisdiction on the authority or the tribunal; and (d) that in passing the order or taking the action, the principles of natural justice were not violated." 8. The impugned judgment incorrectly states that such exemption has not been granted in tax statutes as the judgments of Mian Muhammad Latif 's case (supra) and Province of Punjab v. Federation of Pakistan (supra) clearly contradict such an untenable conclusion. However the burden then lies on the appellants to prove that they fall within the above exceptions in order to circumvent this bar to the jurisdiction of the civil courts. Since the appellants' counsel mainly relied on the exemption from the general bar to jurisdiction on the ground of the
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orders/actions taken by the authority/Assessment Officer being beyond jurisdiction, first the precise scope of the jurisdiction of the Assessment Officer/authority needs to be determined. The relevant provisions of the Customs Act in this regard are reproduced below: "32. False statement, error , etc.- (1) If any person, in connection with any matter of customs,- (a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever , or (b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer , or (c ) submits any false statement or document electronically through automated clearance system regarding any matter of Customs knowing or having reason to believe that such document or statement is false in any material particular , he shall be guilty of an offence under this section. (3) Where, by reason of any inadvertence, error or misconstruction, any duty taxes or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date requiring him to show cause why he should not pay the amount specified in the notice; 80. Checking of goods declaration by the Customs .- (1) On the receipt of goods declaration under section 79, an officer of Customs shall satisfy himself regarding the correctness of the particulars of imports, including declaration, assessment, and in case…
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