(a) Protection of Economic Reforms Act (XII of 1992)---

----Preamble---Protection to economic measure---Scope---Perusal of various provisions of Protection of Economic Reforms Act, 1992, make it clear that it provides protection to the various economic measures taken, on or after 7-11-1990.

(b) Interpretation of statutes---

----Preamble---Function---Preamble can validly be referred to in case of doubt about interpretation of statutory provision.

(c) Income Tax Ordinance (XXXI of 1979)--

----Sched. II, Part I, para. 122-D---Protection of Economic Reforms Act (XII of 1992), S.6---Constitution of Pakistan (1973), Art.199---Constitutional petition---Protection of economic measures---Mentioning of two notifications in the Schedule appended with Protection of Economic Reforms Act, 1992-- Effect---Specifically mentioning of two notifications in the Schedule made it obvious that what S.6 of Protection of Economic Reforms Act, 1992, said was the measures taken by the Government after 5-11-1990 and the same was the date on. which the then Government came into power---Exemption granted by para. 122-D of Part I of Second Sched. to Income Tax Ordinance, 1979, had no protection of the Protection of Economic Reforms Act, 1992.

Messrs Elahi Cotton Mills Ltd. and others v. Federation of, Pakistan and others PLD 1997 SC 582 ref.

Imtiaz R. Siddiqui for Petitioner.

Shafqat Mahmood Chauhan for Respondents.

Date of hearing: 6th October, 1999.

JUDGMENT

This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 has been filed by M/s. Zahur Textile Mills Ltd., a company incorporated under the Companies Ordinance, 1984 against the Central Board of Revenue and two other officers of the Income-tax Department.

2. The dispute between the parties primarily revolves around the interpretation of section 6 of the Protection of Economic Reforms Act, 1992 (hereinafter referred to as Act, 1992).

3. The circumstances in which this dispute has arisen, briefly stated, are that the petitioner is carrying on business of textiles and its income was exempt from the payment of income-tax under clause 122 of the Part 1 of the Second Schedule to the Income Tax Ordinance, 1979, for a period of five years. This provision was however deleted on.1-11-1993. The dispute is therefore confined to the assessment years 1991-92 and 1992-93.

4. On 8-4-1992, the Federal Government promulgated the Protection of Economic Reforms Ordinance, 1992 to provide legal protection to the economic reforms undertaken by it. The relevant provision in this regard is section 6 of the Protection of Economic Reforms Ordinance, 1992 which is as follows:

"6. Protection of fiscal incentives for setting up of industries. ---The fiscal incentives for investment provided by the Government through the statutory orders listed in the Schedule or otherwise notified shall continue in force for the term specified therein and shall not be altered to the disadvantage of the investors."

5. It further appears that by Finance Act, 1991 and Finance Act, 1992, sections 80-C, 80-CC and 80-D were added to the Income Tax Ordinance, 1979 by virtue of which minimum-tax on the turn-over of the company at a specified rate was imposed which was to be recovered notwithstanding the exemption from the income-tax granted under the taxation laws.

6. According to the learned counsel for the petitioner section 6 of the Protection of Economic Reforms. Act, 1992 protects not only two notifications mentioned in the Schedule but also all the notifications which were in existence at that time. Mr. Siddiqui emphasized that these notifications continued to remain in force for the period specified therein. According to the learned counsel exemption from payment of income-tax granted to the petitioner was for five years which it was entitled to enjoy for that period notwithstanding the enactment of sections 80-C and 80-D of the Income Tax Ordinance, 1979. The learned counsel for the petitioner has further argued that the similar benefits as being claimed by the petitioner were allowed in other cases by the respondents themselves and therefore the petitioner is being discriminated against.

7. The learned counsel for the respondents, on the other hand maintained that the exemption which was granted under the Income Tax Ordinance, 1979 by clause 122 of the Second Schedule was conveyed neither by section 6 nor the Schedule to the Protection of Economic Reforms Act, 1992 in view of the definition of "economic reforms" as appearing in section 2(b). The learned counsel for the respondents states that it is correct that in certain cases exemption was granted but that was on account of misconception of the true legal position and the respondents are now taking measures to collect the tax.

8. As is obvious from the contentions of the teamed counsel for the parties, the only question which arises is as to whether the exemption granted by para. 122-D of the Part 1 of the Second Schedule to the (Income Tax Ordinance, 1979 has the protection of the Protection of the Economic Reforms Act, 1992.

9. Relying upon -Messrs Elahi Cotton Mills Ltd: and others v. Federation of Pakistan etc. (PLD 1997 SC 582), the learned counsel for the petitioner has pointed out that section 6 of the Act, 1992 not only saves two notifications mentioned in the Schedule but also any fiscal incentives for investment provided by the Government otherwise` notified. The learned counsel has further emphasized that section 6 does not use the word "economic reforms" and therefore, the stand taken by the respondents that section 6 has application to the measures taken after 1thNovember, .1990 was based upon misinterpretation of the true legal position. The learned counsel says that the said statute being beneficial in nature retrospective operation has been given by the Legislature.

10. These contentions have no force. From a perusal of various provisions of Act, 1992 it becomes clear that it provides protection to the various economic measures takers din or after 7-11-1990. Although it is true that section 6 of the Act, 1992 does not use the words "economic but it is to be seen that this word does not appear anywhere preamble and the definition clause. In case of doubt about this statutory provision preamble can validly be under:--

"Whereas it is necessary to create a liberal environment for savings and investments and other matters relating thereto;

And whereas a number of economic reforms have been introduced and are in the process of being introduced to achieve the aforesaid ' objectives;

And whereas it is necessary to provide legal protection to these reforms in order to create confidence in the establishment and continuity of the liberal economic environment created thereby."

The definition of "economic reforms" in the Protection of Economic Reforms Act, 1992 is contained in section 2 (b) which reads as under:--

"2(b) 'economic reforms' means economic policies and programmes, laws and regulations announced, promulgated or implemented by the Government on and after the seventh day of November, 1990, relating to privatisation of public sector, enterprises, and nationalized banks, promotion of savings and investments, introduction of fiscal incentives for industrialization and deregulation of investment, banking, finance, exchange and payment systems, holding arid transfer of currencies: and;"

11. A cumulative reading of section 2(b) and the preamble would show that the. saving clause apply only to the economic measures taken after 5th November, 1990 pursuant to the economic policy of the Government which granted the incentives. The Intention of the Legislature becomes manifest from a perusal of the Schedule. If the argument of the learned counsel is correct that section 6 applies to all the notifications issued before the promulgation of the Act, then there was no necessity of specifically mentioning two notifications in the Schedule. It is thus obvious that what section 6 says is the measures taken by the Government after 5th November, 1990 which was the date on which the then Government came into power.

12. So far as the question of discrimination is concerned, the learned counsel for the respondents has stated that some cases were decided under misconception and misinterpretation of law and henceforth all the cases will be dealt with in the manner in which the petitioner has been dealt with.

In view of what has been stated above, this petition is dismissed, leaving the parties to bear their own costs.

Q.M.H./M.A.K./Z-95/L.Petition dismissed.