KARACHI: A two-member bench of The Sindh High Court (SHC) declared SRO 583(I)/2017 dated 01.07.2017 as ultra vires and of no legal effect, being in violation of the law on more than 120 constitutional petitions filed including M/s Superior Steel Corp, M/s Rehman Steel, Masood Farooq, M/s Standard Steel Mills, M/s Sadiq Re-Rolling Mill, and others.
On 21 May 2021, the court released detail verdict and observes in its order that “the petitioners have assailed SRO 583(I)/2017 dated 01.07.2017 (“Impugned SRO”) and seek for the instrument to be declared as ultra vires/nullity in law, upon the premise that same has been issued in violation of the Constitution, per the law illumined by the august Supreme Court in Mustafa Impex. The respective petitions were heard conjunctively and determined to vide our common short order dated 16.04.2021.
Briefly stated, the petitioners were aggrieved by certain amendments to the sales tax regime, applicable thereto, brought about vide the Impugned SRO.
It was articulated that while the Constitution envisaged such variation in the incidence of taxation to be brought about by the Federal Government, however, the impugned variation was brought by the Board with the approval of the Federal Minister-in-charge.
It was in this context that the Impugned SRO was contended to be devoid of Constitutional fiat. It is considered illustrative to reproduce the preamble of the instrument under challenge herein below:
The crux of the petitioners’ case was that the Impugned SRO cannot survive constitutional scrutiny when subjected to the anvil of Mustafa Impex.
The learned Deputy Attorney General, and the counsel for the respondents articulated no cavil with respect to the applicable ratio of Mustafa Impex; however, supported the instrument impugned by resting their case upon the subsequent 2 Mustafa Impex vs. Government of Pakistan reported as PLD 2016 Supreme Court 808 (“Mustafa Impex”). CP D 4662 of 2017 & connected petitions Page 3 of 8 insertions of section 74A3 in the Sales Tax Act 1990 (“Act”), is a validation clause.
It is observed that the Impugned SRO was issued by the Board with the approval of the Federal Minister-in-charge, post conferment of authority thereon vide amendments undertaken vide FA 2017. In so far as the original text of section 74A was concerned, it provided no the benefit to the Impugned SRO since the effect was to be in respect of notifications and orders issued and notified prior to commencement of FA 2017.
The FA 2018 extended the ambit of section 74A of the Act but only in so far as the period was concerned; i.e. in respect of notifications and orders issued and notified prior to commencement of FA 2018.
However, the crucial point to consider is that section 74A of the Act sought to validate notifications and orders issued and notified in exercise of powers conferred upon the Federal Government. At the time that the Impugned SRO was issued the relevant power was not conferred upon the Federal Government; therefore, the instrument was admittedly never issued in exercise of any power conferred upon the Federal Government.
In view of the reasoning and rationale herein deliberated we are of the considered view that SRO 583(I)/2017 dated 01.07.2017 is ultra vires and of no legal effect, being in violation of the law illumined by the august Supreme Court in Mustafa Impex; hence, we had determined these petitions vide our short order dated 16.04.2021. These are the reasons for our aforementioned short order.
