11/28/23, 12:37 PM 2017 S C M R 1427

2017 S C M R 1427

[Supreme Court of Pakistan]

Present: Mian Saqib Nisar, C.J., Maqbool Baqar and Faisal Arab, JJ

The COLLECTOR OF SALES TAX, GUJRANWALA and others---Appellants

Versus

Messrs SUPER ASIA MOHAMMAD DIN AND SONS and others---Respondents

Civil Appeals Nos. 682 to 684 of 2008, 131, 233, 253, 504, 219 and 220 of 2011, 678-
683, 783 and 729-732 of 2012, 389-401 and 710-713 of 2013, 1632 of 2014, 565 of
2015 and 1424-1425 and 2470 of 2016 and Civil Appeal No. 733 of 2010 and Civil
Appeal No. 1507 of 2016, decided on 31st March, 2017.

(On appeal against the judgments/orders dated 7.11.2007, 18.12.2007, 05.11.2008,

25.09.2009, 09.07.2009, 29.01.2009, 01.04.2008, 07.04.2008, 04.05.2012, 05.04.2012,
05.04.2012, 06.06.2012, 19.07.2012, 06.06.2012, 05.04.2012,13.07.2011, 05.04.2012,
07.12.2011, 10.09.2014, 21.01.2015, 17.11.2015, 22.03.216 of the Lahore High Court,
Lahore passed in W.P.13331/2006, S.T.R.68/2006, S.T.R.13/2007, S.T.A.5/2005,
S.T.R.42/2006, W.P.13499/2003, W.P.16171/2008, S.T.A.23/2006, S.T.A.2/2007,
S.T.R.44/2010, S.T.R.29/2010, S.T.R.144/2011, S.T.R.95/2010, S.T.R.36/2011,
S.T.R.26/2010, S.T.R.76/2010, S.T.R. 55/2009, S.T.R.82/2010, S.T.R.32/2010,
S.T.R.73/2010 S.T.R.22/2010, S.T.R.77/2009, S.T.R.21/2010, S.T.R.43/2010,,
S.T.R.85/2010, S.T.R.101/2010, S.T.R.21/2011, S.T.R.62/2011, S.T.R.68/2011,
S.T.R.69/2011, S.T.R.75/2011, S.T.R.70/2011, S.T.R.22/2011, S.T.R.83/2011,
S.T.R.130/2011, S.T.R.13/2011, S.T.R.114/2011, S.T.R.89/2014, S.T.R.14/2015,
S.T.R.194/2015, S.T.R.195/2015 and S.T.R.58/2016 respectively)

(a) Interpretation of statutes---

----Mandatory/directory/provision, determination of--- Test--- Word "shall" used in a

provision of law---Scope---Word 'shall' was to be construed in its ordinary grammatical
meaning and normally the use of word 'shall' by the legislature branded a provision as
mandatory, especially when an authority was required to do something in a particular
manner---Ultimate test to determine whether a provision was mandatory or directory
was that of ascertaining the legislative intent---While the use of the word 'shall' was
not the sole factor which determined the mandatory or directory nature of a provision,
it was certainly one of the indicators of legislative intent---Other factors included the
presence of penal consequences in case of non-compliance, but the clearest indicator
was the object and purpose of the statute and the provision in question---Court was
duty bound to garner the real intent of the legislature as expressed in the law itself.

Haji Abdul Karim and others v. Messrs Florida Builders (Pvt.) Limited PLD 2012 SC
247; Safeer Travels (Pvt.) Ltd. v. Muhammad Khalid Shafi through Legal Heirs PLD
2007 SC 504; Mian Muhammad Nawaz Sharif v. President of Pakistan and others PLD

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 1/15
11/28/23, 12:37 PM 2017 S C M R 1427

1993 SC 473; Syed Zia Haider Rizvi and others v. Deputy Commissioner of Wealth
Tax, Lahore and others 2011 SCMR 420; In re: Presidential Election, 1974 AIR 1974
SC 1682; Lachmi Narain v. Union of India AIR 1976 SC 714 and Dinesh Chandra
Pandey v. High Court of Madhya Pradesh and another (2010) 11 SCC 500 ref.

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

----Ss. 11(4), first proviso [erstwhile], 36(3), first proviso [erstwhile], 11(5) & 74---
Sales tax, recovery of---Show cause notice---Adjudication proceedings---Order-in-
original---Limitation period---Question as to whether the limitation period contained in
the first provisos to the erstwhile Ss. 11(4) & 36(3) of the Sales Tax Act, 1990, and the
current S. 11(5) of the Act for passing an order thereunder was 'mandatory' or
'directory' in nature; held, that provisions of S. 11 and the erstwhile S.36 of the Sales
Tax Act, 1990 ("the Act") were mandatory in nature, and any order passed beyond the
time period stipulated therein would be invalid---Collector/Commissioner had the
power to extend the time within which an order under provisions of S. 11 or the
erstwhile S. 36 of the Act was to be passed---Such time could also be extended in a
particular case or class of cases by the Federal Board of Revenue ("the Board") or the
Commissioner if empowered by the Board, as per the provisions of S. 74 of the Act---
Power to extend time in terms of S. 74 of the Act must be exercised within a
reasonable time period of 'six months' from the date when the time period provided in
the first provisos to S. 11 and the erstwhile section 36 of the Act and the extension
granted thereunder had lapsed, and such power could only be exercised (by the Board
under S. 74) to grant an extension of not more than a reasonable time period of 'six
months'.

Plain language of the first provisos to the erstwhile sections 11(4) and 36(3) of the
Sales Tax Act, 1990, clearly indicated that the tax officer was bound to pass an order
within the stipulated time period of forty-five days, and any extension of time by the
Collector could not in any case exceed ninety days. The Collector could not extend the
time according to his own choice and whim, as a matter of course, routine or right,
without any limit or constraint; he could only do so by applying his mind and after
recording reasons for such extension in writing. Language of the first proviso was,
thus, meant to restrict the officer from passing an order under sections 11(4) and 36(3)
whenever he wanted. It also restricted the Collector from granting unlimited extension.
The curtailing of the powers of the officer and the Collector and the negative character
of the language employed in the said first provisos pointed towards their mandatory
nature. This was further supported by the fact that the first provisos were inserted
through an amendment. Prior to such insertion, undoubtedly there was no time limit
within which the officer was required to pass orders under sections 11(4) and 36(3) of
the Act. The insertion of the first provisos through an amendment reflected the clear
intention of the legislature to curb the earlier latitude conferred on the officer for
passing an order under the said sections. When the legislature made an amendment in
an existing law by providing a specific procedure or time frame for performing a
certain act, such provision could not be interpreted in a way which would render it
redundant or nugatory. Thus, the first provisos to erstwhile sections 11(4) and 36(3) of
the Act and the first proviso to the current section 11(5) of the Act were mandatory in

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 2/15
11/28/23, 12:37 PM 2017 S C M R 1427

nature, and the natural corollary of non-compliance with their terms would be that any
order passed beyond the stipulated time period would be invalid.

Collector had the power to grant extensions within which an order under erstwhile
sections 11(4) and 36(3) of the Act were to be passed, however, such extension could
not exceed ninety days. It was not incumbent upon the Collector to extend the time
within the currency of the initial time period of forty-five days; it was entirely possible
to extend the time even after the expiry of the initial time period but the critical period
in this regard was ninety days because at the expiry of this maximum period time could
not be further extended. As per the first provisos to erstwhile sections 11(4) and 36(3)
of the Act, if an officer failed to pass an order within forty-five days (the initial time
period), the Collector need not grant an extension within such forty-five days, instead
he could do so after the said number of days. However, since the latter part of the first
provisos only allowed him to grant an extension of ninety days, thus any extension
granted must not exceed the maximum limit of one hundred and thirty-five days (forty-
five plus ninety) from the date of the show cause notice.

In terms of section 74 of the Act, the Federal Board of Revenue ("the Board") also had
the power to extend the time within which an order under the erstwhile sections 11(4)
and 36(3) of the Act and the current section 11(5) of the Act were to be passed.
However this did not mean that in exercise of its power under section 74 of the Act, the
Board would have unfettered and unbridled authority to extend time when, and for
however long, it felt it expedient to do so. Rather time would only be extended in
certain cases, after application of mind and that too for a reasonable amount of time.
For the purposes of settling the reasonable time, after the expiry of the two time
periods envisaged by the first provisos to erstwhile sections 11(4) and 36(3) of the Act,
i.e. forty-five days [within which the order was to be passed] and a further ninety days
[extended period under the first provisos], the Board should have six months within
which it may grant extension of time under section 74 which (extension) could also not
exceed six months. If such reasonable time also lapsed, then the rule of past and closed
transaction shall apply because it was inconceivable in law that the Board would have
infinite and unlimited time within which it could grant extensions under section 74.
Board could not grant infinite and unlimited extension under section 74 to obliterate
the vested rights that stood created in favour of the taxpayer on account of lapse of
time.

Federal Land Commission through Chairman v. Rias Habib Ahmed and others PLD
2011 SC 842 ref.

(c) Interpretation of statutes---

----Casus omissus, principle of---Scope---Principle of reading in or 'casus omissus' was

not to be invoked lightly, rather it was to be used sparingly and only when the situation
demanded it---Courts should refrain from supplying an omission in the statute because
to do so steered the courts from the realms of interpretation or construction into those
of legislation.

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 3/15
11/28/23, 12:37 PM 2017 S C M R 1427

Abdul Haq Khan and others v. Haji Ameerzada and others PLD 2017 SC 105 and
Principles of Statutory Interpretation (13th Ed.) by Justice G. P. Singh ref.

(d) Interpretation of statutes---

----'Directory' and 'mandatory' provisions---Scope---When a statute required that a

thing should be done in a particular manner or form, it had to be done in such manner,
but if such provision was directory, the act done in breach thereof would not be void,
even though non-compliance may entail penal consequences; however, non-
compliance of a mandatory provision would invalidate such act.

Rubber House v. Excellsior Needle Industries Pvt. Ltd. AIR 1989 SC 1160 ref.

Izhar-ul-Haq, Advocate Supreme Court for Appellants (in C.As. 682-684/08,

131, 233, 253, 504/11, 389-401/13, 710, 711, 713/13, 219 and 220/11)

Dr. Farhat Zafar, Advocate Supreme Court, M. S. Khattak, Advocate-on-Record

and Raja Abdul Ghafoor, Advocate-on-Record for Appellants (in C.As. 678-
683/12, 783/12, 1632/14, 565/15, 1424, 1425, 1507, 2470/16 and 729-732/12).

Farhat Nawaz Lodhi, Advocate Supreme Court and Raja Abdul Ghafoor,
Advocate-on-Record for Appellants (in C.A. 733/10).

Ch. M. Zafar Iqbal, Advocate Supreme Court for Appellants (in C.A. 712/13).

Nemo for Respondents (in C.A. 220/11).

Syed Naveed Andrabi, Advocate Supreme Court for Respondents (in C.As.
682/08, 397 and 398/13).

Riaz Hussain Azam, Advocate Supreme Court and M.S. Khattak, Advocate-on-
Record for Respondents (in C.A. 733/10).

Waqar Azeem, Advocate Supreme Court for Respondents (in C.As. 682-684/08).

Nemo for Respondents (in C.A. 131/11).

Nazir Mahmood Qureshi, Advocate Supreme Court for Respondents (in C.A.
233/11).

Nemo for Respondents (in C.A. 253/11).

Muhammad Iqbal Hashmi, Advocate Supreme Court for Respondents (in C.As.
504/11, 396, 399, 710/13).

Nemo for Respondents (in C.As. 678/12, 713/13, 683/12, 392/13).

Shazib Masud, Advocate Supreme Court for Respondents (in C.A. 390/13).

Mian Ashiq Hussain, Advocate Supreme Court for Respondents (in C.A. 400/13).

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 4/15
11/28/23, 12:37 PM 2017 S C M R 1427

Nemo for Respondents (in C.As. 394, 401/13, 711/13, 1632/14, 2470/16,
565/15, 730/12, 712/13, 732/12).

M. Ajmal Khan, Advocate Supreme Court for Respondents (in C.A. 1507/16).

Ex parte for Respondents (in C.As. 219/11, 729/12, 731/12).

Nemo for Respondents (in C.As. 679-682, 783/12, 382, 391, 393, 395/13, 1424,
1425/16).

Date of hearing: 31st March, 2017.

JUDGMENT

MIAN SAQIB NISAR, C.J.---The facts pertaining to these appeals, with the leave of
the Court, are that the respondents are manufacturing units/suppliers who made taxable
supplies during various tax years and filed sales tax returns for the relevant periods.
They were served with show cause notices under the erstwhile sections 11 and 36 of
the Sales Tax Act, 1990 (the Act) and later the current section 11 thereof. The orders-
in-original were passed beyond the period of limitation provided in law. Aggrieved,
some respondents approached the learned High Court directly by way of writ petitions,
whilst others challenged the orders before the Customs, Excise and Sales Tax
(Appellate) Tribunal (the Tribunal) which culminated in sales tax references before the
learned High Court. The learned High Court allowed the writ petitions and the
references alike through the impugned judgments; holding that since the adjudicating
authority failed to decide the show cause notices within the statutory period provided
in the first provisos to the erstwhile sections 11(4) and 36(3) of the Act and the current
section 11(5) thereof, the orders were barred by time. Leave was granted on
09.04.2008 in the following terms:-

" whether the limitation of 45 days for completion of adjudication proceedings

under Finance Ordinance, 2000 enhanced to 90 days by the Finance Act, 2003
was mandatory or directory in nature "

2. The moot point is whether the limitation period contained in the first provisos to the
erstwhile sections 11(4) and 36(3) of the Act and the current section 11(5) thereof for
passing an order thereunder is mandatory or directory in nature (note:- as the show
cause notices and the orders passed pursuant thereto were spread over a span of
approximately 15 years, i.e. from 1998 to 2013, we shall discuss all the relevant
provisions which were in force from time to time). The relevant law read as under:-

Erstwhile section 36

[36. Recovery of tax not levied or short-levied or erroneously refunded.-

(3) The officer of [Inland Revenue] empowered in this behalf shall, after
considering the objections of the person served with a notice to show cause

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 5/15
11/28/23, 12:37 PM 2017 S C M R 1427

under subsection (1) or subsection (2), determine the amount of tax or charge
payable by him and such person shall pay the amount so determined [:]

[Provided that order under this section shall be made within [one hundred and
twenty] days of issuance of show cause notice or within such extended period
as [the [Commissioner] [* * *]] may, for reasons to be recorded in writing, fix,
provided that such extended period shall in no case exceed [sixty] days [:]]

[Provided further that any period during which the proceedings are adjourned
on account of a stay order or Alternative Dispute Resolution proceedings or the
time taken through adjournment by the petitioner not exceeding thirty days
shall be excluded from the computation of the periods specified in the first
proviso.]

Erstwhile section 11

[11. Assessment of Tax.-

(4) No order under this section shall be made by an officer of [Inland Revenue]
unless a notice to show cause is given [within five years] to the person in
default specifying the grounds on which it is intended to proceed against him
and the officer of [Inland Revenue] shall take into consideration the
representation made by such person and provide him with an opportunity of
being heard [:]]

[Provided that order under this section shall be made within [one hundred and
twenty] days of issuance of show cause notice or within such extended period
as [the [Commissioner] [* * *]] may, for reasons to be recorded in writing, fix
provided that such extended period shall in no case exceed [sixty] days [:]]

[Provided further that any period during which the proceedings are adjourned
on account of a stay order or Alternative Dispute Resolution proceedings or the
time taken through adjournment by the petitioner not exceeding thirty days
shall be excluded from the computation of the periods specified in the first
proviso.]

Current section 11

[11. Assessment of Tax and recovery of tax not levied or short-levied or

erroneously refunded.--

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 6/15
11/28/23, 12:37 PM 2017 S C M R 1427

(5) No order under this section shall be made by an officer of Inland Revenue
unless a notice to show cause is given within five years to the person in default
specifying the grounds on which it is intended to proceed against him and the
officer of Sales Tax shall take into consideration the representation made by
such person and provide him with an opportunity of being heard:

Provided that order under this section shall be made within one hundred and
twenty days of issuance of show cause notice or within such extended period as
the Commissioner may, for reasons to be recorded in writing, fix provided that
such extended period shall in no case exceed ninety days:

Provided further that any period during which the proceedings are adjourned on
account of a stay order or Alternative Dispute Resolution proceedings or the
time taken through adjournment by the petitioner not exceeding thirty days
shall be excluded from the computation of the period specified in the first
proviso.

[74. Condonation of time-limit.-Where any time or period has been specified

under any of the provisions of the Act or rules made thereunder within which
any application is to be made or any act or thing is to be done, the [Board] may,
in any case or class of cases, permit such application to be made or such act or
thing to be done within such time or period as it may consider appropriate [:]

[Provided that the Board may, by notification in the official Gazette, and
subject to such limitations or conditions as may be specified therein, empower
a [Commissioner] to exercise the powers under this section in any case or class
of cases.]]

[Explanation.- ]

Since the first provisos to the erstwhile sections 11(4) and 36(3) of the Act and the
current section 11(5) of the Act are identical, save for the time limit prescribed and the
officers mentioned therein, we are using the erstwhile section 36(3) (as originally
inserted in the Act) as notionally representative of the other sections and any reference
to the said provision and the terms used therein are to be taken to include the
corresponding provisions and terms of the erstwhile section 11(4) and the current
section 11(5) of the Act and the subsequent amendments made therein from time to
time (unless stated otherwise).

3. The learned counsel for the petitioner/department argued that once the first proviso
to section 36(3) of the Act had been inserted, a time frame came to be prescribed for
the officer of Sales Tax (the 'officer') to pass an order under the said section and the
same is not mandatory but rather directory especially considering that this period can
be extended by the Collector under the first proviso itself and by the Board (or
Collector notified by the Board) under section 74 of the Act. He was of the opinion that
the order passed by the officer after the stipulated period would not be vitiated merely

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 7/15
11/28/23, 12:37 PM 2017 S C M R 1427

on the ground that it had been passed beyond such time frame; therefore, the impugned
orders of the learned High Court were liable to be set aside. Conversely, the learned
counsel for the respondents submitted that the word 'shall' appearing in the first proviso
to section 36(3) of the Act rendered the provision mandatory and the officer was bound
to pass the order within the stipulated period. Further, whilst time could be extended
under the Act, such extension could not be for an unlimited period but only for the
period specified therein.

4. The first proviso to section 36(3) of the Act (as it stood at the time it was inserted)
stipulated that orders passed thereunder 'shall be made within forty-five days' of the
issuance of the show cause notice or within such extended period as the officer may,
for reasons to be recorded in writing, fix, provided that such extended period 'shall in
no case exceed ninety days'. There were basically two time frames: (i) a period of
forty-five days within which the officer was to pass an order under section 36 of the
Act; and (ii) a period of ninety days which was the maximum period for which the
officer could grant extension of time (with reasons recorded in writing) for passing of
the order under section 36 supra. The word 'shall' as opposed to 'may' has been used on
both occasions when prescribing the maximum time period in the first proviso. It is
settled law that when the word 'shall' is used in a provision of law, it is to be construed
in its ordinary grammatical meaning and normally the use of word 'shall' by the
legislature brands a provision as mandatory, especially when an authority is required to
do something in a particular manner. Reference in this behalf may be made to the case
of Haji Abdul Karim and others v. Messrs Florida Builders (Pvt.) Limited (PLD 2012
SC 247) wherein, whilst interpreting Order VII Rule 11 of the Code of Civil Procedure,
1908, this Court held that the Courts were bound by the word 'shall' used therein which
made it mandatory to reject a plaint if it appeared from the statements in the plaint that
it was barred by any law. In effect the deployment of the word 'shall' in this context
denuded the Courts of their discretion in this behalf. Similarly, in the judgment
reported as Safeer Travels (Pvt.) Ltd. v. Muhammad Khalid Shafi through legal heirs
(PLD 2007 SC 504) it was held with regard to section 16(2) of the Sindh Rented
Premises Ordinance, 1979 that the word 'shall' made it obligatory for the Court to
strike off a defence in case of default. Therefore we find that the use of the word 'shall'
is a strong indicator that the provisos in question are mandatory in nature.

5. Learned counsel for the appellants argued that the word 'shall' is not always to be
construed as mandatory but rather the determining factor is whether non-compliance
with a provision entails penal consequences or not. He stated that since no such
consequences flowed from section 36(3) of the Act thus the proviso was directory
notwithstanding the fact that the word 'shall' was used therein.

6. The ultimate test to determine whether a provision is mandatory or directory is that

of ascertaining the legislative intent. While the use of the word 'shall' is not the sole
factor which determines the mandatory or directory nature of a provision, it is certainly
one of the indicators of legislative intent. Other factors include the presence of penal
consequences in case of non-compliance, but perhaps the clearest indicator is the
object and purpose of the statute and the provision in question. It is the duty of the
Court to garner the real intent of the legislature as expressed in the law itself.
Reference may be made to the cases of Syed Zia Haider Rizvi and others v. Deputy

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 8/15
11/28/23, 12:37 PM 2017 S C M R 1427

Commissioner of Wealth Tax, Lahore and others (2011 SCMR 420), In Re. Presidential
Election, 1974 (AIR 1974 SC 1682), Lachmi Narain v. Union of India (AIR 1976 SC
714) and Dinesh Chandra Pandey v. High Court of Madhya Pradesh and another
[(2010) 11 SCC 500].

7. From the plain language of the first proviso, it is clear that the officer was bound to
pass an order within the stipulated time period of forty-five days, and any extension of
time by the Collector could not in any case exceed ninety days. The Collector could
not extend the time according to his own choice and whim, as a matter of course,
routine or right, without any limit or constraint; he could only do so by applying his
mind and after recording reasons for such extension in writing. Thus the language of
the first proviso was meant to restrict the officer from passing an order under section
36(3) supra whenever he wanted. It also restricted the Collector from granting
unlimited extension. The curtailing of the powers of the officer and the Collector and
the negative character of the language employed in the first proviso point towards its
mandatory nature. This is further supported by the fact that the first proviso was
inserted into section 36(3) supra through an amendment (note:- the current section 11
of the Act, on the other hand, was enacted with the proviso from its very inception in
2012). Prior to such insertion, undoubtedly there was no time limit within which the
officer was required to pass orders under the said section. The insertion of the first
proviso reflects the clear intention of the legislature to curb this earlier latitude
conferred on the officer for passing an order under the section supra. When the
legislature makes an amendment in an existing law by providing a specific procedure
or time frame for performing a certain act, such provision cannot be interpreted in a
way which would render it redundant or nugatory. Thus, we hold that the first proviso
to section 36(3) of the Act [and the first proviso to the erstwhile section 11(4) and the
current section 11(5) of the Act] is/was mandatory in nature.

8. As regards the submission of the learned counsel for the appellants that the time
period in the first proviso was only meant to ensure that orders were passed within a
reasonable time and in fact, the orders could have been passed beyond the stipulated
time period if the department were able to show that special circumstances existed
warranting the same, suffice it to say that there is no justification whatsoever to read
'special circumstances' and 'reasonable time' into the said proviso. It is settled law that
the principle of reading in or casus omissus is not to be invoked lightly, rather it is to
be used sparingly and only when the situation demands it. In fact the Courts should
refrain from supplying an omission in the statute because to do so steers the Courts
from the realms of interpretation or construction into those of legislation. This
principle has been aptly dealt with by this Court in judgment reported as Abdul Haq
Khan and others v. Haji Ameerzada and others (PLD 2017 SC 105) in which it was
observed that:-

The reading in of words or meaning into a statute when its meaning is

otherwise clear is not permissible. As a matter of statutory interpretation,
Courts generally abstain from providing casus omissus or omissions in a
statute, through construction or interpretation. An exception to this rule is,
when there is a self-evident omission in a provision and the purpose of the law
as intended by the legislature cannot otherwise be achieved, or if the literal

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 9/15
11/28/23, 12:37 PM 2017 S C M R 1427

construction of a particular provision leads to manifestly absurd or anomalous

results, which could not have been intended by the legislature. However, this
power is to be exercised cautiously, rarely and only in exceptional
circumstances.

Therefore, we find that the wording of the first proviso to section 36(3) of the Act
contained no ambiguity or obscurity warranting reading in of the aforesaid phrases.

9. Another aspect of the matter is that when a statute requires that a thing should be
done in a particular manner or form, it has to be done in such manner. But if such
provision is directory, the act done in breach thereof would not be void, even though
non-compliance may entail penal consequences. However, non-compliance of a
mandatory provision would invalidate such act. In this context, reference may be made
to the case of Rubber House v. Excellisor Needle Industries Pvt. Ltd. (AIR 1989 SC
1160). Thus, having held the first proviso to section 36(3) supra to be mandatory, the
natural corollary of non-compliance with its terms would be that any order passed
beyond the stipulated time period would be invalid.

10. Learned counsel for the appellants submitted that in terms of the second proviso to
section 36(3) of the Act, the time consumed by virtue of stay orders or adjournments
not exceeding thirty days was to be excluded from the calculation of the time period in
the first proviso. We find that such exclusion could not exceed 30 days as per the clear
mandate of the provision itself.

11. Learned counsel for the appellants also stated that the Collector under the first
proviso to section 36(3) of the Act was empowered to grant extensions. Learned
counsel for the respondent argued that the Collector could only extend time during the
subsistence of the time limit provided in the former part thereof, accordingly, as per
section 36(3) of the Act, once the time period of forty-five days for passing the order
under the section ibid had passed, no extension could be granted. We do not find any
force in this argument. Undoubtedly the Collector has the power to grant extensions
which cannot exceed ninety days, as is manifest from the wording of the latter part of
the first proviso, however it is not incumbent upon the Collector to extend the time
within the currency of the initial time period of forty-five days: it is entirely possible to
extend the time even after the expiry of the initial time period but the critical period in
this regard is ninety days because at the expiry of this maximum period time cannot be
further extended. By way of illustration, as per the first proviso to section 36(3) of the
Act, if an officer fails to pass an order within forty-five days (the initial time period),
the Collector need not grant an extension within such forty-five days, instead he can do
so after the said number of days. However, since the latter part of the first proviso only
allows him to grant an extension of ninety days, thus any extension granted must not
exceed the maximum limit of one hundred and thirty five days (forty-five plus ninety)
from the date of the show cause notice.

12. As regards the reliance placed on section 74 of the Act, it provides that where a
time frame has been stipulated in the Act within which an act or thing is to be done, the
Board, or the Commissioner notified by the Board, are empowered to permit such act
or thing to be done within such time period as they may consider appropriate. Passing

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 10/15
11/28/23, 12:37 PM 2017 S C M R 1427

an order under section 36(3) of the Act is certainly an act or thing to be done under the
Act. Therefore the Board (which expression shall hereinafter include Commissioner
notified by the Board) has the power under section 74 of the Act to permit the passing
of an order under the aforesaid section within such time period as it may consider
appropriate. While applying the principles of harmonious construction, we find that the
proviso is restricted in its application to the section it is attached to, whereas section 74
of the Act is of general applicability and shall apply to all the provisions of the Act and
the rules framed thereunder. This provision will undoubtedly have an overriding effect
over the first proviso to section 36(3) supra and can be held to be an exception thereto.
The purpose of section 74 supra is to give a separate overriding power to the Board to
permit any act or thing to be done under the statute within such time period as it may
deem appropriate, which undoubtedly is independent of any other provision of the Act
which provides a time frame. To restrict the time period that can be granted under
section 74 supra to the maximum period available under the first proviso to section
36(3) of the Act would render the former absolutely redundant and superfluous, which
cannot be countenanced under the settled rules of interpretation which do not allow
such redundancy to be attributed to the legislative intent. Therefore, where the Board
has permitted the passing of an order under the proviso within a time frame different
from that contained therein, this new time frame shall be deemed to be the relevant
one. However this does not mean that in exercise of its power under section 74 of the
Act, the Board will have unfettered and unbridled authority to extend time when, and
for however long, it feels it expedient to do so. Rather time would only be extended in
certain cases, after application of mind and that too for a reasonable amount of time.
For the purposes of settling the reasonable time, we hold that after the expiry of the
two time periods envisaged by the first proviso to section 36(3) of the Act, i.e. forty-
five days [within which the order under section 36 of the Act is to be passed] and a
further ninety days [extended period under the first proviso to section 36(3) ibid], the
Board should have six months within which it may grant extension of time under
section 74 supra which (extension) can also not exceed six months. If the reasonable
time mentioned above also lapses, then the rule of past and closed transaction shall
apply because it is inconceivable in law that:- (a) the Board would have infinite and
unlimited time within which it can grant extensions under section 74 supra; and (b) the
Board can grant infinite and unlimited extension under section 74 ibid; to obliterate the
vested rights that stand created in favour of the taxpayer on account of such lapse of
time. In this respect, the judgment reported as Federal Land Commission through
Chairman v. Rais Habib Ahmed and others (PLD 2011 SC 842) is relevant in which
this Court, while relying upon the settled principles of past and closed transaction and
reasonable time, stipulated that a period of six months was the reasonable time for the
purposes of exercise of power by the Federal Government under section 25 of the Land
Reforms Act, 1977. Thus we are of the opinion that while undoubtedly the Board has
the power under section 74 supra to extend the time limit and permit an order under
section 36 supra to be passed within such time or period as it may consider appropriate,
such power must be exercised within a reasonable time period of six months from the
date when the time period provided in the first proviso to section 36(3) supra and the
extension granted thereunder have lapsed, and such power can only be exercised (by
the Board under section 74 supra) to grant an extension of not more than a reasonable
time period of six months.

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 11/15
11/28/23, 12:37 PM 2017 S C M R 1427

13. In view of the findings given hereinabove, it is appropriate to consider the relevant
facts of each case which are tabulated below:-

Civil Date of Date of Limitation Observations

Appeal show cause order in period
No. notice original
682/2008 06.04.1998 No order 90 days Beyond time
passed as
yet.
683/2008 22.06.2000 24.02.2004 45 days Beyond time
684/2008 19.06.2000 30.10.2000 45 days Beyond time
131/2011 06.04.2002 31.07.2002 45 days Beyond time
233/2011 31.05.2004 02.01.2006 90 days Beyond time
253/2011 21.11.2001 20.08.2003 45 days Beyond time
504/2011 23.04.2005 28.03.2006 90 days Beyond time
219/2011 09.09.2004 30.04.2005 90 days Beyond time
220/2011 17.05.2002 28.10.2002 45 days Beyond time
678/2012 07.11.2001 23.07.2003 45 days Beyond time
679/2012 11.12.2006 23.10.2008 90 days Beyond time
680/2012 27.11.2001 08.05.2002 45 days Beyond time
681/2012 19.07.2001 18.10.2001 45 days Beyond time
682/2012 20.03.2006 30.12.2006 90 days Beyond time
683/2012 12.02.2002 30.05.2002 45 days Beyond time
783/2012 15.11.2007 20.09.2008 90 days Beyond time
729/2012 09.08.2003 31.03.2005 90 days Beyond time
730/2012 19.02.2009 13.10.2009 120 days Beyond time
731/2012 09.08.2003 24.11.2004 90 days Beyond time
732/2012 06.11.2006 14.12.2007 90 days Within time
(extension granted by
the Board)
389/2013 04.03.2002 30.11.2005 45 days Beyond time
390/2013 12.04.2001 17.08.2001 45 days Beyond time
391/2013 19.05.1999 17.06.2004 45 days Beyond time
392/2013 10.11.2004 12.10.2005 90 days Beyond time
393/2013 12.12.2002 11.11.2004 45 days Beyond time
394/2013 17.10.2008 12.02.2009 120 days Within time
395/2013 22.10.2007 28.02.2008 90 days Beyond time
396/2013 13.03.2004 18.05.2005 90 days Beyond time
397/2013 10.03.2004 10.06.2005 90 days Beyond time
398/2013 28.06.2003 20.03.2004 90 days Beyond time
399/2013 21.09.1998 19.06.1999 No Before insertion of
limitation proviso
period
400/2013 07.05.2005 06.10.2005 90 days Beyond time
401/2013 21.05.2005 21.10.2005 90 days Beyond time
710/2013 28.11.2007 30.12.2008 90 days Beyond time

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 12/15
11/28/23, 12:37 PM 2017 S C M R 1427

711/2013 22.04.2005 26.12.2006 90 days Beyond time

712/2013 28.05.2007 12.09.2008 90 days Within time
(extension granted by
the Board)
713/2013 17.12.2004 16.05.2005 90 days Beyond time
1632/2014 09.08.2003 06.04.2004 90 days Beyond time
565/2015 16.05.2003 12.06.2004 45 days Beyond time
1424/2016 15.05.2012 05.10.2012 120 days Beyond time
1425/2016 14.03.2012 04.10.2012 120 days Beyond time
2470/2016 14.12.2012 19.04.2013 120 days Beyond time

14. While dictating the judgment, it came to our attention that in Civil Appeal
No.394/2013, the show cause notice was issued on 17.10.2008 while the order was
passed on 12.02.2009 which was within the limitation period of 120 days. In Civil
Appeal No.399/2013, the show cause notice was issued on 21.09.1998 and the order
was passed on 19.06.1999 therefore the matter pertained to the time period when the
proviso containing the limitation period was not yet inserted into the Act hence, such
limitation period did not apply thereto. In Civil Appeal No.712/2013, the show cause
notice was issued on 28.05.2007 and the order was passed on 09.09.2008. However
there are letters of the Board on record suggesting that the time period was extended up
till 30.09.2008 under the second proviso to section 45(1) read with section 74 of the
Act. Thus the order was passed within time. Similarly, in Civil Appeal No.732/2012,
the show cause notice was issued on 06.11.2006 and the order was passed on
14.12.2007, whereas there is a letter of the Board on record indicating that the time
period was extended up till 31.12.2007 under the provisions ibid hence the order was
passed within time. Therefore these four noted appeals are separated from the rest of
the cases and the office is directed to fix them for re-hearing.

15. In the remaining appeals, all the orders of the officers were time barred as they
were passed beyond the time period provided in the respective law existing at the
relevant point in time and there is no material on the record in any of the cases
suggesting that time was extended [under the second part of the first proviso to section
36(3) of the Act or section 74 thereof] for passing an order under section 36 of the Act
or that there was any stay order or adjournment granted on the request of the assessee
[under second proviso to section 36(3) of the Act] warranting exclusion of a period of
30 days from the limitation period in the first proviso, therefore, Civil Appeals Nos.682
to 684 of 2008, 131, 233, 253, 504, 219 and 220 of 2011, 678 to 683, 783 and 729 to
731 of 2012, 389 to 393 and 395 to 398, 400, 401, 710, 711 and 713 of 2013, 1632 of
2014, 565 of 2015 and 1424 to 1425 and 2470 of 2016 are dismissed.

16. The above are the detailed reasons for our short order of even date which reads as
under:-

"For the reasons to be recorded later and without in any manner limiting our
jurisdiction to appropriately enlarge the scope of the detailed judgment, we
hold that the provisions of section 11 and the erstwhile section 36 of the Sales

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 13/15
11/28/23, 12:37 PM 2017 S C M R 1427

Tax Act, 1990 (the Act) are mandatory in nature. The Collector/Commissioner
has the power to extend the time within which an order under either of the
Sections supra is to be passed; besides, such time can also be extended in a
particular case or class of cases by the Federal Board of Revenue (or the
Commissioner if empowered by the said Board) as per the provisions of section
74 of the Act. In the light of the above, all these petitions (except Civil Appeals
Nos.733/2010 and 1507/2006) are dismissed on the above question of law.

C. As.733/2010 AND 1507/2016

Due to their peculiar facts, these cases are separated from the aforementioned
cases and are to be relisted."

MWA/C-9/SC Order accordingly.

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 14/15
11/28/23, 12:37 PM 2017 S C M R 1427

https://www.pakistanlawsite.com/Login/PrintCaseLaw?caseName=2017S848 15/15