IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: MR. JUSTICE MIAN SAQIB NISAR, CJ 
 
 
MR. JUSTICE UMAR ATA BANDIAL 
 
 
MR. JUSTICE IJAZ UL AHSAN 
 
CIVIL APPEALS NO.633 TO 637 OF 2007 
 
AND 
CIVIL APPEALS NO. 130 TO 145 OF 2009  
 
AND 
CIVIL APPEALS NO. 68-70 OF 2011 
 
 
AND 
CIVIL APPEAL NO. 1229 OF 2013  
 
 
AND 
CIVIL APPEALS NO. 158 TO 160, 983 TO 999 & 
1025-1026 OF 2015 
 
 
 
 
 
AND 
CIVIL APPEALS NO. 1337 & 1353-1356 OF 2016 
AND 
CIVIL APPEALS NO. 172-174 OF 2017 
 
 
AND 
CIVIL PETITIONS NO. 261-P TO 265-P OF 2011  
AND 
CIVIL PETITIONS NO. 3697 & 3698 OF 2016 
(on appeal from the judgments/orders dated 19.10.2006, 
21.02.2002, 03.06.2002, 3-7-2002, 17-7-2003, 25.11.2004, 3-
2-2005, 23-12-2005, 28-4-2006, 25-2-2003, 9-10-2003, 3-9-
2003, 
10-3-2004, 
18-12-2009, 
30.5.2013, 
04.02.2016, 
30.04.2015 ,14.05.2015, 27.05.2015, 28.01.2016, 14.01.2016, 
20.07.2016, 24.02.2011, 13.10.2016 of the Peshawar High 
Court, Peshawar passed in W.P. Nos.1669/2004, 53/2006, 
154, 1846 , 2023 /2005, 988/2001, 226/2002, 594/2003, 
W.P.1443/2003, 1826, 453, 453/2004, 589/2005, 657/2002, 
662/2002, 1148/2002, 118/2003, 872/2003, 796/2003, 
1008/2003, 1824/2004, 1134/2004, 1191/2004, 1246/2004, 
1506/2001, 157 &158/2005, 854-P /2006, 1830-P /2014, 
192-P,195-P, 194-P, 221-P/2015, 916-P to 917-P, 919-P, 920-
P/2013,1644-P/2014,190-P/2015,2195-P,2196-P/2012,1831-
P/2014, 191-P /2015, 193-P, 222-P/2015, 3643-P/2012,3644-
P/12,220-P/2016, 
3525-P, 
3526-P/2015,5-P/2016, 
R.P.8/2016 In W.P.3526-P/2015, 2751-P, 2752-P, 3776-P 
/2015, 1845/05, 2212/06, 2213/06, 535,536/07, 2952-P and 
2953-P /2016) 
 
Pakistan through Chairman F.B.R. & others  
(in CAs 633-
637/07, 134/09) 
Pakistan through Chairman Revenue etc. 
(in CAs 130/09) 
The Collector Customs etc 
(in CAs 131 and 
135/09) 
Collector of Central Excise and Sales Tax and 
others 
(in CAs 132/09) 
Collector of Customs, Peshawar  
(in CAs 133,142 
to 144/09) 
Govt. of Pakistan thr. Secy. Revenue Div. 
Islamabad and others 
(in CAs 136/09) 
M/s. Lal Ghee & Oil Mills Pvt. Ltd.  
(in CAs 137/09, 
158-160/15) 
Collector of Customs & Central Excise & others 
(in CAs 138/09) 
The Central Board of Revenue & others 
(in CAs 139 to 
141/09) 
Pakistan through Secy. Finance & others 
(in CAs 141/09) 
Govt. of Pakistan thr. Chairman Central Board 
of Revenue and others 
(in CAs 145/09) 
M/s Saadat Ghee & Oil Mills Pvt. Ltd. 
(in CAs 68 to 
70/11) 
Commissioner Inland Revenue, RTO, Peshawar (in CAs 1229/13, 
983-999, 1025-
CAs 633/2007 etc 
 
-: 2 :-
& others  
1026, /15) 
Federal Board of Revenue thr. its Chairman, 
Islamabad 
(in CAs 1337/16, 
174/17) 
M/s Roshni Mate Industries  
(in CP 261-P/11) 
M/s Excellence Plastic  
(in CPs 262-P, 
263-P/11) 
M/s Star Plastic Industries 
(in CPs 264-P, 
265-P/11) 
The 
Chief 
Commissioner 
Inland 
Revenue, 
Regional Tax Office, Peshawar and another  
(in CAs 1353-
1356,172,173/16 
& C.P.s 3697 & 
3698/16) 
 
…Appellants/ 
Petitioners  
VERSUS 
Hazrat Hussain and others 
(in CAs 633/07) 
M/s Naveed Ghee Industries (Pvt). Ltd. 
(in CAs 634/07) 
M/s Lal Ghee Oil Mills (Pvt). Ltd. 
(in CAs 635/07, 
1337/16) 
Roshni Mat Industries thr: Gul Sher, Proprietor 
(in CAs 636/07) 
M/s Nafees Plastic Industries 
(in CAs 637/07) 
M/s Gul Cooking Oil & Vegetable Ghee Dargai 
(in CAs 130/09) 
M/s PATA Packages & another 
(in CAs 131/09) 
Allied Rubber (Pvt.) Ltd. 
(in CAs 132 and 
142/09) 
M/s Malakand Ghee & Oil Mills (Pvt.) Ltd. and 
others 
(in CAs 133/09) 
M/s Taj Vegetable Oil Processing Unit (Pvt.) Ltd. (in CAs 134 and 
145/09) 
M/s Afridi Poly Propylene Industries (Pvt.) Ltd. 
and another 
(in CAs 135 to 
136/09) 
Pakistan thr. Chairman CBR.& others. 
(in CAs 137/09) 
M/s Gul Cooking Oil & Vegetable (Pvt) Ltd. 
(in CAs 138/09) 
M/s Gul Cooking Oil & Ghee Mills Ltd. & 
another 
(in CAs 143/09) 
M/s Bara Ghee Mills (Pvt) Ltd. 
(in CAs 139/09) 
M/s Saadat Ghee Mills (Pvt) Ltd. 
(in CAs 140/09) 
Mahsood Ghee Industries (Pvt) LTd. & others 
(in CAs 141/09) 
Inamullah Khan Afridi 
(in CAs 144/09) 
Government of Pakistan thr. Secretary, Revenue 
Division & others 
(in CAs 68 to 
70/11 and 158 
to 160/15) 
M/s Cherat Cement Company Ltd & another 
(CAs 1229/13) 
M/s Sher Steel Furnace and Re-Rolling Mills & 
others 
(in CAs 983 & 
996/15) 
M/s AK Tariq Foundry & others 
(in CAs 984 & 
998/15) 
M/s Mohmand Moulding Works & others 
(in CAs 985 to 
986/15) 
M/s Al Haj Foundry & others 
(in CAs 987 & 
999/15) 
M/s Taj Packages Company Pvt Ltd & others 
(in CAs 988 to 
989/15) 
M/s Taj Wood Board Mills (Pvt) Ltd & others 
(in CAs 990-
991/15) 
M/s Taj Re Rolling & Steel Mills Pvt Ltd & 
others 
(in CAs 1353-
1354, 1356/16) 
CAs 633/2007 etc 
 
-: 3 :-
Umar Zada & others 
(in CAs 992/15) 
M/s Universal Steel Mills & others 
(in CAs 993 & 
997/15) 
M/s Brilliant Plastic Manufacturer & others 
(in CAs 994-
995/15) 
M/s Eagle Plastics Industries & others 
(in CAs 1025-
1026/15) 
M/s Wasim Sharif Industries (Pvt) Ltd & others 
(in CAs 
1355/16) 
M/s GMS Steel Foundry and others 
(in CAs 172 
to173/17) 
M/s Muslim Steel Mills and others 
(in CAs 174/17) 
The Collector Custom & others 
(in CP 261-P/11) 
The Commissioner of Income Tax & others 
(in CP 262-P, 
264-P/11) 
The Collector Sales Tax & others 
(in CP 263-P, 
265-P/11) 
M/s Aitamad Steel Furnace and re-rolling Mills 
Ameerabad thr. its Director , Peshawar 
(in CP 3697/16) 
M/s Gul Shehzada Steel Mills thr. its Manager 
Import and others 
(in CP 3698/16) 
 
…Respondent(s) 
 
 
For Appellant/Pet.(s): 
(in CA 633/07) 
 
(in CAs 633-637/07 and 
130-136,138-140/09) 
 
(in CAs 68-70/11 & 
158-160/15) 
 
(in CAs 1229/13) 
 
 
(in CAs 983-999/15, 
1025, 1026/15 & 
1337/16, 1353-1356/16 
& C.P.s 3697 & 3698/16) 
 
 
(in CAs 172-174/17) 
 
(in CAs 135,136/09) 
 
 
(in CA 137/09) 
 
 
(in CA 141/09) 
 
(in CP 261-265/11) 
 
Mr. Khalid Abbas Khan, ASC 
 
Hafiz Ahsan Ahmad Khokhar, ASC 
 
 
Mr. Isaac Ali Qazi, ASC. 
Mr. M. S. Khattak, AOR. 
 
Dr. Farhat Zafar, ASC. 
Mr. M. S. Khattak, AOR. 
 
Mr. Ghulam Shoaib Jally, ASC. 
Syed Rifaqat Hussain Shah, AOR. 
 
 
 
Mr. Rehmanullah, ASC. 
 
Raja M. Iqbal, ASC. 
Raja Abdul Ghafoor, AOR. 
 
Mr. Shumail Butt, ASC 
Mr. Tariq Aziz, AOR 
 
Mr. Ahmed Raza Kasuri, Sr. ASC. 
 
Nemo.  
 
 
For the Respondent(s):  
(in CAs 983,996/15) 
 
(in CAs 984-999/15 & 
1025-1026/15 & 1229/13) 
 
Mr. Khalid Anwar, Sr. ASC. 
 
Mr. Issac Ali Qazi, ASC. (also in CA 134/09) 
CAs 633/2007 etc 
 
-: 4 :-
 
 
(in CPs 263-P,265-P/11) 
 
(in CPs 1353-1356/16) 
 
(in CAs 158-160/15) 
 
 
 
 
(in CA 137/09) 
 
(in CAs 633,634,636 and 
637/07 and 130-133/09) 
 
(in CAs 635/07 & 
137/09) 
 
(in CA 68-70/2011) 
 
On Court’s notice 
Raja M. Iqbal, ASC. 
 
Dr. Farhat Zafar, ASC. 
 
Mr. Shumail Butt, ASC. 
 
Mr. Ghulam Shoaib Jally, ASC. 
Raja M. Iqbal, ASC. 
Mr. Farhat Nawaz Lodhi, ASC. 
Raja Abdul Ghafoor, AOR. 
 
Raja M. Iqbal, ASC. 
 
Nemo.  
 
 
Mr. Shumail Butt, ASC. 
 
 
Mr. Habib Qureshi, ASC.` 
 
Mr. M. Waqar Rana, Addl. AGP. 
 
 
Date of Hearing: 
 
14.12.2017 
JUDGMENT 
 
 
 
MIAN SAQIB NISAR, CJ.- All these appeals with leave 
of the Court vide orders dated 15.1.2007 and 27.1.2009 involve 
akin questions of law, thus are being disposed of together. The 
facts relating to the present controversy can be set out within a 
brief compass by making reference to one appeal. The respondent 
No.1 in Civil Appeal No.983/2015 (the respondent) is carrying on the 
business of operating a steel furnace and re-rolling mill. Pursuant 
to the said business it imports iron and steel remeltable scrap from 
time to time as also machinery and plant. The importation takes 
place through the port of Karachi. At the time of importation, the 
respondent files the appropriate goods declaration along with each 
consignment (Goods Declaration). In terms thereof, the respondent 
claims an exemption in relation to both advance income tax as well 
as sales tax on the ground that its plant is located in Dargai, 
Malakand Agency which is part of the Provincially Administered 
Tribal Areas (PATA). The respondent does not dispute its liability to 
CAs 633/2007 etc 
 
-: 5 :-
pay Customs duty and thus there is no controversy regarding the 
same. The Goods Declarations filed in the present case clearly 
show that the customs duty has been duly paid. However, insofar 
as the advance income tax and sales tax are concerned, the same 
are strongly contested on the anvil of Article 247(3) of the 
Constitution of the Islamic Republic of Pakistan (the Constitution) 
which is reproduced below:- 
 
“247.  (3) 
No Act of Majlis-e-Shoora (Parliament) 
shall apply to any Federally Administered Tribal Area 
or to any part thereof, unless the President so directs, 
and no Act of Majlis-e-Shoora (Parliament) or a 
Provincial Assembly shall apply to a Provincially 
Administered Tribal Area, or to any part thereof, unless 
the Governor of the Province in which the Tribal Area 
is situated, with the approval of the President, so 
directs; and in giving such a direction with respect to 
any law, the President or, as the case may be, the 
Governor, may direct that the law shall, in its 
application to a Tribal Area, or to a specified part 
thereof, have effect subject to such exceptions and 
modifications as may be specified in the direction.” 
 
2. 
 
The Customs Department, however, refused to accede 
to the request of the respondent. Its stance was that both advance 
income tax and sales tax were payable under the Customs Act, 
1969 (Customs Act) and accordingly the respondent, having no other 
effective, efficacious and expeditious remedy available to it, invoked 
the jurisdiction of the learned Peshawar High Court. The petition 
filed by it was ultimately succeeded, as further explained 
hereinafter. The Chief Commissioner, Inland Revenue (appellant) 
challenged this decision by filing petition for leave to appeal before 
this Court, which (leave to appeal) was granted and pursuant thereto 
the case has come up before us for final decision.  
CAs 633/2007 etc 
 
-: 6 :-
3. 
 
The case of the appellant is best set out in terms of the 
para-wise comments filed by it before this Court and the opening 
ground contains the following passage:-  
 
“That the petitioner (i.e. the Respondent herein) cannot 
claim territorial/constitutional exemption of sales tax on 
imports of raw materials/machinery as the activity 
“taxable imports” is taking place in the area to which 
tax laws are fully applicable irrespective of its 
transportation to taxable or non-taxable areas. Besides, 
the ruling of the Supreme Court of Pakistan in the 
judgment passed in the case of Master Foam (Pvt.) Ltd. 
as well as the ratio decided in Review Order dated 
5.3.2007 in the case of Gul Cooking Oil this 
Honourable Court has also settled the matter in 
question, therefore, re-agitating the same at this stage 
and before this Honourable Court is extremely 
unwarranted. Consequently, the demand of sales tax at 
import stage is based upon the interpretation of apex 
court in the respective and concurrent decisions and the 
constitution as well. The charging and collection of 
sales tax on imports is not discriminatory or 
confiscatory as the petitioner had to add the element of 
sales tax being an indirect levy in the cost of finished 
products on its sales depending upon the market 
conditions.” 
 
4. 
 
As against the above argument the contention of the 
respondent is that the immunity granted to it under Article 247(3) 
of the Constitution cannot be taken away by the Department. This 
is the critical area of dispute between the parties which we have to 
decide.  
5. 
 
We begin with the admitted position that the Customs 
Act applies in the matter. This is because, irrespective of the 
question as to whether the Customs Act applies to PATA or not, 
CAs 633/2007 etc 
 
-: 7 :-
there can be no doubt about the fact that it applies in Karachi 
which is the port of the importation of the goods. The above being 
the admitted position we now have to determine on what basis 
income tax and sales tax can be demanded from the respondent 
under the Customs Act. The applicable section in this regard of the 
Income Tax Ordinance, 2001 (Income Tax Ordinance) is Section 148 and 
the relevant provisions thereof are reproduced below:- 
 
“148. Imports (1) 
The Collector of Customs shall 
collect Advance Tax from every importer of goods on 
the value of the goods at the rates specified in Part-II of 
the First Schedule. 
………………………….. 
(5) 
Advance Tax shall be collected in the same 
manner and at the same time as the customs-duty 
payable in respect of import or, if the goods are exempt 
from customs duty, at the time customs-duty would be 
payable if the goods were dutiable.” 
 
The above provisions prima facie create the jurisdiction entitling 
the Customs Department to demand advance income tax from the 
importers. 
6. 
 
Sub-section (1) thereof makes it clear beyond any iota 
of doubt that what is being collected by the Collector of Customs is 
advance income tax and not customs duty. This is a point of 
critical importance. Sub-section (5) ibid further clarifies that the 
role of the Customs Department is essentially that of a collecting 
agency. It has been statutorily conferred the power to collect 
advance income tax for and on behalf of the Income Tax 
Department. It is here that the appellant comes up against a 
constitutional barrier. It is not denied that the income tax law does 
not apply for, and in relation to PATA. Section 148 is an integral 
CAs 633/2007 etc 
 
-: 8 :-
part of the Income Tax Ordinance. Since the Income Tax Ordinance 
does not apply in toto it necessarily follows that Section 148 
thereof will also not apply for, and in relation to, PATA. Thus, ex 
facie, the Department lacks the jurisdiction to collect advance 
income tax under the said section.  
7. 
 
We now turn to the issue of demand for sales tax. The 
applicable provision of the Sales Tax Act, 1990 (Sales Tax Act) is 
Section 3 and the relevant part thereof is reproduced below:- 
“Scope of Tax. (1) Subject to the provisions of this Act, 
there shall be charged, levied and paid a tax known as 
sales tax at the rate of 17% of the value of— 
 
(a) 
taxable supplies made by a registered person in 
the course or furtherance of any taxable activity 
carried on by him; 
(b) 
goods imported into Pakistan.” 
 
Section 3 (ibid.) has to be read in juxtaposition with Section 6 of the 
Sales Tax Act and the relevant part thereof is reproduced below:- 
 
“6. Time and manner of payment. (1) The tax in respect 
of goods imported into Pakistan shall be charged and 
paid in the same manner and at the same time as if it 
were a duty of customs payable under the Customs Act 
1969 and the provisions of the said Act including 
section 31A thereof, shall, so far as they relate to 
collection, 
payment 
and 
enforcement 
including 
recovery of tax under this Act on such goods where no 
specific provision exists in this Act, apply.” 
 
It may be observed that this section is a parallel section to the 
provisions contained in Section 148(1) and (5) of the Income Tax 
Ordinance. What is important to note here, once again, is that 
what has to be collected under Section 3 (1)(b) is not customs duty; 
CAs 633/2007 etc 
 
-: 9 :-
it is, and throughout remains, sales tax which is leviable on the 
imports of goods into Pakistan. It is merely that the machinery 
provisions of the Customs Act, insofar as they relate to the 
payment and recovery of tax under the said Act, have been made 
applicable.  
8. 
 
Thus, in brief, both the Income Tax Ordinance and the 
Sales Tax Act contain provisions which enable the machinery of 
the Customs Act to be made applicable and also create jurisdiction 
in the Collector of Customs for the purpose of recovery of both 
advance income tax as well as sales tax. Both laws are clear 
beyond any dispute on the point that by so doing what is being 
collected is not customs duty but respectively income tax and sales 
tax. 
 
It follows that by a parallel set of reasoning, as has been set 
out hereinabove, in relation to income tax, that the provisions of 
the Sales Tax Act will also not justify the levy and collection of 
sales tax on goods meant and intended for PATA. There is no 
dispute, as pointed out above that neither the Sales Tax Act nor 
the Income Tax Ordinance applies in relation thereto.  
9. 
 
The above is the constitutional and legal background 
of the matter. The principle is clear, beyond any doubt. However, 
what has still to be resolved is the modality in terms of which this 
principle is to be applied. On the one hand the appellant claims 
that since the goods are being imported through Karachi, they are 
entitled to recover not merely the customs duty but also the 
income tax and the sales tax, since it is not known as to whether 
the goods will actually be delivered to PATA and processed and 
sold therein or not. That is a pure question of fact. No 
interpretation of law is involved therein. The mere fact that a 
CAs 633/2007 etc 
 
-: 10 :-
question of fact arises will not create a non-existent jurisdiction in 
the Revenue. As against this the stance of the respondent is that it 
is, as a matter of fact, transporting the imported scrap from 
Karachi to PATA, utilizing it therein for the purposes of 
manufacture of the goods made by it and thereafter the same are 
being sold in PATA. 
10. 
 
We have to resolve this dilemma. While the entitlement 
of the respondent is clear, on the constitutional plane, there is also 
no doubt about the fact that the Department is entitled to conduct 
an investigation on the factual plane to determine whether the 
goods are indeed intended for PATA and whether thereafter these 
are processed and sold also in PATA. Bearing in mind the 
conflicting stands of the parties, the learned Peshawar High Court, 
by means of the impugned judgment, set out a mechanism for 
resolving the factual dispute. In essence, it provided that the 
respondent shall initially prepare and deposit a post-dated cheque 
in favour of the Department. Thereafter, on receipt of the cheque 
the Department releases the goods without insisting on payment of 
the claimed amnesty of tax. An elaborate procedure of checking 
and verification is carried out. This is illustrated by a set of 
documents which has been made part of the record and is 
available in CMA No.752 of 2015. The basic document is a letter 
addressed by the respondent to the Commissioner Inland Revenue 
bearing the heading “Request for issuance of consumption 
certificate.” The letter sets out the details of the raw materials 
which have been imported for utilization in the factory located in 
PATA. It ends with a request to the Commissioner Inland Revenue 
that he should verify the arrival of the above consignment at the 
factory, as well as its consumption therein, and issue consumption 
CAs 633/2007 etc 
 
-: 11 :-
certificates. Attached to the letter are a set of documents. These 
include the Goods Declaration filed with the Customs Department, 
the documents showing the production and consumption of 
material, the stock report of raw material, the stock report of 
finished goods, the statement of production and the statement of 
sale. The list of dealers is also shown to whom the sales have been 
made. Then follow up details in relation to the abovementioned 
transactions. The documents include the names of the firms to 
which the goods are sold and the amount recovered therefrom. 
There is also a date-wise statement showing the opening balance of 
raw 
materials, 
a 
receipt 
of 
raw 
material 
including 
the 
transportation documents, and the gate passes along with the 
quantities. Further particulars which are contained therein are the 
waste percentage, the quantity of goods in process, the quantity of 
material 
actually 
consumed, 
the 
quantity 
of 
goods 
produced/manufactured with the number of packages and the 
closing balance. The final document is a certificate issued by the 
Commissioner of Inland Revenue in response to the above 
mentioned documents which have been received by him and duly 
processed. It states that the arrival and consumption of the 
material was verified from the record by the audit staff of the 
Department, who has confirmed that the goods have arrived at the 
factory premises and have been processed therein. It is further 
certified that the imported goods have been consumed in the 
production of finished goods in the premises of the respondent in 
Dargai, Malakand Agency. This consumption certificate is, it is 
important to note, only issued after the sale has taken place to the 
buyers whose names and details of sales have been set out in the 
accompanying documents, which we have already referred to 
CAs 633/2007 etc 
 
-: 12 :-
hereinabove. It is a significant fact of the utmost importance that 
throughout the period in which the respondent was carrying on 
business, this process and procedure was carried out smoothly 
and at no point of time, including up until now, was there any 
discrepancy found in the documents and, indeed, it is not the case 
of the Commissioner Inland Revenue, that the raw materials 
imported have not been consumed at the factory at PATA and sold 
again in PATA, as evidenced by the documentation referred to 
hereinabove. 
11. 
 
In the above circumstances, we are at a loss to 
understand why and how, on the factual plane, the present appeal 
has been filed. The learned counsel appearing on behalf of the 
respondent has raised a strong objection in relation thereto. On 
the face of it we are inclined to agree with him. It is to be noted 
that appeals should not be filed as a matter of routine or because a 
decision has been rendered against the Department. Decisions 
should be taken on a reasonable basis. It is not advisable for 
government departments to waste public time and money by filing 
appeals routinely. In the present case we have been informed that 
the respondent has suffered substantial financial loss since the 
factory was shut down for over a year as a consequence of the ex 
parte stay order obtained by the Department. This must have had 
serious 
consequences 
for 
the 
workers 
who 
lost 
gainful 
employment. The position would have been different if the 
respondent had been engaged in an illegal activity but that is not 
the case pleaded by the Department. The net result is that citizens 
of Pakistan have suffered substantial financial losses with no 
corresponding benefit to the Revenue Department. This can only 
be described as an undesirable status of affairs. When we raised 
CAs 633/2007 etc 
 
-: 13 :-
these questions the only response given on behalf of the 
Department was that the legal issues were involved especially 
those reported in the two main judgments, namely Commissioner 
of Income Tax, Peshawar Vs. Gul Cooking Oil and Vegetable 
Ghee (Pvt.) Ltd (2008 PTD 169 Supreme Court) and the case of 
Master Foam Pvt. Ltd. Vs. Government of Pakistan (PLD 2005 
SC 373). Accordingly, it is necessary that we should set out our 
views in relation thereto. Prior to doing so, it is imperative to 
summarize concisely the principle of law which is applicable on the 
conceptual plane. The Department lacks the jurisdiction in relation 
to an activity taking place in PATA. It does, however, have 
jurisdiction to carry out an enquiry in the settled areas of Pakistan 
where the tax laws apply. Thus the initial burden of proof rests on 
the importer to establish that the goods are intended for PATA and 
once that has been discharged, the burden shifts to the 
Department to establish that a fraud has been committed and the 
goods have, in fact, been processed or sold in the areas where the 
tax does apply. Unless it discharges that burden, it cannot raise 
demands against the importers. This principle safeguards the 
interests of both sides. 
12. 
 
We now propose to discuss the case law. Before that, 
however, we would like to express our appreciation for the 
judgment of the Peshawar High Court (authored by Yahya Afridi, J.) 
which has not only set out the factual and legal contentions raised 
by both parties but has also summarized the applicable case law in 
the body of the judgment. This has saved us a great deal of time.  
13. 
 
The Gul Cooking Oil’s case (supra) went through three 
stages. The first was before the Peshawar High Court. The case 
pertained to a factory located in the Malakand Division and the 
CAs 633/2007 etc 
 
-: 14 :-
question was about recovery of advance income tax at the stage of 
importation of the goods into Pakistan. The notices issued to the 
company by the Department under sections 56 and 61 of the 
Income Tax Ordinance were declared illegal and a direction was 
given that the raw material of the company should be released 
without deducting withholding tax at the import stage. The second 
stage was when an appeal was lodged before the Supreme Court. 
The judgment in this case is reported in (2003 PTD 1913 = PLD 
2003 SC 614), whereby the judgment of the High Court was 
maintained. This judgment was delivered on 25.4.2003. The final 
stage was when a review petition was filed and for purposes of 
disposal of the matter a larger bench of five members was 
constituted. This judgment is reported in (2008 PTD 169) and was 
strongly relied upon by the Department.  
14. 
 
In our opinion, the judgment does not support the 
stance adopted by the Department in the present case. In the first 
place it should be noted that the judgment expressly accepts the 
legal position as stated by the High Court and as also stated 
hereinabove. This is so clear from the following extract of the 
judgment:  
 
“16. 
There is no cavil to the legal position that 
exemption under the law from payment of income tax is 
available to a person or company carrying its business 
in tribal areas and income tax cannot be collected from 
such person or company by the tax collecting 
authorities of the Government unless the law relating to 
the collection of income tax is extended to the tribal 
areas by virtue of article 247 of the constitution……” 
 
CAs 633/2007 etc 
 
-: 15 :-
Secondly, the judgment goes on to state what it considered to be 
the real question which was to be decided in that case. The 
following extract indicates the said question:- 
 
“16……The exemption from payment of tax is 
certainly available on the business being carried in the 
tribal area in which income tax law is not applicable but 
the real question for determination in the present case 
would be that a company with its manufacturing unit 
and registered office in non-taxable area, if is also 
carrying business in taxable area, is exempted from 
payment of Income Tax of its income as a whole or 
only on the income being derived from the non-
taxable areas.” [Emphasis supplied] 
 
In the above circumstances, the case was remanded to the 
Department to determine this question of fact. The findings on the 
legal aspect of the case were left untouched. We may note, in 
passing, at this point, that the facts of the present case are 
different. As the sequence of the events which has been set out 
hereinabove makes clear, the business in the present case was 
being carried on exclusively in PATA where both the factory is 
located and also where the sales take place. This case therefore is 
of no help to the Department. 
15. 
 
The second main case on which reliance is placed is 
Master Foam’s case (supra). (We may note that the High Court judgment 
under appeal incorrectly identifies the Master Foam judgment as having been 
delivered by a five members Bench. It was in fact a three members Bench.)  
16. 
 
The facts of Master Foam’s case are clearly 
distinguishable since in that case the business was being carried 
on in Azad Jammu & Kashmir (AJK) which is, of course, technically 
an independent state with its own laws which is partially 
CAs 633/2007 etc 
 
-: 16 :-
administered by Pakistan (as per Article 31(3) of the Azad Jammu and Kashmir 
Interim Constitution Act, 1974). The question in dispute related to the 
payment of sales tax at Karachi Port at the import stage. The 
demand was made in terms of section 3(1)(b) of the Sales Tax Act. 
At this point of time it is necessary to refer to a significant feature 
of the laws of AJK. In terms of the Sales Tax (Adoption) Act, 1993 
(Sales Tax (Adoption) Act) it is provided in terms of section 2(4) as 
follows:- 
 
“In determining the input tax under sub-section (1) the 
amount paid as input tax at the import stage to the 
Customs authority in Pakistan shall be deemed to have 
been paid in Azad Jammu and Kashmir for the purpose 
of adjustment against the tax liability on the finished 
goods.” 
 
In our opinion there can be little doubt about the fact that this 
provision of law is both significant and detrimental to the case 
pleaded on behalf of the company. The grievance being made was 
that sales tax should not be charged on the goods since they were 
merely in transit through Pakistan. However, the feature which 
now emerges is that since the goods were intended for AJK the 
consequence of the above section 2(4) is that the amount paid to 
the Pakistan Customs would be deemed to have been paid to the 
AJK Government under the Sales Tax Act applicable therein. It 
would seem to follow that the company would not have a genuine 
cause of action in relation to the levy of the sales tax in Pakistan 
since in fact that tax would be deemed to have been paid to the 
AJK Government. Admittedly, the company was subject to the 
jurisdiction of the AJK Government and the provisions of the Sales 
CAs 633/2007 etc 
 
-: 17 :-
Tax (Adoption) Act applied to it. The question as to whether or not 
the company would be entitled or able to claim a refund from the 
AKJ Government relates only incidentally to Pakistan. The 
Company relied on an exemption notification issued by the AKJ 
Government and contended that it would be nullified if sales tax 
were levied on its goods by the Government of Pakistan. However, 
this by no means follows as a logical consequence. In fact, the 
finding on this point in the judgment is to the contrary: “The 
appellants have been granted sales tax exemption in AJK on the 
goods manufactured by them there. There is no exemption on 
import of raw material. In other words, they have been granted 
exemption only on the value addition they made to the raw 
material.” Thus theoretically it was possible for the matter to have 
been decided on this point. However, the reasoning in the 
judgment traverses a much wider field of enquiry. It relates to legal 
issues as well as to the question of constitutional interpretation. 
17. 
 
The legal issue which was primarily raised on behalf of 
the company was as to the true meaning of the word “import”. 
Does the word import mean simply the passing of the goods into 
the territories of Pakistan i.e. by crossing the frontier, or, does it 
has a more extended meaning as was contended on behalf of the 
company i.e. that import means not merely the physical crossing of 
the goods but the entire legal procedure of importation including 
compliance with all the requisite formalities and excludes goods in 
transit. The specific contention which was raised was that goods 
which are in transit should not be considered as having been 
imported into Pakistan. After considering the matter in some 
depth, eventually the Court rejected the contention. Instead of 
giving a wider meaning to the term import it relied on the narrower 
CAs 633/2007 etc 
 
-: 18 :-
interpretation in terms of which import merely means the bringing 
of the goods into the country. For this purpose reliance was placed 
on an earlier decision of this court reported as Pakistan Textile 
Mills Owners Association Karachi versus Administrator of 
Karachi (PLD 1963 SC 137). A number of decisions from the 
Indian jurisdiction were also considered and the contention raised 
on behalf of the company was rejected. The case law emanating 
from the United States was also taken into consideration while 
doing so. In our opinion the decision taken as to the meaning and 
concept of import in the Master Foam’s case is correct and is to 
be followed. However, this does not end the matter. The Court then 
decided to embark upon the wider constitutional issue which 
perhaps it was not essential to do in the facts of that case. 
18. 
 
In this connection, the Attorney General appearing on 
behalf of the Government referred to the case reported as WAPDA 
versus Collector of Central Excise and Sales Tax (2002 PTD 
2077 at 2082). Paragraph 11 thereof is reproduced below:- 
 
“11. … … The subject of sales tax was on the 
Provincial Legislative List at Serial No.48 in the 
Government of India Act, 1935 and was described as 
“Taxes on sales of goods and on advertising”. In the 
Constitution, 1956, “tax on sales and purchases” was 
mentioned at Serial No.26 of the Federal Legislative 
List, and therefore, for the first time it became a Federal 
subject. The position was maintained in 1962 
Constitution, which mentioned “tax on sales and 
purchases” on the Federal Legislative List as clause (j) 
at Serial No.43 in the Third-Schedule. In 1973 
Constitution as originally adopted ‘tax on sales and 
purchases’ was kept on Federal Legislative List at 
Serial No.49 of Part I of the Federal Legislative List 
given in the Fourth Schedule. The item was, however, 
CAs 633/2007 etc 
 
-: 19 :-
completely substituted by Constitution 5th Amendment 
Act, 1976 with effect from September 13, 1976 to read 
“Taxes on sales and purchases of goods imported, 
exported, produced, manufactured or consumed”. The 
second half of the amended entry appears to have been 
taken from the amendment made in Sales Tax Act, 
1951 by Finance Ordinance, 1960. Through that 
amendment the words “consumption of goods” in the 
preamble were substituted by “importation, exportation, 
production, manufacture or consumption”.” 
 
19. 
 
The finding of the Court thereon is set out in para 20 
of the Master Foam’s case which is reproduced below:- 
 
“20. 
The Act of 1990 was introduced as an 
amendment to the Act of 1950 vide section 13 of the 
Finance Act, 1990 which substituted chapters 1 to 16 of 
the Sales Tax Act, 1951 with the chapters set out in the 
Third Schedule to the Finance Act, 1990. Further, the 
preamble to the Sales Tax Act, 1951 was not substituted 
and was retained as the preamble to the Act of 1990. 
Relevant part of section 3 of the Act of 1951 reads as 
follows:-  
3.(1) 
There shall be levied and collected a tax 
on the value of --- 
(a) 
All 
goods 
produced 
or 
manufactured 
in 
Pakistan 
payable by the manufacturer or 
producer;  
  
(b) 
All goods imported into Pakistan 
payable by the importer… .” 
 
It is noted that anomaly in the law with reference to tax was 
rectified by replacing the original Entry 49 with the present one 
quoted above and this intent was noted in the case reported as 2002 
PTD 2077. Now as a result, import, export, production, 
manufacture and consumption are distinct taxable events 
CAs 633/2007 etc 
 
-: 20 :-
independent and irrespective of sales of goods. It is thus clear that 
the purpose of substituting of original Entry 49 with the present 
one was to expand its scope so as to include, inter alia, import as a 
separate taxable event as had been the position under the Act of 
1951.” (Emphasis supplied). 
 
20. 
 
The legislative history of the constitutional status of 
sales tax and the meaning to be applied thereto has been set out in 
the above. Thereafter, the further history of the constitutional 
amendments for, and in relation to, sales tax have been discussed. 
It has been noted that by means of the Finance Act, 1990 a 
thorough revision of the law was carried out in the Sales Tax Act, 
1951. The argument was thereafter further developed in the 
following terms:- 
 
“29. Close scrutiny of Entry 49 and other laws referred 
to above reveal that acceptance of appellants’ argument 
that Entry 49 authorizes tax on import only when it is 
followed by sale or purchase in Pakistan, will render the 
words ‘imported, exported, produced, manufactured or 
consumed’ redundant and also frustrate the whole 
purpose of substituting present entry for the original 
Entry 49, and the amendment inconsequential. If sale 
and purchase alone was taxable events, as argued by the 
learned counsel for the appellants, then there was no 
point in adding the words ‘imported, exported, 
produced, manufactured or consumed’. Clearly, no 
redundancy can be attributed to the Legislature and on 
this ground the argument of the appellants is repelled. 
It is also to be noted that, if above argument of the 
appellants is accepted, a situation would arise where 
import into Pakistan may not be taxed at all. Besides, 
while examining the validity of a statute, the principle 
is that there is a presumption of constitutionality of a 
statute and that every explanation in favour of a statute 
must be found. Keeping in view the complexity of 
CAs 633/2007 etc 
 
-: 21 :-
economic problems, great latitude is shown in favour of 
fiscal statutes.” [Emphasis supplied] 
 
21. 
 
It will be perceived that the central argument which 
was developed was that if we accept the proposition that sales tax 
on imports can only be levied when it is followed by sale or 
purchase in Pakistan the result will be to render the words 
“imported, exported, produced, manufactured or consumed,” 
redundant. It was further urged that this would frustrate the whole 
purpose of substituting the present entry for the original entry 49 
and make the amendment inconsequential and irrelevant. 
22. 
 
The argument needs to be examined closely. To make 
the point clearer let us re-visit for a moment the earlier paragraph 
reproduced in para 17 above which essentially makes the point 
that the original entry in the constitution which was “tax on sales 
and purchases” would, in effect, be restored if the interpretation 
being advanced on behalf of the Company was accepted. In other 
words, the argument was based on the concept of redundancy.  
23. 
 
But is this contention correct? A critically important 
aspect which has been missed in the above interpretation needs to 
be examined. What the Court, with all due respect, failed to notice 
was that the original Entry “taxes on sales and purchases” had one 
very important implication which seems to have completely eluded 
it. “Taxes on sales and purchases”, as the Entry originally stood, 
has a wider connotation. Sales and purchases may not be merely 
of goods but also of services. Thus, prior to the making of the 5th 
Amendment to the Constitution in 1976, Entry 49, being open 
ended was wide enough to comprehend both the sales of goods and 
also sales of services. The fact that sales tax on services was, or 
CAs 633/2007 etc 
 
-: 22 :-
was not, imposed by the Legislature at that time is not relevant. 
The Entry was wide enough to cover both classes of sales. 
However, after the 5th Amendment, the scope of the Entry was 
narrowed down to goods and only goods. There is, therefore, no 
redundancy. With profound respect, the finding of the Court 
cannot be sustained on the plane of principle.  
24. 
 
We can develop the principle further. The new Entry, 
as introduced in 1976, can now be analyzed further. It can be 
perceived that the Entry falls, broadly speaking, into two parts: 
 
(i) The first part is the opening phrase “Taxes on the sales 
and purchases of goods”. This phrase controls the 
ensuing second part. 
 
(ii) The second part essentially answers the question as to 
which categories of goods are subject to the levy of 
sales tax. The answer is (a) goods which are imported, 
(b) goods which are exported, (c) goods which are 
produced, (d) goods which are manufactured, and 
finally, (e) goods which are consumed. In other words, 
the entire range of goods is covered. There is no 
redundancy.  
 
25. 
 
The point can be re-stated from a different perspective 
by clarifying that the words “imported, exported manufactured, 
produced or consumed” qualify the word “goods”. The goods are 
those which fall in the categories set out in the above, which are all 
covered. Neither the rules of syntax nor of grammar justify any 
other interpretation. The use of these words, does not, and cannot, 
alter the basic fact that the levy is, and remains, on the sales and 
purchases of goods. This is the essence of what a sales tax is, as is 
obvious from the lexical meaning of the term. It is not a tax on 
CAs 633/2007 etc 
 
-: 23 :-
import of goods, per se – that is levied by Entry 43 i.e. customs 
duty. Nor is it a tax on the manufacture or production of goods per 
se – that is excise duty, which is levied under Entry 44. If the 
discussion is to centre around the doctrine of redundancy then this 
over-broad interpretation of sales tax leads to Entry 43 and Entry 44 
becoming redundant which surely is a consequence which cannot be 
countenanced. Can it seriously be contended that those words were 
added to Entry 49 so as to lead to the implied removal of the need 
for Entry 43 and 44. The question answers itself. The import of 
goods always has been, and is still, subject to customs duty. This 
is the normal structure of the Constitution of Pakistan and it is a 
normal structure of other constitutions also. Duties on import are 
called customs duty. They have been levied over the centuries in 
different Countries around the world. They have always been one 
of the principle modes of collection of revenue. Their importance 
cannot be underestimated.  
 
The allied concept which requires consideration relates to 
duties on production or manufacture. These are covered by Entry 
44 which deals with duties of excise. Excise duties have 
traditionally been duties which have been imposed on the act of 
manufacture or production. This has been true for a long period of 
time and reference may be made, by way of illustration, to the 
Central Excises and Salt Act, 1944, as well as its legislative 
predecessors. Thus the structure of the Constitution now becomes 
clear in relation to the all important fiscal entries. Entry 43 
primarily relates to customs duty i.e. duties on importation, Entry 
44 relates to excise duty or duties on manufacture or production 
and Entry 49 relates to duties on sales. Each entry has its own 
separate and clearly demarcated role and scope. The interpretation 
CAs 633/2007 etc 
 
-: 24 :-
given to Entry 49 in terms of the judgment unfortunately renders 
entry 43 and entry 44 virtually redundant. Thus the argument 
relating to redundancy which has been advanced in the judgment, 
in fact operates in the opposite direction. We are therefore 
regretfully unable to concur with the views expressed in the 
judgment. 
26. 
 
The matter does not end here. There is yet another 
way of analyzing the status of the Entry which reinforces the above 
interpretation. Entry 49, as it existed prior to the 18th Amendment 
(i.e. when the judgment was delivered) reads as follows:- 
 
“Taxes on the sales and purchases of goods imported, 
exported, produced, manufactured or consumed.” 
 
In effect, the Court has interpreted the Entry as if the words in 
square brackets were omitted i.e. as if the Entry read as “Taxes on 
goods imported, exported, produced, manufactured or consumed”. 
If the Entry read as set out above then the interpretation placed by 
the court thereon would be correct. The act of importation would 
constitute an independent source of taxation, and the same would 
be the position in relation to each of the other categories of goods. 
But that is not so, if the words in square brackets are restored. 
Indeed they are vitally important words which encapsulate the 
central premise. This is indubitably a tax which is primarily on the 
sale of goods, irrespective of the category into which the goods in 
question fall. Surely no known, or accepted, principle of 
interpretation justifies the omission of the central part of an Entry. 
Therefore, with profound respect to the Court, we find ourselves 
unable to accede to the interpretation placed by it on Entry 49. 
CAs 633/2007 etc 
 
-: 25 :-
27. 
 
A consequential error in para 29 follows clearly on the 
basis of the above. It has been observed therein that if above 
argument of the appellant is accepted, a situation would arise where 
import into Pakistan may not be taxed at all. “With respect, surely 
that is a complete non-sequitur. The existence of Entry 43, which 
seems to have been lost sight of, enables all imports to be taxed by 
way of customs duty.  
28. 
 
Finally, there is a reference in the judgment to the well 
known principle of the presumption of constitutionality of a 
statute. The principle is indeed well established. But an equally 
well established principle is that, if there is a conflict between the 
provisions of a statute and that of the Constitution, then it is the 
statute which must yield to the superior mandate of the basic law, 
which confers on parliament the power to enact laws. The offspring 
must necessarily be subservient to the parent and the lesser power 
must surrender before the greater one. There is no greater power 
known to any civilized polity then that which flows directly from 
the constitution.  
 
In the above connection reference may be made to the 
following judgments:  
 
(i) Abdul Aziz v. Province of West Pakistan (PLD 1958 
SC 499 at 506) 
“They (i.e. the High Court) went on to observe that 
“Courts 
should 
normally 
lean 
in 
favour 
of 
constitutionality of statutes and if two interpretations of 
a constitutional provision are possible, one of which 
would invalidate a statute while the other would support 
its validity, the second interpretation should be 
preferred”. That observation appears to us, speaking 
with due respect, to call for comment. If what is meant 
is that constitutional provisions may be stretched by 
CAs 633/2007 etc 
 
-: 26 :-
interpretation with the object of saving the validity of 
statutes, which ex facie contravene the Constitution, it 
must be said at once that this view cannot be accepted. 
The correct view is that a constitutional provision must 
be interpreted, as befits an organic instrument, in the 
widest possible sense. It is not permissible to place 
narrow constructions upon provisions contained in a 
Constitution, if the result be that thereby the validity of 
a statute is prejudiced. In all circumstances, the full 
scope and extent of the constitutional provision must 
first be determined, and if the statute in question is 
capable of a construction which is conformable to the 
true meaning of the relevant constitutional provision, 
then that construction should be accepted. It is possible 
that the learned Judges meant to convey this impression 
by the words which they have employed, and we have 
only found it necessary to comment upon these words 
to ensure that they should not be interpreted as allowing 
Courts to adapt the Constitution for the purpose of 
saving a statute when in fact the requirement is that all 
statutes and more generally, all sub-constitutional laws 
should conform to the Constitution. [Emphasis 
supplied]” 
 
(ii) Inamur Rehman v. Federation of Pakistan (1992 
SCMR 563 at 589) 
“He has relied on the proposition that one of the 
cardinal principles of interpretation is that law should 
be saved rather than destroyed and the Court must lean 
in favour of upholding the Constitutionality of a 
legislation. 
(Mehreen 
Zaibun 
Nisa 
v. 
Land 
Commissioner, Multan PLD 1975 SC 397). There can 
be no cavil against this proposition as it is a well-
recognized rule of Constitutional interpretation that 
there is a presumption in favour of the Constitutionality 
of a legislative enactment but if there is on the face of a 
statute no classification at all and no visible differentia, 
with reference to the object of the enactment as regards 
the person or persons subjected to its provisions, then 
CAs 633/2007 etc 
 
-: 27 :-
the presumption is displaced. We cannot be asked to 
presume that there must be some undisclosed or 
unknown reasons for subjecting certain individuals to 
discriminatory treatment, for, in that case we will be 
making a travesty of the fundamental right of equality 
before law enshrined in the Constitution.”  
 
29. 
 
At the time of hearing of this case it was not our 
intention to delve into the constitutional issues referred to above. 
However, when we came to writing this judgment we concluded 
that it was necessary to deal with the judgment in Master Foam’s 
case (supra) because of the importance attached to it by the 
appellant’s counsel. In the circumstances, we have arrived at the 
conclusion that this judgment may have to be considered either 
per incuriam, or, at the very least, be confined to the facts of the 
case which were linked with AJK.  
30. 
 
We next take up the issue relating to the security 
mechanism to be placed in position by the Government so as to 
ensure that the facility is not misused by unscrupulous importers. 
In the judgment under appeal, we have noticed that in paragraph 
14 the learned High Court has set out a large number of exemption 
notifications issued, from time to time, by the Government/Federal 
Board of Revenue granting exemptions as well as the conditions for 
ensuring that the facility is not misused. By way of illustration we 
may refer to Entry 5 contained therein. It relates to manufacturing 
in bond. In this case the condition for exemption laid down is that 
the imports are to be made against a bond. Similarly, in entry No.6 
of the said table a reference has been made to the duty and tax 
remission for exporters under Rules 296 and 297 of the Customs 
Rules 2001, in terms whereof exporters are allowed the facility not 
CAs 633/2007 etc 
 
-: 28 :-
to pay duty in advance but furnish post-dated cheques. The same 
facility has been granted under Entry No.7 which relates to 
common Bonded Warehouses. In this case too, goods can be 
imported under bond or post-dated cheques.  
31. 
 
The point we make is that since the above relate to 
exemptions granted by the Government in its discretion, from time 
to time, the case for granting the facility of not demanding advance 
payment in the present case rests on a much stronger foundation. 
The Constitution itself grants a complete immunity for, and in 
relation to, sales tax and income tax in FATA/PATA. Obviously 
persons carrying on business in these areas cannot be subjected to 
discriminatory treatment. The High Court, after reviewing the facts 
and circumstances of the case, was, in our opinion, completely 
justified in allowing the release of goods without prior payment of 
tax/duty against deposit of post-dated cheques. It has also been 
found, as a matter of fact, that the facility was not misused or 
abused by the importers of the raw materials. The High Court has 
recommended that the Federal Government should lay down a 
uniform policy.  
32. 
 
We are unable to understand what possible objection 
can be raised by the Federal Government in this behalf. In fact, it 
is worth noting that no appeal has been filed against the judgment 
by the Federal Government and it is only the Chief Commissioner 
of Inland Revenue who has preferred the present appeal. Prima 
facie, this appears to be a case of being more loyal than the King. 
We have no hesitation in deciding that, in the above facts and 
circumstances, the Federal Government should lay down a 
uniform policy in terms whereof the facility for importation against 
post-dated cheques is extended to all the manufacturers in 
CAs 633/2007 etc 
 
-: 29 :-
FATA/PATA. It does not require any argument to establish that the 
policies in relation to grant of exemptions should be applied on a 
uniform and a non-discriminatory basis. While it is perfectly true 
that the power of granting exemptions is discretionary, it is equally 
true that the said power cannot be exercised in a discriminatory 
manner. Exemptions are to be granted and regulated in terms of 
consistent policies for sound reasons. There is no justification for 
granting or refusing exemptions arbitrarily or on the ipse dixit of 
the concerned officials. The power to grant an exemption or to 
decline to grant an exemption, must be exercised in accordance 
with the general principles relating to good governance. In this 
connection, reference may be made to the following well known 
judgment pertaining to the exercise of discretionary powers:- 
 
Abid Hassan vs. PHC (2005 SCMR 25 at 35) 
“14.  
In his Treatise ‘Discretionary Powers’ which is 
Legal Study of Official Discretion D.J. Galligan has 
acknowledged that “the general principles that 
discretionary decisions should be made according to 
rational reasons means; (a) that there be findings of 
primary facts based on good evidence, and (b) that 
decisions about the facts be made for reasons which 
serve the purposes of the statute in an intelligible and 
reasonable manner”. According to the celebrated 
author, the actions which do not meet these threshold 
requirements are arbitrary, and may be considered a 
misuse of powers. (Emphasis provided).” 
 
15.  
In Amanullah Khan and others v. The Federal 
Government of Pakistan through Secretary, Ministry of 
Finance, Islamabad and others PLD 1990 SC 1092 
Shafiur Rehman, J. who was sitting in the Full Bench 
has very ably propounded the well-known doctrine of 
‘Structuring the discretion’ in the report at page 1147 
“Wherever wide-worded powers conferring discretion 
CAs 633/2007 etc 
 
-: 30 :-
exist, there remains always the need to structure the 
discretion and it has been pointed out in the 
Administrative Law Text by Kenneth Clup Davis (page 
94) that the structuring of discretion only means 
regularizing it, organizing it, producing order in it so 
that decision will achieve the high quality of justice. 
The seven instruments that are most useful in the 
structuring of discretionary power are open plans, open 
policy statements, open rules, open findings, open 
reasons, open precedents and fair informal procedure 
(Emphasis provided). Somehow, in our context, the 
wide-worded conferment of discretionary powers or 
reservation of discretion, without framing rules to 
regulate its exercise, has been taken to be an 
enhancement of the power and it gives that impression 
in the first instance but where the authorities fail to 
rationalize it and regulate it by Rules, or policy 
statements or precedents, the Courts have to intervene 
more often than is necessary, apart from the exercise of 
such power appearing arbitrary and capricious at times. 
“Government of N.W.F.P. v. Mejee Flour and General 
Mills (Pvt.) Ltd. 1997 SCMR 1804.  
 
16. 
The judicial consensus seems to be that the 
functionaries of any organization or establishment 
cannot be allowed to exercise discretion at their whims, 
sweet-will or in an arbitrary manner; rather they are 
bound to act fairly, evenly and justly. Aman Ullah 
Khan v. Federal Government of Pakistan PLD 1990 SC 
1092, Chairman R.T.A. v. Pakistan Mutual Insurance 
Company PLD 1991 SC 14, Pacific Multinational (Pvt.) 
Ltd. V. I.G. of Police PLD 1992 Kar. 283, Presson 
Manufacturing Ltd. V. Secretary, Ministry of Petroleum 
and Natural Resources 1995 MLD 15, Ramana v. I.A. 
Authority of India AIR 1979 SC 1628, Dwarka Nath 
Prasad Atal v. Ram Rati Devi AIR 1980 SC 1992, Ram 
and Shyam Company v. State of Haryana AIR 1985 SC 
1147 and Nizamuddin v. Civil Aviation Authority 1999 
SCMR 467.” 
CAs 633/2007 etc 
 
-: 31 :-
 
33. 
 
At the conclusion of the hearing we dismissed Civil 
Appeals No.633 to 637 of 2007, 130 to 136 & 138 to 145 of 2009, 
1229 of 2013, 983 to 999 & 1025 & 1026 of 2015, 1337 & 1353 to 
1356 of 2016, 172 to 174 of 2017 and Civil Petitions No. 3697 & 
3698 of 2016 (filed by the department); whereas, Civil Appeals No. 137 of 
2009, 68 to 70 of 2011 and 158 to 160 of 2015 (filed by the private 
parties) were allowed. As regards Civil Petitions No. 261-P to 265-P 
of 2011 (filed by the private parties), the same were converted into 
appeals and allowed. 
34. 
 
The above are the reasons of our short order of even 
date. 
 
 
 
 
CHIEF JUSTICE 
 
 
 
 
 
JUDGE 
 
 
 
 
JUDGE 
ISLAMABAD. 
14th December, 2017. 
Approved for reporting 
Waqas/ 
