Harris Hassan Syed Vs Commissioner Inland Revenue etc

Stereo.HCJDA.38

JUDGMENT SHEET

IN THE LAHORE HIGH COURT

LAHORE

JUDICIAL DEPARTMENT

ITR No.21137/2025

Harris Hasan Syed Vs. The Commissioner Inland Revenue etc.

Date of hearing 29-09-2025 M/s Barrister Saffi-ul-Hassan, Muhammad Ajmal Khan, M. Mansha Sukhera, Omer Applicants by Wahab, Rana Usman and M. Zafar Iqbal Mian, Advocates.

M/s Shahid Sarwar Chahil, Kausar Parveen Respondents by and Rana Waqas Habib Khan, Advocates.

ABID AZIZ SHEIKH, J.. This Reference

Application has been filed under Section 133 of the Income Tax Ordinance, 2001 (Ordinance) against order dated 28.2.2025 (impugned order) passed by Commissioner Inland Revenue (Appeals) (Commissioner (Appeals).

2.Learned counsel for the applicant assesse submits that after the omission of section 126A of the Ordinance through the Finance Act, 2025 (Finance Act, 2025), this Reference Application is now required to be transmitted to the Appellate Tribunal Inland Revenue (Tribunal) for adjudication and cannot be decided by this Court. Submits that this question has already been decided by Division Bench (Multan) of this Court in “Commissioner Inland Revenue vs. M/s Darya Khan

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Sugar Mills Limited” ITR No.79/2024 vide order dated 10.9.2025 and “Ibrar Iqbal vs. Commissioner (Appeals- Sahiwal) Inland Revenue etc” ITR No.28/2025 vide order dated 15.9.2025. Further submits that amendment being procedural will apply to pending matters and in case, the matter is not transmitted to the Tribunal for decision, the applicant will be deprived of one forum of adjudication. Adds that after amendment through Finance Act, 2025, the questions of fact cannot be examined by this Court unlike Tribunal. Finally submits that in case of “Commissioner Inland Revenue vs. M/s Darya Khan Sugar Mills Limited supra”, it was the department’s own stance to transmit the cases to the Tribunal, hence respondents are estopped by its own conduct. Submits that being no adjudication took place on merit, court fee was also returned by learned Division Bench of this Court.

3.Learned counsel for the respondent department when confronted submits that as the department already took the stance in case of M/s Darya Khan Sugar Mills Limited supra, therefore, he accept the plea of the applicant being plausible.

4.Arguments heard. The relevant legislation on issue in hand shows that prior to 03.5.2024, the Reference Application could be filed before this Court under Section 133

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of the Ordinance only against the order of the Tribunal.

However, the said section 133 of the Ordinance was amended through Tax Laws (Amendment) Act, 2024 dated 03.5.2024 (Amendment Act of 2024) and Section 126A was introduced in the Ordinance under which, a person or Officer of Inland Revenue, aggrieved by an order of Commissioner (Appeals) or Tribunal could file Reference Application before this Court under section 133(1) of the Ordinance. However, through Finance Act, 2025 (Amended on 27.6.2025), Section 133 of the Ordinance has been amended and Section 126A of the Ordinance is omitted and Section 133 of the Ordinance has been restored to its original position before 03.5.2024.

5.Now the moot question is that whether the pending reference applications filed after 03.5.2024 under Section 133 of the Ordinance, against the orders of Commissioner (Appeals) are to be transmitted to the Tribunal for adjudication or same are to be decided by this Court. This legal question has already been decided by Division Bench of this Court in M/s Darya Khan Sugar Mills Limited supra. The operative part of the said order is reproduced hereunder:-

“The contention raised by learned counsel for the applicant-department is fortified by the legal position that Section 126A of the Ordinance has been omitted and consequential amendments have been made in Section 133 thereof, restoring the original position on the subject. As a result, the

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impugned order dated 03.10.2024 passed by the CIR-Appeals is to be assailed before the Tribunal and not before this Court under Section 133 of the Ordinance”.

6.It is observed that the amendments introduced in Section 133 of the Ordinance via the Amendment Act of 2024 and the Finance Act, 2025 are procedural in nature and do not define or alter substantive rights or liabilities of the parties.

These amendments pertain solely to the forum and mechanism available for adjudication, thereby falling within the realm of procedural law. It is a well-established principle of statutory interpretation that procedural laws operate retrospectively unless expressly stated otherwise. The rationale underlying this principle is that no party has a vested right in procedural mechanisms. As held in various precedents, where a legislative change merely affects the procedure or remedies and does not abridge substantive rights, it is applicable to all pending and future proceedings. In the present case, the amendment to Section 133 of the Ordinance by the Finance Act, 2025 does not curtail any vested rights of the litigants. Rather, it provides an additional forum of adjudication namely, the Appellate Tribunal for appeals arising from orders of the Commissioner (Appeals). This procedural augmentation enhances access to justice without affecting any existing rights or remedies. To the

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contrary, not applying such amendments to pending matters would deprive parties, including both taxpayers and the tax authorities of an independent forum of fact-finding and adjudication, thereby frustrating the very purpose of the amendment.

7.In light of the foregoing, it is manifest that the amendments introduced by the Finance Act, 2025 to Section 133 are procedural and hence applicable to all pending proceedings. They do not infringe upon any substantive or vested rights of the parties and, in fact, advance the legislative intent of ensuring a fair, just, and efficient adjudicatory mechanism. The application of these amendments to pending cases aligns with both jurisprudential principles and constitutional safeguards. In this regard, the Supreme Court of Pakistan has consistently held that a distinction must be drawn between substantive and procedural law. While substantive law establishes rights, duties, and liabilities, procedural law concerns the manner and forum in which those rights are enforced. ubi jus ibi remedium, where there is a right, there is a remedy and the route to remedy is procedural. Therefore, amendments that merely modify the forum of appeal or procedure for redressal, and do not extinguish or curtail any vested or accrued rights, are not caught within the prohibition

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against retrospective operation. As no party has an inalienable right to a particular forum, such changes are generally presumed to apply to pending proceedings and “forum non conveniens” considerations do not override legislative intent in procedural changes.

8.Indeed the amendment through Finance Act, 2025 will not affect those reference applications, which are already decided by this Court against the orders of Commissioner (Appeals) or appeals are decided by Tribunal directly against the orders for amendment of assessment orders, as same will be governed by the well-established doctrine of past and closed transaction. Reliance in this regard is placed on The Commissioner Inland Revenue etc vs. Mekotex (Pvt.) Limited etc (PLD 2024 SC 1168), Defence Housing Authority vs. The Federal Board of Revenue etc (2025 PTD 530) and Service Global Footwear Limited etc vs. Federation of Pakistan etc

(2024 PTD 1271).

9.The above distinction between substantive and procedural law has been repeatedly elaborated and settled by Supreme Court and High Courts in following case law:-

i)In case of Muslim Commercial Bank Limited vs. Punjab Labour Appellate Tribunal through Chairman,

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Lahore etc (2025 SCMR 303), Hon’ble Supreme Court held as under:-

“The law can be categorized as either substantive or procedural. Substantive law defines rights, while procedural law deals primarily with the process or remedies involved. Procedure is merely a machinery, a means to an end, and its object is to facilitate, not obstruct, the administration of justice. In fact, procedural laws are meant to set the rules for the judicial system, outlining how the business of the court should function to protect the rights of individuals within the credible and sound justice system. The purpose is to safeguard and uphold the due process of law and ensure a fair trial in both civil and criminal proceedings. In tandem, the mere change in the forum of appeal does not prejudice a vested right of appeal provided by any special or general law....

The outcome of legislation or changes in law that pertain solely to the procedures or legal remedies indicates that if legislation is enacted with the primary intent to alter or modify procedural aspects without prejudicing the rights of the litigants, then no doubt, it will apply to all pending and future actions. Individuals do not possess a vested right in any particular course of procedure, so for all intents and purposes, the change in the law of procedure operates retrospectively. However, laws affecting, curtailing or prejudicing vested rights shall be applied prospectively....”

ii)In case of Commissioner of Income Tax vs.

Messrs Café Student Karachi and others (2016 PTD 1072), Sindh High Court observed as follows:- “The legal issue relating to application of amendment introduced in Fiscal Laws, through Finance Act, 1994, either prospectively or retrospectively, stands settled by various decisions of this Court as well as of the Hon'ble Supreme Court, according to which, an amendment

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introduced in law through Finance Act shall apply prospectively in the year in which it has been inserted unless such retrospective effect has been given by the legislature. Similarly, it has also been settled through various pronouncements of this Court as well as of the Hon'ble Supreme Court that unless and until any amendment introduced by Finance Act creating any charge or additional burden upon a taxpayer is given retrospective effect by express words by the legislature, it cannot be applied retrospectively to the disadvantage of the taxpayer”

iii)In case of Commissioner Inland Revenue vs.

Messrs Ghausia Builders (Pvt.) Ltd (2015 PTD 772), this Court followed the same approach in following terms:- “The proper approach of interpretation to determine whether an amendment has retrospective effect is not by looking at the "Label" applied to such amendment i.e. procedural or substantive, but to see whether the amendment in statute if applied retrospectively would impair existing vested rights including rights protected by substantive provision of law. If a law destroys existing rights and even places any restriction on it, no retrospective effect would be given to it unless the statute is expressly enacted to that effect”.

iv)In case of Messrs A.G.E. Industries (Pvt.)

Ltd vs. IAC of Income Tax (2010 PTD 1850), Peshawar High Court reiterated the same legal position as under:- “The procedural law, if altered and that too for the benefit of the assessee then in such a case, the amendment would be retrospective and applicable to cases, which are pending before a forum prescribed by law. We are fortified in our views on this issue by the judgments of the superior Courts in particular Army Welfare

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Sugar Mills Ltd. v. Federation of Pakistan (1992 SCMR 1652) and Commissioner of Income Tax v. Shah Nawaz Ltd. (1993 SCMR 73), M/s.

Dreamland Cinema v. Commissioner of Income Tax Lahore (PLD 77 Lah. 292), Commissioner of Income Tax v. J.D. Sugar Mills (2009 PTD

The same view was also expressed in

Commissioner of Income Tax vs. Messrs Eli Lilly Pakistan (Pvt.) Ltd (2009 PTD 1392). In addition to above legal position, it is also settled law that remedial and beneficial legislation in favour of tax payers are to be construed liberally and in several instances can be given retrospective effect.

Reliance in this regard is placed on Commissioner of Income Tax vs. Shahnawaz Limited and others (1993 SCMR 73).

10.We have also noted that being no adjudication took place on merit, the Division Bench of this Court in case of Ibrar Iqbal supra, returned the court fee, while placing reliance on order of this Court dated 05.3.2025 in ITR No.119/2024.

Therefore, the applicant is also entitled for the return of court fee in same terms, however, requisite court fee shall be paid before the Tribunal.

11.In view of above discussion, we direct the Office to transmit the present Reference Application alongwith its annexures to the Tribunal, to be treated as an appeal against the order of Commissioner (Appeals), for decision in accordance

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with law. The court fee shall be returned by office in accordance with rules/law. The matter stands disposed of.

(MALIK JAVID IQBAL WAINS) (ABID AZIZ SHEIKH)

JUDGE. JUDGE.

Approved for Reporting.

JUDGE. JUDGE.

Rizwan