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Constitutional Petition No. D‑526 of 1985, decided on 18th January, 1987.

‑‑‑Arts. 199 & 270‑A‑‑Registration Act (XVI of 1908), S. 17 West Pakistan Finance Act (IX of 1963), S.16‑‑West Pakistan Capital Gains Tax Rules, 1964‑‑Registration of sale‑deed‑‑Conveyance deed in respect of immovable property executed by sellers (pro forma respondents) in favour of petitioners presented before Sub‑Registrar for registration‑ Sub‑Registrar, adjourning registration, directing sellers to produce a o‑objection certificate from Excise and Taxation Officer in respect of apital gains tax payable on sale of property under S.16, West Pakistan inance Act, 1963‑‑No provisions of Registration Act, 1908, West Pakistan Finance Act, 1963, and West Pakistan Capital Gains Tax Rules, 1964 as amended in Sind) existed which required production of a clearance or no‑objection certificate in respect of Capital Gains Tax by the owner before registering Authority‑‑State counsel, however, submitting that there was an order of Martial Law Administrator which required that capital gains tax wherever leviable under the Rules was to be recovered romassessees before registration of sale‑deeds‑‑Neither any Martial Law Order nor any notification in said regard placed before Court and instead copies of a summary presented to the then Martial Law Administrator and subsequent memorandum of Government addressed to Commissioners of Divisions in Sind placed on record which required that with a view to check its evasion capital gains tax wherever leviable should be recovered before registration of sale‑deeds‑‑Such executive instructions not shown to have been issued in exercise of powers derived from any Proclamation, President's Order, Martial Law Regulation, Martial Law Order, enactment, notification, rule, order or bye‑law and, therefore, protection granted by sub‑Art (2) of Art. 270‑A of Constitution was not available for seeking immunity for such instructions‑‑Such instructions, even otherwise, were not issued to replace, change or amend existing law relating to registration of conveyance deed‑‑Registering authority, held, could not refuse registration of conveyance deed on ground of non‑production of clearance or no‑objection certificate regarding payment of capital gains tax‑‑Conveyance deed presented before Sub‑Registrar directed to be registered without production of requisite certificate unless there was any other legal hurdle in registration of the said conveyance deed.

S.A.Sarwana for Petitioners.

Abdul Sattar Sheikh Addl.A.‑G for Respondents Nos. 1 to 5

Abbas Ahmad for Respondents Nos.6 to 8.

Dates of hearing: 11th, 12th and 13th November, 1986.

The petitioners contracted to purchase a property located in Frere Town Quarters, Karachi, from its owners, who have been joined as pro forma respondents Nos. 6,7, and 8 on 25‑9‑1982 for a total sale consideration of Rs.42,86,250. Out of the total consideration, an amount of Rs.12,81,532.50 was paid prior to the execution of the conveyance deed and the balance amount of Rs.30,04,718 was paid through pay orders at the time of the execution of the conveyance deed. According to the agreement between the petitioners and the sellers (pro forma respondents Nos. 6, 7 and 8) conveyance deed was drawn up, stamped and presented to Sub‑Registrar, "T" Division‑I Karachi, on 5‑9‑1983 for registration under section 17 of the Registration Act. The sellers executed the conveyance deed before the Sub‑Registrar and received the balance sale consideration of Rs.30,04,718 as observed earlier. The Sub‑Registrar, however, adjourned the registration directing the pro forma respondents to produce a no‑objection certificate from respondent No.5, the Excise and Taxation Officer, "L" Division, Karachi the assessing authority, in respect of capital gains tax payable on sale of the property under section 16 of the West Pakistan Finance Act, 1963. From a perusal of the averments made in the memo of petition, it appears that the concerned Excise and Taxation Authorities have assessed capital gains tax payable by the sellers :at Rs.23,10,000, against which assessment the sellers filed appeal and revision but the same have been dismissed and that the sellers are ready to pay the capital gains tax on the actual sale consideration as declared by them but they are not willing to pay what has been described as arbitrary capital gains tax as assessed by respondent No.5. The result, in so far as the petitioners are concerned is that the conveyance deed dated 5‑9‑1983 in their favour has not been registered and it is lying adjourned before the Sub‑Registrar. Being aggrieved by the refusal of the Sub‑Registrar to register the conveyance deed presented on 5‑9‑1983, the petitioners have filed the present constitutional petition. We have heard Mr.S.A.Sarwana, learned counsel for the petitioners, and Mr.A.Sattar Sheikh, learned Additional Advocate‑General for the official respondents Nos.l to 5. Mr. Abbas Ahmad, Advocate, appeared on behalf of pro forma respondents Nos. 6, 7 and 8 and supported the case of the petitioners.

2. The only point involved in the present constitutional petition is whether the Sub‑Registrar could refuse registration of the conveyance deed presented to him on 5‑9‑1983 on the ground that, prior to registration, no‑objection or clearance certificate from the concerned Excise and Taxation Officer about payment of capital gains tax be produced to the effect that there is no‑objection to the registration of the conveyance deed. Mr. S.A. Sarwana, learned counsel for the petitioners, referred to the provisions of the Registration Act, 1908, relevant provisions of West Pakistan Finance Act, 1963, and the West Pakistan Capital Gains Tax Rules, 1964 as amended in Sind. The contention of the learned counsel for the petitioners, after referring to the aforesaid legal provisions, was that there was no statutory provision, which required the production of a clearance or no‑objection certificate relating to capital gains tax from the Exise and Taxation Officer prior to registration of a conveyance deed. According to the learned counsel, the Sub‑Registrar, in this case therefore, could not refuse registration of the conveyance deed on the ground that clearance or no‑objection certificate of the Excise and Taxation Officer in respect of capital gains tax had not been produced by the pro forma respondents.

3. We have perused the provisions of the Registration Act, 1908, relevant provisions of the West Pakistan Finance Act, 1963, relating to levy of capital gains tax and the West Pakistan Capital Gains Tax Rules, 1964, as amended in Sind and we agree with the contention of the learned counsel for the petitioners that there is no provision in these statutes and rules requiring production of a clearance or no‑objection certificate in respect of capital gains by the owner before the registering authority. In fact the provisions of the West Pakistan Finance Act, 1963 as amended by Sind Amendments and the provisions of the West Pakistan Capital Gains Tax Rules, 1964, as amended, show that any person, who sold, exchanged or transferred the immovable property within an urban area, was required to furnish to the prescribed authority a statement giving relevant details inter alia about the parties to the transaction, location of the property and the sale consideration. The relevant provisions also provided that the Registrar or Sub‑Registrar who registers under the Registration Act, 1908, any document relating to the sale, exchange or transfer of any immovable property within an urban area, was required to furnish within 15 days of such registration a true copy of the statement submitted by the owner to the prescribed authority. According to the Capital Gains Tax Rules, 1964, as amended in Sind, every assessee (the owner of the property selling the same) was required to submit a return in the prescribed form within 15 days of the sale, exchange or transfer of the immovable property to the concerned Excise and Taxation Officer. In the prescribed return details inter alia about the parties to the sale/transfer/exchange, location of the property, consideration had to be given.

4. Mr. Shaikh A. Sattar, learned Additional Advocate‑General, could not controvert the contention raised on behalf of the petitioners that neither under the Registration Act, 1908, nor under the law and rules relating to capital gains tax, the owner was required to produce a clearance or no‑objection certificate from the Excise and Taxation Officer relating to capital gains tax or that without production of such certificate the Registrar could refuse registration. However, the learned Additional Advocate‑General submitted that there was an order of the Martial Law Administrator, Zone "C", which required that capital gains tax, wherever leviable under the Rules, was to be recovered from the assessees before the registration of the sale deeds. For that, neither any Martial Law order was produced nor any notification was placed before this Court showing that the then Martial Law Administrator, Zone "C" had passed any such order but alongwith an application (Misc. No.2774 of 1986) presented in Court on 13‑11‑1986, the learned Additional Advocate General placed on record copies of a Summary dated 18‑2‑1979 presented to the then Martial Law Administrator, Zone "C", in March, 1979, and Memo., dated 15‑3‑1979 of the Government of Sind addressed to all Commissioners of the Division in Sind. The Memo Sated 15‑3‑1979 reads as follows:‑

With a view to check evasion of Capital Gains Tax, the Martial Law Administrator Zone 'C' has been pleased to order that Capital Gains Tax wherever leviable under the Rules shall be recovered from the assessees before the registration of the sale‑deed.

(2) All Registration authorities may be directed to ensure strict compliance of these instructions."

In the copy of the Summary submitted to the Martial Law Administrator, Zone "C" it was mentioned that under the relevant law relating to capital gains tax and the Rules framed thereunder, capital gains tax was payable by the seller of an immovable property within a period of 15 days from the date of the execution of sale‑deed and this resulted in substantial evasion of capital gains tax because a large number of sellers of immovable properties became untraceable after the execution of the sale deeds. It was further stated in the summary that suggestions had been made to the Punjab Government for amending the relevant Rules but the Punjab Government in preference to amending the existing Rules, considered it advisable to issue executive instructions for realization of the capital gains tax at the time of registration of the sale‑deeds. It was, therefore, suggested that executive instructions may be issued on the subject to all the Commissioners of the Divisions in Sind directing them to ensure that capital gains tax should be realized before the registration of the sale deeds. It was further submitted in the Summary that issuance of executive instructions appeared to be the only practical solution for the following reasons:‑

The Federal Government had at one time introduced the system of income‑tax clearance certificate but it was withdrawn because it was interpreted as an unwarranted restriction on the right of a citizen to register sale deeds and other documents. It will, therefore, be practically impossible to persuade the Federal Government to agree to a similar arrangement for recovery of Capital Gains Tax."

In the end it was requested in the summary that the Martial Law Administrator may accord his approval for issuance of executive instructions on the lines proposed in the summary. This Summary was presented to the Martial Law Administrator, Zone "C", who made the following endorsement:‑

"Alright."

Pursuant to this, the aforesaid memo. dated 15‑3‑1979 was issued.

Mr. Shaikh A. Sattar, learned Additional Advocate‑General relying on Article 270‑A of the Constitution, submitted that the aforesaid order of the Martial Law Administrator, Zone "C", amended the relevant law on the subject or in any case it was binding on all registering authorities in Sind and as such in the instant case the registering authority rightly did not register the document as clearance or no‑objection certificate from the concerned Excise and Taxation Officer about payment of capital gains tax had not been produced by respondents Nos. 6, 7 and 8 (the sellers).

5. Sub‑Article (1) of Article 270‑A of the Constitution is not relevant to the controversy as the executive instructions issued by the Government to the Commissioners of the Divisions in Sind pursuant to the endorsement "Alright" of the then Martial Law Administrator Zone "C", cannot be termed as a Martial Law Regulation or a Martial Law Order or a law made between the prescribed dates. However, reliance had been placed specifically by the learned Additional Advocate‑General on sub‑Article (2) of Article 270‑A of the Constitution, which reads as follows: ‑

"(2) All orders made, proceedings taken and acts done by any authority, or by any person, which were made, taken or done, or purported to have been made, taken or done, between the fifth day of July, 1977, and the date on which this Article comes into force, in exercise of the powers derived from any Proclamation, President's Orders, Martial Law Regulations, Martial Law Orders, enactments, notifications, rules, orders or bye‑laws, or in execution of or in compliance with any order made or sentence passed by any authority in the exercise or purported exercise of powers as aforesaid; shall, notwithstanding any judgment of any Court, be deemed to be and always to have been validly made, taken or done and shall not be called in question in any Court on any ground whatsoever."

We had asked the learned Additional Advocate‑General to point out or refer to any Proclamation, President's Order, Martial Law Regulation, Martial Law Order, enactment, notification, rule, order or bye‑law, under which the aforesaid executive instructions were issued but the learned Additional Advocate‑General could not refer specifically to any such instrument. His argument was that as the Martial Law Administrator, Zone "C" had given his concurrence to the suggestions made in the Summary about the issuance of executive instructions such instructions assumed the status of a valid and legal instrument not challengeable in any forum and. override the statutory law.

6. In the instant case, a Summary had been submitted to the Martial Law Administrator, Zone "C" for issuance of executive instructions and his approval was sought, which apparently was given. The summary, copy whereof has been placed on record by the Government, shows that according to the Government also the relevant applicable laws did not require production of a clearance or no‑objection certificate regarding payment of capital gain‑tax as a condition precedent for registration of a conveyance deed it is also clear from the summary that there was; neither any intention to amend or change the law on the subject nor any suggestion made to amend or change the law but a proposal was made for issuance of executive instructions only. By giving his concurrence to the proposal made in the aforesaid summary, what in effect had been approved by the then Martial Law Administrator, Zone "C" was that executive instructions may be issued. No order was passed nor even any intention expressed by the Martial Law Administrator, Zone "C" that such executive instructions would change or modify the law already applicable in respect of registration of conveyance deeds. Approval had not been given by the Martial Law Administrator, Zone "C" for issuance of any instructions to replace, amend or modify the law already applicable at the time relating to registration of conveyance deeds. The proposal in the summary was for issuance of executive instructions, concurrence of the Martial Law Administrator, Zone "C" was for issuance of executive instructions and resultantly instructions, which were issued, were executive instructions and not instructions amending or replacing the law on the subject. As observed earlier, this is apparent from the summary itself, copy whereof has been placed on record by the Government. And in case of conflict between executive instructions and statutory provisions, latter of course prevail.

7. . In our view, as the aforesaid executive instructions have not been shown to have been issued in exercise of the powers derived from any Proclamation, President's Order, Martial Law Regulation, Martial Law Order, enactment, notification, rule, order or bye‑law, the protection granted by sub‑Article (2) of Article 270‑A of the Constitution is not available for seeking immunity for such instructions. Even otherwise, as observed earlier, it is apparent that the aforesaid executive instructions were not issued to replace, change or amend the existing law at the time relating to registration of conveyance deeds. Under the then applicable law, a registering authority could not refuse registration of a conveyance deed on the ground that first a clearance or no‑objection certificate regarding payment of capital gains tax be produced and the aforesaid executive instructions did not change this law.

8. In our view, therefore, the Registering Authority could not refuse registration of the conveyance deed dated 5‑9‑1983 presented to it for registration. Respondents Nos.l and 2 are, therefore, directed to register the conveyance deed dated 5‑9‑1983 presented before respondent No. l for registration on 5‑9‑1983 without production of a clearance or no‑objection certificate from the Excise and Taxation Officer relating to payment of capital gains tax provided there is no other legal hurdle in the registration of the said conveyance deed.

Constitutional Petition No. D‑526 of 1985 stands disposed of accordingly with no order as to costs.

A.A. / A‑4/ K Petition accepted

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