2025 PLP 708 (PTD)

WIQAR AHMAD, J.

Through this single judgment, this Court proposes to resolve a preliminary question relating to maintainability of this and connected Tax Reference No. 88/P/2024, Tax Reference No. 129-P/2024, Tax Reference No. 91-P/2024, Tax Reference No. 113-P/2024, Tax Reference No.136-P/2024, Tax Reference No. 142-P/2024, Tax Reference No. 117-P/2024 and Tax Reference No. 118-P/2024, which question is common in all these petitions.

2. Instant income tax reference has been filed under 133(1) of the Income Tax Ordinance, 2001 (herein after referred to "the Ordinance") against the order dated 22.7.2024, passed by Commissioner Inland Revenue (Appeals), Peshawar under Section 129(4) of the Ordinance. Earlier this Court had sent a similar case to the Appellate Tribunal Inland Revenue vide order dated 15.1.2025 in T.R. No. 130-P/2014 which order is also reproduced for ready reference; "15.1.2024. This Tax Reference has been filed under section 133 of the Income Tax Ordinance, 2001 (Ordinance) (as amended by the Tax Law (Amendment) Act, 2024 and Finance Act, 2024) against the order of the commissioner Inland Revenue (Appeals), Peshawar dated 9.10.2024 passed under section 129(1) of the Ordinance."

2. The record would clearly suggest that the assessment proceedings were initiated for the tax year 2019 and the assessment order was passed on 20.3.2023. The Finance Act, 2024 which has changed the forum of appeal/reference depriving the present petitioner from the right of further appeal before the Income Tax Appellate Tribunal has no retrospective application. Therefore, the right of the second appeal to the present petitioner available to him on 30.6.2024 cannot be taken away through the Finance Act, 2024.

3. In this view of the matter, this Tax Reference is sent to the worthy Tribunal to treat it as an appeal under the unamended provision of the ordinance prior to the Finance Act, 2024 and decide the same in accordance with law. The petitioner is directed to appear before the worthy tribunal on 23.1.2025.

4. This petition is disposed of the in the above terms."

3. Learned counsel for petitioner while appearing in the instant case on 29.1.2015, argued that the tax reference was maintainable before this court under amended section 133 of the Ordinance, on which date the matter was fixed for further arguments. Relevant order of the day is also reproduced. "29.1.2025. Commissioner of Inland Revenue Peshawar Zone has filed the instant tax reference under section 133 of the Income Tax Ordinance, 2001 (Ordinance), amended through Finance Act, 2024 (Act of 2024) against the order of Commissioner Inland Revenue (Appeals) Peshawar dated 22.7.2024.

4. Learned counsel has also drawn the attention of this Court to section 126A which was inserted through the Act of 2024 in the Ordinance delineating the pecuniary jurisdiction of the Commissioner Appeal as well as of Tribunal.

3. In past, in number of case, we have observed that since the right of second appeal under the dispensation prior to the Act of 2024 could not be taken away by the subsequent amendment through Act of 2024, and the matter were referred to the Tribunal for adjudication under the dispensation which was available prior to the Act of 2024. However, the learned counsel representing the revenue has drawn the attention of this court to the explanation after section 133 of the Ordinance which too was inserted through the Act of 2024, clearly providing the intention of legislature for giving retrospective effect to the provision of section 133 of the Ordinance. Therefore, notice be issued to the respondents as well as worthy Attorney General to assist this court in the matter. Adjourned to 13.2.2025.

4. Today we have heard arguments of learned counsel or petitioner namely, Mr. Ghulam Shoaib Jally, Advocate and Mr. Sana Ullah, DAG in instant and other similar references and considered relevant law on the subject.

6. Section 126A was inserted in Part-III of the Ordinance by way of tax law (Amendment) Act, 2024. Newly inserted section 126A is providing as follows; 126A. Pecuniary jurisdiction in appeals.- (1) Notwithstanding anything contained in any other provision of this Ordinance,- (a) an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed twenty million rupees or (b) an appeal to the Appellate Tribunal Inland' Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds twenty million rupees. Explanation.

For the purposes of this section value of assessment of tax means the net increase in tax liability of a person as a result of order sought to be assailed and value of refund means net reduction in refund as a result of order sought to be assailed. (2) A person or, as the case may be, officer of Inland revenue aggrieved by an order of the Commission (Appeals) in cases under clause (a) of subsection (1) may file a reference before the High Court in accordance with section 133. (3) A person or, as the case may be, officer of Inland revenue aggrieved by an order of the Appellate Tribunal in cases under clause (b) of subsection (1) may file a reference before the High Court in accordance with section 133. (4) The case pending before the Commissioner (Appeals) having the value of assessment of tax or, as the case may be, refund of tax exceeding twenty million rupees shall on [ or before the 31st day of December,], 2024 stand transferred to the appellate Tribunal Inland Revenue. (5) All the cases transferred from the Commissioner (Appeals) to the Appellate Tribunal under subsection (4) shall be decided by the Appellate Tribunal within the period provided for under section 132 which period shall commence from the date of transfer under subsection (4).

6. Section 126A was inserted through Tax Law (Amendment) Act, 2024. The non-obstante clause occurring in start of subsection (1) of section 126A was substituted for the earlier clause by Finance Act, 2024. The non-obstinate clause was inserted and the earlier clause of "subject to other provisions of the act" was omitted. The newly inserted section 126A (as provided by Finance Act, 2024) have been given overriding effect over other provisions of Ordinance by inserting a non-obstinate clause and thereby a new mechanism was provided for appeal against assessment orders where pecuniary value of assessment of tax was provided as determinative for ascertaining forum of appeals. It was provided that where value of assessment of tax or refund of tax was not exceeding twenty million rupees, an appeal would lie before Commissioner Appeals and in case where such value exceeded twenty million an appeal would lie before Appellate Tribunal Inland Revenue. In subsection (4) of above reproduced section 126A it was expressly provided that those cases of value (of assessment of tax) exceeding twenty million rupees and pending before Commissioner Appeals on 31" day of December, 2024 would stand transferred to the Appellate Tribunal Inland Revenue; which was further directed, in subsection (5) thereof, to be decided by tribunal within the period provided under section 132, commencing from the date of transfer of the appeal to the tribunal.

7. Section 133 of the Ordinance was providing for a right of filing reference before a High Court. Amendments have also been effected therein by Finance Act, 2024 so as to bring it in line with the amended provision of section 126A. Amended section 133 of the Ordinance was providing that subject to section 126A an aggrieved person or the Commissioner might file reference, in the prescribed form, before the High Court within 30 days of communication of the order by the Commissioner Appeals or Tribunal as the case may be, stating any question of law and mixed question of law and fact arising out of the order in respect of which the reference was being filed. The explanation given to subsection (1) is of much significance to our discussion which is also reproduced; "Explanation.- For the removal of doubt it is clarified that reference against order of the Commissioner (Appeals), communicated after the date of commencement of the Tax Laws (Amendment) Act, 2024 (V of 2024), shall lie before the High court notwithstanding the proceedings pending prior to the date of commencement of the said Act."

8. The above reproduced explanation have also been inserted through Finance Act, 2024. In the explanation the legislature has made its intention quite clear and categorical to the effect that reference against order of the Commissioner (Appeals) communicated after the day of commencement of the tax laws amendment Act, 2024 would lie before the High court notwithstanding pendency of the proceeding prior to the date of commencement of said Act. There thus remained no doubt that the legislature have provided by expressed words that the amendment brought by way of finance Act, 2024 as well as by way of Tax laws (Amendment) Act, 2024 should be given retrospective effect from the date of promulgation of Finance Act, 2024. An order communicated thereafter was provided to be appealed against or taken to the High Court by filing a reference under section 133 of the Ordinance, according to the dispensation provided for filing appeal or reference, according to amended provisions of the ordinance. Similarly subsection (4) of section 126A, (providing for transfer of those cases which were pending on 31st day of December, 2024 to the Inland Tribunal for having assessment value more-than twenty million rupees) was also indicating that the legislature was intending to give the Act a retrospective effect. The appeals having a value of less-than twenty million rupees and pending with the Inland Revenue Tribunal have however been left as it was and regarding transfer of same, no provision have been introduced, substituted or inserted which can legitimately be interpreted to the effect that the legislature while providing for transfer of the appeals from Commissioner to the Tribunal and not opting to provide for transfer of appeal from the Inland Revenue Tribunal to the High Court, was aiming to create a legal dispensation where appeal for value of less-than twenty million rupees filed before coming into force of the tax laws (amendments) Act, 2024 and Finance Act, 2024 should be decided by the tribunal. To said extent, the legislature had not put in place any mechanism for transfer and therefore, it can be inferred that while giving a retrospective effect to the Finance Act, 2024 the matter of appeals for having value of assessment less than twenty million rupees have consciously been left with the tribunal for its decision by exercising its powers under the repealed law. Section 6 of General Clauses Act, 1897 was also providing that where a remedy is available to a person on the date of promulgation, same would not be effected by a repeal of the law unless a different intention appears from the amending Act. Section 6 of general clauses act is also reproduced for ready reference;

6. Effect of repeal - Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not- Revive anything not in force or existing at the time at which the repeal takes effect, or Affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder, or Affect any right, privilege, obligation or liability acquired, accrued or incurrent under any enactment so repealed, or Affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed, or Affect any investigation, legal proceeding or remedy in respect of any such right, privileges, obligation, liability, penalty, forfeiture, or punishment as aforesaid; and any such investigation, legal proceedings or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed." Hon'ble Supreme Court of Pakistan while rendering its judgment in the case of Manzoor Ali and 39 others v. United Bank Limited through President reported as 2005 SCMR 1785 has also held that (general principle of law was) that when the law was altered during pendency of an action rights of the parties were to be decided according to the law as it existed when action had begun unless the new statute had a clear intention to vary such rights. Relevant part of the observations in the judgment are also reproduced herein for ready reference;

9. Although there is no legislative enactment taking away the jurisdiction of the Tribunal in type of cases in hand, the general principle of law is that when the law is altered during the pendency of an action, the rights of the parties are decided according to the law as it existed when the action was begun unless the new statute has clear intention to vary such rights. Where the Legislature has made its intention clear that the amending Act should have a retrospective operation, there is no doubt that it must be so construed even though consequence may entail hardship to a party. Refer State v. Muhammad Jamil PLD 1965 SC

681. In Gul Hassan & Co. v. Allied Bank of Pakistan 1996 SCMR 237 this Court reaffirmed the principle of law observing that it is well-settled principle of interpretation of statutes that where a statute affects a substantive right, it operates prospectively unless "by express enactment 0 or necessary intendment" retrospective operation has been given. Earlier this principle was laid down in Muhammad Ishaq v. State PLD 1966 SC (Pak) 256; and Muhammad Jamil's case (supra). This principle was affirmed in Abdur Rehman v. Settlement Commissioner PLD 1956 SC

362. While reinforcing the principle in Adrian Afzal v. Capt. Sher Afzal PLD 1969 SC 187, it was observed that, however, statute, which is a procedural in nature, operates retrospectively unless it affects an existing P right on the date of enactment or cause injustice or prejudice to al substantive right. Similarly in the case of Badshah Gul Wazir v. Government of Khyber Pakhtunkhwa through Chief Secretary and others reported as 2015 SCMR 43 Hon'ble Apex Court has also held in this regard; We, therefore, need to examine the effect of such repeal and particularly whether section 4 (as amended pursuant to the Amendment Act) would also apply to the appellant, in other words whether the effect of the amendment is retrospective. The provincial General Clauses Act, 1956 was promulgated as stated, "to facilitate the interpretation of provincial statutes"; clauses (b) and (c) of subsection (1) of section 4 whereof respectively stipulate that, the repeal "shall not affect the previous operation of any enactment so repealed" or "affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed." The judgment of this Hon'ble Court in the case of Lt. Gen. (Retd) Jamshaid Gulzar, which was followed in the case of Gulzar Khan, had considered a federal law and held that section 6 of the General Clauses Act, 1897 (which section is similar to the provincial General Clauses Act) was not applicable as Parliament had consciously given the amendment retrospective effect and had incorporated a non obstante clause commencing with the word "notwithstanding". However, in the Amendment Act the Provincial legislature did not give section 4 of the Act retrospective effect nor contained a non obstante clause, therefore, the cases of Lt. Gen. (Reid.) Jamshaid Gulzar and Gulzar Khan are clearly distinguishable.......... In the case of Zilla Council Jehlum through District Coordination Officer v. Messrs Pakistan Tobacco Company Ltd. and others reported as PLD 2016 SC 398 a five members bench of the apex court has inter alia held that while interpreting a statute not only the wording or text of the Statute was to be considered in isolation (for ascertaining whether a statute had got a retrospective effect or not) but the matter was to be examine holistically by considering several factors such as, the dominant intention of the legislature which was to be gathered from the language used, the object indicated or the mischief meant to be cured, the nature of rights affected, and the circumstances under the statute was passed.

9. The above discussed principle of continuing operation of a repealed law can only be applied where legislature does not give the amending Act retrospective effect. Where legislature gives retrospective effect to the provisions of amending act by express words or necessary intendment then the principle enshrined in section 6 of General Clauses Act shall not apply and the express intention of the legislature in the new enactment has to be given effect.

10. In light of what has been discussed above this court resolves the controversy revolving around the question of maintainability of the petitions in the following manner; (a) In those cases where value of the tax or refund, as the case may be, is less-than twenty million rupees an appeal against the order Commissioner of Appeals shall lie to the Commissioner Appeals and in cases exceeding said amount appeal shall lie to the Appellate Tribunal if the order has been communicated to the effected parties after the date of commencement of the Finance Act, 2024; (b) that appeals having assessment value of tax or refund of tax as the case may be, pending before the Commissioner Appeals on 31st of December, 2024 stand transferred to the Appellate Tribunal Inland Revenue by operation of law and are supposed to be decided by the Tribunal; (c) appeals having value of twenty millions rupees or less and pending before the Tribunal on or before 31st day December, 2024 shall continue to be decided by Appellate Tribunal Inland Revenue; (d) Reference against order of Commissioner Appeals filed on communication of the order after commencement of tax law (amendment) Act, 2024, shall be entertainable by High Court and shall be decided in accordance with the amended law.

11. Since this Court has clarified the matter after hearing the parties therefore, all the cases pending before this Court or sent back to the tribunal shall be dealt in accordance with our declaration made hereinabove. Parties may approach worthy tribunal for sending back those tax references which have been filed before this Court after the above amendment and sent to the tribunal, for re-transfer to this Court in accordance with our declarations made hereinabove. In said cases the tribunal shall be at liberty to send back the cases despite our earlier directions in those cases. Office shall also send a copy of this judgment to the Tribunal. MH/59/P Order accordingly.