This consolidated judgment shall decide the instant intra-court appeal as well as I.C.A. Nos.1090 and 1091 of 2013, I.C.A.Nos.08, 31, 32 and 33 of 2014, I.C.A.Nos.1379,

1380, 103865 of 2017 and I.C.A.No.157300 of 2018, as all these matters involve common questions of law and fact.

2. Through these intra-court appeals, filed under Section 3(2) of the Law Reforms Ordinance, 1972, the appellants have challenged the vires of the impugned judgment dated 08.11.2013 passed in Writ Petition No.4927 of 2013 along with other connected writ petitions, whereby the learned Single Judge in Chambers allowed the constitutional petition filed by respondent No.1. The operative portion of the said judgment is reproduced below: -

"11. In view of the aforesaid, all these petitioners areallowedand sub clause (d) of the impugned SRO No.77(I) of 2013 dated 7.2.2013 is declared to be illegal and it is not in consonance with the decision of the ECC and is set aside."

3. At the very outset, learned counsel for the respondents raised an objection regarding the maintainability of the present intra-court appeals. It was argued that the appeals have been filed by the Commissioner Inland Revenue, who lacks the legal competence to question the judgment of the learned Single Judge, particularly when sub-clause (d) of the impugned SRO stood declared unlawful. It was further contended that the impugned SRO was issued by the Government of Pakistan through the Revenue Division in pursuance of the decision of the Economic Coordination Committee ("ECC") dated 10.01.2013. Hence, if any grievance arose from the judgment, the proper and competent authority to file an appeal would have been the Federal Government or the Revenue Division. Further pointed out that, neither the Federal Government nor the Revenue Division, including the Federal Board of Revenue ("FBR"), opted to assail the impugned judgment before this Court and on merits supported the impugned judgment.

4. In rebuttal, learned counsel for the appellants contended that sub- clause (d) of the impugned SRO was lawfully inserted by the FBR while exercising powers under sub-section (4) of Section 3 of the Federal Excise Act, 2005 ("Act, 2005"). Further submits that the Commissioner Inland Revenue, whose authority and functions are directly affected by the declaration made in the judgment, is legally competent to file these intra- court appeals as an aggrieved authority.

5. We have heard the learned counsel for the parties and perused the record with due care and attention.

6. A plain reading of the impugned judgment shows that the learned Single Judge declared sub-clause (d) of the impugned SRO No.77(I)/2013 to be unlawful and inconsistent with the decision of the ECC, and consequently, the said sub-clause was struck down. The relevant sub- clause (d) reads as under,

"(d) the benefit of this notification shall not be admissible in respect of exports by land routes to Afghanistan and Central Asian Republics"

It is important to observe that the SRO in question had been issued by the Government of Pakistan, Revenue Division, Federal Board of Revenue through Member-IR (Operations)/Additional Secretary, purportedly while exercising powers conferred under sub-section (4) of Section 3 of the Act, 2005, in implementation of the Federal Government/ECC‟s decision dated 10.01.2013.

7. From the record, it further emerges that although the impugned SRO was issued by the Revenue Division, Government of Pakistan, pursuant to the ECC‟s decision dated 10.01.2013, the insertion of sub- clause (d) therein was carried out independently by the Revenue Division/FBR, without any express direction or approval of the ECC. It is also noteworthy that neither the Federal Government/ Revenue Division nor the concerned Ministry of Commerce/Finance has opted to assail the judgment of the learned Single Judge, which circumstance indicates that both have accepted the decision and do not consider themselves aggrieved thereby.

8. To better appreciate the matter, the relevant provision defining the jurisdiction of Income Tax Authorities, as contained in Section 209 of the Income Tax Ordinance, 2001 ("Ordinance, 2001"), is reproduced below:

"209. Jurisdiction of income tax authorities.(1) Subject to this Ordinance, the [Chief Commissioners], the Commissioners and the Commissioners (Appeals) shall perform all or such functions and exercise all or such powers under this Ordinance as may be assigned to them in respect of such persons or classes of persons or such areas as the [Board] may direct"

This provision makes it abundantly clear that the jurisdiction and powers of Appellant/Commissioners IRO under the Ordinance, 2001 are both conferred and circumscribed by the Ordinance itself and exercised only upon directions of the Board. The authority of the Commissioner, therefore, is neither inherent nor general in nature, rather it is functional, delegated, and territorially/personally specific, strictly bound to matters arising under the Ordinance, 2001.

9. A plain reading of sub-section (4) of Section 3 of the Act, 2005, makes it evident that the power to levy, vary, or exempt duties of excise is vested exclusively with the Board, with the approval of the Federal Minister-in-Charge (subsequently substituted by the term "Federal Government" through the Finance Act, 2018). Such authority is exercised through the issuance of a notification in the official Gazette and is of a policy-making and fiscal in nature. The provision does not confer, either expressly or impliedly, any independent authority upon Appellant/Commissioners Inland Revenue to issue, modify, or defend such notifications. Therefore, any attempt by a Commissioner to exercise powers in relation to matters governed under Section 3(4) would fall outside his statutory jurisdiction and run contrary to the scheme and intent of the Act. Relevant provision is reproduced as follows,

"(4) Without prejudice to other provisions of this Act, the [Federal Government] may levy and collect duty on any class or classes of goods or services by notification in the official Gazette at such higher or lower rate or rates as may be specified in such notification.

10. It is pertinent to observe that the power envisaged under sub-section (4) of Section 3 of the Act, 2005, is of an executive and fiscal in nature, conferred exclusively upon the "the Board with the approval of the Federal Minister In-charge," as was the position in the relevant year, 2013. The said provision empowers the Board, not subordinate officers, through notification concerning the levy, exemption, or modification of excise duties. It is thus manifest that no policy-making authority is delegated under this provision to Commissioners Inland Revenue.

11. It is an admitted position on record that no express authorization was granted to the Commissioner Inland Revenue to challenge the judgment passed by the learned Single Judge, nor was any sanction obtained from the competent authority i.e., the Federal Government/Revenue Division or any other concerned authority for filing of the instant Intra-Court Appeals (ICAs).

12. It is a settled principle of law that the right to appeal must emanate from statute and should be exercised by a person or authority duly empowered under the law. In the present case, the judgment under challenge pertains to the setting aside of a sub-clause of an SRO issued under the Act, 2005. The issuance of such SROs falls squarely within the domain of the Revenue Division/FBR/Ministry of Finance.

13. In view of the foregoing discussion, it is evident that the Commissioner Inland Revenue, being a field formation officer, lacks the statutory competence and locus standi to challenge the judgment of the learned Single Judge, particularly where the matter concerns the vires of an SRO issued under the authority of the Revenue Division. The Commissioner‟s powers are confined to those expressly conferred under the Ordinance, 2001, and do not extend to matters of fiscal policy or the defense of SRO issued by the concerned authorities. The right of appeal being a statutory creation can only be exercised by a person or authority duly empowered by law.

14. Furthermore, neither the Federal Government/ Revenue Division nor the concerned Ministry, being the competent authorities under the law has chosen to challenge the judgment of the learned Single Judge. This inaction reflects a deliberate decision not to contest the findings rendered therein, thereby reinforcing the conclusion that no grievance has been demonstrated by the appropriate authorities against the said judgment. To allow a subordinate officer to maintain an appeal in such circumstances would, in effect, permit a person without lawful authority to override or question the considered silence of the competent policy organ of the State. Such action would not only offend the doctrine of locus standi but also undermine the administrative discipline envisaged under the Rules of Business, 1973.

15. Without prejudice to the preliminary objection regarding maintainability, and for the sake of completeness, we have also examined the merits of the impugned judgment. Upon careful scrutiny, we find no legal infirmity in the reasoning adopted by the learned Single Judge.

16. The record unequivocally reflects that the decision of the ECC dated 10.01.2013 was aimed at promoting Sugar exports and incentivizing the same through the application of a reduced duty rate of 0.5% on the quantity of local supply of sugar equivalent to the quantity actually exported by Sugar manufacturers, in accordance with the export quota allocated pursuant to the said ECC decision. This policy initiative was undertaken on the joint recommendations of the Ministry of Commerce and the Revenue Division. Furthermore, there is nothing in the summaries presented to the ECC or in its final decision to indicate any restriction or exclusion of Sugar exports via land routes to Afghanistan and the Central Asian Republics from the scope of the approved subsidy.

17. Learned counsel for the appellant has further contended that sub- clause (d) of the impugned SRO No.77(I)/2013 declared illegal by the learned Single Judge, which was introduced by the Federal Board of Revenue in pursuant to Section 7(1) of the Export Policy Order, 2009. In support of this argument, reliance was placed on SRO No.767(I)/2009, issued by the Ministry of Commerce, Government of Pakistan, dated 04.09.2009, whereby the Export Policy Order, 2009 was promulgated under Section 3(1) of the Imports and Exports (Control) Act, 1950. It is observed that Section 7(1) of the Export Policy Order, 2009 permits the export of all commodities produced or manufactured in Pakistan excluding those manufactured in manufacturing bonds and export- oriented units to Afghanistan and, through Afghanistan, to the Central Asian Republics via land route, against Pak rupees, upon filing regular shipping bills without the requirement of submitting Form „E‟. However, such exports are not entitled to:

(i) zero-rating of sales tax on taxable goods;

(ii) rebate of central excise duty; and

(iii) repayment or drawback of customs duty.

18. Further, a plain reading of sub-section (2) of Section 7, which governs exports against convertible currency, indicates that it operates independently of sub-section (1). However, when both sub-sections (1) and (2) are read conjointly, it becomes apparent that sub-section (1) specifically governs exports against Pak rupees via land routes to Afghanistan and the Central Asian Republics, while sub-section (2) regulates exports conducted in convertible currency, and in this way exporter is entitled for all benefit provided in the aforementioned sub- clause (1). Therefore, the argument advanced by learned counsel for the appellant does not carry legal weight, particularly as the impugned SRO was issued with the objective of enhancing sugar exports to earn revenue in convertible currency.

19. It is also pertinent to mentioned here that the aforementioned SRO was issued by the Federal Government through the Ministry of Commerce, which had been impleaded as a respondent in the writ petition before the learned Single Judge vide order dated 04.11.2009. However, the said Ministry chose not to challenge the vires of the judgment rendered by the learned Single Judge.

20. In the present matter, the impugned SRO was issued specifically to enhance and facilitate the export of sugar in accordance with the policy approved by the Economic Coordination Committee (ECC) of the Cabinet. Accordingly, the reliance placed by the learned counsel for the appellant on SRO No.767(I)/2009 is misplaced and legally untenable. The said notification pertains to general export regulation under the Export Policy Order, 2009, and does not conflict with the fiscal incentive framework or policy direction approved by the ECC with respect to sugar exports. Therefore, it cannot serve as a legal basis for the inclusion of clause (d) in the impugned SRO.

21. In the case at hand, the impugned SRO was issued with the specific objective of promoting and facilitating the export of Sugar in line with the policy approved by the ECC of the Cabinet. It is a well-established principle of administrative law that an executive authority cannot override, alter, or limit a policy decision taken by a superior forum, particularly when such a decision emanates from a competent authority such as the ECC. Once the ECC, in exercise of its mandate, has granted a fiscal incentive across the board to encourage Sugar exports, the Board, acting under Section 3(4) of the Act, 2005, does not possess the jurisdiction to unilaterally curtail or modify the said benefit by inserting any clause in a Statutory Regulatory Order (SRO) that is inconsistent with the spirit and objective of the ECC‟s policy decision to enhance exports.

22. Furthermore, this objection about the competency of Appellant had previously been raised during the course of proceedings before this Court. Pursuant to this Court‟s order dated 23.01.2019, time was granted to the learned Deputy Attorney General for Pakistan to obtain and submit a report on behalf of the Federal Government. In compliance, the Secretary, Finance Division, Government of Pakistan, submitted a written report affirming that the dispute in the present matter pertains exclusively to SRO No.77(I)/2013 dated 07.02.2013, issued by the Revenue Division/Federal Board of Revenue. It was further clarified that, under the Rules of Business, 1973, the Revenue Division operates as a distinct division within the Ministry of Finance, and that matters relating to revenue, tax policy, and its administration fall squarely within the domain of the Revenue Division/FBR, being the concerned quarter. Accordingly, the Secretary, Finance Division, requested that the Ministry be excluded from the array of respondents.

23. For a proper understanding, reference must be made to the procedure laid down under the Rules of Business, 1973 about the functioning of Federal Government of Pakistan. In order to determine the authority competent to defend the impugned SRO, it is necessary to consider the applicable legal framework and relevant Rules. The pertinent rules, along with the relevant sub-clauses, are reproduced below for clarity and legal reference.

Rule 2(vi) provides the definition of "Division"

(vi)"Division"means a self-contained administrative unit responsible for the conduct of business of the Federal Government in a distinct and specified sphere and declared as such by the Federal Government;

(xiv)"Ministry"means a Division or group of Divisions constituted as a Ministry;

3. Allocation of Business.--(1) The Federal Secretariat shall comprise the Ministries and Divisions shown in Schedule I.

(3) The business of government shall be distributed among the Divisions in the manner indicated in Schedule II

14A. Consultation with Revenue Division.-(1) No Division shall, without previous consultation with the Revenue Division, authorize the issue of any orders, other than orders in pursuance of any general or special delegation made by the Revenue Division, which will affect directly or indirectly the collection of revenue from federal taxes, levy of taxes, duties, cesses or fees.

SCHEDULE II [Rule 3 (3)]

DISTRIBUTION OF BUSINESS AMONG THE DIVISIONS

35. Revenue Division

1. Tax Policy.

2. Tax administration.

3. Avoidance of double Taxation Agreements with other countries.

4. Administration of Customs and Excise Group, and Income Tax Group.

5. The prosecution and defense of legal proceedings concerning the Revenue Division shall be conducted by the Revenue Division and Federal Board of Revenue.

24. In light of above Rules of Business of the Federal Government of Pakistan, it is evident that matters relating to tax policy and tax administration fall exclusively within the prerogative of the Revenue Division. Furthermore, as per sub-clause (5) of Serial No.35, the prosecution and defense of legal proceedings concerning the Revenue Division shall be undertaken by the Revenue Division itself and the Federal Board of Revenue, prima facie through Ministry of Finance and Revenue.

25. The question as to whether the Federal Board of Revenue (FBR), being an attached department of the Revenue Division, possesses the requisite legal competence or locus standi to initiate legal proceedings in its own name, as a juristic person or body corporate, is not a moot point in the present case and does not require determination at this stage. Since the instant proceedings have not been initiated by the FBR, this issue shall be considered, if necessary, in appropriate proceedings in the future.

26. In light of the foregoing statutory framework, the authority to institute and defend to any legal proceedings relating to the fiscal, administrative, or policy functions of the Revenue Division lies with the Federal Government of Pakistan, through the concerned Ministry of Finance/Revenue Division, in accordance with the Rules of Business, 1973.

27. Accordingly, the learned Single Judge in Chamber has rightly set aside the impugned sub-clause (d) inserted by the FBR, holding it inconsistent with the ECC decision and beyond the powers conferred under Section 3(4) of the Act, 2005.

28. In view of the foregoing, we hold that preliminary objection regarding the maintainability of the instant ICA as well as in connected ICAs is sustained. The appeals, having not been filed by a competent person/authority, are not maintainable in the eyes of law and are, accordingly,dismissed.