1985 PLP 787 (PTD)

NAIMUDDIN, J.‑This is a constitution petition under Article 9 of the Provisional Constitution Order, 1981.

2. The facts giving rise to this petition as stated therein are that on 15‑8‑1983, the petitioner has been awarded the Export Tax Contract for the year 1983‑84, by the District Council, Tharparkar, at Mirpurkhas, respon dent

2. In terms of the contract the petitioner is liable to pay a sum of Rs. 1,40,00,000 to respondent 2, in instalments during the course of the year. Pursuant to the contract the petitioner has been recovering Export tax under the Sind Local Government Ordinance, 1979.

3. Respondent 2 sent a letter, dated. 21‑4‑1984, to the petitioner inform ing him that the Income‑tax Officer Circle "A", Mirpurkhas respondent 1, has issued a notice to it under section 92 of the Income‑tax Ordinance, 1979 (hereinafter called the Ordinance) for recovery of a sum of Rs. 3,42,000 by way of deduction under section 50(7‑A) of the said Ordinance and requiring the petitioner to pay the same amount to the Income‑tax Officer and further informing him that failing which it would make payment on behalf of the petitioner by deducting the same amount from the amount of security deposited by him and lying with it.

4. Under section 92 of the Ordinance the Income‑tax Officer is authoris ed to require by notice in writing any person who is responsible for payment of any sum to an assessee to which section 50 of the Ordinance applies to deduct from any payment subsequent to the date of such notice any arrears of tax due from the assessee as specified therein. The petitioner has therefore, questioned the demand made by the Income‑tax Officer by this constitution petition.

5. We have heard Mr. A. S. Waswani, learned counsel for the petitioner and Mr. Shaikh Haider, learned counsel for respondent

1. Respondent 2 has remained absent though served.

6. It is contended by Mr. A. S. Waswani that under section 50 (7‑A) of the Ordinance, respondent. 2 is not entitled to deduct any amount and the Income‑tax Officer is not entitled to claim any amount from respondent 2, as the provisions of subsection {7‑A) are not attracted. It is submitted by Mr. A. S. Waswani that the right to collect the export tax transferred to the petitioner by auction by respondent 2 is not property' and the transaction is not a sale' which are necessary conditions to attract the provisions of sub section (7‑A).

7. However, before we discuss the above submission we may quote the provisions of subsection (7‑A) of section 50 of the Ordinance for the sake of convenience: "(7‑A) Any person making sale, by public auction, of any property belonging to the Government, a local authority, a public company, a foreign association declared to be a company under clause (16) of section 2, or a foreign contractor or consultant or consortium shall collect advance tax, computed on the basis of sale price of such property and at the rate specified in the First Schedule, from any person to whom such property is sold, and credit for the tax so collected in any financial , year shall, subject to the provisions of section 53 be given in computing the tax payable by the person purchasing such property for the assessment year commencing on the first day of July next following the said financial year, or in the case of an assessee to whom section 72 or section 81 applies, the assessment year, if any, in which the "said date" as referred to therein, falls, which ever is the later."

8. Mr. A. S. Waswani learned counsel for the petitioner in support of his submission has mainly relied on Muhammad Younas v. The Chairman Municipal Committee Sahiwal and others (P L D 1934 Lab. 345). In this case a learned Single Judge of Lahore High Court after examining the meaning of the property as given in various dictionaries repelled the contention which is now advanced by Mr. A. S. Waswani that the right to collect octroi (in the present case export tax) was not property. Since the word 'property' is not defined in the Ordinance, he besides relying on the meaning of the word as given in various dictionaries also relied on the observation of the Supreme Court in Messrs Hamdard Dawakhana v. Commissioner of Income‑tax, Karachi (P L D 1980 S C 84) to come to the conclusion that the right to collect octroi was property within the meaning of subsection (7‑A) of the Ordinance. It may be pertinent to quote observation of the Supreme Court which are as follows "There is consensus of judicial opinion that the term 'property', as used in clause (i), is a term of the widest import and subject to any limitation or qualification which the context might require, signifies every possible interest, which a person can acquire, hold and enjoy. It is comprehensive enough as to cover even business, case deposits, securities and other such things. There is nothing in the language of the clause in question to restrict in any manner the normal and accepted meaning of the word 'property' so as to exclude business from its connotation. Although the restricted view of the term property was taken in the cases reported as In re: Lachman Das Nara indas A I R 1925 All. 115 and Commissioner of Income‑tax v. Thevara Patasala A I R 1926 Mad. 949, in which it was observed that income derived from profits in trade or business, even though the income be dedicated to an idol or for other charitable purposes, was not income derived from trust property, yet this view was not approved in subsequent cases ; and the matter was set at rest by their Lordships of the Judicial Committee in Trustees 'of Tribune Press, Lahore v. Commissioner of Income-tax A I R 1939 P C 208 and All India Spinner's Association of Mirzapur v. Commissioner of Income‑tax A 1 R 1944 P C 88, by holding that even the stock and good will of business as well as its organization and undertaking, besides the fluctuating stock in trade, were covered by the term 'property'."

9. Besides, the above we may also here quote froth Black's Law Dic tionary, 4th Ed., p. 1382, the meaning of the word 'property' which is as follows :‑ "The word is also commonly used to denote everything which is the subject of ownership, corporeal or incorporeal, tangible or intangible, visible or intangible, real or personal, everything that has an exchangeable value or which goes to make up wealth or estate. It extends to every species of valuable right and interest, and includes real and personal property, easements, franchises. and incorporeal hereditaments. Samet v. Farmers & Merchants Nat. Bank of Baltimore, C. C. A. Md. 247 F 669, 671 ; Globe. Indemnity Co. v. Bruce C. C. A. Oki. 81 F. 2d 143, 150".

10. The meaning of the word 'property' in relation to section 4(3)(1) of the Indian Income‑tax Act came up for consideration of the Bombay High Court in Dharama Vijaya Agency v. Commissioner of Income‑tax, Bombay City 1 (1960) 38 I T R 392), wherein reference was also made to a decision of the Supreme Court in J. K. Trust, Bombay v. Commissioner of Income‑tax, Excess Profits Tax, Bombay (1957) 32 I T R 535), in which it was ruled that 'property' is a term of the widest import, and subject to any limitation or qualification which the context might require, it signifies every possible interest which a person can acquire, hold and enjoy. Business would undoubtedly be property, unless there is some thing to the contrary in the enactment. Venkatarama Aiyar, J., at p. 543 of the report after referring to some cases further observed as follows "...even an office of trusteeship was held to be property especially when emoluments were attached to it, and that must a fortiori be the positional, in the case of office of managing agency, which is clearly one of the profit and even alienable under certain circumstances. The office requires no doubt the performance of services ; but there is no antithesis between service and business, as there are several kinds of business, which involve the performance of services, such as insurance and commission agency ..." 10‑A. We may also refer to Langdale M. R. Jones v. Skinner (5 L J Ch. 90) wherein it was held that 'property' is the most comprehensive of all terms which can be used, inasmuch as it is indicative and descriptive of every possible interest which the property can have". Stroud's Judicial Dictionary, 4th Edn., p. 2151, has further referred to the cases of Casey v. Lalor (5 1 C L R 507), Morony v. Morony (1R8CL174), Morrison v. Hoppe (4D G & S234), Termes de la Ley ; Cowel).

11. We may also refer to Henry Briggs, Sons & Co. Ltd., (in voluntary liquidation) v. Island Revenue Commissioners (1961) 1 W L R 68 : (1961) 1 AER220), wherein the property in relation to the Finance Act, 1973, was considered and it was observed that the term 'property' for the purposes of the Act includes rights to receive compensation as a result of nationalization of whole industry.

12. It is clear from the judgment relied upon by the learned counsel for, the petitioner that the learned Judge did, not accept the contention that right to collect octroi was not property. We have therefore, no doubt that the right to collect export tax is 'property'.

13. This brings us to the second submission that the auction of the right to collect export tax is not a sale but a transaction in the nature of grant of lease. On this point, there is no doubt, the judgment relied upon is in favour of the petitioner, However, Mr. Shaikh Harder has submitted that this judgment has lost its efficiency because of Explanation inserted in sec tion (7‑A) of section 50 of the Ordinance by the Finance Act, 1984. It is therefore, necessary to refer to the Explanation which reads as follows "Explanation.‑For the purposes of this subsection, sale of any property includes the awarding of any lease to any person, including a lease of the right to collect octroi duties, tolls, fees or other levies, by what ever name called."

14. In view of the Explanation Mr. Shaikh Haider further submitted that there was no ambiguity in the provisions for the said provisions squarely applies to the case of the petitioner. In reply it is submitted by Mr. A. S. Waswani that the Explanation added to subsection (7‑A) is not retroactive in its operation for there is no such enactment express or implied and in support he relied on Adnan Afzal v. Capt. Sher Afzal (P L D 1969 S C 187), Nabi Ahmed and another v. Home Secretary, Government of West Pakistan, Lahore and 4 others (P L D 1969 S C 599), Arshad Akram & Co. and 8 others v. Divisional Superintendent, Pakistan Railways, Rawalpindi and S others (P L D 1982 Lah. 109).

15. In, the first named case it was held that the general principle with regard to interpretation of statute as laid down in the well‑known case of Colonial Sugar Refining Company Limited v. Irving (1905 A C 369.), is that if the matter in question be a matter of procedure only the provision would be retrospective. We may quote the relevant observations here : "The general principle with regard to the interpretation of statutes as laid down in the well‑known case of the Colonial Sugar R fining Company Limited v. Irving 1,1905) A C 369 is that "if the matter in question be a matter of procedure only", the provisions would be retrospective. "On the other hand, if it be more than a matter of procedure, if it touches a right in existence at the passing of the Act", then "in accordance with a long line of authorities extending from the time of Lord Coke to the present day", the legislation would cot operate retrospectively, unless the Legislature had either "by express enactment or by necessary intendment" given the legislation retroactive effect. 'To the same effect are the observations of Jessel, Master of the Rolls, in the case of In re Joseph, Suche & Co. Limited (1875) 1 Ch. D. 48, where it was observed that as "a general rule when the Legislature alters the rights of parties by taking away or conferring any right of action, its enactments, unless in express terms they apply to pending actions, do not affect them. It is said that there is one exception to that rule, namely, that, these enactments merely affect procedure and do not extend to rights of action, they have been held to apply to existing rights. The question for consideration here was regarding the right of a secured creditor of a company to prove for the full amount of his debt without deducting the value of his securities in the course of the winding up. That was held to be, in substance, a right of action for the recovery of a debt and, therefore, section 10 of the English Judicature Act was held not to apply retrospectively." The principle has been admirably put _ by Crawford in his Book on Construction of Statutes, 1940 Edition, page 581, as follows :‑ "As a general rule, legislation which relates solely to procedure or to legal remedies will not be subject to the rule that statutes should not be given retroactive operation. Similarly; the presumption against retrospective constructing is inapplicable. In other words, such statutes constitute an exception to the rule pertaining to statutes generally. Therefore, in the absence of a contrary legislative intention, statutes pertaining solely to procedure or legal remedy may affect a right of action no matter whether it came into existence prior to, or after the enactment of the statute. Similarly, they may be held applicable to proceedings pending or subsequently commenced. In any event, they will, at least, presumptively apply to accrued and pending as well as to future actions." This principle has also been fully adopted 'by this Court in the cases of The State v. Muhammad Jamil P L D 1965 S C 681 and Muhammad Alam v. The State P L D 1967 S C

259. The next question, therefore, that arises for consideration is as to what are matters of procedure. It is obvious that matters relating to the remedy, the mode of trial, the manner of taking evidence and forms of action are all matters relating to procedure. Crawford too takes the view that questions relating to jurisdiction over a cause of action, venue, parties pleadings and rules of evidence also pertain to procedure, provided the burden of proof is not shifted. Thus a statute purporting to transfer jurisdiction over certain causes of action may operate retroactively. This is what saying that a change of forum by a law is retrospective being a matter of procedure only means. Neverthe less, it must be pointed out that if in this process any existing rights are affected or .the giving of retroactive operation cause inconvenience or injustice, then the Courts will not even in the case of a procedural statute, favour an interpretation giving retrospective effect to the statute. On the other hand, if the new procedural statute is of such a character that its retroactive application will tend to promote justice without any consequential embarrassment or detriment to any of the parties concerned, the Courts would favourably incline towards giving effect to such procedural statutes retroactively."

16. In the second cited case what was observed by Qadeeruddin Ahmad, J. is summarised in the head‑note (d) of the report and reads as follows "Rights of the parties arising from facts which come into existence before the passing of a statute, should be presumed to be unaffected by it, unless it is expressly or by necessary implication made retrospective. The full significance, and implications, of the protection cannot be fully appreciated, unless we discover its reason. This is not a statutory protection, yet the principle has by virtue of a presumption of fair play effectively checked encroachments on existing rights by the all powerful British Parliament, unless they were found to have been clearly and unambiguously so intended. The origin of this presump tion is to be found in the conscientious abhorrence that all just men have for the injustice that is inherent in changing the legal implications of a situation to the disadvantage of those who would otherwise benefit by a right which existed at the time of the change. As a manifestation of more or less, a natural or instinctive sense of justice, or perhaps an instinctive repugnance to what one feels to be injustice, the Courts have held that laws do not "impose new liabilities in respect of events taking place before their commencement". Since the above way of thinking is the consequence of a sense of aversion for injustice, it is immaterial "whether the law is changed before the hearing of the case at first instance or whilst an appeal is pending". One more consideration which appeals is that law‑abiding members of society regulate their lives according to the law as it exists at the time of their actions, and they expect the law to be steadfast and reliable. They assess and weigh the consequences according to the demands of existing law, including the requirements implicit in the existing system of law, and are entitled to feel cheated if the law later lets them down by taking away or reducing their rights, or increasing either burdens. The time at which a presumption arises against retros pectivity is to be determined by the circumstances which call for protection against injustice. The differences in the manifestations of this deed are mere matters of detail. The need may arise before the commencement of proceedings with reference to the time at which a cause of action arose, or an innocent deed was done. This happens if, for instance, a law is made to eliminate that cause of action or to make that innocent act punishable. It may also arise with reference to the time at which a new law was enforced during the pendency of a proceeding. Such an occasion can arise if, for instance, the right of appeal is abolished after the institution of a proceeding. So also it may arise with reference to the time at which a proceeding, whether civil or criminal, was concluded by a decree, conviction or acquittal, and then a law was passed taking away the right of appeal against the decree, conviction or acquittal, when no proceeding was pending. When we think of such an injustice we are really thinking of the adverse effect of the new law on vested rights." There cannot be any cavil with the principle laid down in the aforesaid two cases but the question is of their application.

17. In the Arshad Akram & Co. and 7 others v. Divisional Superintendent, Pakistan Railways, Rawalpindi and S other, cited by Mr. A. S. Waswani, it was held that it is well‑settled that an `Explanation' does not enlarge the scope of main section which it is supposed to explain. It was further observed that generally, an `Explanation' is added to a section by way of clarification and to facilitate its interpretation. However, the true construction of an 'Explanation' must depend on its terms and the language used in it. In that case on the language of the `Explanation' used it was held that it was not possible to hold that a ban on the movement of rice, from these four District to other provinces, had been imposted. This case is therefore, of no help to petitioners.

18. However, the real question for consideration in this case is that what is the nature of the 'Explanation' added to subsection (7‑A) of section 50 of the Ordinance. A bare perusal of it does show that it is declaratory in nature and it declares what law is and ought to be understood. It appears that the need for adding the 'Explanation' arose because of the decision of of the Lahore High Court in 30 petitions which were allowed by the judgment, dated 16‑4‑1984, Muhammad Younas v. Chairman, Municipal Committees, Sahiwal and others and therefore, such provisions must be considered as operating retrospectively. Reliance is placed on the following passage from Craies on Statute Law, 6th Edn., p. 394. "Where a statute is passed for the purpose of supplying an obvious omission in a former statute, or, as Park, J. (afterwards Baron Parke) said in R v. Dursley (1832) 3 B & Ad. 465, 469 "to 'explain' a former statute" the subsequent statute has relation back to the time when the prior Act was passed. Thus, in Att.‑Gen. v. Pougett (1816) 2 Price 381, 392, it appeared that by a Customs Act of 1873 (53 Geo. 3, c. 33 a duty was imposed upon hides of 9s. 4d., but the Act omitted to state that it was to be 9s. 4d., per cwt., and to remedy this omission another Customs Act 53 Geo. 3, c. 105 was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not liable to pay the duty of 9s. 4d., per cwt., but Thomson C. B., in giving judgment for the Attorney‑General, said : "The duty in this instance was in fact imposed by the first Act, but the gross mistake of the omission of the weight for which the sum expressed was to have been payable occa sioned the amendment made by the subsequent Act, but that had reference to the former statute as soon as it passed, and they must be taken together as if they were one and the same Act." "Where an Act is in its mature declaratory, the, presumption against construing it retrospectively is inapplicable. In Att.‑Gen. v. Theobald (189C) 24 O. B. D. 557, section l l of the Customs and Inland Revenue Act, 1889, as to the liability of voluntary settlements to stamp duty, was held retrospective, although the litigation in which its terms were involved had commenced before it was passed. Acts of this kind, like judgments, decide similar cases pending when the judgments are given, but do not reopen decided cases (See Ate.‑Gen. v. Marquis of Hertford (1849) 3 Ex.

670. In Young v. Adams (1898) A C 469, 476 Lord Watson held that Att.‑Gen. v. Theobald and R. v. Dursley dealt with enactments Paving no analogy with the statute then before the Committee (see : pp. 389, 390, ante)."

19. Reference may also be made to the following statement in Maxwell on "Interpretation of Statutes" 12th Ed., p. 224 :‑ "If a statute is in its nature a declaratory‑Act, the argument that it is not to be construed so as to take away previously vested rights is inapplicable." In support he has cited the case of Attorney‑General v. Theobald (1890) 24 0 B D 557) wherein it was held as follows : "Section 11 of the Customs and Inland Revenue Act, 1889 declared that the provisions of the Customs and Inland Revenue Act, 1881, section 38, with regard to the imposition of stamp duties upon personal property passing under 'voluntary settlements' should tic construed as if that expression included any trust 3n favour of a volunteer. It was held that section 11 was retrospective, and that the construction provided by it must be applied even though the property sought to be taxed had passed to the beneficiaries and proceedings to recover the duty had been taken before the 1889 Act came into force." Reliance is also placed on In re : Lovell and Collard's Contract (1907) 1 Ch. 249) wherein it was laid down as follows "Section 6 of the Finance Act, 1898 provided, for the removal of doubt, that the definition 'of conveyance on sale in the Stamp, Act, 1891 included an order for foreclosure. It was held that section 6 was declaratory and therefore retrospective, so that an order of 1896 foreclosing a legal mortgage required stamping as a conveyance on sale."

20. It may be explained that P6 declaratory Act is described in Craies Statutes as an Act to remove doubts as to the meaning or effect of a statute, and it is also stated that the usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error. (See : Bindra's well‑known book entitled "Interpretation of Statute and General Clauses Act" page 605).

21. The learned‑ author has relied o judgment of Allahabad High Court in Mt. Muhammadi Bibi v. Kashi Upadhya and others (A I R 1926 All. 725), wherein it was held that a declaratory Act is an Act to remove doubt as to the meaning or effect of a statute. We may quote the actual observations which are as follows :‑ "A declaratory Act is an Act to remove doubt existing as to t Fe meaning or effect of a statute, and the usual reason for passing a declaratory Act is to set aside what the legislative body deems to have teen a judicial error. Declaratory Act, like judgments, decide cases pending when the judgments are given but do not reopen decided cases."

22. However, it is contended by Mr. A. S. Waswani that the provisions added by way of explanation have enlarged the scope of main provision and therefore, they would not apply retrospectively but we do not agree for, as stated earlier, the necessity seems to have arisen because of the judgment of Lahore High Court wherein the learned Judge held that the right to collect octroi was in the nature of lease and not in the nature of sale. Accordingly, in our view the Explanation would apply retrospectively. Even otherwise, hese provisions, as submitted by Mr. Shaikh Haider, are not of the nature of charging section. They only provide a mechanism for collection of revenue but the liability for payment of tax by the petitioner has to be determined in independent proceedings under the Income‑tax Act and the amount so collect ed is liable to be refunded partly or wholly in case it is found to be in excess of liability or where no liability to pay tax is incurred. Therefore, for this reason also the Explanation shall have retrospective effect. Reliance is placed on Colonial Sugar Refining Company Limited v. Irving which has been consistently followed in this country.

23. In view of the Explanation added we are of the view that the Lahore High Court's decision in Muhammad Younas v. Chairman, Municipal Commit tees, Sahiwal and others' case has lost its efficacy and the demand made by the Income‑tax Department is valid and unexceptionable. Accordingly, we find no force in this constitutional petition and dismiss it but leave the parties to bear their own costs for this constitutional petition was filed before the amend ment was made. M. B. A. Petition dismissed.