S. NASIM AHMED SHAH VS STATE BANK OF PAKISTAN, 2017 PTD-KARACHI-HIGH-COURT-SINDH 2029 (2017)

2017 P T D 2029

[Sindh High Court]

Before Muhammad Ali Mazhar and Adnan-ul-Karim Memon, JJ

S. NASIM AHMED SHAH and 115 others

Versus

STATE BANK OF PAKISTAN through Governor and another

C.P. No.D-440 of 2012, decided on 13/07/2017.

(a) Interpretation of statues---

----Hardship or inconvenience caused to a citizen by a provision of law was not a ground to be considered by the Courts in interpreting and determining the legality of a provision of a statute; and if a subject fell within the ambit of statute, then irrespective of hardships which such subject/person may face, the provision of the statute was to be given effect and a citizen could not be absolved from his liability on sympathetic or humanitarian grounds.

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

----Ss. 16 & 2 (c)(i)---FBR Circular No. 15 of 1997 dated 06.11.1997---"Salary" liable to be taxed under the Income Tax Ordinance, 1979---Amounts received by retiring employees under a voluntary separation scheme/golden handshake, as "salary" under the Income Tax Ordinance, 1979---Petitioners, inter alia, sought reimbursement of the income tax deductions made on amounts derived from their availing of golden handshake schemes from the State Bank of Pakistan---Validity---By virtue of golden handshake / voluntary separation scheme, the terms and conditions of retiring employees were modified which resulted in termination of their employment, and once it was decided that such payments made to retiring employees were "salaries" as defined in S.16 of the Income Tax Ordinance, 1979, the natural consequence of the same was that such payments would be liable to be taxed---Language used in Ss.16(2)(a)(iii) & 2(c)(i) of the Income Tax Ordinance, 1979, even in absence of words "payments" or "profits received on retirement or termination on account of voluntary separation", without any doubt brought such payments within ambit of definition of salary in the Income Tax Ordinance, 1979 , chargeable to tax.

(c) Constitution of Pakistan---

----Art.189---Decision of Supreme Court binding on other courts---High Court could not revisit, explicate or expound the law on an issue decided by the Supreme Court, which had a binding effect on the High Court.

Malik Muhammad Inam and others v. Federation of Pakistan 2006 SCMR 1670 foll.

Hussain Badshah and another v. Akhtar Zaman and others 2006 SCMR 1163 ref.

Mst. Nawab Bibi and another v. Chairman Allotment Committee and others PLD 1987 SC 145 distinguished.

PTCL 1997 Statute 1942 rel.

(d) Constitution of Pakistan---

----Arts. 189 & 201---Decisions of Supreme Court and High Court binding on subordinate courts---Doctrine of "precedent", "stare decisis" and "ratio decidendi" contained in Arts. 189 & 201 of the Constitution---Scope---Articles 189 & 201 of the Constitution recognized and adopted the doctrine of precedent and also seemed to have accorded recognition to one of existing realities of life, namely that judges made and changed the law---Under Articles 189 & 201 of the Constitution only such decision was binding which decided a question of law or was based upon a principle of law, or enunciated a principle of law---Doctrine of binding precedent had the merit of promoting certainty and consistency in judicial decisions and enabled organic development of law, besides providing assurance to an individual as to the consequence of transactions forming part of his daily affairs and therefore, there existed a need for a clear and consistent enunciation of legal principles in the decisions of a court---Doctrine of "stare decisis" meant to abide by or adhere to decided cases and it was a doctrine under which a deliberate or solemn decision of court was made after argument on question of law fairly arising in the case and necessary to its determination, which became an authority or binding precedent in the same court or in other courts of equal or lower rank in subsequent cases where such point was again in controversy---Doctrine of "stare decisis" had been given Constitutional recognition in Arts. 189 & 201 of the Constitution---Expression "ratio decidendi" was the ground or reason of a decision, the point in a case which determined the judgment---Decision of a Court generally decided the "ratio decidendi" or "rule of law" for which it was the authority, and what it decided between the parties included far more---Law provided that once a case had been heard and all appeals had been taken (or the time for appeal had expired) all parties to a dispute and their successors were bound by the Court's findings on the issues raised between them and on questions of fact and law necessary to the decision of such issues---In a controversy raising a dispute inter parties, things adjudged were conclusion between parties both on questions of law and fact but as to what the Court decided generally was the "ratio decidendi" or "rule of law" for which the same was an authority---Ratio decidendi was applicable to subsequent cases presenting the same problem between third parties not involved in the original case.

Union of India v. Raghubir Singh (1989) 2 SCC 754 = 1989 SC 1933; Constitutional Limitations and Judicial Review of Public Actions, Volume 1 Justice (R) Fazal Karim. Page 515 rel.

(e) "Per incuriam"---

----Meaning, concept, connotation and terminology, elaborated.

Black's Law Dictionary, Ninth Edition rel.

M.M. Aqil Awan for Petitioners.

Rashid Anwer for Respondents.

Sheikh Liaquat Hussain, Standing Counsel.

Dates of hearing: 16th December, 2016 and 27th March, 2017.

ORDER

MUHAMMAD ALI MAZHAR, J.---This petition has been brought to entreat the directions of this court against the respondents for the implementation of the judgment rendered by the apex court on 03.04.2001 and pay back the amount of income tax deducted on the benefits derived from golden handshake scheme.

2.The ephemeral characteristics of the case are that the State Bank of Pakistan (SBP), (respondent No.1) announced Golden Handshake Scheme (GHS) on 23.10.1997 which was opted by the petitioners. However they were found aggrieved due to deduction of income tax at source on the retirements benefits. Virtually 165 persons filed appeals including petitioners in the Federal Service Tribunal and their appeals were disposed of vide common judgment dated 19.10.2000. Mr.Abdul Hameed Khan Khattak learned member FST dismissed the appeals whereas the second member, Dr.Akhtar Hassan Khan took different view and held that the petitioners are entitled to the annual increment fell due to them on 01.01.1998 and State Bank made arbitrary deductions of income tax from the retirement benefits. On account of difference of opinion, the matter was referred to the learned Chairman and vide order dated 19.10.2000 the learned Chairman FST concurred the views of Mr. Abdul Hameed Khan Khattak but made some observations that during the course of hearing the departmental representative candidly submitted before him that the income tax deducted from the appellants will be reimbursed to them. Both the parties challenged the order in the honourable Supreme Court.

3.In the aforesaid backdrop, the learned counsel for the petitioner argued that the petitions filed by the employees in the apex court were converted into appeal with the directions that their pensionary benefits should be calculated on the last pay drawn between the period from 01.12.1997 to 15.12.1997 and not from the date of acceptance of option. However in SBP appeal, it was denied to have made any such statement by their representative for the reimbursement of income tax, therefore, by consent the matter was remitted to the Federal Service Tribunal to examine the question afresh in the light of affidavit of Abdul Aziz, Deputy Director Human Resources Department, State Bank of Pakistan and to inquire whether such statement was made and in case it was found that no such statement was made, the observation of the learned Chairman shall be deleted otherwise it shall remain intact and with these observations the hon'ble Supreme Court disposed of the matters vide judgment dated 03.04.2001. It was further contended that on remand, the matter was fixed on 28.07.2001 before the division bench of the same Chairman and the Member, Dr. Akhtar Hassan Khan. The matter was decided on the same date with clear order that such statement to the effect of reimbursement of the deducted income tax was made. The State Bank of Pakistan again approached to the apex court by filing separate petitions which were clubbed together and the same were dismissed vide judgment dated 30.10.2001.

4.The learned counsel further argued that the respondent No.1 (SBP) despite making various requests failed to comply with the directions, therefore some of the colleagues of the petitioners moved contempt petition being Cr. Original Petition No.66/2002. However on 02.02.2006, the counsel representing the SBP made a statement that a sum of Rs.19,88,997.42 is being deposited with the Registrar of the Apex Court through pay order. The hon'ble Supreme Court on compliance of the order dropped the proceedings and directed the claimants to collect the amount in due course. One more Cr. Original Petition No.02/2008 was filed by 116 petitioners which was ultimately dismissed by the apex court vide order dated 06.10.2011 with the observation that no contempt is made out, however, the petitioners may avail the appropriate remedy available to them under the law. The learned counsel argued that the representative of respondent No.1 before the FST made a categorical statement that the amount deducted on account of income tax shall be refunded back to the petitioners and in one contempt proceedings the amount was also deposited in the apex court but the same treatment was not given to the present petitioners hence they have approached this court. However the learned counsel did not contend with or controvert that amount paid under Golden Handshake Scheme (GHS) was not taxable but he somewhat insisted and averred enormously that this amount should be refunded back to the petitioners so in order to converge the responsibility of income tax payment, each individual petitioner may file his income tax return to pay of this statutory liability.

5.Quite the reverse, the learned counsel for the respondents argued that the State Bank deducted the amount of tax pursuant to the explicit instructions contained in the FBR Income Tax Circular No.15 of 1997 dated 06.11.1997 that the payments made by a financial institution under a Golden Handshake Scheme are taxable under the head of "Salary" according to Section 16 (2) (c) of the Income Tax Ordinance, 1979. On deduction the amount was paid into the government treasury and the State Bank never retained this amount for its own use. This action was challenged in the Federal Service Tribunal, the Lahore High Court and the hon'ble Supreme Court. All three forums agreed that this amount was liable to be taxed but the FST relied upon an alleged offer by a State Bank official to reimburse this amount. The hon'ble Supreme Court, vide its judgment dated 15.12.2004 in Criminal Misc. Application Nos.317, 371, 380 and 381 of 2004 dismissed the specific plea of the ex-employees of the SBP that as the income tax had been wrongly deducted by the SBP, the same should therefore be returned to them. The leading petitioner, Nasim Ahmed Shah was also an applicant before the hon'ble Supreme Court but he has willfully and knowingly withheld this important judgment from this court. The learned counsel further argued that the validity of Income Tax Circular No.15 was challenged before the hon'ble Supreme Court in the case reported as Malik Muhammad Inam and others v. Federation of Pakistan (2006 SCMR 1670) but the apex court upheld the validity of the circular in the following terms:--

"From a bare perusal of section 16(2)(a)(iii) of the repealed Ordinance it may be observed that the salary as defined includes profits in lieu of or in addition to salary or wages. Furthermore, according to section 16(2)(c)(i) of the repealed Ordinance the words profit in lieu of salary used in section 16(2)(a)(iii) of the repealed Ordinance would include any amount due or received by any employee or assessee from his employer on account of termination of or the modification of any terms and conditions relating to his service/employment. The aforesaid provision of the repealed Ordinance read together leave no room for doubt that such payments irrespective whether they were by way of compensation for loss of service or payments in lieu of the salary, which they would have been entitled to draw till their services came to an end in the normal course of their service, squarely fell within the definition of salary. This conclusion is obvious from a bare reading of the two afore-referred provisions of section 16 of the repealed Ordinance which admit of no other conclusion or inference. By virtue of the golden hand shake/voluntary separation scheme, the terms and conditions of the retiring employees were modified which resulted in termination of their employment on their voluntarily agreeing to retire from service on acceptance of such payments as compensation. Once it is concluded that such payments made to the retiring employees were salaries as defined in section 16 of the repealed Ordinance, the natural consequence would be that such payments would be liable to be taxed under clause "a" of section 15 of the repealed Ordinance. In view of the clear/express and unambiguous provisions of section 16(2)(a)(iii) and (2)(c)(i) of the repealed Ordinance all the contentions and arguments advanced by the learned counsel for the retiring employees pale into insignificance . The language used by the Legislature in section 16(2)(a)(iii) and (2)(c)(i) of the repealed Ordinance even in absence of the words payments or profits received on retirement or termination of employment on account of golden hand shake scheme or voluntary retirement scheme without any doubt or ambiguity brought such payments within the ambit of definition of salary in the repealed Ordinance, thus, falling within the tax net and chargeable to tax".

6.He further argued that the petitioners may file applications for refund to the FBR if they feel that they were not liable to be taxed. The petitioners failed to point out any circular or provision of law in terms of which this amount should not have been deducted. It was further averred by the learned counsel that when the Hon'ble Supreme Court seized with the hearing of the contempt application, i.e. Crl. Org. No.66 of 2002, filed by ex-employees of the State Bank to enforce the judgment dated 30.10.2001, the apex court's own earlier decision dated 15.12.2004 was not placed before it. The said contempt application came up for hearing on 02.01.2006 which is the date after the decision dated 15.12.2004. He argued that the order dated 02.01.2006 was per incuriam. However when some other employees sought to seek enforcement of the same decision, the Hon'ble Supreme Court refused to grant any relief on concentration of judgment dated 15.12.2004 and the judgment reported in 2006 SCMR 1670. The leading petitioner Nasim Ahmed Shah and other ex-employees of the SBP filed Crl. Review Petition No.04 of 2005 before the Hon'ble Supreme Court which was dismissed on 27.10.2010. He again approached the apex court by filing Crl. Orig. Petition No. 02 of 2008 which was also dismissed on 06.10.2011.

7.In rebuttal, the learned counsel for the petitioners argued that the case of M. Inam and others v. Federation of Pakistan reported in 2006 SCMR 1670 shall have no retrospective application when in the case of present petitioners the apex court to the extent of statement made by the SBP representative before the FST dismissed the appeal much earlier and maintained the findings of the learned Chairman FST that the statement to the effect of refund of income tax was made before him by the representative of SBP. The learned counsel for the petitioner referred to 2006 SCMR 1163 (Hussain Badshah and another v. Akhtar Zaman and others in which the apex court held that "the declaration to the effect that all appointments made under the earlier policy are illegal, void and without lawful authority is difficult to sustain being against the law as the judgment, dated 12-5-2000 would operate prospectively and not retrospectively adversely affecting the rights already accrued to the teachers appointed before the declaration of law by Full Bench of the High Court. Admittedly, appointments made prior to the said judgment were neither inherently illegal nor ultra vires the law .Their case is protected by the doctrine of past and closed transaction, which cannot be reopened". The learned counsel further referred to PLD 1987 SC 145 (Mst. Nawab Bibi and another v. Chairman Allotment Committee and others) in which it was held that "the Judgment of Supreme Court to be operative from date of its announcement. Such judgment, held further, to have no effect of re-opening rights of parties concluded finally under High Court's judgment. The authority of law laid down by this Court under Article 189 being prospective, the decision of the High Court nonetheless stands over-ruled on the same question of law, but that will not affect the rights of the parties already determined by the High Court's judgment".

8.The core issue is whether in terms of FST and Supreme Court orders/judgment, the respondents are liable to refund the amount of income tax deducted by them on payment of GHS benefits to the petitioners? In order to delve into the long-winded issue raised up in the petition which is somewhat concomitant and associated with the implementation of the apex court order, we have to analyze and survey the niceties and nitty-gritties of the twine and chain of the orders/judgments passed by learned Federal Services Tribunal and the honourable Supreme Court in one and the same matter. The matter starts in on as a result of FST divergent views of two learned members i.e. Mr.Abdul Hameed Khan Khattak and Dr. Akhtar Hassan Khan, (Members-FST).

Order of Mr.Abdul Hameed Khan Khattak, (Member-FST) dated 4.5.1999 in Appeal No.277(R)/98 and others on the issue of income tax:

"12. With regard to deduction of income Tax from the retirement benefits, to our mind it was liability under the law which after said deductions was passed on to the government and if the appellants feel aggrieved thereof they can approach the income tax department for refund of the same if the decision is to be made in their favour by the said department as we think that appropriate forum for the purpose is the said department and not this tribunal.

13. For all the aforesaid reasons, we find no merit in the appeals and the same as such are hereby dismissed by leaving the parties to bear their own costs.

Order of Mr. Dr. Akhtar Hassan Khan,

(Member-FST) dated 5.5.1999 in the

above appeals on the issue of income tax:

"16. The State Bank also made arbitrary deduction of income tax from the retirement benefits. Income tax is paid by the officers when they file their annual returns in September each year and these officers would have filed their returns in September, 1998 and paid income tax according to each individual return. They cannot be arbitrary uniform withholding income tax fall all employees. Moreover, the pension, provident fund and gratuity given to the Government employees are free from income tax. The golden handshake scheme benefits are given on voluntarily retirement and hence should be free from income tax. The learned counsel for the respondents could not produce any documents which makes it mandatory for the State Bank to deduct income tax at arbitrary rate before the paying of benefits of GHSS.

17. Therefore, I agree with my learned brother on all other points but I feel that the appellants should be given (a), annual increments due on 1.12.1998 and (b), the income tax deducted by the appellant should be refunded and the money given to them should be reported to the income tax department for which they be asked them to file fresh returns for that year based on their total income if their payments are declared to be liable to income tax. In any case an arbitrary uniform rate of income tax is not justified because some of them may have other incomes and would be liable to pay higher tax while those not giving other income would be subject to lower rate of tax. To apply uniform withholding income tax is neither fair nor logical, nor according to income tax laws."

Order of Mr. Justice (R) Jalal-ud-Din Akbarji, Chairman,

Federal Service Tribunal dated 19.10.2000

"This matter has come up before me under section 3-A(2)(b) of the Service Tribunals Act, 1973 as there is difference of opinion between the two learned Members in delivering the judgment.

2. I have heard the learned counsel for the appellants as well the respondent State Bank of Pakistan and the representatives and considered the arguments of the parties. I have perused the record of appeal and the judgments proposed to be delivered by my learned brothers Mr. Abdul Hameed Khan Khattak and Dr. Akhtar Hasan Khan. Mr. Abdul Hameed Khan Khattak has delivered a very comprehensive and well-reasoned judgment, to which Dr. Akhtar Hasan Khan has also agreed almost on all points except a few. I, therefore, agree with the findings/ judgment recorded by Mr. Abdul Hameed Khan Khattak, learned Member, during the course of hearing the departmental representative candidly submitted that the income tax recovered from the appellants will be reimbursed to them. [Emphasis applied]

ORDER OF THE TRIBUNAL.

By virtue of proviso (B) to subsection (2) of Section 3-A of the Service Tribunals Act, 1973, the judgment of the Tribunal shall be in terms of the opinion of the Chairman".

Relevant excerpt of Apex Court judgment

dated 3.4.2001 in Civil Petitions Nos. 12/2001 to 63/2001.

"9. In the result, we convert all these petitions into appeals and dispose of the same by modifying the impugned judgment of the Tribunal to the extent indicated above. The result is that the pension admissible to the petitioners/employees shall be calculated after bringing it to bear upon such calculation the number of days spent by them in service after their violation to abide by VGHS put differently, all the pensionary benefits shall be calculated by taking into account the period between 1.12.1997 to 15.12.1997. No costs.

10. Needless to observe that in the connected petitions brought by the Governor, State Bank of Pakistan and others against the respondent/employees, the sole grievance of the petitioners therein is that the observation of the learned Chairman of the Tribunal in the impugned judgment to the effect "...During the course of hearing, the departmental representative candidly submitted that the income tax recovered from the appellants will be reimbursed to them," is based on erroneous assumption of fact in that neither any counsel for the Bank nor any representative of the Bank made any statement before the Tribunal during the course of proceedings that income tax will be reimbursed to the respondents/employees. With consent of Mr. Fakhruddin G. Ibrahim, Mr. Abdul Mujeeb Pirzada, Mr. Muhammad Munir Peracha, Mr. M. Bilal and Mr. K.M.A. Samdani learned counsel for the parties, we remit the case to the Tribunal to examine this question afresh in the light of the affidavit of Mr. Abdul Aziz, Deputy Director, Human Resources Department, State Bank of Pakistan, copy whereof may be forwarded to the Tribunal, after hearing the parties and holding, such inquiry as the Tribunal may deem fit. If it is established that no such statement was made as attributed to the departmental representative of the Bank, the above observation shall be deleted otherwise it shall remain intact. [Emphasis applied]

Order of Justice (R) Jalal-ud-Din Akbarji, Chairman FST

dated 28.7.2001 on remand by the Supreme Court

"2. The learned counsel and the appellants present, affirm that the departmental representative candidly submitted that the income tax recovered from the appellants will be reimbursed to them. Appellants, Shakir Ahmed in Appeal No. 1198(K)/ 1998 and Kaleem Ahmed in Appeal No. 298(R)/1998, have also filed affidavits in the same effect. Mr. Abdul Aziz, Deputy Director, State Bank of Pakistan, states that he has not made any such submission. Learned counsel for the respondent-Bank states that the said very matter was subjudice between the parties in the Lahore High Court, and in the Intra-Court Appeal, Status quo has been issued and, therefore, the departmental representative of the State Bank of Pakistan could not make such statement.

4. As far as my person (Chairman) is concerned, I vividly remember, that it was stated and candidly submitted by the departmental representative of the respondent-Bank in the presence of the learned counsel for the parties and the appellants present in the court on the date of hearing i.e. 11th October, 2000. The matter is disposed off accordingly". [Emphasis applied]

Relevant excerpt from the Judgment of Apex Court

dated 30.10.2001 in Civil Petitions Nos.2844/2001 to 3008/2001

"6. As regards the contention that the difference of opinion between the learned Members of the Tribunal needs resolution, we suffice by observing that the appeals were remanded to the Tribunal only to examine the specific question as to whether the representative of the petitioner-Bank had made the statement attributed to him or not. This being so, the above question cannot be permitted to be agitated in these proceedings. More so, when it was observed that: "If it is established that no such statement was made as attributed to the departmental representative of the Bank, the above observations shall be deleted otherwise it shall remain intact" (underlining is for emphasis)

7. Resultantly, the petitions are dismissed and leave declined".

9.Since the order of apex court 30.10.2001 passed in C.Ps. 2846 and 2851 was not complied with therefore a Criminal Original Petition No.66/2002 was filed by Manzoor Elahi and others, Ex-Officer Gr.I (P) State Bank of Pakistan, Muzaffarabad. The honourable three members bench of Supreme Court on 2.1.2006 after dilating and expounding erstwhile incidents, passed the order. The relevant excerpts of the order are as follows:--

4. From the perusal of the above facts, we are prima facie of the opinion that violation of the order of this Court has been committed. On our query learned counsel appearing for the State Bank stated that respondent No.2 namely Mr. Akram Durrani is, responsible for the implementation of the order of this Court. Issue notice to him in terms of Article 204 of the Constitution of Islamic Republic of Pakistan to appear in person and state as to why he should not be proceeded against for the contempt of court.

5. Adjourned to a date in the 1st week of February, 2006. In the meanwhile learned counsel is directed to obtain the amount payable to each of the petitioners deducted from their dues being income tax".

10.When the aforesaid Criminal Original Petition was fixed before the three members bench of apex court in Civil Petitions Nos.2846, 2851, 2854, 2855, 2858, 2859, 2862, 2871, 2876, 28790, 2882, 2886, 2888-2890 and 2893/2001, the learned counsel for State Bank of Pakistan gave a statement that equal to amount deducted on account of income tax, a pay order amounting to Rs.1,988,997.42 is being deposited with the Registrar of the apex court. On this statement, honourable Supreme Court on 2.2.2006, passed the following order:--

"In compliance of order 2nd January, 2006 Mr. Khalid Anwar, Sr. ASC has submitted a list of persons along with calculated amount which has been deducted and paid to the Central Board of Revenue. However, equal to the said amount a pay order amounting to Rs.1,988,997.42 is being deposited with the Registrar of this Court.

2. As the order of this court has been complied with, therefore, no further proceedings are called for. The applicants/claimants can receive the amount from the Registrar in due course as per rules".

11.At this juncture few more orders passed by the honourable Supreme Court are also very essential and crucial to the instant proceedings which have been referred to by the learned counsel for the respondents. For instance, an order dated 15.12.2004 passed by the honourable three members bench of apex court in Crl.Misc.As.Nos.317, 371, 380 and 381/2004 in Crl.Misc.No.295/2004 in Crl.O.Ps. Nos.32, 33, 34/2003 and 2/2004 in Civil Petitions Nos.2020/2000 and 12 to 55 of 2001 filed by Khyber Zaman and others, Syed Naseem Ahmed Shah and others, Shakir Ahmed and others and Abdul Hameed. The relevant segment is reproduced as under:--

"11. As regards income tax, it is noted that the Bank in accordance with law was obliged to deduct income tax at the time of making payment of dues to the employees. The employees kept on pressing the Bank to refund the amount of income tax. It appears that the petition filed by the employees before Lahore High Court was allowed by a learned Single Judge, but the decision was set aside by a Division Bench of said Court by means of the judgment in I.C.A. No.21/2000 and it accepted the stand of the income tax department. Be that as it may, if the employees feel that income tax was deducted from their dues, which according to them, was not their liability, they may, if so advised, approach the income tax authorities for its refund according to law. The plea that income tax be paid to them cannot be acceded to. [Emphasis applied]

12. In consequence, all the above miscellaneous applications are dismissed".

12.The order dated 20.4.2007 passed by three members bench of honourable Supreme Court in Criminal Original Petition No.83/2005 (Against the judgment dated 30.10.2001 passed in C.P. No.2844/2001) is as follows:--

"The petitioner in person stated that the department itself had under-taken to refund the income tax deducted from the benefits he had received under the Golden Handshake Scheme but did not abide by the same.

2. On the other hand, the learned counsel for the respondents submitted that the petitioner had earlier moved Criminal Original Petition No.32/2003 on the same cause of action seeking the same relief which was dismissed by this Court vide judgment dated 15.12.2004. The learned counsel also placed reliance on the case of Malik Muhammad Inam and others v. Federation of Pakistan and others (2006 SCMR 1670) in which it was held that the benefits received by the retiring employees under the Golden Handshake Scheme were taxable.

3. We have heard the petitioner in person as well as the learned counsel for the respondents at length. Admittedly, the earlier Crl.O.P. No.32/2003 of the petitioner has already been dismissed by this Court on the same subject matter against which Criminal Review Petition No.4/2005 by him is pending before this Court. Therefore, we would not like to entertain the second Criminal Original Petition for contempt of this Court which would stand dismissed accordingly."

Order dated 27.10.2010, passed by three members' bench of the apex court in Criminal Review Petition No.04/2005 in Crl. M.A. 371/2004 and Crl. M.A.295/2004 in Cr1. O.P. 34/2004 in C.P. 2020/2000:--

"Heard Mr. Fakhruddin G. Ibrahim, learned Sr. ASC on behalf of petitioner and Mr. Khalid Anwar, learned Sr. ASC on behalf of respondents. All the arguments agitated today have been dilated upon and decided by this court and the controversy has been set at naught completely by means of judgments dated 15.12.2004 and 29.4.2004 passed by this Court. No illegality or irregularity could be pointed out warranting interference. Criminal Review Petition being devoid of merit is dismissed".

13.And after everything else the order dated 06.10.2011, passed by the honourable division bench of the apex court in Criminal Original Petition No.2 of 2008 in Civil Petition No.2895 of 2001 moved for implementation of the order dated 30.10.2001 in C.P.No.2895 of 2001 which is reproduced as under:--

"After hearing learned counsel for the petitioner we do not find any reason in this case for contempt of Court. However the petitioner may avail the appropriate remedy available to him under law before any other forum. The petition stands dismissed".

14.Seeing as the case primarily articulates the claim with regard to the refund of income tax, therefore, we need to analyze and dissect the divergent findings of members of Federal Service Tribunal (FST). Mr. Abdul Hameed Khan Khatak, Member, FST dismissed the appeals. So far as deduction of income tax at source, he subscribed his view that it was the liability under the law and after its deduction the money passed on to the Government. If the appellants feel aggrieved they could approach Income Tax Department for the refund whereas, Dr. Akhtar Hussain Khan other member of the same bench though concurred the view of Mr. Abdul Hameed Khan Khatak on other issues but on the verge of income tax, he held that the State Bank arbitrarily deducted the income tax from the retirement benefits which is to be paid by the officers when they file their annual returns each year. He further held that the officers could have filed their annual return in September each year and paid the income tax according to each individual return. The appraisal and survey of the diverging views engender a feeling that the liability to pay income tax is manifestly intact but a modality was alighted and encompassed that rather than withholding of income tax by the State Bank of Pakistan on retirement benefits, this could have been left upon to an individual employee to file his individual return and pay the income tax accordingly. This finding was based on the premise that the arbitrarily uniformed policy of income tax is not justified because some of them may have other income and would be liable to pay tax while other income would be subject to lower tax to apply uniform withholding income tax is neither fair nor logical nor according to Income Tax Laws.

15.On account of dissenting or divergent views, the matter was referred to the learned Chairman FST. The learned Chairman agreed with the judgment authored by Mr. Abdul Hameed Khan Khatak but his order shows that departmental representative of the State Bank gave a statement that income tax recovered from the appellants will be reimbursed to them. The matter went to the hon'ble Supreme Court where the apex court held that pension admissible to the petitioners/ employees shall be calculated after bringing it to bear upon such calculation the number of days spent by them in service after their volition to abide by VGHS but so far as the question relating to the deduction of Income Tax is concerned, the hon'ble Supreme Court was reminded to the departmental representative statement conveyed to the Chairman of the Tribunal. The hon'ble Supreme Court with the consent of the lawyers appearing for the parties remanded the case to the Tribunal to examine this question afresh in the light of affidavit of Abdul Aziz, Deputy Director, H.R., State Bank of Pakistan and after holding such inquiry if it is established that no such statement was made as attributed to the departmental representative of the bank the observation in this regard shall be deleted otherwise it shall remain intact. However, when the matter was again put up before the Chairman on remand, he again confirmed in the order that such statement was given before him by the departmental representative and when again this matter was taken up by the Apex Court it was held that this question may not be permitted to be agitated. Resultantly, the petitions were dismissed and leave was declined.

16.The foregoing state of affairs alluded to the discord and confrontation with regard to the authenticity and validity of the statement given by the departmental representative before the learned Chairman, FST agreeing to reimburse the amount of deducted income tax. So far as the verdict of the Apex Court, it was solely based on the statement and its clarification from the learned Chairman, FST. It is obvious that the Apex Court had not expounded and explicated the question as to whether the income tax was rightly deducted at source or not which otherwise means that no question of law was enunciated by the Apex Court at the time of remand to the Chairman on the specific point thereafter the leave was declined in the second round of litigation for the reasons that the learned Chairman FST reaffirmed after remand that such statement was made by the departmental representative before him. Record further reflects that due to non-implementation of order, the petitioners filed Criminal Original Petition No. 66 of 2002 which was fixed before the three members bench of Apex Court on 02.01.2005. On this contempt application, with a detailed order notice was issued to the alleged contemnors. The matter was fixed on 02.02.2006 when the counsel for the State Bank submitted a list of persons along with the amount deducted and paid to FBR and stated that the pay order equivalent to said amount is being deposited with the Registrar of the Apex Court. The court ordered that claimants can receive the amount from the Registrar and further held that since the order has been complied with no further proceedings are called for.

17.The aforesaid contempt notice was issued in the year 2006. At this juncture it is somewhat noteworthy that the petitioner No.1 with some other petitioners filed Criminal Miscellaneous Application No. 371 of 2004 which was decided by the hon'ble three members bench of the Supreme Court on 15.12.2004 when all criminal miscellaneous applications were dismissed. Insomuch as the deduction of income tax, the apex court held that the bank in accordance with law was obliged to deduct income tax at the time of making payment of dues to the employees. Be that as it may, if the employees feel that income tax was deducted from their dues, which according to them, was not their liability, they may, if so advise, approach the income tax authorities for its refund according to law. The plea that income tax be paid to them cannot be acceded to. This order was passed earlier in time but perhaps this order was not brought into the knowledge of the hon'ble bench seized of the matter on 02.01.2006. The record further reflects that one more Criminal Original Petition No. 83/2005 was filed on the same plea that department had undertaken to refund the income tax deducted from the benefits under the Golden Handshake Scheme but did not abide by the same. The order on this application was passed by the three members bench on 20.04.2007 but till such time the judgment on the question of deduction of income tax had already been rendered by the hon'ble Supreme Court in the case of Malik Muhammad Inam v. Federation of Pakistan reported in 2006 SCMR 1670. The Apex Court while referring to the aforesaid dictum observed that the earlier Criminal Original Petition No. 32/2003 of the petitioners has already been dismissed on the same subject matter against which Criminal Review Petition No. 4/2005 is pending. The court declined to entertain the second criminal original petition for contempt and dismissed the same. So far as the Criminal Review Petition No. 04/2005 is concerned that was dismissed on 27.10.2010. The last order passed by the Apex Court on 16.10.2011 in Criminal Original Petition No. 2/2008 in Civil Petition No. 2895/2001 reflects that again contempt application was filed and the Apex Court held that no case of contempt is made out, however, the petitioner was left open to avail the appropriate remedy available to him under law before any other forum.

18.The Golden Handshake Scheme or its acceptance by the petitioners is not at issue but the sticking and disquieting point in the current petition is the alleged wrongful deduction of income tax and its claim of refund. The petitioners never pleaded that they were not liable to pay tax or amount of Golden Handshake Scheme should have been paid to them net of taxes and or the respondent bank was responsible to bear the tax liability on behalf of the petitioners. More willingly the learned counsel for the petitioners argued that after refund the amount of income tax, the petitioners will file their separate returns which statement expresses unequivocally that the petitioners are not claiming the refund as gratis or ex gratia but they want to pay the tax by their own with their separate tax returns.

19.With the aim of moving forward, it is essential to advert to the Income Tax Circular No. No.15 of 1997 dated 06.11.1997 (reported in PTCL 1997 Statute 1942). The nucleus of this circular concentrates and congregates on the payment of income tax under the Golden Handshake Scheme. For the ease of reference, the circular is reproduced as under:-

"INCOME TAX CIRCULAR NO. 15 OF 1997,

DATED 6TH NOVEMBER, 1997

Subject:PAYMENTS UNDER THE GOLDEN HAND SHAKE SCHEME---TAX TREATMENT OF.

Recently a number of banks and other organizations have announced golden handshake schemes for their employees, offering a variety of compensation packages to them. It has been represented to the Board that a portion of this compensation amount would be deducted by way of income tax and, therefore, the actual amount that a terminated/retired employee would be reduced.

2. Payment made under the golden handshake scheme is primarily a "compensation in connection with termination of employment" and is taxable under the head "salary" under section 16(2)(c) of the Income Tax, 1979. The compensation forms part of an employee's income for the year in which it is received. This treatment obviously results in taxation at a rate higher than that which would normally be applicable to a terminated employee. Realizing this hardship, the C.B.R. issued Circular No.1 of 1965 dated July 1, 1965, whereby a terminated employee was granted the concession of getting this compensation taxed as a 'separate block', at his three preceding year's average tax rate.

3. In response to the queries referred to the Board in this regard, it has been confirmed that this concession is still available.

4. The Board has received representations that in view of the fact that the rates of tax have been substantially reduced from the Assessment Year 1998-99 onwards, the employees who have been allowed golden handshake would not be able to benefit from this reduction if they are taxed at the previous three years average rate.

5. The matter has been considered by the Board and it has been decided that the terminated/retired employees if they so opt, can get the amount of termination compensation taxed at the reduced rates applicable to assessment year 1998-99. However, if an employee considers that the three years average tax method is more beneficial to him, he can opt for it. These concessions are obviously in addition to the exemptions already available to private sector employees in respect of payments from Recognized/Gratuity Funds.

(Issued by the C.B.R. Islamabad under the signature of Mr. Muhammad Faiyaz Khan, Secretary (Income Tax Policy), vide File C. No. 1(39)B&JC/97".]

20.The same circular was the subject matter in the case of Malik Muhammad Inam v. Federation of Pakistan reported in 2006 SCMR 1670. The court held that by virtue of the golden handshake/voluntary separation scheme, the terms and conditions of the retiring employees were modified which resulted in termination of their employment on their voluntarily agreeing to retire from service on acceptance of such payments as compensation. Once it is concluded that such payments made to the retiring employees were salaries as defined in section 16 of the repealed Ordinance, the natural consequence would be that such payments would be liable to be taxed. The language used by the Legislature in section 16(2)(a)(iii) and (2)(c)(i) of the repealed Ordinance even in absence of the words payments or profits received on retirement or termination of employment on account of golden hand shake scheme or voluntary retirement scheme without any doubt or ambiguity brought such payments within the ambit of definition of salary in the repealed Ordinance, thus, falling within the tax net and chargeable to tax. Hardship or inconvenience to be caused to a citizen by a provision of law is not a ground to be considered by the courts in interpreting and determining the legality of a provision of a statute. If the subject falls within ambit of a statute then irrespective of the hardships which he may face, the provision of the statute is to be given effect to and the citizen cannot be absolved his liability on sympathetic or humanitarian grounds.

21.The deduction of income tax at source was made by the State Bank on account of Income Tax Circular No.15 of 1997, dated 6th November 1997 and the exactitudes and precisions of this circular have been discussed and taken into consideration by the apex court comprehensively in the case of Malik Muhammad Inam (supra). When the deduction was made the effect of circular was serviceable and in force so for all practical purposes, the bank under the law was bound to deduct the tax and deposit in government treasury as has been done in the case in hand. The apex court examined the rationality and legitimacy of circular and found it fair and correct. The learned counsel for the petitioner relied on the case of Hussain Badshah (supra) in which the apex court held that declaration to the effect that appointments made under the earlier policy are illegal would operate prospectively and not retrospectively. He further relied on the case of Nawab Bibi (supra) where it was held that the Judgment of Supreme Court to be operative from date of its announcement. Such judgment, held further, to have no effect of re-opening rights of parties concluded finally under High Court's judgment. In our view the case law referred to above are distinguishable. Here the case is altogether different. The rudimentary center of attention is the circular which is not under challenge rather it has already been examined by the apex court and on the basis of this judgment all subsequent applications filed for implementation of the order/ contempt were dismissed including the review application. In our considerate view, at this juncture we cannot revisit nor decide the same issue. We also in our vision and outlook confident that there is no question of retrospective or prospective application of apex court judgment. Examining the Income Tax Circular by the apex court and to hold and maintain its legality, validity and propriety does not tantamount that the circular will be applicable only from the date of judgment of apex court but in this situation its applicability means to have remained in field undoubtedly from the date of its notification. With all humility to our command, one more significant facet cannot be circumvented that before the order dated 15.12.2004 passed in Crl.Misc.As.Nos.317, 371, 380 and 381/2004 in Crl.Misc.No.295/2004 in Cr1.O.Ps. Nos.32, 33, 34/2003 and 2/2004 in Civil Petitions Nos.2020/2000 and 12 to 55 of 2001 and the judgment rendered by the apex court in the case of Malik Muhammad Inam (supra), no question of law in this regard was decided by the apex court but both orders were based on the peculiar circumstances of the case which is evident from the record that the order of the apex court dated 3.4.2001 was primarily based on the statement of bank representative, allegedly conveyed to the Chairman FST, so while remanding the case the apex court observed that "If it is established that no such statement was made as attributed to the departmental representative of the Bank, the above observation shall be deleted otherwise it shall remain intact". Since on remand the learned Chairman FST reiterated his earlier findings therefore the apex court vide order dated 30.10.2001 dismissed Civil Petitions Nos.2844/2001 to 3008/2001 on the same basis.

22.The binding effect of the judgment of honourable Supreme Court is well known. Under Article 189 of the Constitution, any decision of the Supreme Court to the extent that it decides question of law or enunciates a principle of law is binding on all other courts in Pakistan. In the case of Justice Khurshid Anwar Bhinder v. Federation of Pakistan, reported in PLD 2010 SC 483, it was held that "where the Supreme Court deliberately and with the intention of settling the law, pronounces upon a question, such pronouncement is the law declared by the Supreme Court within the meaning of this Article and is binding on all courts in Pakistan. It cannot be treated as mere obiter dictum. Even obiter dictum of the Supreme Court, due to high place which the court holds in the hierarchy of courts in the country, enjoy a highly respected position as if it contains a definite expression of the Court's view on a legal principle or the meaning of law".

23.What Articles 189 and 201 of the Constitution do is to recognise and adopt the doctrine of precedent; they also seem to have accorded recognition to "one of the existing realities of life" namely that Judges make and change the law. Under Articles 189 and 201 of the Constitution, only that decision is binding which (a) decides a question of law or (b) is based upon a principle of law, or (c) enunciates a principle of law. In the case of Union of India v. Raghubir Singh (1989) 2 SCC 754 = AIR 1989 SC 1933, the court held that "The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of his daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a court."

24.The doctrine of "Stare decisis" means to abide by, or to adhere to, decided cases. It is a doctrine under which a deliberate or solemn decision of court made after argument on question of law fairly arising in the case, and necessary to its determination, is an authority, or binding precedent, in the same court, or in other courts of equal or lower rank in subsequent cases where the very point is again in controversy. This doctrine has been given constitutional recognition in Articles 189 and 201 of the Constitution. Cooley in his treatise "Constitutional Limitations", while commenting on this doctrine quotes Chancellor Kent:

"A solemn decision upon a point of law arising in any given case becomes an authority in a like case, because it is the highest evidence which we can have of the law applicable to the subject, and the Judges are bound to follow that decision so long as it stands unrevised, unless it can be shown that the law was misunderstood or misapplied in that particular case. If a decision has been made upon solemn argument and mature deliberation, the presumption is in favour of its correctness, and the community have a right to regard it as a just declaration or exposition of the law, and to regulate their actions and contracts by it. It would, therefore, be extremely inconvenient to the public if precedents were not duly regarded and implicitly followed."

Whereas the expression 'ratio decidendi' is the ground or reason of decision. The point in a case which determines the judgment. What it (a decision) decides generally is the ratio decidendi or rule of law for which it is authority; what it decides between the parties includes far more than just this. Since it would be obviously impracticable if there were no end to litigation and if either party to a legal dispute were at liberty to reopen the dispute at any time, the law provides that once a case has been heard and all appeals have been taken (or the time for appeal has gone by) all parties to the dispute and their successors are bound by the Court's findings on the issues raised between them and on questions of fact and law necessary to the decision of such issues . As was said in Pir Bakhsh v. Chairman Allotment Committee "In a controversy raising a dispute inter parties, the thing adjudged is conclusive as between the parties both on questions of fact and law, but as to what the Court decides generally is the ratio decidendi or rule of law for which it is the authority. It is the ratio decidendi which is applicable to subsequent cases presenting the same problem between third parties not involved in the original case nor will either of the original parties be bound in a subsequent dispute with a third party. (Ref: Judicial Review of Public Actions, Volume 1, Justice (R) Fazal Karim. Page 515)

25.So far as the plea of per incuriam articulated by the respondent's counsel that while taking cognizance, earlier judgment on the point of deduction made on account of income tax was not taken into consideration, we would like to take the aid and assistance from Black's Law Dictionary, Ninth Edition to get the drift of true connotation of the expression and terminology "per incuriam":--

"There is at least one exception to the rule of stare decisis. I refer to judgments rendered per incuriam. A judgment per incuriam is one which has been rendered inadvertently. Two examples come to mind: first, where the judge has forgotten to take account of a previous decision to which the doctrine of stare decisis applies. For all the care with which attorneys and judges may comb the case law, errare humanum est, and sometimes a judgment which clarifies a point to be settled is somehow not indexed, and is forgotten. It is in cases such as these that a judgment rendered in contradiction to a previous judgment that should have been considered binding, and in ignorance of that judgment, with no mention of it, must be deemed rendered per incuriam; thus, it has no authority . The same applies to judgments rendered in ignorance of legislation of which they should have taken account. For a judgment to be deemed per incuriam, that judgment must show that the legislation was not invoked." Louis-Philippe Pigeon, Drafting and interpreting legislation 60 (1988). "As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concern, so that in such cases some features of the decision or some step in the reasoning on which it is based is found on that account to be demonstrably wrong. This definition is not necessarily exhaustive, but cases not strictly within it which can probably be held to have been decided per incuriam, must in our judgment, consistently with the stare decisis rule which is an essential part of our law, be of the rarest occurrence." Rupert Cross & J.W. Harris, Precedent in English Law 149 (4th ed. 1991).

Here the petitioners approached for the implementation of apex court judgment based on the statement of SBP representative recorded by the learned Chairman FST and contempt notice was also issued on the same basis. The order dated 2.1.2006 does not reflect that earlier order passed by the apex court on 15.12.2004 (supra) brought into the knowledge of court where the issue of income tax deduction was dealt with in paragraph 11 of the order. Afterwards the apex court on the same issue dismissed Cr. Original Petition No.83/2005 on 20.4.2007 with reference to the order passed on 15.12.2004 and the judgment passed in the case of Malik Muhammad Inam (supra) so in all fairness we cannot revisit, explicate or expound the law on the issue decided by the apex court which has binding effect on us.

26.In the wake of above discussion, this Constitution Petition is dismissed. However, if the petitioners feel some miscalculation or inaccuracy in the quantum of income tax so deducted by the State Bank of Pakistan from Golden Handshake Scheme (GHS) benefits, they may approach to the income tax department for the refund in accordance with the law.

KMZ/N-28/Sindh Petition dismissed.