I.TAS. NOS. 1217/KB, 1218/KB, 714 TO 716/KB, 915/KB AND 1125/KB OF 1994-95 VS I.TAS. NOS. 1217/KB, 1218/KB, 714 TO 716/KB, 915/KB AND 1125/KB OF 1994-95
1995 P T D (Trib.) 1113
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman and S.M. Sibtain, Accountant Member
I.TAs. Nos. 1217/KB, 1218/KB, 714 to 716/KB, 915/KB and 1125/KB of 1994-95, decided on /01/.
th
April, 1995. (a) Income Tax Ordinance (XXXI of 1979)---
----Ss.134 (5) & 2(43)---Appeal to Appellate Tribunal---Such an appeal has to be accompanied by a fee, and any fee, sum or amount payable under the Income Tax Ordinance, 1979 has been included in the definition of term "tax" as contained in S.2 (43) of the Income Tax Ordinance, 1979.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.134 (5) [as amended by Finance Act (X of 1994)]---Appeal to Appellate Tribunal---Provision of S.134(5), being in the nature of charging provision, amendment therein enhancing appeal fee from Rs.100 to Rs.5,000 or 10% of the tax levied whichever is less and in case where no tax is levied a fee of Rs.5,000 shall be paid, shall apply to the appeals relating to the assessment year 1994-95 and onward.
1995 PTD (Trib.) 482; (1990) PTD (Trib.) 121; Rustam F. Cowasji v. C.B.R. 1985 PTD 529 ref.
(c) Interpretation of statutes---
---- Fiscal statute ---Amendment---Retrospectivity or prospectivity-- Principles---Law prescribing court-fee/appeal fee or amending the same for enhancing or reducing such fee is in nature of fiscal legislation/taxing statute-- Any amendment in a fiscal/taxing statute is to be prospective and not retrospective until and unless the Legislature has deemed fit to give it retrospective effect by clear and unambiguous legislation.
Muhammad Boota v. Farzand Ali 1980 CLC 1124; M/s. Pakistan Gun and Chemicals Ltd. v. The Chairman, Karachi Municipal Corporation PLD 1975 Kar. 495 and Zafar Ali Mirza v. Mst. Kulsoom Begum 1989 CLC 1211 ref.
(d) Income Tax Ordinance (XXXI of 1979)---
----S. 134(5) [as amended by Finance Act (X of 1994)]---Appeal to Appellate Tribunal---Right of appeal being in continuation of the original proceedings, in the absence of any express provision or intendment to the contrary, the appeal is not to be governed by any subsequent amendment in the law---Where the lis commenced much before the amendment was introduced in S.134 (5), Income Tax Ordinance, 1979 by Finance Act, 1994, all the appeals relating thereto shall be governed by the law as it stood before 1-7-1994.
Lahore Development Authority v. Muhammad Saeed Mehdi, Commissioner, Lahore Division 1994 CLC 2313; R.N. Seshadri v. Province Madras AIR 1954 Mad. 543; Hussain Qasim Dada v. The State of M.P. AIR 1953 SC 221; AIR 1960 SC 980; CIT v. Bengal Card Board Industries 1989 ITR 193; Essential Industries v. C.B.R. PLD 1969 Lah. 24 and 1995 PTD (Trib.) 482 ref.
(e) Constitution of Pakistan (1973)---
----Arts. 227, 2A, 203-D & 199---Jurisdiction of declaring any provision of law as un-Islamic/un Constitutional is exclusively vested in the Supreme Court, Federal Shariat Court and the High. Courts.
Sindh High Court Bar Association v. Islamic Republic of Pakistan PLD 1991 Kar. 178; Dr. Mahmoodur Rehman Faisal v. Secretary, Ministry of Law, Justice and Parliamentary Affairs PLD 1992 FSC 195 and Mian Aziz A. Sheikh v, CIT PLD 1989 SC 613 ref.
(f) Income Tax Ordinance (XXXI of 1979)---
----S.134 (5) [as amended by Finance Act (X of 1994)]---Appeal to Appellate Tribunal---Amendment introduced in S.134 (5), Income Tax Ordinance, 1979 by Finance Act, 1994 wherein appeal fee has been enhanced shall take effect prospectively---Enhanced appeal fee shall be applicable to the appeals pertaining to the assessment year 1994-95 onward---All appeals up to the assessment year 1993-94, however, shall be governed by the un amended provision contained in S.134 (5), Income Tax Ordinance, 1979 irrespective of the date of filing of appeals in the Appellate Tribunal.
1995 PTD (Trib.) 482; (1990) PTD (Trib.) 121; Rustam F. Cowasji v, C.B.R. 1985 PTD 529; Muhammad Boota v. Farzand Ali 1980 CLC 1124; M/s. Pakistan Gun and Chemicals Ltd. v. The Chairman, Karachi Municipal Corporation PLD 1975 Kar. 495; Zafar Ali Mirza v. Mst. Kulsoom Begum 1989 CLC 1211; Lahore Development Authority v. Muhammad Saeed Mehdi, Commissioner, Lahore Division 1994 CLC 2313; R.N. Seshadri v. Province Madras AIR 1954 Mad. 543; Hussain Qasim Dada v. The State of M.P. AIR 1953 SC 221; AIR 1960 SC 980; CIT v. Bengal Card Board Industries 1989 ITR 193; Essential Industries v. C.B.R. PLD 1969 Lah. 24; Sindh High Court Bar Association v. Islamic Republic of Pakistan PLD 1991 Kar. 178; Dr Mahmoodur Rehman Faisal v: Secretary, Ministry of Law, Justice and Parliamentary Affairs PLD 1992 FSC 195 and Mian Aziz A. Sheikh v. CIT PLD 1989 SC 613 ref.
Farogh Nasim, Munir Ansari and Aminuddin Ansari for Appellants.
Zar Khalil, D.R. for Respondent.
I.N. Pasha and Rehan Hasan NaqviAmicus Curiae.
Date of hearing: 14th March, 1995.
ORDER
MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN).---The above appeals have been preferred against various orders by the learned C.I.T. (Appeals) under section 132 and Inspecting Additional Commissioner of Income-tax under section 66-A of the Income Tax Ordinance, 1979. All the above appeals are accompanied by a fee of Rs.100. The-office has raised a common objection to the effect that the appeals have been filed after 1st of 'July, 1994 and, therefore, each memo of appeal is required to be accompanied by a fee of Rs.5,000 or 10% of the tax levied whichever is less. On behalf of appellants it has been contended that the appeals pertain to the assessment years 1988-89, 1989-90, 1991-92, 1992-93 and 1993-94, therefore, appeal fee has en paid at Rs.100 instead of Rs.5,000 prescribed in section 134(5) as ended by the Finance Act, 1994 for the reason that the amendment made in subsection (5) of section 134 enhancing appeal fee by Finance Act, 1994 is prospective in effect and shall be applicable from the assessment year 1994-95. Similar office objections have been raised and are pending at Lahore, Islamabad and Peshawar Benches as well, therefore, we have heard office objections in all these appeals together. As the issue is of general importance affecting large number of assessees, therefore we requested M/s. I.N. Pasha and Rehan Hasan Naqvi, Senior Advocates to assist us as amicus curiae.
2. We have heard M/s. Farogh Nasim, Munir Ansari and Aminuddin Ansarilearned Advocates for the appellants and Mr. Zar Khalil, learned Representative for the Department. We have also heard M/s. I.N. Pasha and Rehan Hasan Naqvi, Advocates as amicus curiae.
3. Section 134 of the Income Tax Ordinance, 1979 deals with the appeal to the Appellate Tribunal. Several amendments have been made in the Income Tax Ordinance; 1979 by the Finance Act of 1994. Section 134(5) of the Income Tax Ordinance, 1979 as it stood before amendment by the Finance Act, 1994 read as follows:
"134(5).--An appeal to the Appellate Tribunal shall be in prescribed form and shall be verified in the prescribed manner, and shall, except in the case of an appeal under subsection (2), be accompanied by a fee of one hundred rupees.
4. After amendment introduced by Finance Act, 1994 it reads as follows:
"134(5).--An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner, and shall except in the case of an appeal under subsection (2), be accompanied by a fee of five thousand rupees or ten per cent of the tax levied, whichever is less provided that where no tax is levied, a fee of five thousand rupee's shall be paid."
5. At this juncture we would like to refer to another amendment. in subsection (3) of section 134, as a similar question relating to the amendment in subsection (3) of section 134 was raised earlier which has been decided by a larger Bench of this Tribunal at Lahore vide judgment reported as 1995 PTD (Trib.) 482. The original subsection (3) of section 134 reads as follows:
"134(3).---Every appeal under subsection (1) or subsection (2) shall be filed within sixty days of the date on which the impugned order is communicated to the assessee or the Commissioner, as the case may be."
6. A proviso was added to the above section by Finance Act, 1994 and the amended subsection (3) of section 134 reads as follows:
"134.(3).---Every appeal under subsection (1) or subsection (2) shall be filed within sixty days of the date on which the impugned order is communicated to the assessee or the Commissioner, as the case may be:
Provided that no appeal, except in the case of an appeal under subsection (2), shall lie unless an amount not less than fifty per cent. of the amount of tax assessed has been paid."
7. A perusal of our order reported as 1995 PTD (Trib.) 482 wherein the question of retrospectivity of the proviso in section 134(3) was considered shows that the following grounds were agitated:
(i) The proviso shall not operate retrospectively to defeat the assessee's vested right of appeal.
(ii) In the matter of appeal the law as it existed at the time of assessment and not as it exists at the time of Filing of the appeal shall apply.
(iii) The amendment is void being inconsistent with the provisions of Constitution.
(iv) The amendment is void being against the Injunctions of Islam.
8. After hearing the learned Advocates for the parties and other Senior Advocates who appeared on the request of Tribunal to assist us as amicus curiae and examining the case-law it was held as follows:
"Mr. I.N. Pasha, Advocate, Karachi, appearing as amicus curiae submitted that t ire is a strong presumption supported by high judicial authority that the statutes are construed as operating only to cases of facts which come into existence after the statutes are passed unless retrospective effect is clearly intended. The counsel submitted that there is no indication that the proviso was intended to take effect retrospectively. According to Mr. Pasha the proviso shall apply only to appeals arising out of assessments relating to the assessment year 1994-95 or thereafter. In support of his submission Mr. Pasha relied on a decision of the erstwhile High Court of West Pakistan in case of Essential Commodity Industries Model Town, Lahore v. Central Board of Revenue reported in PLD 1969 Lah. 24 and the decision of the erstwhile High Court of East Pakistan in case of Ansaruddin v. Appellate Assistant Commissioner of Income Tax, Dacca 1972 PTD 118. By Finance Act of 1967 a proviso was added to subsection (1) of section 30 of the Income-tax Act, 1922 (hereinafter referred to as the Act) which provided that no appeal shall lie against any order under this subsection unless the tax payable under section 22-A or one-half of the sum demanded under section 29 after regular assessment under section 23 whichever is greater has been paid. The High Court of West Pakistan and the East Pakistan in the above-cited cases had held that the proviso shall not apply to any appeal relating to any assessment made before the year in which the proviso was added to the Act. The precise reasoning of the said High Courts was that where a statute affects a substantive right in the absence of express words or necessary intendment, it had to be construed prospectivley and not retrospectively and the right of appeal in this country being the creation of statute is a substantive right and it can only be conferred or taken away retrospectively by express words or necessary implication. Fortunately the language of the proviso added to subsection (3) of section 134 of the Ordinance and of the proviso added to subsection (1) of section 30 of the Act is quite similar. The Finance Act, 1994 by which the proviso has been added to the Ordinance does not give any indication that the proviso was intended to be applied to all appeals coming before this Tribunal after the 1st of July, 1994 irrespective of the fact that the said appeals arise out of any assessment order relating to any earlier assessment years. There is a strong presumption that the legislature is presumed to be aware of the law laid down by the Superior Courts. Thus, it is presumed that while adding the proviso to subsection (3) of section 134 of the Ordinance the legislature was presumed to know that on the basis of the above High Court's judgments it will apply only to appeals arising out of assessments relating to the assessment year 1994-95 or thereafter.
It will be quite relevant to point that the C.B.R. in its Circular No.129 (1)DTP-94/PL-1, dated the October 19, 1994 has also clarified that the provisions relating to mandatory payment introduced through Finance Act, 1994 and the Income Tax (4th Amandine) Ordinance, 1994 are applicable to proceedings relating to assessment years 1994-95 and onward ........
The conclusion, therefore, is that the answer to the question regarding the retrospection of a statute is to be found in the principle of fairness rather than by reference to whether the statute affects vested or substantive rights or only it relates to the procedure of the Court.
The question that would arise is whether it is fair that the proviso should apply to the appeals relating to any assessment year earlier than 1994-95. It is clear that the other assessees have been availing this right of appeal without depositing the specified amount of assessed tax whereas the assessees before us have been obliged to deposit the same. It appears to be a case of unfairness to oblige an assessee objecting to an order of an A.A.C. to deposit the specified amount of tax before he could avail that right whereas numerous other assessees have availed that right without depositing the tax. There being a prima facie element of unfairness for those assessees who could not avail that right before 2-7-1994 for one reason or the other including the fault of the Appeals Commissioner to dispose of their appeals earlier if the requirement of the proviso was intended to be applied retrospectively the statute by which it was added was required to state clearly. In our view, therefore, the proviso would not affect the right of appeal of the assessee before this Tribunal."
9. A perusal of the above extract from the judgment of this Tribunal delivered by a Larger Bench shows that the proviso added to subsection (3) of section 134 of the Income Tax Ordinance, 1979 has been held to be effective from the assessment year 1994-95.
10. As stated earlier the proviso to section 134(3) and the amendment in section 134(5) enhancing the appeal fee were introduced simultaneously by the Finance Act, 1994 the learned representatives for the parties have forcefully argued that both the provisions have added rigors to the right of appeal and both of them are part of fiscal enactment and the effect of both the provisions is the impairment to the right of appeal, therefore, the findings whereby proviso to subsection (3) of section 134 of the Income Tax Ordinance, 1979 has been held to be prospective in effect and thereby applicable to the appeals pertaining to the assessment years 1994-95 and onward only shall equally apply to the amendment introduced in subsection (5) of section 134 of the Income Tax Ordinance, 1979 whereby the appeal fee has been enhanced from Rs.100 to Rs.5,000 or 10% of the tax levied whichever is less and in cases where no tax is levied a fee of Rs.5,000 is required to be paid. In addition to the above contention the learned Advocates appearing on behalf of the appellant have raised several other contentions, which we will presently examine.
11. The first contention of Mr. Aminuddin Ansari, Advocate, is that section 134(5) is a charging section and in the absence of express and clear provisions giving retrospective effect the provision shall be treated as prospective in effect and thus applicable to the filing of appeals pertaining to the assessment year 1994-95, and onward. Elaborating his point of view Mr. Aminuddin Ansari has submitted that subsection (5) of section 134 contains that except in the case of an appeal under subsection (2) an appeal shall be accompanied by a fee of Rs.5,000 or 10% of the tax levied whichever is less provided that where no tax is levied; a fee of Rs.5,000 shall be paid. He has contended that by virtue of definition of the term "tax" contained in section 2(43) of the Income Tax Ordinance, 1979 a fee chargeable under the Income Tax ordinance shall also be deemed as tax. Section 2(43) of the Income Tax Ordinance reads as follows:
"2(43) tax means income-tax, super-tax, surcharge and additional tax chargeable or payable under this Ordinance and includes any penalty, fee or other charge or any sum or amount leviable or payable under this Ordinance:'
12. Mr. Aminuddin Ansari has submitted that when any word, term or expression is defined in any statute then for the purpose of that statute said definition is to be taken to the exclusion of all other definitions contained in dictionaries or understood in common parlance. Mr. Aminuddin Ansari has urged that a perusal of the definition of the term tax as contained in section 2(43) clearly shows that any fee or any sum or amount leviable or payable under the Ordinance would be treated as tax: He has, therefore, submitted that the appeal fee payable under subsection (5) of section 134 being a tax as defined under section 2(43) of the Income Tax Ordinance, 1979 shall have prospective, effect in the absence of express provision clearly giving retrospective effect.
13. The learned D.R. is not able to rebut the contentions raised by Mr. Aminuddin Ansari. We are persuaded to agree with the contentions raised by Mr. Aminuddin Ansari for the reason that subsection (5) of section 134 clearly states that an appeal to the Appellate Tribunal shall be accompanied by a fee, and any fee, sum or amount payable under the Ordinance has been included in the definition of term "tax" as contained in section 2(43) of the Income Tax Ordinance. It has been held by this Tribunal in the judgment reported as (1990) PTD 21 (Trib.) that, "while interpreting the statutes it has to be presumed that the legislature has used every word in the statute with full consciousness and knowing the connotation of each word and more particularly when a word has been defined by the legislature itself in the interpretation clause." It is held further in the same judgment that when the legislature defines any word then the Courts are bound to accept whether they like it or not and whether actually the word carries the same meaning ordinarily or not The reason being that the Legislature can assign any artificial meaning also to a particular term as the concept of fiction of law is not alien particularly to fiscal statutes. It was ultimately held in this judgment that the word tax defined in section 2(43) of the Income Tax Ordinance means income-tax, super-tax surcharge, additional tax chargeable or payable under the Ordinance as well as any penalty fee, or other charge or any sum of amount leviable or payable under this Ordinance. It has been held by the Hon'ble Sindh High Court in the case of Rustam F. Cowasji v. C.B.R. 1985 PTD 529 (relevant finding on page 138 that section 45-A of the Income-tax Act, 1922 like section 3 also contains a charging provision. Section 45-A of the repealed Income-tax Act, 1922 pertained to payment of additional amount on account of delayed payment of tax and it was held by the Hon'ble High Court that section 45-A is the charging section. It was further held in this judgment that the payment of additional tax being a penal provision it shall not have operation with retrospective effect. It was further observed by Mr. Justice Ajmal Mian (as he then was) that, "retrospective legislation is looked upon with disfavour, as a general rule and properly so because of its tendency to be unjust and oppressive." It is further held in this judgment that, "Indeed there is a presumption that the legislature intended its enactments to have this effect to be effective only in future. This is true because of the basic presumption that the legislature does not intend to enact legislation which operates oppressively and unreasonably and retrospective laws will generally have such operation. Consequently in the absence of any indication in the statute that the legislature intended for it to operate retrospectively, it must not be given. Retrospective effect. If per chance any reasonable doubt exists, it should be resolved in favour of prospective operation. In other words, before a law will be construed as retrospective its language must imperatively and clearly require such construction".
14. Respectfully following the earlier decision of this Tribunal and the findings of Hon'ble Sindh High Court cited above we are persuaded to agree with the submission of Mr. Aminuddin Ansari and it is held that the provisions contained in subsection (5) of section 134 of the Income Tax Ordinance being in the nature of charging provision the amendment therein enhancing appeal fee from Rs.100 to Rs.5,000 or 10% of the tax levied whichever is less and in case where no tax is levied a fee of Rs.5,000 shall be paid, shall apply to the appeals relating to the assessment year 1994-95 and onward.
15. The next contention raised by Mr. Farogh Nasim is that the matters pertaining to court-fee relate to substantive rights and not procedure because matters relating to court-fee come within the purview of fiscal enactment, the main and primary object of which is to collect revenue. In support of his contention Mr. Farogh Nasim has placed reliance on various judgments. The first judgment is by Supreme Court of Azad Jammu and Kashmir in the case of Muhammad Hoota v. Farzand Ali 1980 CLC 1124, wherein it has been held that Court Fees Act is a fiscal enactment and the primary object of a fiscal enactment is protection of revenue. The second judgment is by the Sindh High Court in the case of M/s. Pakistan Gun and Chemicals Ltd. v. The Chairman, Karachi Municipal Corporation (PLD 1975 Karachi 495) wherein it has been held that amendment is a taxing statute is in the nature of fiscal legislation and, therefore, the amendment is to operate prospectively in the absence of express provision to the contrary. The third decision on which Mr. Farogh Nasim has placed reliance is also by the Hon'ble Sindh High Court in the case of Zafar Ali Mirza v. Mst. Kulsoom Begum (1989 CLC 1211) wherein it has been observed that the Court Fees Act was a taxing statute, which would be interpreted in favour of a subject. In support of his contention that legislation pertaining to the court-fee/appeal fee is in the nature of fiscal enactment/tax statute the learned representatives for the appellants have drawn our attention to the Annexure with the Budget Speech of the Federal Finance Minister wherein under the head "revenue effect of the Budget proposals" it is stated that as a result of improvements in the legal system such as increase in appeal fees, minimum payment of 25% of the additional tax demand before filing of appeals and liquidation of revenues through establishment of additional benches of Income Tax Appellate Tribunal a revenue of two thousand million rupees shall be generated. Thus, Mr. Farogh Nasim has maintained that not only the Superior Courts have held that the court-fee/appeal fee is in the nature of fiscal enactment/taxing statute but the intention of Legislature is also manifest by the Annexure to the Speech of Finance Minister whereby generation of tax has been specifically shown as a result of increase in the appeal fees.
16. The learned D.R. is not able to rebut the contentions raised on behalf of Mr. Farogh Nasim. We are persuaded to agree with the submissions made by Mr. Farogh Nasim and it is held that any law prescribing any court- fee/appeal fee or amending the same for enhancing or reducing it is in the nature of fiscal legislation/taxing statute and, therefore, any amendment in a taxing statute is to be prospective and not retrospective until and unless the Legislature has deemed fit to give it retrospective effect by clear and unambiguous legislation.
17. Mr. I.N. Pasha appearing as amicus curiae has contended that the appeal is continuation of original proceedings and, therefore, the appeals arising out of original proceedings shall be governed by the law as prevailing at the time of initiation of original proceedings. He has maintained that the right of appeal accrues to a party as soon as the original proceeding is initiated and, therefore, the appeal shall not be governed with the subsequent amendment in the law. In support of his contention he has placed reliance on the judgment of Lahore High Court in the case of Lahore Development Authority v. Muhammad Saeed Mehdi, Commissioner, Lahore Division (1994 CLC 2313) wherein it has been held as follows:
"It is since a long well-settled that the right of appeal vests in a person the moment the lis commences and the subsequent change in law cannot, in the absence of any specific provision to the contrary, take away that right."
18. The next case on which reliance has been placed is from Indian jurisdiction. The Madras High Court in the case of R.N. Seshadri v. Province Madras (AIR 1954 Mad. 543) held that a subsequent law enhancing the court -fee on the appeal shall not have retrospective effect and the court-fee prescribed thereto cannot apply to the appeal in respect of a suit in which the court-fee for filing of appeal was much lower when the suit was instituted. In coming to this conclusion the Hon'ble Judges of the Madras High Court placed reliance on a judgment of Supreme Court of India in the .case of Hussain Qasim Dada v. The State of M.P. (AIR 1953 SC 221). The relevant facts in this case were that the appellant was assessed by the Assistant Commissioner on 8-4-1950. The appellant being aggrieved with the assessment preferred an appeal on 10-5-1950 with the Sales Tax Commissioner. As the tax for which he was assessee was not paid the appellate authority declined to admit appeal. According to the law at the time when the assessment proceedings were started, "no appeal against an order of assessment with or without penalty shall be entertained unless it is specified that such amount of tax or penalty or both as the appellant may admit to be due from him has been paid." But by the time the appeal was sought to be filed the law was amended and according to the amended law, "no appeal against an order of assessment with or without penalty shall be admitted by the said authority unless such appeal is accompanied by a satisfactory proof of the payment of tax, with penalty, if any, in respect of which the appeal has been preferred".
19. According to the pre-existing law the amount admitted by the assessee was required to be paid but by reasoning of the amendment the payment of the entire tax was a condition precedent for preferring an appeal. It was contended that the amendment has placed a substantial restriction on the assessee's right of appeal and, therefore, has affected his vested right. The Hon'ble Judges of the Supreme Court of India held as follows:-----
"The above decision could firmly establish and our decisions in Janardan Reddy v. The State. (AIR 1961 SC 124(H) and in Ganpatrai v. Agarwal Chamber of Commerce Ltd. (AIR 1952 SC 409(1)), upheld the principle that the right of appeal is not merely a matter of procedure. It is a matter of substantive right. This right of appeal from the decision of an inferior Tribunal to a Superior Tribunal becomes vested in a party when proceedings are first initiated in and before a decision is given by the inferior Court. In the language of Jenkins, CJ. in Nana v. Sheku 32 Bom. 337(J) to disturb an existing right of appeal is not mere alteration in procedure. Such a vested right cannot be taken away except by express enactment or necessary intendment. An intention to interfere with or to impair or imperil such a vested right cannot be presumed unless such intention be clearly manifested by express words or necessary implication."
20. In another judgment the Supreme Court of India held that:
"A right of appeal is a substantive right which vests in a litigant at the date of the filing of the suit and cannot be taken away unless the Legislature expressly or by necessary intendment says so; furthermore an appeal is the continuation of the suit and it is merely that a right of appeal cannot be taken away by a procedure enactment which is not made retrospective, but the right cannot be impaired or imperiled nor can new conditions be attached to the filing of the appeal; nor can a condition already existing be made more onerous or more stringent so as to affect the right of appeal arising out of a suit instituted prior to the enactment." The Hon'ble Judges of the Supreme Court of India referred to their earlier decision reported as AIR 1953 SC 221 wherein it was held that, `the appellant had a vested right of appeal when the proceedings were initiated in 1947 and his right of appeal was governed by the law as it stood then.' It was further held that `the amendment of 1950 could not be regarded as a mere alteration in procedure or an alteration regarding the exercise of the right of appeal; it whittle down the right itself and had no retrospective effect as the Amendment Act of 1950 did not expressly or by necessary intendment give it retrospective effect. This decision proceeded on the principle that impairment of the right of appeal by imposing a more onerous condition is not a matter of procedure only." (See AIR 1960 SC 980 (V-47-c-174).
21. There is another decision from the Indian jurisdiction on this point in which Calcutta High Court has held that subsequent amendment will not curtail the right of appeal (see CIT v. Bengal Card Board Industries, (1989) ITR 193). In this case following question was referred to the Calcutta High Court:
"Whether on the facts and in the circumstances of the case, the appeal filed by the assessee before the Appellate Assistant Commissioner on October 9, 1975 for the assessment year 1974-75, would not come within the purview of subsection (4) of section 249 of the Income Tax Act, 1961, which was inserted by the Taxation Laws (Amendment) Act, 1975 with effect from October 1, 1975)"
22. Briefly stated the facts in this case were that .the assessment was framed by the Income Tax Officer on July 31, 1975. The assessee preferred appeal before AA.C on October 9, 1975. In the meanwhile subsection (4) was inserted in section 249 of the Indian Income Tax Act, 1961 with effect from October 1, 1975. By virtue of this amendment the assessee was required to pay the undisputed tax into the treasury in order to enable him to file an appeal before the Appellate Assistant Commissioner. The assessee had not paid the undisputed tax before filing the appeal to the Appellate Assistant Commissioner; therefore, the Appellate Assistant Commissioner dismissed the appeal as incompetent. The Indian Income Tax Appellate Tribunal held as follows:
"The right of appeal is a substantive right and, therefore, the same cannot be withdrawn or varied by any amendment which comes into effect after the end of assessment year. It is now settled law that the law applicable for assessment is the law as on the 1st of April of that assessment year. If any authority is needed, reference may be made to the Privy Council decision in Maharaja of Pithapuram v. C.I.T. 1945 13 1TR 221. What applies to assessment would apply to appeals also. We, therefore, feel that the right of assessee in this regard will have to be determined with reference to the law as it stood on April 1st, 1974. Any amendment specifically so proceeding, will not apply, to the appeal for this year."
23. It was held by the Calcutta High Court that the right of appeal is a statutory right and is not merely a matter of procedure. It is a substantive right and this right is vested in an assessee when the proceedings are first initiated and before a decision is given by the first Court or the authority. For the purpose of accrual of the right of appeal the crucial and relevant date is the date of initiation of the assessment. proceedings, i.e., the date of issuance of notice under section 143(2) of the Act. It is the law existing on the day the proceeding was first initiated which governs the exercise and enforcement of the right of appeal. A subsequent amendment cannot curtail this right. Where on the date of initiation of the assessment proceedings, law permitted an appeal to be preferred without payment of the admitted tax liability, but subsequently, if the law is amended requiring deposit of the entire amount of admitted liability before the appeal is entertained, the right of appeal in such a case should be governed by the un-amended law. It was further held that the right of appeal having accrued to the assessee prior to the amendment therefore, the date of filing of the appeal is neither relevant nor material.
24. The point in issue came for consideration before the erstwhile West Pakistan High Court in the case of Essential Industries v. C.B.R. PLD 1969 Lah. 24. In the said judgment an amendment made by Finance Act of 1967 in section 30 of the repealed Income tax Act, 1922 came for consideration, which was similar to the amendment in subsection (3) of section 134 of the Income Tax Ordinance, 1979 which has been considered by us in the judgment reported as 1995 PTD (Trib.) 482. It was held by the Hon'ble High Court as follows----
"It is a well-settled rule of law that a right of law existing on a day on which a proceeding or a lis commences is a vested right and this right is governed by the law prevailing on that day and not on the law prevailing on the date of its decision and that this vested right can be taken away only by a subsequent enactment. if it so provides expressly or by necessary intendment. It is also: a well-established principle of interpretation of statutes that right of appeal is not merely a matter of procedure but is one of substantive right, that there is no vested right in procedure and that alterations in the form of procedure are always retrospective but amendment in the substantive law has no retrospective appeal."
25. It was contended on behalf of department before Hon'ble High Court that if the court-fee is raised for filing an appeal that will be a mere procedural change. The contention was repelled by the Hon'ble High Court and it was held that the amended provision was definitely curtailed the right of appeal enjoyed by an assessee at the time when the `lis' in that case commenced namely in the year 1962. It was further held that, "in our opinion, the imposition of such a condition cannot be considered to be a procedural nature or prescribing the manner in which the appeal is to he filed. In effect it takes away the right of appeal if for some reason or other the assessee is unable to deposit 50% of the tax demanded. These are, therefore, the cases in which vested rights of appeal of the petitioners have definitely been substantially affected".
26. The learned D.R. has not produced any law to the contrary and, therefore, as a result of above discussion we are convinced without any scintilla of doubt in our mind that the right of appeal is continuation of the original proceedings and in the absence of any express provision or intendment to the p contrary the appeal shall not be governed by any subsequent amendment in the law. In the present cases the lis commenced much before the amendment was introduced in subsection (5) of section 134 of the Income Tax Ordinance, 1979 amended by Finance Act, 1994 and, therefore, all the appeals shall be governed by the law as it stood before 1-7-1994.
27. The last contention raised on behalf of Mr. Farogh Nasim is that the appeal fee and its increase are un-Islamic and, therefore, by virtue of the provisions contained in Article 2A and Article 227 of the Constitution the provision under consideration is ultra vires the Constitution. In support of his contention Mr. Farogh Nasim has placed reliance on the judgment of Hon'ble Sindh High Court in the case of Sindh High Court Bar Association v. Islamic Republic of Pakistan (PLD 1991 Karachi 178). The relevant facts in the cited case were that under Schedule I to the Court Fees Act, 1870 the maximum court-fee was prescribed at Rs.15,000. An amendment was introduced by Sindh Finance Act, 1990 whereby maximum limit was abolished. The amendment was assailed before the Hon'ble High Court contending that the Court Fees Act, 1870 was against the Injunctions of Islam and was violative of the Articles 2A, 227 and 37 of the Constitution. It was further contended that the amendment of Court Fees Act, 1870 by Sindh Finance Act, 1990 respecting the maximum limit was also unconstitutional being in violation of the Injunctions of Islam. After very lengthy and elaborate discussion the Hon'ble High Court held that, "in our view, as levy of court-fee is against Islamic Injunctions, increase in court-fee through the Sindh Finance Act, 1990 by abolishing the maximum of Rs.15,000 and making court-fee payable without any upper limit would equally be un-Islamic." The Hon'ble High Court did not give any direction declaring the existing court-fee as unconstitutional. However, the amendment was struck down and following direction was given:
"In view of our conclusions in this petition, we have decided to issue the following directives:
(a) The concerned officers of the Sindh High Court will accept plaints, written statements, pleading, set offs or counterclaims, memoranda of appeals or cross-objections presented or filed in the Sindh High Court with court-fees affixed on such documents payable under the Court Fees Act, 1870 (as applicable to the Sindh Province) ignoring its amendment by sections 4 and 6 of the Sindh Finance Act, 1990, as if these two sections were not enacted;
(b) Similar directive be issued to all Courts subordinate to the Sindh High Court and exercising civil jurisdiction."
28. Mr. Farogh Nasim has next referred to the judgment of Hon'ble Federal Shariat Court in the case of Dr. Mahmoodur Rehman Faisal v. Secretary, Ministry of Law, Justice and Parliamentary Affairs (PLD 1992 FSC 195) wherein it has been held that the court-fee in any form is repugnant to the Injunctions of Islam. However, he has stated that an appeal has been preferred against the above order of Federal Shariat Court before Hon'ble Supreme Court of Pakistan, which is pending and, therefore, the judgment of Federal Shariat Court is not operative for the time being. Mr. Farogh Nasim has placed reliance on another judgment of Hon'ble Supreme Court of Pakistan, which has been referred by the Hon'ble Sindh High Court also in the judgment cited above. This is a case of Mian Aziz A. Sheikh v. C.I.T. (PLD 1989 SC 613). The relevant observations of the Hon'ble Supreme Court are reproduced below:
"Article 227(1) not only requires that all existing laws shall be brought in conformity with the Injunctions of Islam but it also commands as a mandate that `No law shall be enacted which is repugnant to such Injunctions'. It is a command to all law-making bodies and functionaries. It will be anomalous to assume that although in Article 227 there is a command to all the legislative bodies not to enact any law which is repugnant to Islamic Injunctions, nevertheless it permits the functionaries of the State at all levels to go on enacting rules like those of evidence which have the force of law and which are repugnant to the Injunctions of Islam: It is in this context that the earlier made remarks about the conduct of State functionaries in Pakistan get illustrated, i.e., none would ever assert that he has power or would lay down a rule having the force of law, which is repugnant to Injunctions of Islam. In the context of the present case, neither the Legislature, under the command contained in Article 227(1) has the power to enact a law in any field including those relating to taxes, which is repugnant to Injunctions of Islam; nor any other functionary including the income-tax authorities has any such power to lay down any un-Islamic rule, which has a force of law.
It is true that which regard to the statutory enactments Article 227 in its clause (2) commands that: effect shall be given to the afore discussed negative command in clause (1), `only in the manner provided in this part (Part IX)'. And thus it may be argued, it also applies to Statutory Rules. But, this prohibition in clause (2) of Article 227 does not apply to decisions by functionaries of State where in the judicial, quasi-judicial or other spheres involving exercise of judgment, as distinguished from exercise of law-making or statutory rule-making authority, they like decisions. In other words, whatever a decision is contained in any such judgment of any such functionary which lays down a rule of law or declares so as a rule of law the superior Courts, shall be within their competence in a properly instituted proceedings to strike it down both under the general mandate contained in clause (1) of Article 227 as well as under Article 2A read with the Objectives Resolution."
29. We would not like to d-date on the contention of Mr. Farogh Nasim regarding the vires of appeal fee for the reason that according to our humble opinion the jurisdiction of declaring any provision of law as un-Islamic/un-Constitutional is exclusively vested in the superior Courts, i.e., Hon'ble Supreme Court of Pakistan, Hon'ble Federal Shariat Court and the Hon'ble High Courts. We are fortified in our view with the finding of Hon'ble Supreme Court of Pakistan in the case of Aziz A. Sheikh (supra) wherein it has been observed that the superior Courts shall be within their competence in a properly instituted proceedings to strike it down both under the general mandate contained in clause (1) of Article 227 as well as under Article 2A read with the Objectives Resolution. We, therefore, leave this issue for consideration by the superior Courts in any properly constituted proceedings.
30. As a result of above discussion we find that on more than one counts and for more than one reasons the amendment introduced in subsection (5) of section 134 of the Income Tax Ordinance, 1979, wherein the appeal fee has been enhanced shall take effect prospectively. There is nothing to show that the Legislature had any intention to give the retroactive effect to the amendment. It is consequently held that the enhanced appeal fee shall be applicable to the appeals pertaining to the assessment year 1994-95 onward. All appeals up to the assessment year 1993-94 shall be governed by the un-amended provision contained in subsection (5) of section 134 of the Income Tax Ordinance, 1979 irrespective of the date of the filing of appeals in this Tribunal. The objection raised by the office is, therefore, overruled and the office is directed to admit all the appeals for regular hearing. The office objection stands disposed of as above.
M.BA-./95/T Order accordingly.