2015 P T D 734

[Peshawar High Court]

Before Yahya Afridi and Ikramullah Khan, JJ

Messrs AL-IMDAD GENERAL TRADING CO. through Proprietor

versus

PAKISTAN through Secretary, Ministry of Commerce, Islamabad and 5 others

Writ Petition No.3036 of 2011, decided on 23rd December, 2014.

(a) Sales Tax Act (VII of 1990)---

----Ss.3 & 13---Notifications S.R.O. 165(I)/2010, dated 10-3-2010---S.R.O. 180(I)/2011, dated

5-3-2011---S.R.O. 283(I)/2011, dated
1-4-2011---Constitution of Pakistan, Art.199---Constitutional petition---Claim of lower lower
rate of sales tax---Petitioners claimed to run their business concerns in the most affected areas
in war on terrorism and claimed benefit of notifications (SROs)---Validity---Provisions of
notification S.R.O. 180(I)/2011, dated 5-3-2011, extended a 'territory specific benefit' to person
engaged in business in 'affected areas', whereas notification S.R.O. 283(I)/2011, dated 1-4-
2011, provided a 'sector specific benefit' to textile sector, throughout the country---Petitioners
fell within the purview of those entitled to 'benefits' under both the SROs as they were
registered and carrying on business in 'affected areas' and that too in 'textile sector'---Provisions
of notification S.R.O. 180(I)/2011, dated 5-3-2011, had restricted the 'benefit' to 50% of the
rate of sales tax leviable under S. 3(1) of Sales Tax Act, 1990---High Court declared that
notification S.R.O. 180(I)/2011, dated 5-3-2011, was illegal being based on 'mala fide in law'-
--Petitioners being entitled to benefits provided under notification S.R.O. 165(I)/2010, dated
10-3-2010 and notification S.R.O. 283(I)/2011, dated 1-4-2011, and the effect thereto had to
be duly extended to petitioners---Petitioners from 1-4-2011 were to be charged 50% of the rate
of sales tax provided under notification S.R.O. 283(I)/2011, dated 1-4-2011---Petition was
disposed of accordingly.
 Abdul Ghani's case PLD 2007 SC 308; Osman Khan's case 2010 CLC 475; Muhammad
Naseem Khan's case 2013 PTD 2005; Muhammad Ajmal's case 2009 CLC 647 and Hasnat
Ahmad Khan's case 2010 SCMR 354 ref.

Dr. Akhtar Hussain Khan's case 2012 SCMR 455; Saeed Ahmad Khan's case PLD 1974
SC 151 and Begum Agha Abdul Karim Shorish Kashmiri's case PLD 1969 SC 14 and Messrs
Saif Textile Mill's case Writ Petition No.2011 of 2012 rel.

(b) Constitution of Pakistan---

----Art.199---Constitutional petition---Moulding of relief---Principle---Constitutional Court

may mould relief already sought in petition or even grant fresh relief appropriate for just and
equitable resolution of dispute pending adjudication.

Salahuddin's case PLD 1975 SC 244; Messrs Facto Belarus Tractors Limited Karachi's
case PLD 2006 Kar. 479; All Pakistan Textile Mills Association's case PLD 2009 Lah. 494;
Mst. Amina Begum's case PLD 1978 SC 220; Marghub Siddiqi's case 1974 SCMR 519 and
Mehrab Khan's case 2005 CLC 441 rel.

(c) Words and phrases---

----"Mala fide"---Import.

True import of mala fide in as under:--

(i) Generally, the term 'mala fide' can be divided into two; 'mala fide in fact' and 'mala fide
in law'.

(ii) 'Mala fide in fact' attributes an actual malice upon the "maker" of the impugned action,

(iii) 'Mala fide in law' does not attribute any personal or actual malice upon the "maker"
but the action is wrongful or without any reason or justification.

Black's Law Dictionary (Ninth Edition); The Law of Lexicon (Second Edition (Reprint)
2002; Corpus Juris Secundum, A Complete Restatement of The Entire American Law
(Volume-54); Mitra's Legal and Commercial Dictionary (Sixth Edition) and Judicial Review
of Public Actions rel.

(d) Constitution of Pakistan---

----Art.199---Constitutional petition---Judicial review---Scope---In order to maintain balance

in trichotomy of power' of a State, 'legislature' through legislation vests authority in the
'executive' and while exercising its vested jurisdiction it has to proceed in a lawful, 'bona fide'
and fair manner---Never is the 'executive' given authority under any statute to exercise its
jurisdiction in a colourable 'manner excessively on 'mala fide'---Any action or order passed by
even a competent authority, without essential attributes of fairness or 'bona fide', would render
such action justiciable and can be struck down by the 'judiciary' (Constitutional Court) in
judicial review.

Abdul Rauf's case PLD 1965 SC 671; Begum Agha Shoraish Kashmiri's case PLD 1965
SC 623; Ziaur Rehman's case PLD 1973 SC 49 and Saeed Ahmad's case PLD 1973 SC 151 rel.

(e) Interpretation of statutes---

----Fiscal statute---Grant of benefits---Principle---Interpreting fiscal provisions relating to

grant of 'benefits' that the same have to be positively and liberally construed in order to ensure
that the benefits' intended to be granted are actually given effect to in a meaningful manner.

Isaac Ali Qazi for Petitioner.

Mian Naveed Gul Kakakhel and Ishtiaq Ahmad for Respondents.

Date of hearing: 23rd December, 2014.

JUDGMENT

YAHYA AFRIDI, J.---Through this single judgment, we propose to dispose of six writ
petitions, as they all have common questions of law involved therein. The particulars of the
writ petitions are:--
(1) Writ Petition No.3036/2011, (Messrs Al-Imdad General Trading Co. Shah Shopping
Centre, H- Floor, BlockA, Jamrud Road, Peshawar v. Pakistan, through Secretary, Ministry of
Commerce, Constitutional Avenue, Islamabad and 5 others).

(2) Writ Petition No.3274/2011, (Messrs MPK Traders, 5C-Ist Floor, Cantonment Plaza,
Saddar Road, Peshawar through its Managing Partner Mr. Mubashir Pervez Khan v. Pakistan,
through Secretary, Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).

(3) Writ Petition No.3275-P/2011, (Messrs Keen Agencies, Suit No.4, Ist Floor, Block C,
Cantt: Plaza, Peshawar through its Partner Mr. Mudassir Pervez Keen v. Pakistan, through
Secretary, Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).

(4) Writ Petition No.3276/2011, (Messrs Style Fabrics v. Pakistan, through Secretary,
Ministry of Commerce, Constitutional Avenue, Islamabad and 5 others).

(5) Writ Petition No.1173-P/2012, (Messrs Wadud Woollen Mills Ltd., Plot No.26,
Industrial Estate, Jamrud Road, Peshawar v. Pakistan, through Secretary, Ministry of
Commerce, Constitutional Avenue, Islamabad and 5 others).

(6) Writ Petition No.1174-P/2012, (Messrs Frontier Woollen Mills (Pvt.) Ltd., 98-98A
Industrial Estate, Jmrud Road, Peshawar v. Pakistan, through Secretary, Ministry of
Commerce, Constitutional Avenue, Islamabad and 5 others).

The petitioners in the aforementioned six petitions, have invoked the constitutional
jurisdiction of this Court seeking a common prayer that:--

"The petitioner, being situated in most affected area of the Province of Khyber
Pakhtunkhwa, therefore, entitled to the benefit of S.R.O. 180(I)/2011 dated 5-3-2011 and
S.R.O. 283(I)/2011 dated 1-4-2011 and the Board letter C.No.1(155)101(RGST)/2011 dated
7-7-2011 being arbitrary, illegal, thus, of no legal effect and ineffective upon the rights of the
petitioner accrued under S.R.O. 180(J)/2011 dated 5-3-2011."

2. In two of the aforementioned petitions (Writ Petitions Nos. 1173, 117 of 2012), the
petitioners have also sought alternative relief in terms that:--
 "To declare that very issuance of S.R.O. 180(I)/2011 dated 5-3-2011 is mala fide and
colourable exercise of power of power thus, void and of no legal effect upon the rights of the
petitioner accrued under S.R.O. 165(I)/2010 dated 10-3-2010".

3. The petitioners are business concerns, mainly engaged in import or manufacture of

textile products, having their registered offices in Peshawar.

4. It all started, when the Federal Government, in pursuance of the Financial Package
announced by worthy Prime Minister ("Package"), exercising its powers under subsection (2)
of section 13 of the Sales Tax Act, 1990 ("Act"), issued S.R.O. 165(I)/2010 dated 10-3-2010
("S.R.O. 165"), provided exemption of 50% of leviable rate of sale tax on taxable supplies
made other than certain specified goods in "most affected areas in war on terrorism" twelve
districts of Khyber Pukhtunkhwa, including District Peshawar ("Affected Areas"). S.R.O. 165
reads as under:--

"In exercise of the powers conferred by clause (a) of subsection (2) of section 13 of the
Sales Tax Act, 1990, the Federal Government is pleased to exempt fifty percent of leviable rate
of sales tax on supplies made of goods, other than cement, sugar, beverages and cigarettes, by
the registered persons located in districts of Hangu, Bannu, Tank, Kohat, Chitral, Charsadda,
Peshawar, Dera Ismail Khan, Batagram, Lakki Marwat, Swabi and Mardan."

5. Later, the Federal Government, while exercising its authority under subsection (2) of
section 3 of the Act and in supersession of the exemption provided under S.R.O. 165, was
pleased vide S.R.O. 180(I)/ 2011 dated 5-3-2011 ("S.R.O. 180") to specify that the sales tax
was to be charged at a lower rate of 50% of the rate leviable under subsection (1) of Section 3
of the Act on taxable supplies made in the Affected Areas. S.R.O. 180 reads as follows:--

"In exercise of the powers conferred by clause (b) of subsection (2) of section 3 of the
Sales Tax Act, 1990 and in supersession of its Notification No.S.R.O. 165(I)/2010, dated 10th
March 2010, the Federal Government is pleased to specify that sales tax shall be charged at the
lower rate of fifty per cent of the rate leviable under subsection (1) of the said section on the
supplies made of goods, other than cement, sugar, beverages and cigarettes, by the registered
persons located in districts of Hangu, Bannu, Tank, Kohat, Chitral, Charsadda, Peshawar, Dera
Ismail Khan, Batagram, Lakki Marwat, Swabi, Nowshera and Mardan.

The notification shall take effect on and from the 10th March, 2010."

6. The only but crucial difference between the 'benefits' provided under S.R.O. 165 and
S.R.O. 180, was that the later was restricted to 50% of the leviable rate of sales tax specified
under subsection (1) of section 3 of the Act, while the former had no such restriction. However,
the incidence of sales tax in both the SROs was the same.

7. The petitioners, who are mainly importers or manufacturers of textile products, were
since 2005 governed by a 'zero rated sales tax regime' introduced under section 4 of the Act.
However, there was a shift in policy, when the Federal Government introduced a 'composite
sales tax regime' vide S.R.O. 283(I)/2011 dated 1-4-2011 (S.R.O. 283). Under the said regime,
both at import and manufacture stages, the petitioners' goods were subjected to 'zero rate' of
sales tax. However, at the retail stage, the petitioners were made liable to pay sales tax on the
rates specified in the S.R.O. itself, which were much lower than the standard rate of sales tax
provided under subsection (1) of section 3 of the Act. The essential and relevant provisions of
S.R.O. 283 reads:--

"In exercise of the powers conferred by clause (c) of section 4 read with clause (b) of
subsection (2) and subsection (6) of section 3, clause (b) of subsection (1) of section 8, clause
(a) of subsection (2) of section 13 and section 71 of the Sales Tax Act, 1990, and subsection
(2) of section 16 read with section 3A of the Federal Excise Act, 2005 and in supersession of
its Notification No.S.R.O.509(I)/2007, dated the 9th June, 2007, the Federal Government is
pleased to notify the goods specified in column (2) of the Table below under PCT heading
numbers mentioned in column (3) of the said Table, to be the goods on which sales tax shall,
subject to the conditions stated in this notification, be charged at the rate of zero percent on the
supply and import thereof, or at reduced rate of sales tax of six percent or, as the case may be,
at four percent as specified in the said conditions, namely:--

TABLE

S.No. Description of goods PCT heading No.

(1) .............. .............
1. .................. ...............
2. Textile and articles thereof Chapter 50 to Chapter 63 and other
respective headings.

CONDITIONS

(a) Textile Sector:-

(i) The facility of zero-rating shall be available to every such person engaged in
manufacturing of trading in textile sector (including Carpets and jute) who is registered for the
purpose of sales tax other than retailer. No tax shall be payable at any stage of the supply chain
if goods are sold by a registered person to a registered person till the stage of processing where
sales tax shall be charged as specified hereunder;

(ii) The benefit of this notification shall be available to registered importers, traders,
manufactures and exporters. In case where a commercial importer sells any imported goods to
unregistered person, he shall charge and pay sale tax @ 6% of value of supply, if the goods are
usable in textile sector up to the stage of spinning including the product of spinning such as
yarn and its by-products, whereafter such importer shall charge and pay sales tax @ 4% of
value of supply.

(iii) No sales tax shall be payable at ginning of man-made and synthetic fiber
manufacturing stage;

(iv) In case of registered manufactures importing their inputs or acquiring their inputs from
commercial importers or registered manufactures, such manufactures shall charge and pay
sales tax @ 6% of value of supply only at the spinning stage, i.e. yarn and its by-products if
these goods are supplied to any unregistered person provided that if such goods relate to the
stages after spinning, sales tax shall be charged and paid @ 4% of the value of supply.

(v) In case of yarn purchases on payment of sales tax @ 6% of value of supply from
spinning mills by unregistered persons i.e. traders or persons engaged in activities like sizing,
warping, weaving, intermediary and other ancillary processes etc. before processing of finished
fabric, no further amount of sales tax shall be charged or demanded;

(vi) In case of registered persons engaged in providing processing services of any kind in
respect of textile goods, such person shall charge from the person who owns the goods but is
not a registered person, sales tax @ 4% of service charges;

(vii) In case of stages after weaving, if the fabric is sold by a registered manufacturer to an
unregistered person, sales tax shall be charged @ 4% of value of supply, if such manufacturer
has availed zero-rate facility at previous stages of the production chain;

(viii) At the stage of processing or finishing of any kind of fabric or stitching of such fabric, if
any registered person supplies the goods including finished products like finished, dyed/
processed/printed fabric, textile apparel, home textile and clothing including garments and all
non-woven products etc. to an unregistered buyer, he shall charge and pay sales tax @ 4% of
the value of supply; and

(ix) The registered persons who have acquired goods at zero-rate under this notification
shall pay sales tax @ 4% of value of supply on their supplies of all kinds of finished products
to retailers, regardless of the registration of such retailers."

8. The petitioners, claiming to be entitled to 'benefits' provided under S.R.O. 180 and
S.R.O. 283, sought clarification in this regard from the Federal Board of Revenue ("FBR").
The said request of the petitioners was not positively responded to by the FBR vide its letter
dated 7-7-2011, which stated that:--

"GOVERNMENT OF PAKISAN

REVENUE DIVISION

FEDERAL BOARD OF REVENUE

C.No.1 (155)/C(RGST)/2011

Islamabad the 7th July, 2011

Mr.Irshad Ahmad
Advocate,
A-105, Town Towers, University Road,
Peshawar.

Subject: Ambiguities/Anomolies in Notification No.S.R.O. 283(I)/2011 viz-a-viz

Notification No.S.R.O. 165(I)/2010.

I am directed to refer to your letter dated 30-6-2011 on the above subject and to state
that S.R.O. 165(I)/2010 dated 10th March 2010 superseded by S.R.O. 180(I)/2011 dated 5th
March 2011 (copy enclosed) issued under clause (b) of subsection (2) of section 3 of the Sales
Tax Act, 1990 had in fact reduced the standard rate of sales tax by 50% on goods supplied by
the registered persons within the territorial jurisdiction of 13 Districts of Khyber Pakhtunkhwa.
The scope of the aforesaid notification is thus limited to the standard rate of tax charged and
levied under subsection (1) of section 3 of the Sales Tax Act, 1990 and therefore cannot be
extended to reduce rate of sales tax notified under clause (b) of subsection (2) of the section 3
of the Sales Tax Act, 1990 through S.R.O. 283(I)/2011 dated 1-4-2011.

Sd/-
(Muhammad Zarif)
Second Secretary (RGST)

Copy to Chief Commissioner, RTO, Peshawar."

9. Feeling aggrieved, the petitioners have filed the instant writ petitions.

10. The valuable arguments of the learned counsel of the parties were heard on 26-11-2014,
but at the time of writing judgment, certain factual and legal issues required further
clarification, as such, the case was fixed for re-hearing on 23-12-2014.

11. Learned counsel for the petitioners contended that S.R.O. 180 is against the letter and
spirit of the benefits announced by Prime Minister for the "Affected areas" and thus without
lawful authority; that the classification made through the impugned superseding S.R.O. 180 is
unreasonable; that delegated legislative authority as the delegatee has no jurisdiction or
authority to pass an order or regulation to prohibit a lawful business; that the impugned
executive act to exclude the petitioners from the benefit of S.R.O. 180 is violative of the
petitioners business rights guaranteed under Article 18 of Islamic Republic of Pakistan, 1973
("Constitution"); the same being violative of the right of the freedom of trade and business and
hence, merits to be judicially reviewed; that impugned letter of FBR and the impugned S.R.O.
being discriminatory in nature is violative of the petitioners rights guaranteed under Articles 3,
18, 35 and 37 of the Constitution, hence, merits to be judicially reviewed; that continuous
denial of the demanded benefit is detrimental to the business of the petitioners; and that the
actions impugned and all proceeding connected therewith have done away with the
constitutional protection available to the petitioner and are, therefore, hit by provisions of
Articles 4 and 25 of the Constitution.

12. The learned counsel for the Revenue vehemently refuted the contentions raised by the
learned counsel for the petitioners and defended the legality of S.R.O. 180 and the impugned
letter dated 7-7-2011 being 'intra vires' and based on policy of the Federal Government, which
according to the worthy counsel was non- justiciable.
13. Valuable arguments of the learned counsel for the parties heard and the record perused
with their able assistance.

JURISDICTIONAL CHALLENGE.

14. At the outset, this Court shall consider the jurisdictional challenge made by the
petitioners to the impugned actions of the Federal Government. The powers of the Federal
Government to exempt sales tax on taxable supply made by a person is clearly provided under
section 13 of the Act, while its authority to vary the rate, manner of charging and collecting the
same is also vested under subsection (2) of section 3 ("Supra"). Let us review these power
vesting provisions of the Act, they read as follows:--

Authority to Vary rate of Sales Tax

"Section 3(2)(b), Notwithstanding the provisions of subsection (1),--

(a) taxable supplies specified in the Third Schedule shall be charged to tax at the rate of
[seventeen] per cent of the retail price which along with the amount of sales tax shall be legibly,
prominently and indelibly printed or embossed by the manufacturer on each article, packet,
container, package, cover or label, as the case may be:

Provided that the Federal Government, may, by notification in the official Gazette,
exclude any taxable supply from the said Schedule or include any taxable supply therein,

(aa) goods specified in the Eight Schedule shall be charged to tax at such rates and subject
to such conditions and limitations as specified therein; and

(b) The Federal Government may, subject to such conditions and restrictions as it may
impose, by notification in the official Gazette, declare that in respect of any goods or class of
goods imported into or produced; and or any taxable supplies made by a registered person or a
class of registered persons, the tax shall be charged, collected and paid in such manner and at
such higher or lower rate or rates as may be specified in the said notification.

Power to grant Exemption

 "Section 13.---Notwithstanding the provisions of sub-section (1)---(a) the Federal
Government may, by notification in the official Gazette, exempt any taxable supplies made or
[import or supply of] any goods or class of goods, from the whole or any part of the tax
chargeable under this Act, subject to the conditions and limitations specified therein; and

(b) the Board may, by special order in each case stating the reasons, exempt any [import
or supply of goods of such description or class, as may be specified] from the payment of the
whole or any part of the tax chargeable under this Act.]"

15. It is apparent from the bare reading of the aforementioned provisions of the Act, that a
clear authority is vested in the Federal Government to exempt payment of sales tax under
Section 13 and to change the rate, manner and mode of collection and payment thereof, under
section 3 of the Act.

16. In view of the clear mandate of the Act, this Court is in consonance with the
submissions made by the learned counsel for the Revenue that SRO 180 was 'intra vires', and
thus with lawful authority, as the Federal Government had express jurisdiction to issue the
same.

17. As far as the contention of the learned counsel for the petitioners, that S.R.O. 165 being
an exemption, could only be withdrawn under section 13 of the Act, and the same could not be
withdrawn in any other manner, is not the correct appreciation of the law. The authority to
grant an exemption from the payment of sales tax is vested in the Federal Government and thus
could also be recalled by the said authority, as it did vide S.R.O. 180. In this regard, section 21
of The West Pakistan General Clauses Act, 1897, is clear and relevant to the issue in hand,
which reads:--

"Power to make to include, power to add to amend, vary, or rescind orders, rules or
bye-laws,-Where by any [Central Act], or Regulation, a power to [issue notifications], order,
rules, or bye-laws is conferred, then that power includes a power, exercisable in the like manner
and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind, any
[notifications], orders, rules, scheme, form, bye-laws so [issued]."

18. This Court is also alive to the fact, that while withdrawing the exemption granted under
S.R.O. 165, section 13 of the Act was not mentioned in S.R.O. 180. When admittedly, the
authority granting the exemption had withdrawn the same, then 'substantial compliance' had
been made. Not mentioning the provision of law at the time of withdrawing any exemption
would not make the action of a competent authority passing the said order illegal or without
lawful authority. In similar circumstances, the superior Courts have upheld such actions in
Abdul Ghani's case (PLD 2007 SC 308), Osman Khan's case (2010 CLC 475), Muhammad
Naseem Khan's case (2013 PTD 2005), Muhammad Ajmal's case (2009 CLC 647), and Hasnat
Ahmad Khan's case (2010 SCMR 354).

CONTESTED CLAIMS ON MERITS

19. In essence, the petitioners contend that the rate of sales tax leviable under S.R.O. 180,
should be construed from the rate specified under S.R.O. 283. While, the Revenue insist that
the rate of sales tax stated in S.R.O. 180, relate to the standard rate of tax charged under
subsection (1) of Section 3 of the Act and not that stated in S.R.O. 283.

20. It is pertinent to state that S.R.O. 180 extended a 'territory specific benefit', to person
engaged in business in the "Affected Areas". Whereas, S.R.O. 283 provided a 'sector specific
benefit' to textile sector, throughout the country. Admittedly, the petitioners fall within the
purview of those entitled to 'benefits' under both the SROs, as they are registered and carrying
on business in the "Affected Areas" and that too in 'textile sector'.

However, the crucial fact remains that S.R.O. 180 has restricted the 'benefit' to 50% of
the rate of sales tax leviable under subsection (1) of Section 3 of the Act.

21. The petitioners' claim to be granted the benefits provided under S.R.O. 180. Revenue,
on the other hand, is not declining the same but restricting it to 50% of the rate of sales tax
leviable under subsection (1) of Section 3 of the Act, as expressly provided therein. This stance
of the Revenue is in accord with the clear terms stated in S.R.O. 180.

22. Thus, the impugned letter of FBR dated 7-7-2011 is the correct appreciation of the
provisions of S.R.O. 180. Accordingly, this Court is not inclined to accept the main claim of
the petitioners challenging the interpretation of SROs taken by the Revenue in its impugned
letter dated 7-7-2011.

ALTERNATIVE AND MOULDING OF RELIEF.

23. As this Court has declined to accept the main prayer in the instant petitions, it would
then proceed to examine the alternative relief sought by the petitioners in two of the petitions.
The main thrust in the said relief is the challenge made to S.R.O. 180 being illegal on the
ground of 'mala fide' and for revival of the 'benefits' provided to the petitioners under S.R.O.
165.
24. This Court is adjudicating the present petitioners, while exercising its jurisdiction under
Article 199 of the Constitution. In appropriate cases, this Constitutional Court may mould relief
already sought in the four petitions or even grant fresh relief appropriate for just and equitable
resolution of the dispute pending adjudication. The authority of this Court to do so was initially
discussed by the Apex Court in Salahuddin's case (PLD 1975 SC 244) in terms:--

"It is indeed true that in the High Court the relief claimed by the appellants was so
worded as to fall under clauses (2)(a)(i) and (2) (a)(ii) of Article 201 of Interim Constitution,
and attention was not directed to the provisions contained in clause (2)(b)(ii) thereof, but this
failure on the part of the appellants did not relieve the High Court of its constitutional duty to
afford relief where it was lawfully due. The appellants had invoked the extraordinary
jurisdiction of the High Court, and it mattered little whether the relief claimed by them fell
under one clause or the other of the relevant provision of the Constitution. To deny relief to the
citizen on such a hypertechnical ground would, in our view, amount to a negation of the
beneficial jurisdiction conferred by the Constitution on the High Court in the larger public
interest. In any case, the question was indeed one of law touching the interpretation of the
Constitution and permission to raise such a question has invariably been accorded by this Court
even though the matter was not agitated in the Courts below. We consider, therefore, that relief
cannot be refused to the appellants only on the ground that they did not invoke clause (2)(b)(ii)
of Article 201 in the High Court."

(Emphasis is added)

The ratio decidendi of the aforementioned case has been consistently followed in
various other pronouncements of the Superior Courts including Messrs Facto Belarus Tractors
Limited Karachi's case (PLD 2006 Karachi 479), All Pakistan Textile Mills Association's case
(PLD 2009 Lahore 494), Mst. Amina Begum's case (PLD 1978 SC 220), Marghub Siddiqi's
case (1974 SCMR 519), Mehrab Khan's case (2005 CLC 441).

As circumstances leading to filing of all the petitions are common, this Court would
also consider the alternative relief sought in the two petitions, for remaining four petitions.

CHALLENGE ON THE BASIS OF 'MALA FIDE'.

25. Let us consider the alternative relief. The impugned action of the Federal Government
is challenged on the touchstone of 'mala fide'. Before we proceed to do the same, it would be
important to first understand the true meaning of the term 'mala fide'.
26. The term 'mala fide' has two facets; 'mala fide in fact' or 'malice in fact' and 'mala fide
in law' or 'malice in law'. These two terms have been defined in various judicial dictionaries
and commentaries, some of the leading observations on the issue in hand are as follows:--

BLACK'S LAW DICTIONARY

(NINTH EDITION)

Malice in the legal sense imports:

(1) The absence of all elements of justification, excuse or recognized mitigation, and

(2) The presence of either

(a) an actual intent to cause the particular harm which is produced or harm of the same
general nature, or

(b) the wanton and wilful doing of an act with awareness of a plain and strong likelihood
that such harm may result..... The Model Penal Code does not use 'malice' because those who
formulated the Code had a blind prejudice against the word. This is very regrettable because it
represents a useful concept despite some unfortunate language employed at times in the effort
to express it. "Rollin M. Perkins & Ronaid N. Boyce, Criminal Law 860 (3d ed, 1982).

THE LAW OF LEXICON (SECOND EDITION (REPRINT) 2002).

Malice in fact.---"Malice in Fact" means express malice. MALICE IN FACT OR

ACTUAL MALICE, relates to the actual state or condition of the mind of the person who did
the act.

Malice in fact is where the malice is not established by legal presumption or proof of
certain facts, but is to be found from the evidence in the case.

Malice in fact implies a desire or intention to injure, while malice in law is not
necessarily inconsistent with an honest purpose.
 Malice in law, "Malice in law" means implied malice. "MALICE IN LAW" simply
means a depraved inclination on the part of a person to disregard the rights of others, which
intent is manifested by his injurious acts.

"Malice in law" means an act done wrongfully and willfully without reasonable or
probable cause, and not necessarily an act done from ill feeling and spite , or a desire to injure
another.

Mala fide action or "malice in law" are not to be easily presumed. The mere non-
adherence to the strict procedure followed by a judicial tribunal does not amount to either acting
mala fide or acting contrary to natural justice. Bireshwar Chakravarti v. L.N. Kaula, AIR 1957
All 671, 677. (Evidence Act, 1872, S.114)

Malice in law denotes absence of legal excuse. N.C.Jute Mills v. Finance Ministry, AIR
1966 Cal 151, 159. Malice in its legal sense means malice such as may be assumed from the
doing of a wrongful act intentionally but without just cause or excuse, or for want of reasonable
or probable cause. S.R Venkataraman v. Union of India, AIR 1979 SC 49,51.

CORPUS JURIS SECUNDUM. A COMPLETE RESTATEMENT OF THE ENTIRE

AMERICAN LAW (VOLUME 54).

In General.

The word "malice" is derived from the Latin root "malus". It is an ambiguous term,
variously prompted and variously manifested, and difficult to define. There have been many
and various definitions or descriptions of the word "malice," and so many varying attributes
have been accredited to it, depending on the connection in which the word is used, the nature
of the litigation in which it is sought to be established, the subject to which it is applied, the
object sought to be obtained, and the consequences depending on its use, that there has been
much confusion regarding its use and meaning.

Popular sense compared with legal sense.

The word "malice," as ordinarily and popularly used, has a general and definite
meaning, while in law it is a term of art. The legal sense of malice differs from its sense in
common speech, and in law the term has a broader meaning than that which is applied to it in
ordinary use. In its legal sense it may be wantonness or a reckless disregard of the rights of
others, importing wickedness, and excluding a just cause or excuse, extending to evil design or
corrupt or wicked motive against someone at the time of the act, and referring to that state of
mind which is reckless of law and of the legal rights of the citizen in a person's conduct toward
that citizen. It implies an act done without legal justification or excuse, and in this, the legal
sense, it characterizes all acts done with an evil disposition, a wrong and unlawful motive or
purpose.

Malice in law exists where a wrongful act is intentionally done without just cause or
excuse, but since malice in law is predicated on the doing of an unlawful manner, it cannot
exist where the thing done is lawful and the means employed are lawful. Actual or express
malice, as distinguished from malice in law, exists when one with a sedate, deliberate mind
and formed design injures another, as where the person is actuated by ill will in what he does
and says, with a design willfully or wantonly to injure another.

Malice in law may exist with malice in fact, or it may exist quite independently of it.
Malice in law may exist with malice in fact since malice in law may include, or be motivated
by, anger, animosity, hatred, ill will, corrupt design, actual malevolence, spite, and every other
unlawful and unjustifiable motive or act and all acts wantonly or willfully done, that is, which
any man of reason, knowledge, and ability must know to be contrary to his duty. However,
malice in law may exist where there is an entire absence of malice in fact, since malice in law
does not mean, and need not be actuated by, or proceed from, actual malice and need not be
actuated by, or proceed from, anger, animosity, desire to injure another, dislike, hatred, ill
feeling, ill will, malevolence, passion, resentment, revenge, spite, temper, vindictiveness, or
wrath.

MITRA'S LEGAL and COMMERCIAL DICTIONARY (SIXTH EDITION).

Malice in Law.

Malice in law not necessarily personal hate or ill will, but it is that state of mind which
is reckless of law and of the legal rights of the citizen.

It means the intentional doing of a wrongful act without just cause or excuse, (Lyons v.
St. Joseph Belt Ry. Co. 84 SW 2d 933, 934)

Malice in law means the doing of a wrongful act intentionally without just cause or
excuse, (Bromage v. Prosser (1825)4 B & C 247)
 Note: A person who inflicts an injury upon another in contravention of the law is not
allowed to say that he did it with an innocent mind. He is taken to know the law, and he must
act within the law. He may, therefore, be guilty of malice in law; although so far as the state of
mind is concerned, he acts ignorantly, and in that sense innocently. (Shearer v. State of J&K
1982 Sri LJ 138, 142).

Acting on a legally extraneous or obviously misconceived ground of action is a case of

malice in law. (Regional Manager v. Pawan Kumar Dubey AIR 1976 SC 1766: (1976)3 SCC
334: (1976)3 SCR 540).

The phrase denotes absence of legal excuse. (N.C. Jute Mills v. Finance Ministry AIR
1966 Cal 151: 70 CWN 290: (1965)2 Comp LJ 152).

It is also called implied malice.

The most apt observation on the matter has been expounded by Mr. Justice (R) Fazal
Karim, in his treatise 'Judicial Review of Public Actions', in terms that:--

Malice in law. is said to mean the intentional doing of a wrongful act without just cause
or excuse. It is also called implied, inferred or legal malice. In Bromage v. Prosser, quoted in
Ghulam Mustafa Khar v. Pakistan, Bayley J. said:

"Malice in common acceptation means ill- will against a person, but in its legal sense
it means a wrongful act done intentionally without just cause or excuse...."

This was quoted with approval by the House of Lords in Allan v. Flood, where Lord
Watson said:

"...The root of the principle is that, in any legal question, malice depends, not upon evil
motive which influenced the mind of the actor, but upon the illegal character of the act which
he contemplated and committed...."

27. Reviewing the aforementioned legal discourse on the true import of the term 'mala fide',
it would be safe to state that:--
(i) Generally, the term 'mala fide' can be divided into two; 'mala fide in fact' and 'mala fide
in law'.

(ii) 'Mala fide in fact' attributes an actual malice upon the "maker" of the impugned action,

(iii) 'Mala fide in law' does not attribute any personal or actual malice upon the "maker"
but the action is wrongful or without any reason or justification.

28. We have earlier in the judgment, discussed and confirmed the jurisdiction of the Federal
Government to issue S.R.O. 180, and thereby withdraw the exemption provided to the
petitioners under S.R.O. 165 and also to vary the rate of sales tax leviable under the law.
However, the judicial review of the impugned subordinate legislation would not end there.

29. In order to maintain the balance in the 'trichotomy of power' of a State, 'legislature'
through legislation vests authority in the 'executive' and while exercising its vested jurisdiction
it has to proceed in a lawful, 'bona fide' and fair manner. Never is the 'executive' given authority
under any statute to exercise its jurisdiction in a 'colourable' manner excessively on 'mala fide'.
Any action or order passed by even a competent authority, without the essential attributes of
fairness or 'bona fide ', would render the said action justiciable and can be struck down by the
'judiciary' (constitutional Court) in judicial review. There is no dearth of judicial precedent in
this regard. The leading cases include Abdul Rauf's case (PLD 1965 SC 671), Begum Agha
Shoraish Kashmiri's case (PLD 1965 SC 623), Ziaur Rehman's case (PLD 1973 SC 49) and
Saeed Ahmad's case (PLD 1973 SC 151). MALA FIDE IN FACT

30. Let us consider the challenge made to the impugned action on the ground of it being
based on 'mala fide in fact'. This matter was discussed by the apex Court in its judgment
rendered in Dr. Akhtar Hussain Khan's case (2012 SCMR 455), wherein, relying on Saeed
Ahmad Khan's case (PLD 1974 SC 151) and Begum Agha Abdul
Karim Shorish Kashmiri's case (PLD 1969 SC 14) it was reiterated that:--

"Mala fides is one of the most difficult things to prove and the onus is entirely upon the
person alleging mala fides to establish it, because, there is, to start with, a presumption of
regularity with regard to all official acts, and until that presumption is rebutted, the action
cannot be challenged merely upon a vague allegation of mala fides. As has been pointed out
by this Court in the case of the Government of West Pakistan v. Begum Agha Abdul Karim
Shorish Kashmiri (PLD 1969 SC 14), mala fides must be pleaded with particularity, and once
one kind of mala fides is alleged, no one should be allowed to adduce proof of any other kind
of mala fides nor should any enquiry be launched upon merely on the basis of vague and
indefinite allegations, nor should the person alleging mala fides be allowed a roving enquiry
into the files of the Government for the purposes of fishing out some kind of a case.

"Mala fides" literally means "in bad faith". Action taken in bad faith is usually action
taken maliciously in fact, that is to say, in which the person taking the action does so out of
personal motives".

31. Keeping in view of the settled principle on adjudging 'mala fide in fact', as discussed
by the Apex Court in Dr. Akhtar Hussain's case (supra), the impugned action in the present
petitions cannot be struck down on the basis of it being 'mala fide in fact', as the essential
ingredients and conditions precedent of actual personal malice of the "maker" of the S.R.O.
180 could not be adjudged from the available record.

MALA FIDE IN LAW.

32. It is an admitted position that 'rights' had accrued in favour of the petitioners, when the
Prime Minister announced the Package for providing incentives to businesses in "Affected
Areas". These 'rights' matured into 'vested rights', when the Federal Government issued S.R.O.
165 under section 13 of the Act, exempting 50% of the leviable sales tax. As the said exemption
was not time bound and was withdrawn by the competent authority, the same was intra vires.
However, this would not absolve the Federal Government to ignore the cumulative effect of
the striking features protecting the 'benefits' to the petitioners provided in the Package and
clearly reflected in the SROs 165 and 180, particularly the following:--

(i) The petitioners are admittedly carrying on their business in the "Affected Areas"
expressly stated in S.R.O. 180.

(ii) S.R.O. 180 does not declare 'textile', as other sectors, have been expressly excluded
from the 'benefits' extended therein.

(iii) S.R.O. 283 does not supersede the 'benefits' of S.R.O. 180.

Essentially, the 'rationale' behind the Package and S.R.O. 165 was aimed to give
persons, such as the petitioners, an advantage over others engaged in the same business,
elsewhere in the country.
33. It is also a settled principle of interpreting fiscal provisions relating to grant of 'benefits',
that the same have to be positively and liberally construed in order to ensure that the 'benefits'
intended to be granted are actually given effect to in a meaningful manner.

34. Now, when we compare the incidence of sale tax flowing out of S.R.O. 165 and S.R.O.
180, it is noted that the effect therefrom is the same. S.R.O. 165 is granting an exemption of
50% of the leviable sales tax, while S.R.O. 180 is imposing sales tax at a rate of 50% of the
rate of sales tax under subsection (1) of section 3 of the Act. The incidence of sales tax on the
person making taxable supplies under both the SROs, as stated earlier, would have been the
same.

35. To clarify this crucial issue, the representative and the learned counsel for the Revenue
were confronted to explain the need for superseding S.R.O. 165 by issuance of S.R.O. 180,
when the incidence of sales tax flowing from both the SROs was the same, they had no
explanation. However, they insisted that though the incidence of sales tax flowing from both
SROs was the same, they were validly issued by the competent authority under the policy of
the Federal Government, which was non justiciable.

36. Another striking feature to note is the timing of issuance of SROs. On 5-3-2011, S.R.O.
180 superseded S.R.O. 165 and less than a month later S.R.O. 283 was issued. Had S.R.O. 180
not superseded S.R.O. 165, the petitioners would have availed exemption of 50% of sales tax,
without it being restricted to the standard rate of subsection (1) of section 3 of the Act. When
the learned counsel and representative of the Revenue were further asked to explain, if any
sector other than textile was affected by the restriction imposed in S.R.O. 180 to the standard
rate of sales tax under subsection (1) of section 3 of the Act, their response was again in the
negative.

37. There being no reason, muchless justifiable, forthcoming from the Revenue for the
issuance, timing and the final affect of S.R.O. 180 in superseding the exemption provided to
the petitioners under S.R.O. 165, throws a very negative light on the basis and 'rationale' behind
the impugned action of the Federal Government. This conspicuous silence of the Revenue to
provide any justifiable reason, for the issuance, timing and the exclusive affect upon the 'textile
sector' carrying on their businesses in the "Affected Areas" made by S.R.O. 180 would surely
expose the impugned action of the Revenue to come within the mischief of being declared
"mala fide in law".

38. Before parting with this judgment, this Court would like to emphasis that, earlier while
rendering its decision in Messrs Saif Textile Mills' case (Writ Petition No.2011/2012), wherein
the S.R.O. 180 was under challenge, the judicial review did not consider the ground of 'mala
fide in law', and hence, upheld the validity of S.R.O. 180. The said decision warrants review.
As one of us (Justice Yahya Afridi) was the author of the said decision, hence these petitions
have not been referred to a Larger Bench.

39. Accordingly, for the reasons stated hereinabove, this Court would:--

(i) Declare that S.R.O. 180 to be illegal, being based on 'mala fide in law'.

(ii) The petitioners being entitled to benefits provided under S.R.O. 165 and S.R.O. 283
and the effect thereto has to be duly extended to the petitioners.

(iii) The petitioners from 1-4-2011 are to be charged 50% of the rate of sales tax provided
under S.R.O. 283.

These Writ Petitions are disposed of in the above terms.

MH/31/P Order accordingly.