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Business Recorder
9 hours ago
- Politics
- Business Recorder
Ruling coalition given two-thirds majority as ECP notifies reserved seats
In a significant realignment of parliamentary power, the ruling coalition, largely comprising the Pakistan Muslim League-Nawaz (PML-N) and Pakistan Peoples Party (PPP), secured a two-thirds majority in the National Assembly on Wednesday after the Election Commission of Pakistan (ECP) redistributed reserved seats following a Supreme Court verdict. The Constitutional Bench of the Supreme Court overturned an earlier July 2024 ruling that had granted reserved seats to the Pakistan Tehreek-e-Insaf (PTI), stripping the party of its eligibility to hold them. As a result, PTI ceased to be recognised as a parliamentary party. Reserved seats: ECP says majority judgement premised on 'erroneous conclusion' Responding to the court's majority decision, passed by a seven-judge bench, the ECP withdrew its previous notifications from July 2024 that had marked PTI-backed candidates as returned members of the National Assembly and various provincial legislatures. It then issued new notifications reallocating reserved seats among the PML-N, PPP, and JUI-F. National Assembly composition recast With the allocation of 13 additional reserved seats to the PML-N, 4 to the PPP, the ruling coalition now holds 235 seats in the 336-member house, well above the 224 required for a two-thirds majority. The opposition commands 98 seats, with JUI-F getting two seats, while one seat remains suspended,d and two reserved seats are currently vacant. Provincial shifts The ECP also reallocated reserved seats in the provincial assemblies: Khyber Pakhtunkhwa Assembly: 10 seats to JUI-F, 7 to PML-N, 6 to PPP, and 1 each to PTI-Parliamentarians and Awami National Party (ANP). Punjab Assembly: 23 to PML-N, 2 to PPP, and 1 each to PML-Q and Istehkam-i-Pakistan Party (IPP). Sindh Assembly: 2 reserved seats to PPP and 1 to MQM-P. PHC bars elected MPAs on reserved seats from taking oath Legal background The case stemmed from a March 2024 ruling by the Peshawar High Court, which barred the Sunni Ittehad Council, joined by PTI-backed independents after the February 8 elections, from claiming reserved seats. While Justices Ayesha Malik and Aqeel Ahmed Abbasi initially rejected review petitions filed by the PML-N, PPP, and ECP, they were later removed from the Constitutional Bench. Meanwhile, Justice Jamal Khan Mandokhail dissented, maintaining PTI's claim to 39 seats and urging reallocation to include the party. A previous majority judgment had required independent candidates to clarify their political affiliations through notarised statements, leading to provisional recognition of some as PTI members. However, in the final review, Justices Muhammad Ali Mazhar and Syed Hasan Azhar Rizvi revised their earlier positions and supported the review petitions. They directed the ECP to re-examine the nomination papers and affiliation declarations of all 80 returned candidates and issue decisions on the eligibility of reserved seats within 15 days. The reallocation of these seats has reshaped legislative dynamics at the federal and provincial levels, marking a dramatic shift in parliamentary representation just months after the general elections.
Business Recorder
24-06-2025
- Business
- Business Recorder
Sec 37A of STA: SC spells out conditions for initiating criminal proceedings
ISLAMABAD: The Supreme Court held that without investigative audit or issuance of show cause notice or providing opportunity to explain the matters, under Section 37A of the Sales Tax Act, 1990, registration of FIR, initiation of criminal proceeding and arrest of registered person is without jurisdiction and lawful authority. The 61-page judgment, authored by Justice Aqeel Ahmed Abbasi, further held that criminal prosecution follows adjudication and assessment of tax under Section 11 of the Act; therefore, pre-trial steps including arrest and detention cannot be given effect to unless the tax liability of the taxpayer is determined in accordance with law. A three-judge bench, headed by Justice Shahid Waheed and comprising Justice Irfan Saadat Khan, and Justice Aqeel upheld the Lahore High Court (LHC) verdict dated 19.09.2013, and through consolidated judgment uploaded on the Supreme Court's website decided all the listed matters as they involve common questions of law. The criminal prosecution was initiated under Sections 37A and 37B of the Sales Tax Act, 1990 for the alleged offence of tax fraud, issuance of fake sales tax invoices to claim inadmissible input adjustment/ refund of sales tax. The SC judgment said perusal of the provisions of Section 33 of the Act reveals that criminal penalties are linked with the 'tax loss' or 'amount of tax involved and tax due'. Therefore, instead of providing for imprisonment or fine (ordinarily a certain sum of money) or both as punishment, the 'fine' under the Act requires the taxpayer to pay the 'tax loss' or 'amount of tax involved and tax due,' thereby indirectly criminalising, the recovery of 'tax due.' Careful review of the penalties as provided, clearly shows that the measure of sentence is linked with the 'amount or loss of tax involved and tax due', and prima facie, cannot be imposed unless there is some determination or duly assessed tax liability of sales tax due through the processes of assessment for adjudication as per law. In fact, the linkage uses the tool of imposition of penalty as a mode of recovery of tax. Hence, criminalisation under the Act goes beyond the pale of retribution and deterrence and appears to be principally focused on recovery of tax. The said linkage between 'fine' and the 'amount of tax due' is missing. If we may examine the criminal provisions under the other tax laws; i.e., Income Tax Ordinance, 2001, in Part XI of Chapter X of the said Ordinance, it provides for criminal prosecution under Sections 191 to 200, which simply provide for imposition of 'fine' but does not link it with the 'tax loss or amount of tax' (except for compounding the offence under Section 202). In the case of Federal Excise Act, 2005, such a linkage is visible; however, it has been pointed out that no criminal proceedings can be initiated under the said law without prior assessment of tax. It reflects upon the clear intent of the legislature that primarily tax liability is a civil liability to be determined through process of assessment or adjudication as per law, whereas, in case of wilful default, miscalculation, concealment or fraud penal provisions can be invoked to ensure tax compliance, recovery of tax and payment of additional amount of tax and/ or penalty. It; therefore, appears that criminalisation under the Act while invoking the provisions of Section 37A, without recourse to the assessment proceedings, is being treated differently as compared with other tax laws, which is not only against the scope and application of taxing provisions of the Act but also, violates the settled principles of fairness and fair trial as guaranteed under Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973. 'Imposition of additional tax, default surcharge, penalty or fine; etc., depends upon peculiar facts of each case whereas, such penal provisions are only attracted once the Revenue Authorities can establish that the default in payment of tax was wilful and there was element of mens-rea on the part of tax payer, while not making payment of such amount of tax due.' The judgment noted, in all the cases, the criminal proceedings and registration of FIRs are mainly based on the allegations of tax fraud by the registered persons while preparing fake sales tax invoices to claim false input adjustment/ refund of the amount of sales tax. 'Even if we assume that the Special Judge convicts the taxpayer, he cannot award the sentence, as 'fine' is dependent on the 'amount or loss of tax involved' and it is not within the competence or jurisdiction of the Special Judge to assess tax or determine the 'amount or loss of tax involved' which is not part of the offence but of the sentence. Further, the facility of compoundability under Section 37 (A) (4) is not available to the taxpayer, unless the amount of tax due and penalties as determined under the Act.' The judgment said if the provisions of Section 37A are allowed to be invoked independently without any reference to the other relevant provisions of Sales Tax Act, 1990 including Section 2 (37) 'tax fraud', Section 3 'Scope of Tax', Section 11 'Assessment of tax' and Section 33 'Offences and Penalties', the same will be in violation of the substantial provisions relating to Charge of Sales tax and Assessment of Sales Tax, as it will give unbridled powers to officials of sales tax to initiate criminal prosecution against a registered person or any person within the supply chain, including registration of FIR and arrest, even without creating a lawful demand under the law. If such an interpretation is made in respect of provisions of Section 37A the same will make the provisions of the Act as redundant, whereas, redundancy cannot be attributed to legislation. It noted that under the Sales Tax Act there is no provision of law which authorises the tax officials to presume any tax liability in the absence of assessment proceedings, and to proceed against a registered person or any person within the supply chain. The judgment also stated that the perusal of the provisions of Section 37A of the Act shows that unless these provisions are read in harmony with other corresponding provisions of the Act, and invoked as per scheme of the law after assessment/ adjudication of the amount of sales tax due, it can be abused by initiating criminal proceedings, including arrest of a registered person, on the mere allegation of tax fraud and default in payment of presumed tax liability which is yet to be determined through process of assessment or adjudication. Such interpretation of the provisions of Section 37A would bring uncertainty of taxation, which is against the very spirit and purpose of imposition of any tax. However, before invoking such provisions or adopting coercive measures for the recovery of the amount of tax due, the determination of tax liability through process of assessment or adjudication has to precede before initiating criminal proceedings, which otherwise depend upon wilful default, mens-rea and commission of an offence of tax fraud with an intent to cause loss of tax involved or due. The judgment observed; 'Admittedly in all the cases, without determination of sales tax liability and the amount of tax allegedly evaded or short paid, through process of assessment/ adjudication, recourse to initiation of criminal proceedings on the allegation of tax fraud, including registration of FIR and arrest of a registered person or any person within the supply chain, amounts to, pre-empting the assessment of tax liability, whereas, in the absence of lawful demand of Sales tax pursuant to assessment of tax due, the penal provisions including Section 33 read with Sections 37A and 37B cannot be invoked. Therefore, the penal provisions including registration of FIR and arrest of any person on the above allegations is without jurisdiction and lawful authority. It is settled principle of interpretation of taxing statute that any provision of statute cannot be read in isolation, particularly, when it is dependent upon or complimentary to other provision of the law. In case of any ambiguity or overlapping of the provisions of law, harmonious construction is to be made, so that such provision of law may not render the other provisions as redundant or nugatory. Copyright Business Recorder, 2025
Business Recorder
14-06-2025
- Politics
- Business Recorder
SC highlights defects in Sindh Co-operative Societies Act
ISLAMABAD: The Supreme Court highlighted defects in Sindh Co-operative Societies Act, 2020, and called for correction/ amendment by the Sindh provincial legislatures for appropriate rectification. The Sindh Co-operative Societies Act, 2020, which by virtue of Section 119 of the Act, repealed the Cooperative Societies Act, 1925, enacted to consolidate and amend the law relating to cooperative societies in the Province of Sindh to facilitate the formation and working of co-operative societies for the promotion of thrift, self-help, and mutual aid among agriculturists and other persons with common economic needs, so as to bring about better living, better business, and better methods of production. The judgment of two-judge bench, comprising Justice Muhammad Ali Mazhar and Justice Aqeel Ahmed Abbasi, which heard civil petition against the Sindh High Court (SHC) regarding immovable property dispute, noted that instead of providing right of appeal to the High Court in the Act, which is a substantive right, it is provided in the Rules. Furthermore, the nature/ categories of disputes required to be resolved or decided by the Special Court for Cooperatives are also provided in the Rules rather than being defined in the Act with a specific provision to deal with civil disputes, just as offences are properly described in the Act itself without any ambiguity. It stated; Some corrections in the nomenclature of the Act are also required in Section 104 of the Act, which articulates: '(1) No Court other than the Special Court for Cooperative Societies established under section 121 shall try offences under this Chapter and disputes referred to in section 78'. The judgment further noted; 'The Act ends at Section 119 and there is no Section 121 in the Act. While Section 78 is germane to transfer of property which cannot be sold, and the execution of an order sought to be executed under Sections 81 and 82.' The judgment said perhaps due to misprinting or inadvertence, instead of Sections 73 and 117, the wrong taxonomies of sections of the Act are printed, which is causing confusion and is open to correction/ amendment by the provincial legislatures/ government of Sindh for appropriate rectification. Copyright Business Recorder, 2025
Business Recorder
31-05-2025
- Business
- Business Recorder
SC suspends IHC order relating to enforcement of ICC London foreign arbitral awards
ISLAMABAD: The Supreme Court suspended the Islamabad High Court (IHC) order relating to enforcement of International Chamber of Commerce (ICC) London foreign arbitral awards. A two-judge bench comprising Justice Syed Mansoor Ali Shah and Justice Aqeel Ahmed Abbasi heard the appeals of Frontier Holdings Limited (petitioner) against an interim order of a division bench of the IHC. The apex court written order stated that the interim order of the IHC Division Bench shall remain suspended until the next date of hearing. The said appeals shall be listed before a three-member bench after a fortnight. The bench while issuing notice to the respondents (Petroleum Exploration Pvt Limited) ordered that the interim restraining order passed by the single judge of IHC shall remain in field and continue to operate. The case minutiae are that the dispute between the parties was referred for arbitration under the auspices of the ICC, London. Upon conclusion of the proceedings, a partial foreign arbitral award was rendered on 12.12.2024, and subsequently, a separate award on costs was issued on 31.03.2025. The awards were filed before the IHC for enforcement under the Recognition and Enforcement (Arbitration, Agreements and Foreign Arbitral Awards) Act, 2011 (Act). SC explains how a foreign arbitral award can be refused by local courts The single judge of the IHC while admitting the enforcement petition, issued interim relief vide order dated 24.04.2025, restraining the respondents from assigning, transferring, or alienating their working interest in Badin Fields and from creating any charge, lien, or encumbrance thereon. This interim order was subsequently challenged before a Division Bench in an intra-court appeal (ICA), which vide impugned order dated 19.05.2025, suspended the interim relief granted by the single judge. It is contended that the interim relief was granted in aid of enforcement under the Act and did not amount to final relief. Courts are empowered to pass interim measures to protect the integrity and efficacy of the enforcement process. Denial of such protection would defeat the very purpose of the Act and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 ('Convention'). Reliance was placed on Taisei Corporation and another v. AM Construction Company (Pvt) Ltd (2024 SCMR 640), Orient Power Company (Pvt) Ltd, Lahore v. Sui Northern Gas Pipelines Ltd. (2021 SCMR 1728), Government of India v. Vedanta Limited and Ors (AIR 2020 SC 4550), and Zeiler v. Deitsch (500 F.3d 157 (2007)) which affirm that courts must maintain a pro-enforcement bias while dealing with foreign arbitral awards. It was further argued that the IHC Division Bench interfered at the interim stage without recording or satisfying any of the limited grounds of non enforcement under Article V of the Convention, as incorporated into the Act. Such premature judicial interference sends an adverse signal to the international community, undermines arbitral sanctity, erodes investor confidence, and undermines Pakistan's international obligations. A stable and enforcement-friendly legal environment is vital for encouraging foreign direct investment. It is further submitted with respect that the impugned order passed by the Division Bench, whereby the interim relief granted to the petitioners was suspended, has effectively obstructed the enforcement of the foreign arbitral award and is therefore inconsistent with the pro-enforcement mandate of the Act, the Convention, and the settled jurisprudence of this Court. Foreign arbitral awards are not to be treated as ordinary civil decrees; rather, they possess a binding character under international law, to which Pakistan has expressly committed itself. It is also contended that the ICA before the Division Bench was not maintainable. Orders passed therein are not amenable to an ICA appeal under Section 3(2) of the Law Reforms Ordinance, 1972. It is well settled that ICAs do not lie from orders passed under special laws that contain a self-contained appellate mechanism and do not expressly provide for such appeals. Copyright Business Recorder, 2025
Business Recorder
29-05-2025
- Politics
- Business Recorder
Disputes involving kids: Mediation offers a mutually beneficial solution: SC
ISLAMABAD: The Supreme Court has ruled that in matters involving children, such as custody, guardianship, and family disputes, the courts must recognise that a strictly adversarial approach often exacerbates conflict, delays resolution, and undermines the child's sense of stability and security. 'In contrast, Alternative Dispute Resolution (ADR), particularly mediation, offers a more collaborative, efficient, and child-sensitive mechanism for resolving such dispute. While the CRC does not explicitly reference the term ADR, its spirit and structure clearly support its use,' said a two-judge bench comprising Justice Syed Mansoor Ali Shah and Justice Aqeel Ahmed Abbasi's verdict in children custody case. The bench gave children custody to their mother. The bench directed that all courts, particularly Family Courts and judges of the District Judiciary that 'the voice of the child must be heard and respected in every custody and guardianship matter'. The 12-page judgment, authored by Justice Mansoor, said that properly designed ADR mechanisms reduce the psychological burden on children, promote parental cooperation, and lead to faster, more sustainable outcomes that support the child's long-term welfare. Accordingly, Family Courts and Guardianship Tribunals must prioritise mediation as a first recourse, particularly where parties demonstrate a willingness to engage in good faith. Adjudication should be pursued only when mediation fails or is deemed unsuitable due to concerns of safety, coercion, or imbalance of power. It said that the principles enshrined in Articles 3 and 12 of the CRC, the primacy of the child's best interests and the right to be heard find clear constitutional resonance in Articles 9, 14, 25 and 34 of the Constitution. Article 9 guarantees the right to life, which includes the right to a healthy, secure, and meaningful life. Article 14 protects the inherent dignity of every person, including children. Article 25 enshrines equality before the law and nondiscrimination, and Article 34 obligates the State to ensure the protection of motherhood and childhood. It noted that collectively, these provisions establish a strong constitutional foundation for child justice and child-centered adjudication, aligning Pakistan's constitutional values with its international obligations under the CRC and other international instruments it has ratified16. The Constitution further reinforces these obligations. Article 25(3) empowers the State to enact special provisions for the protection of children, including measures that may favorably differentiate them from adults. The judgment underscored that courts are bound to approach all matters involving children through the lens of a dedicated child-centered and child justice framework, a judicial philosophy grounded in both legal and moral obligations to safeguard, nurture, and empower children within the justice system. The concept of child justice is broad and inclusive. It encompasses not only children in conflict with the law, who require rehabilitative and restorative processes rather than punitive sanctions, but also children in contact with the law, including those involved in custody and guardianship disputes and other civil proceedings who must be treated with dignity, heard, protected, and empowered throughout judicial proceedings. As custodians of justice, courts bear a heightened responsibility to prioritise the best interests of the child in all decisions affecting them. This principle, central to international child rights jurisprudence, demands that the judiciary transcend procedural formalism and engage substantively with each child's unique vulnerabilities, developmental needs, and future potential. Such an approach requires judicial sensitivity, active participation of children in proceedings (where appropriate), and the creation of child-sensitive courtroom environments that respect their dignity and ensure their voices are not only heard but meaningfully considered. Copyright Business Recorder, 2025
