IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: MR. JUSTICE ANWAR ZAHEER JAMALI, CJ 
 
 
MR. JUSTICE MIAN SAQIB NISAR 
 
 
MR. JUSTICE EJAZ AFZAL KHAN 
 
 
MR. JUSTICE MUSHIR ALAM 
 
 
MR. JUSTICE MANZOOR AHMAD MALIK 
 
CIVIL APPEAL NOs.158 & 159/2006 
(Against the judgment dated 6.1.2003 of the Lahore High 
Court, Rawalpindi Bench passed in W.Ps. No.542 of 
1995&1220 of 1993) 
 
 
Zila Council Jehlum through District Coordination Officer 
 
…Appellant(s) 
(in both cases) 
VERSUS 
M/s Pakistan Tobacco Company Ltd. and another   . . . C.A.No.158/2006 
ICI Pakistan, Soda Ash Works and another              . . . C.A.No.159/2006 
 
…Respondent(s) 
*  *  *  *  *  
 
For the appellant(s): 
(in both cases) 
Malik Qamar Afzal, ASC 
 
 
For the respondent(s): 
 
Mr. Farrukh Jawad Panni, ASC 
(In C.A.No.158/2006)   
 
Mr. Shahid Hamid, Sr. ASC 
(In C.A.No.159/2006)   
 
 
Date of hearing: 
11.2.2016. 
… 
ORDER 
 
MIAN SAQIB NISAR, J.- These appeals, by leave of the Court, entail 
the facts, in that, the appellant is a Zila Council constituted under the 
provisions of the Punjab Local Government Ordinance, 1979 (the Ordinance) 
and is empowered to levy and collect various taxes including goods exit 
tax (formerly known as export tax), whereas the respondents operate 
manufacturing plants of cigarettes (in CA No.158/2006) and soda ash (in CA 
No.159/2006) within the territorial limits of District Jhelum. The appellant 
had earlier levied tax on the export of goods and animals from its 
territorial limits on several items including the products of the 
respondents in accordance with Rule 5(1) read with Rule 5(5) of the 
Punjab Zila Council (Goods Exit Tax) Rules, 1990. Aggrieved of the said 
Civil Appeals No.158 & 159 of 2006 
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levy, the respondents agitated the matter through the constitutional 
jurisdiction of the High Court, which ultimately came to this Court and 
was resolved [in the judgment reported as Zila Council, Jhelum Vs. I.C.I. Pakistan Ltd. 
(Formerly ICI Pakistan Manufacturers Limited), Khewra, District Jhelum and another (1993 
SCMR 454)] as under: 
 
“As per the Notification dated 24-4-1990, referred to above, 
even goods in transit have been declared liable to payment of 
export tax if they remained in the limits of Zila Council beyond 
certain time limit which might have been fixed by now. As 
such, the burden of proof regarding each item of export of 
soda ash while in transit is on the exporter to satisfy the 
authorities of the Zila Council at the terminal that the goods 
are in transit and are being exported within the prescribed 
time limit. The impugned notification was not without lawful 
authority and the learned High Court has legally erred in 
declaring it as such.” 
 
Subsequently, the respondents again approached the High Court in its 
constitutional jurisdiction on the ground that despite the judgment of 
this Court in Zila Council, Jhelum (supra) the appellant continued to 
raise demands for goods exit tax even on those goods with respect to 
which the respondents were able to furnish proof that they remained 
within the territorial limits of the appellant for less than 24 hours. It was 
during the pendency of the said constitutional petitions that the Punjab 
Local Government (Fourth Amendment) Ordinance, 1996 (Ordinance II of 
1996) (the Amendment Ordinance) and then the Punjab Local Government 
(Fourth Amendment) Act, 1996 (Act I of 1996) (the Amendment Act) were 
promulgated on 4.2.1996 and 21.5.1996 respectively amending the 
definition of ‘zila’ in the Ordinance to include urban areas for the 
purposes of goods exit tax. The original and the amended definition(s) of 
‘zila’ are reproduced herein below:- 
 
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Original definition 
“3(1)(Ix) 
‘zila’ means a Revenue District as notified under 
the Punjab Land Revenue Act, 1967 (XVII of 1967) but 
excluding its urban areas and Cantonment areas.” 
 
Amended definition 
“3(1)(Ix) 
‘zila’ means the Revenue District as notified 
under the Punjab Land Revenue Act, 1967 (XVII of 1967) 
excluding its urban areas but for purposes of tax on the 
export of goods and animals the zila, including its urban 
areas; and” 
(Emphasis supplied) 
 
The effect of the amendment has been to bring the respondents within 
the territorial jurisdiction of the appellant for the purposes of goods exit 
tax (it is undisputed that the respondents fall within the urban areas). It is pertinent to 
mention that this amendment has been given retrospective effect by 
virtue of Section 1(2) of both the Amendment Ordinance and Amendment 
Act, which (sections) read as follows (as they are identical, they are  being reproduced 
once to avoid repetition):- 
 
“1(2)  
It shall come into force at once and shall be 
deemed to have taken effect on the 1st day of July 1990.” 
 
As a result of the aforesaid developments, the respondents amended 
their petitions so as to challenge the amended law. It is pertinent to 
mention that the goods exit tax was abolished on 29.6.1999 vide the 
Punjab Local Government (Amendment for Abolition of Certain Taxes) 
Ordinance, 1999 (Ordinance XXIX of 1999) (the Abolition Ordinance). The two 
main questions involved in the matter before the High Court were, firstly 
whether the appellant was competent to levy and recover goods exit tax 
from the respondents on goods in transit and secondly whether the 
amendment could be given retrospective effect. The learned High Court 
has, through the impugned judgment, answered the first question 
Civil Appeals No.158 & 159 of 2006 
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against the respondents by holding that the appellant was authorized to 
levy and collect goods exit tax from the respondents’ goods in transit 
from 21.5.1996 to 29.6.1999 (the period between the promulgation of the Amendment 
Act and the Abolition Ordinance), whereas in the second question, it was held 
that the amendment could not have been given retrospective effect. 
Thereafter the appellant approached this Court and leave was granted 
vide order dated 31.1.2006 to consider the following propositions:- 
 
“(i) Whether a legislative enactment can be promulgated 
with retrospective effect and if so, whether a fiscal liability can 
be created retrospectively? 
 
(ii) 
What is the effect of repeal of the amending statute 
within the contemplation of section 6 of the West Pakistan 
General Clauses Act, 1956? 
 
(iii) Whether petitioner Zila Council would be entitled to 
enforce the recovery of tax for the intervening period during 
which the law authorized it to levy and collect export tax on 
goods? 
 
(iv)Whether ICA was competent against the judgment rendered 
in these writ petitions by learned Single Judge and as to what 
is legal impact of not filing such appeal before a Division 
Bench of the High Court?” 
 
However, during the course of hearing, learned counsel for the appellant 
candidly conceded that the only question to be resolved in these matters 
is whether the amendment brought by the Amendment Ordinance would 
have retrospective effect or not. 
2. 
 
Learned counsel for the appellant states that the goods exit 
tax could be validly levied and collected retrospectively in light of the 
judgment reported as Zila Council, Jhang, District Jhang through 
Administrator and others Vs. Messrs Daewoo Corporation, Kot 
Ranjeet, Sheikhupura through Director Contract and others (2001 
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SCMR 1012) wherein the definition of ‘zila’ (as amended) was examined. He 
also relied on Zila Council, Sialkot through Administrator Vs. Abdul 
Ghani Proprietor Iqbal Brothers, Sialkot and others (PLD 2004 SC 
425) and Molasses Trading & Export (Pvt.) Limited Vs. Federation of 
Pakistan and others (1993 SCMR 1905) to support his contention that 
retrospective application of a fiscal statute is permissible. He argued that 
where the wording of a statute is clear, the literal meaning is to be taken 
and since retrospective application has been expressly provided for in 
Sections 1(2) of the Amendment Ordinance and Amendment Act, hence 
the goods exit tax will take effect from 1.7.1990. Further, the only 
protection which could be available to the respondents is regarding past 
and closed transaction(s) and this has not been proved by them. Learned 
counsel also argued that having collected tax from the consumer, the 
incidence of tax has been passed onto them, and consequently the 
respondents cannot retain the benefit and be enriched on that account, 
which (benefit) was the right of the appellant. 
3. 
 
Mr. Shahid Hamid, learned counsel for the respondent (in CA 
No.159/2006) has categorically stated that no amount was included in the 
bills to the consumers nor collected from them on the basis of the goods 
exit tax for the period prior to 21.5.1996, the date of the Amendment Act, 
rather the said respondent has paid all its goods exit tax from 21.5.1996 
till 29.6.1999, the date of abolishment of the said tax. In support of his 
contention that retrospective effect cannot be given to the amending law 
he relied upon the judgments reported as Zila Council, Jhang (supra), 
Zakaria H. A. Sattar Bilwani and another Vs. Inspecting Additional 
Commissioner of Wealth Tax, Range-II, Karachi (2003 SCMR 271) 
and Molasses Trading (supra). He further argued that considering the 
subsequent amendments in the law which do not provide for such 
retrospective effect, the intent of the legislature is clear in that it did not 
Civil Appeals No.158 & 159 of 2006 
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want retrospective application of the said tax. Learned counsel for the 
respondent (in CA No.158/2006) has argued that the said respondent’s 
product was sold at its retail price which is the maximum price and 
therefore, they could not and did not collect or pass on any goods exit tax 
to the consumer (unlike sales and/or excise tax). He further submitted that any 
enactment passed during the pendency of a case would not apply to such 
a case unless clearly provided in the enactment itself. In this regard 
reliance was placed upon Muhammad Hussain and others Vs. 
Muhammad and others (2000 SCMR 367), Nabi Ahmed and another 
Vs. Home Secretary, Government of West Pakistan, Lahore and 4 
others (PLD 1969 SC 599) and Income-Tax Officer, Central Circle II, 
Karachi and another Vs. Cement Agencies Ltd. (PLD 1969 SC 322). 
4. 
 
Heard. As conceded by the learned counsel for the appellant 
the foundational question involved in these cases is whether the goods 
exit tax could be levied and collected retrospectively by virtue of the 
Amendment Ordinance and Amendment Act. In order to answer this 
question, we find it necessary to elucidate the law regarding 
interpretation of fiscal statutes and retrospective operation of laws. 
Although the Legislature can legislate prospectively and retrospectively, 
such power is subject to certain constitutional and judicially recognised 
restrictions. According to the canons of construction, every statute 
including amendatory statutes is prima facie prospective, based on the 
principle of nova constitutio futuris formam imponere debet, non praeteritis 
(which means ‘a new law ought to regulate what is to follow, not the past’ as per Osborn: 
Concise Law Dictionary); unless it is given retrospective effect either expressly 
or by necessary implication. In other words, a statute is not to be applied 
retrospectively in the absence of express enactment or necessary 
intendment, especially where the statute is to affect vested rights, past 
and closed transactions or facts or events that have already occurred. 
Civil Appeals No.158 & 159 of 2006 
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This principle(s) is attracted to fiscal statutes which have to be construed 
strictly, for they tend to impose liability and are therefore burdensome (as 
opposed to beneficial legislation). Furthermore, it is not only the wording/text of 
the statute which is to be considered in isolation; we are not to examine 
simpliciter whether such law has a retrospective effect or not, rather it 
has to be examined holistically by considering several factors such as, 
the dominant intention of the legislature which is to be gathered from the 
language used, the object indicated or the mischief meant to be cured, 
the nature of rights affected, and the circumstances under which the 
statute is passed. 
A bare reading of the Amendment Ordinance and the Amendment 
Act including the preamble and particularly Section(s) 1(2) (reproduced 
above), which is the section providing for retrospective effect, does not 
reflect a clear intendment or a rationale for the levy and collection of 
goods exit tax retrospectively through amendment of the definition of 
‘zila’ so as to include urban areas. Rather, such amendment is a precise 
indication of the fact that it was perhaps done to fill in a supposed 
lacuna which developed as a result of this Court’s judgment in Zila 
Council, Jhelum (supra) whereby entities including the respondents who 
fell outside the territorial limits of the appellant could avoid payment of 
goods exit tax by establishing that their goods-in-transit remained within 
the territorial limits of the appellant for less than 24 hours. It may be 
pertinent to mention here that according to the settled rules of 
interpretation of a fiscal part of a statute, the charging section is the key 
and pivotal provision which imposes a fiscal liability upon a 
taxpayer/person, thus it should be strictly construed and applied. If a 
person does not clearly fall within the four corners of the charging 
section of such a statute he cannot be saddled with a tax liability. Thus,  
mere amendment of the definition clause of 3(1)(Ix) of the Ordinance and 
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inclusion of  the urban areas as a part of a zila for the purposes of goods 
exit tax, with effect from 1.7.1990 does not express a clear intent. For 
expression of clear intent it would be necessary to change the relevant 
charging provision for the purposes of retrospective tax liability. The 
change ibid, restricted as it is to a change in the definition clause, cannot 
be considered to reflect the requisite intendment of the legislature to 
impose the said tax with retrospective effect. Reliance may be placed 
upon the case cited as Nagina Silk Mill, Lyallpur Vs. The Income Tax 
Officer, a-Ward Lyallpur (PLD 1963 SC 322) wherein a five member 
bench of this Court held as under:- 
“The Court must lean against giving a statute retrospective 
operation on the presumption that the Legislature does not 
intend what is unjust. It is chiefly where the enactment would 
prejudicially affect vested rights, or the legality of past 
transactions, or impair existing contracts, that the rule in 
question prevails. Reference may be made in this connection to 
page 206 of Maxwell on the Interpretation of Statutes, Eleventh 
Edition. Even if two interpretations are equally possible, the 
one that saves vested rights would be adopted in the interest of 
justice, specially where we are dealing with a taxing statute.” 
Reliance placed upon the Molasses Trading case (supra) by the learned 
counsel for the appellant is misplaced as that case involved the 
interpretation and retrospectivity of the charging sections itself, which is 
not the situation in the instant matters. Furthermore, the law recognises 
that provisions of statute should not be read in a way that would lead to 
obliteration of rights and liabilities that have accrued as a result of past 
and closed transactions. In this respect this Court has held in Province 
of East Pakistan Vs. Sharafatullah (PLD 1970 SC 514) as under:- 
 
“In other words liabilities that are fixed or rights that have been 
obtained by the operation of law upon facts or events for or 
perhaps it should be said against which the existing law 
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provided are not to be disturbed by a general law governing 
future rights and liabilities unless the law so intends.” 
 
In the case of Molasses Trading (supra), a five member bench of this 
Court by a three to two majority, was of the opinion that since the Bills 
of Entries of the imported goods were presented prior to 1.7.1988 which 
was the date on which Section 31-A of the Customs Act, 1969 (which section 
essentially provided for a rate of duty applicable to certain goods) was enacted and 
enforced, thus they were past and closed transactions which could not 
be destroyed or reopened by applying Section 31-A ibid retrospectively. In 
this regard the Court held:- 
 
“Inevitably therefore a vested right has been created and the 
transaction is closed by the quantification of the tax, if any, or 
by the discharge of liability on that date…Viewed in this 
perspective, if effect is given to the provisions of section 31-A so 
as to undo the discharge of the liability which had already taken 
effect, it will amount to re-opening a past and closed 
transaction. The simple reason is that under the existing law 
there was no further liability to pay the tax and by giving 
retrospective operation to the new dispensation a liability is 
being created for the payment of the tax. I cannot see anything 
in the language of section 31-A, expressly or by necessary 
intendment, to that effect. Such result is therefore not a 
necessary corollary of the fiction created by the deeming 
provisions of section 5 of the Finance Act, 1988. Otherwise also 
it will be contrary of the principle, mentioned above, namely, 
that liabilities once fixed or rights created by operation of law 
upon facts or events, must not be disturbed by a general 
provisions given retrospective effect unless such intention is 
clearly manifested by the language employed.” 
 
In any event, as the goods of the respondents have come and gone 
through the terminals of the appellant in transit over several years and 
such goods having passed through numerous hands and being sold to 
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various persons including wholesalers, retailers and consumers 
culminating into several binding contracts prior to the amendment in the 
definition of ‘zila’, thus this is clearly a fit case of past and closed 
transaction(s) and it has been conceded by the learned counsel for the 
appellant that a past and closed transaction cannot be reopened by a 
retrospective interpretation of the impugned provision (subject to the clear, 
unequivocal and explicit intention of the Legislature which as we have held above is not the case 
in the instant matters). Viewed from this perspective, we are not persuaded to 
give such effect to the provisions of the amended law so as to undo all of 
the concluded transactions mentioned above as it would amount to re-
opening of past and closed transactions and that would disrupt of rights 
and liabilities that have been created in the past. We observe that the 
finding of the learned High Court in this regard is correct. 
5. 
 
With respect to the reliance placed upon Zila Council, Jhang 
case (supra) by the learned counsel for the appellant, suffice it to say that 
the following opinion of the judgment goes against the appellant, which 
is reproduced as under:- 
 
“…thus, the question of its realization with effect from 
1.7.1990 does not arise because retrospective effect could 
be given to the definition of ‘Zila’ but no liability can be 
created retrospectively.” 
(Emphasis supplied) 
 
 
As far as the case of Zila Council, Sialkot (supra) is concerned, it may be 
mentioned that the earlier view of this Court in Muhammad Hussain’s 
case (supra) has not been taken into account, wherein while interpreting 
the provisions of an identically phrased section (except for the date) of an 
amendatory statute giving retrospective effect to an amendment, the 
Court came to the conclusion that:- 
 
Civil Appeals No.158 & 159 of 2006 
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“However, the question which arises for consideration is, 
whether the words used in section 1(2) of Act X of 1992 are 
wide enough to take away the vested rights or to undo past and 
closed transactions. In our view, by merely providing in 
subsection (2) of section 1 ibid that the “provisions of the Act 
shall be deemed to have taken effect from 31-12-1991”, the suits 
already filed in accordance with the existing provision of 
section 31 of Act of 1987 could not be rendered not-
maintainable.” 
 
Obviously, on this account the judgment of Zila Council, Sialkot (supra) 
is per incuriam, as it has failed to take into consideration the principles 
of interpretation laid down by this Court to the effect that while the 
Legislature can enact statutes retrospectively, where the vested rights of 
certain persons may be affected, such retrospective enactments must be 
construed strictly. This principle has been succinctly enunciated by the 
five member bench of this Court in Muhammad Hussain (supra) as 
follows:- 
 
“It is a well-settled principle of interpretation that there is a 
strong presumption against the retrospectivity of a legislation 
which touches or destroys the vested rights of the parties. No 
doubt the Legislature is competent to give retrospective effect to 
an Act and can also take away the vested rights of the parties, 
but to provide for such consequences, the Legislature must use 
the words which are clear, unambiguous and are not capable of 
any other interpretation or such interpretation follows as a 
necessary implication from the words used in the enactment. 
Therefore, while construing a legislation which has been given 
retrospective effect and interferes with the vested rights of the 
parties, the words used therein must be construed strictly and no 
case should be allowed to fall within the letter and spirit of Act 
which is not covered by the plain language of the legislation.” 
 
Additionally, the learned counsel for the appellant has not been able to 
show us any evidence to the effect that any amount(s) of the disputed tax 
Civil Appeals No.158 & 159 of 2006 
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was/were collected by the respondents from the consumers on the basis 
of goods exit tax for the period prior to 1.7.1996. Even otherwise, we find 
it contrary to logic and fail to understand as to how the respondents 
could have conceivably collected from and thereby passed on the 
incidence of such tax to the consumers, when it was not even levied and 
payable as per the law at that time (prior to the amendment) by the 
respondents who, being in the urban areas, stood excluded from the 
territorial ambit of the appellant as per the earlier definition of ‘zila’. 
6. 
 
In view of the foregoing, we find that the goods exit tax cannot 
be levied with retrospective effect in the circumstances, and the learned 
High Court was correct in so holding.  
7. 
 
For the aforesaid detailed reasons the appellant’s civil appeals 
were dismissed vide short order of even date, which reads as:- 
 
“Arguments heard. For reasons to be recorded separately, 
these appeals are dismissed.” 
 
 
 
 
CHIEF JUSTICE 
 
 
JUDGE 
 
 
JUDGE 
 
 
JUDGE 
 
 
JUDGE 
Islamabad, the 
11th February, 2016 
Approved For Reporting 
Ghulam Raza/*