Precedent

A case which does not decide any question of law or enunciate any principle of law and is a leave declining order does not pass as a binding precedent.

In legal milieus, it points towards an incidence where the Court decides a lis without appreciating or deliberating the particular point of law raised before it, which disturbs the precedential value of the judgment

Such doctrine often denotes that if the court, in its judgment, overlooked or dispensed with a crucial point of law raised before it, then the precedential value of such decision is seriously disturbed

Decision is not binding if it was reached at without argument, without reference to the critical terms of the law and without citation of authority and such a decision, taken as sub silentio, lacks authoritative weight.

A case which does not decide any question of law or enunciate any principle of law and is a leave declining order does not pass as a binding precedent.

In legal milieus, it points towards an incidence where the Court decides a lis without appreciating or deliberating the particular point of law raised before it, which disturbs the precedential value of the judgment

Such doctrine often denotes that if the court, in its judgment, overlooked or dispensed with a crucial point of law raised before it, then the precedential value of such decision is seriously disturbed

Decision is not binding if it was reached at without argument, without reference to the critical terms of the law and without citation of authority and such a decision, taken as sub silentio, lacks authoritative weight.

Any decision by a later Bench of the same strength that disregards prior rulings of benches of equal strength within the same Court will hold no precedential value.

Proper course of action for reconsideration through reference to Chief Justice for constitution of larger bench explained

No doubt, the earlier decision of a bench of a High Court, or of the Supreme Court, on a question of law is binding on another bench of equal numeric strength when dealing with the same question, in the sense that the latter bench cannot decide the same question contrary to the first decision

However, the latter bench is not precluded from examining the correctness of the earlier decision or forming a different view

In such a case, the proper course of action is to refer the matter to the Chief Justice of the High Court, or in the case of the Supreme Court to the Bench-Constitution Committee, with a request for the constitution of a larger bench to examine the correctness of the earlier decision.

Four statements can sum up the principles of vertical and horizontal precedents: (i) If an applicable precedent is issued from a court hierarchically superior to the one deciding a new case, then the decision must follow the vertical precedent; (ii) If an applicable precedent is issued from the very court deciding a new case, then the court should follow it, but in certain circumstances may depart from it; (iii) If a seemingly applicable precedent is issued from a court hierarchically inferior to the one deciding a new case, then the decision need not (but may) adopt the reasoning and decision; (iv) If a seemingly applicable precedent is issued from a court outside the jurisdiction, and there is no hierarchical relationship to the deciding court, it may be considered persuasive if it is cogently reasoned but never binding.

A case is only authority for what it actually decides and cannot be cited as precedent for a proposition that may be inferred from it.

When there are conflicting views with regard to question of law of Bench comprising of equal members of judges, the view of the latter will prevail.

Decision rendered per incuriam is devoid of precedential authority and does not have binding effect in subsequent cases.

Proper course of action for reconsideration through reference to Chief Justice for constitution of larger bench explained

No doubt, the earlier decision of a bench of a High Court, or of the Supreme Court, on a question of law is binding on another bench of equal numeric strength when dealing with the same question, in the sense that the latter bench cannot decide the same question contrary to the first decision

However, the latter bench is not precluded from examining the correctness of the earlier decision or forming a different view

In such a case, the proper course of action is to refer the matter to the Chief Justice of the High Court, or in the case of the Supreme Court to the Bench-Constitution Committee, with a request for the constitution of a larger bench to examine the correctness of the earlier decision.

Four statements can sum up the principles of vertical and horizontal precedents: (i) If an applicable precedent is issued from a court hierarchically superior to the one deciding a new case, then the decision must follow the vertical precedent; (ii) If an applicable precedent is issued from the very court deciding a new case, then the court should follow it, but in certain circumstances may depart from it; (iii) If a seemingly applicable precedent is issued from a court hierarchically inferior to the one deciding a new case, then the decision need not (but may) adopt the reasoning and decision; (iv) If a seemingly applicable precedent is issued from a court outside the jurisdiction, and there is no hierarchical relationship to the deciding court, it may be considered persuasive if it is cogently reasoned but never binding.

Any case, whether of the Supreme Court or of a High Court, that establishes binding precedent turns on facts proved or admitted.

No doubt, the Supreme Court has to draw wisdom from the decisions already rendered, but in no way is a Full Court bound by the principle of stare-decisis

To do so, would defeat the very purpose of convening a Full Court to hear and decide a matter.

Judgment cannot be generalized beyond its context, as it is only applicable to the situation at hand and does not serve as a precedent for matters that lie outside its explicit scope.

The doctrine of per incuriam refers to a judgment of a court which has been decided without reference to or in ignorance of a statute or an earlier judgment/precedence and/or overall dress up of the scheme of law which could have been relevant and ,therefore, such ignorance has affected the result of the case

Some of the factors to be considered while contending that a decision is not a binding precedent and should not be followed or be ignored are:- (i) A decision where the point in issue is not argued or considered by the court, or a decision rendered without an answer to the argument, without reference to the crucial words of the rules/provisions ; (ii) If a judgment is delivered in ignorance of scheme of law to demonstrate the real intent of legislature will also be recited per incuriam ; (iii) Legislature's real intent should never be left behind or overshadowed by a judgment rendered per incuriam.

Appellant (taxpayer / company), while placing reliance on a decision given by the Appellate Tribunal Inland Revenue (Tribunal) in ITA No.3867/LB/2023 in a case titled as M/s Atlas Copco Pakistan v. CIR, LTO Lahore dated 01.03.2024 ('the M/s Atlas Copco Pakistan case'), contended the OIR incorrectly classified the commission earned by the appellant as "Brokerage and Commission" under section 4C(2)(i) of the Income Tax Ordinance , 2001 ('the Ordinance 2001') instead of foreign indent commission, and the correct total income under S.4C is below the threshold of 150 million rupees, hence, the appellant is not liable to payment of super tax

Validity

The decision of the Tribunal on the issue given in M/s Atlas Copco Pakistan case had not even touched upon the exclusion given in S. 4C(2)(ii) of the Ordinance, 2001

Since there is no discussion about said primary aspect of the scheme of law, therefore, it cannot be said to be a binding precedent

If the relied judgment is found to be either per incuriam or sub-silentio it has no binding effect

Vital questions escaped adjudication by the earlier bench in M/s Atlas Copco Pakistan case and had become a case of either sub-silentio or per incuriam or a blend of both

In any of the two events, the binding effect of the said judgment is defeated and diluted as the ratio in consideration of the scheme of law pertaining to super tax is not settled in the earlier said referred judgment

The principles of per incuriam and sub-silentio are exceptions to the doctrine of precedent and permit the court to overrule the ratio decidendi of the incorrect decision or to ignore the same

Thus, on analysis of S. 4C of the Ordinance, 2001 and other related provisions, the judgment referred in the M/s Atlas Copco Pakistan case, surfaced as a blend of both per incuriam and sub-silentio

The most appropriate interpretation of S. 4C of the Ordinance, 2001 is that commission income shall not be included as imputable though may be subject to Final Tax Regime and is required to be included under clause (i) of S.4C(2) of the Ordinance, 2001 as a sum in the taxpayer's income for the purpose of charging super tax

Appellate Tribunal Inland Revenue upheld the impugned order

Appeal, filed by Taxpayer/Company, being merit-less was dismissed.

Smaller Bench cannot decide contrary to what a larger Bench has already decided.

Earlier decision of a bench of a High Court, or of the Supreme Court, on a question of law is binding on another bench of equal numeric strength when dealing with the same question, in the sense that the latter bench cannot decide the same question contrary to the first decision

However, the latter bench is not precluded from examining the correctness of the earlier decision or forming a different view

In such a case, the proper course of action is to refer the matter to the Chief Justice of the High Court, or in the case of the Supreme Court to the Bench-Constitution Committee, with a request for the constitution of a larger bench to examine the correctness of the earlier decision and, if necessary, to reconsider and redecide the question.

When the previous decision is found to be 'plainly and palpably wrong', the doctrine of stare decisis does not prevent a court from overruling it

Where the decision of a court is not based upon some constitutional or statutory provision, the doctrine of stare decisis does not apply to such decision.

Doctrine of binding precedent fosters and disseminates firmness and uniformity and also supports the development of law.

This represents an elementary canon of law that Courts and judges should honor the decisions of prior cases on the subject matter which maintains harmony, uniformity and renders the task of interpretation more practicable and reasonable while adhering to it for resolving a lis based on analogous facts

Doctrine of stare decisis is to be adhered to as long as an authoritative pronouncement holds the field, until and unless the dictates of compelling circumstances fortified by rationale justify the exigency of a fresh look for judicial review

Terminology "vertical stare decisis" explicates that the decisions of higher courts should take precedence over the decisions of lower courts

Whereas the concept of "horizontal stare decisis" provides that prior decisions made by courts at a particular appellate level should provide some precedent for cases heard by courts of the same appellate level, however horizontal stare decisis is generally seen to be less forceful as compared to vertical stare decisis.

Foreign judgments have persuasive / non-binding effect but their analysis provides effective tool for comprehending the proposition of law and assists in interpreting legal concepts / jurisdictional issues.

Doctrine of per incuriam refers to a judgment of Court which has been decided without reference to, or in ignorance of a statute or an earlier judgment/precedent and/or overall dress up of the scheme of law, which could have been relevant and therefore such ignorance has affected the result of the case

Some of the factors to be considered while contending that a decision is not a binding precedent and should not be followed or be ignored on such principles are summarized hereunder but are not limited:

"Law of precedent" is an important aspect of legal certainty in rule of law.

Doctrine of binding precedent promotes certainty and consistency in judicial decisions, and ensures an organic and systematic development of the law.

To constitute precedent the law which was interpreted must be the same or similar to the case in hand.

To constitute precedent the law which was interpreted must be the same or similar to the case in hand.

Ratio decidendi encompasses only such reasoning of judgment that is necessary for the decision of the question of law before the Court

Ratio decidendi alone forms the binding precedent/authoritative element of a judgment which possesses the force of law

Other reasons given or discussions had in the judgment of the Court (or the separate opinion of a Judge) which are not necessary for the decision of the case are merely obiter dicta/passing remarks.

Doctrine of binding precedent promotes certainty and consistency in judicial decisions, and ensures an organic and systematic development of the law.

If some Bench of similar nomenclature is desirous to form another view then latter has to send the matter to Chief Justice for constituting of larger Bench.

Earlier judgment of a Bench of the Supreme Court was binding not only upon the Benches of smaller numeric strength but also upon the Benches of co-equal strength; a Bench of co-equal strength could not deviate from the view held by an earlier Bench, and if a contrary view had to be taken, then the proper course was to request the Chief Justice of the Supreme Court for constitution of a larger Bench to reconsider the earlier view

Even if a decision of a bench of equal strength is not brought into the notice of a subsequent bench of same strength and it expresses a contrary view, then the later decision is a judgment per incuriam

Smaller Bench cannot request for the constitution of a larger Bench to revisit the opinion of a larger Bench on any question or principle of law.

Scope and meaning

Held, it was the "ratio decidendi" which was applicable to subsequent cases presenting the same problem.

An earlier judgment of a Division Bench is binding on a subsequent Division Bench, and in case if any contrary view is being taken, then the matter has to be referred to the Chief Justice for constitution of a larger Bench to resolve the controversy.

Precedents in bail matters are of no help to a party, as it varies from case to case depending upon the facts of each case

Court has to examine as to whether accused has made out a case for further inquiry or not.

Test to be essentially applied in one case may absolutely be irrelevant in another, as the crimes were seldom committed in identical situations

Criminal cases were to be decided on their peculiar facts and circumstance as such the rules laid down in earlier cases could not be applied in subsequent cases in an 'omnibus' manner.

Earlier judgment of a Bench of the Supreme Court was binding not only upon the Benches of smaller numeric strength but also upon the Benches of coequal strength; a Bench of co-equal strength could not deviate from the view held by an earlier Bench, and if a contrary view had to be taken, then the proper course was to request the Chief Justice (of the Supreme Court) for constitution of a larger Bench to reconsider the earlier view

Smaller Bench cannot request for the constitution of a larger Bench to revisit the opinion of a larger Bench on any question or principle of law; only a Bench of co-equal strength can make such a request

As a judgment of a larger Bench was binding on the smaller Benches, judicial discipline and propriety demanded that a two member Bench should follow decision of a three member Bench, and if a two member Bench concluded that an earlier judgment of a three member Bench was so incorrect that in no circumstances could it be followed, the proper course for it was to set out the reasons why it could not agree with the judgment of the three member Bench and to refer the matter to the Chief Justice for constitution of a three member Bench

If the three member Bench also came to the conclusion that the earlier judgment of a three member Bench was not correct, then the reference of the matter to a five member larger Bench was justified

Two member Bench cannot jump over a three member Bench and directly ask for constitution of a Bench larger than three member Bench, to review the principle of law declared by that Bench.

What was necessary for decision of the issue in a case was ratio decidendi and was binding however, what was said "by the way" and was entirely unnecessary for decision of a case or what was mere gratuitous statement of the law was obiter dicta and was not binding.

Not only owning obedience, but also of developing consistency in evenhanded administration of justice in Courts.

Authorities objected to acceptance of proposal made by petitioners for return of benefits and had relied upon a judgment passed by Supreme Court wherein such kind of concession at bail stage was disapproved

Validity

Despite plea of hardship and delay in trial for almost four years, petitioners were ready to deposit alleged amount of loss determined by National Accountability Bureau (NAB) against each petitioner

Petitioners relied upon two judgments which were subsequent in time and passed by three members Bench of the Supreme Court whereas judgment relied upon by authorities was earlier in time and was delivered by two members Bench

Bail was allowed, in circumstances.

Each case especially criminal case depends on its own facts and close similarity in one case and in another case is not possible because circumstantial flexibility on additional or different facts may make a world of difference between conclusions in two cases

Disposal of cases by blindly placing reliance on decision is not proper.

Plea raised by authorities was that order of extension was made on 24-09-2010 whereas judgment in case titled 'Collector of Sales Tax Gujranwala v. Super Asia Muhammad Din and Sons and others' reported as 2017 SCMR 1427 was not applicable as it was given on 31.03.2017 and was not applicable to former

Validity

Supreme Court disapproved the plea raised by authorities

Law declared by Supreme Court as to proper interpretation and application of first proviso to S. 36(3) of Sales Tax Act, 1990 applied fully to the order of extension under consideration

Order of Collector was invalid and inoperative in law and as there was no lawful extension of time

Supreme Court observed that order-in-original should have been made by Additional Collector within 90 days of 13.06.2005, i.e., by 12.09.2005

Notice was issued beyond date and it was invalid and non est in law, therefore, same had to be quashed and forums of appeal including High Court in tax reference erred materially in failing to do so

Supreme Court quashed order-in-original and set aside judgment passed by High Court as well as decisions of departmental forums below

Appeal was allowed.

If a new case was dissimilar to an earlier case in ways that seemed important, the court would 'distinguish" it and reach a result different from what the precedent would otherwise suggest or even dictate

In common parlance, either the precedent or the pending case may be said to be "distinguished" from the other

In such way the former decision might be said to be "rerationalized"

Precedent, whether persuasive or binding, need not be applied or followed if it could be distinguished; that is, there was a material distinction between the facts of the precedent case and the case in question

Technique of distinguishing a past case was a powerful engine of legal change

Crucial question was, whether there were any material differences between the facts of the case at bar and the facts of the prior cases to warrant the rule being different

In principle, the distinguishing of an apparent decision presented no problem for the doctrine of precedent.

Judgement refusing leave to appeal to Supreme Court could not be considered as precedent.

Earlier judgment of Division Bench of High Court, on same point is binding upon subsequent equal Bench.

Consent order could not be cited as precedent.

When a court made an assumption about the law, instead of reaching a focused determination in relation to it, the decision based upon it did not carry binding authority under the doctrine of precedent.

When there were conflicting judgments contrary to the principle of law by the bench of equal strength, judgment later in time had to be followed.

Plea raised by authorities was that order of extension was made on 24-09-2010 whereas judgment in case titled 'Collector of Sales Tax Gujranwala v. Super Asia Muhammad Din and Sons and others' reported as 2017 SCMR 1427 was not applicable as it was given on 31.03.2017 and was not applicable to former

Validity

Supreme Court disapproved the plea raised by authorities

Law declared by Supreme Court as to proper interpretation and application of first proviso to S. 36(3) of Sales Tax Act, 1990 applied fully to the order of extension under consideration

Order of Collector was invalid and inoperative in law and as there was no lawful extension of time

Supreme Court observed that order-in-original should have been made by Additional Collector within 90 days of 13.06.2005, i.e., by 12.09.2005

Notice was issued beyond date and it was invalid and non est in law, therefore, same had to be quashed and forums of appeal including High Court in tax reference erred materially in failing to do so

Supreme Court quashed order-in-original and set aside judgment passed by High Court as well as decisions of departmental forums below

Appeal was allowed.