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Petitioner: Salman Talibuddin, Muhammad Ali VS Respondent: The Government of Pakistan & others, The Government of Pakistan & others
Court Name: Sindh High Court Judge(s): Yousuf Ali Sayeed, Ahmed Ali M. Shaikh (C.J) Title:Salman Talibuddin, Muhammad Ali vs The Government of Pakistan &
others, The Government of Pakistan & others Case No.: C. P. No. D-7029 of 2021, C. P. No. D-452 of 2022 Date of Judgment:2023-04-07 Reported As: 2023 SHC 252 Result: Petition Allowed Judgment ORDER YOUSUF ALI SAYEED, J. - The Petitions impugn a Decision of the Federal Cabinet (the "Cabinet"), declining the grant of a one-time relaxation/permit for the import, inter alia, of a 1965 Chevrolet Corvair, bearing Vin No. 105375W189647, and a 1965 Ford Mustang, bearing Vin No. 5F07T632895 (hereinafter referred to individually as the "Corvair" and "Mustang" respectively, and collectively as the "Subject Vehicles") under Clause 21 of the Import Policy Order, 2020 (the "Decision"). 2. As it transpires, the matters represent a second round of litigation, with the impugned Decision having taken place on a referral by this Court, for upon arrival of the Subject Vehicles at Karachi port, the Petitioners had sought their clearance through customs while citing SRO 833(I)/2018 issued by the Respondent No.2 (the "SRO"), exempting vintage and classic cars falling under PCT Code 87.03 (i.e. manufactured prior to January 01, 1968) from all duties and taxes in excess of US$5000/- per unit in the following terms: "GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE, ECONOMIC AFFAIRS, STATISTIC & REVENUE (REVENUE DIVISION) **** Islamabad, the 3rd July, 2018 NOTIFICATION (Customs, Federal Excise, Sales Tax and Income Tax) S.R.O. 833 (I)/2018.- In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), section 16 of the Federal Excise Act, 2005, clause (a) of sub-section (2) of section 13 of the Sales Tax Act, 1990 and sections 148 and 53 read with Second Schedule to the Income Tax
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Ordinance, 2001 (XLIX of 2001), the Federal Government is pleased to exempt vintage or classic cars and jeeps meant for transport of persons on the import thereof from so much of the customs-duty, regulatory duty, additional customs duty, Federal excise duty, sales tax and withholding tax as are in excess of the cumulative amount of U.S. dollars five thousand per unit. Explanation. - For the purpose of this Notification vintage or classic cars and jeeps mean old and used automotive vehicles, falling under PCT Code 87.03 of the First Schedule to the Customs Act, 1969 (IV of 1969), manufactured prior to the 1st January, 1968. (sd/-) Additional Secretary"
3. However, as the concerned collectorate of customs refused to accept and process the Goods Declarations submitted in respect of the Subject Vehicles on the ground that their import was not permissible under the Import Policy Order of either 2016 or 2020, the Petitioners approached this Court through C.P. Nos. 1434 and 3911 of 2021, seeking release of the Subject Vehicles on the basis of the judgment rendered by a learned Division Bench of this Court in the case reported as Moin Jamal Abbasi versus Federation of Pakistan through Secretary and 2 others 2020 PTD 660, where it had been observed that while issuing the SRO the Government had made no reference to any other restriction or prohibition as may be attracted in terms of Import Policy Order, 2016 (since superseded by the Import Policy Order, 2020), which showed a clear intention to not only exempt vintage cars from payment of duty and taxes but also relax other prohibitions or restrictions. Hence, while treating the SRO as constituting a relaxation under the Import Policy Order, the Bench went on to order the release of a vehicle falling within the scope of the SRO. 4. Whilst the decisions in several other petitions followed in the same vein, a different view came to be taken by another Division Bench, when seized with CP Nos. 1434 and 3911 of 2021 and certain other similar matters (hereinafter referred to as the "Prior CPs"), with it inter alia being observed that: 7. ... however, as to the finding that an exemption notification issued in terms of section 19 of the Customs Act, 1969 by the Federal Government, through Ministry of Finance, Economic Affairs, Statistics and Revenue, (Revenue Division), Government of Pakistan shall also be deemed to be a Notification of the Federal Government in terms of Para 20 of the Import Policy Order, 2016 is objected to, and with utmost respect to the learned Division Bench and all the humility at our command, we have also not been able to persuade ourselves to agree with it. Section 19 of the Customs Act, 1969, does not govern importability; nor the Federal Government while exercising powers in terms thereof can regulate the import and export of any goods. Though the said power undoubtedly vests with the Federal Government but for that it has to exercise such powers under section 3 of The Import and Export Control Act, 1950. This aspect of the issue has not been brought before the learned Bench, whereas, in our view the use of the words "Federal Government" in SRO 833 would only be in respect of exercise of powers under the Customs Act, 1969, and it cannot be so construed to have also issued a notification in terms of the Import and Control Act, 1950, notwithstanding that it is the very same "Federal Government". Before us the Ministry of Commerce which is the concerned Ministry as of today is still saying that no notification has been issued to permit import of vintage cars, despite a request moved by FBR to issue the same pursuant to issuance of SRO 833, whereby, taxes have been reduced on such vintage cars. And the reason assigned is that the Federal Government, (Cabinet and ECC) has refused to do so. In fact once again an exercise is going on to consider this aspect of the mater. Nonetheless, as of today the very Federal Government has refused to exercise its powers in terms of the Import and Control Act, 1950; or for that matter under the Import Policy Order. Therefore, it is our considered view that till such time it is done, merely a notification issued in terms of s.19 of the Customs Act, 1969 would not
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suffice. As to non-issuance of necessary orders and or notification in terms of the Import and Export Control Act, 1950, we may observe that it is purely an executive function and is a matter of policy; which we cannot look into and interfere as no such case is made out." 5. In view of the disagreement with the dicta laid down in the case of Moin Jamal Abbasi (supra), the matter was referred for the formation of a Larger Bench in view of the principle laid down by the Honourable Supreme Court in the case of Multiline Associates v Ardeshir Cowasjee 1995 SCMR 362, to consider inter alia whether the SRO, as issued in terms of Section 19 of the Customs Act, 1969, could also be treated as an SRO issued by the Ministry of Commerce in terms of Section 3 of the Import and Export Control Act, 1950, permitting the import of vintage cars which were otherwise not importable as being old and used in terms of the Import Policy Order. 6. The Prior CPs then proceeded before a Larger Bench, culminating in a split judgment dated 10.09.2021, with one of the learned members being pleased to outrightly dismiss the matters whilst the majority went on to refer the same for consideration to the Federal Cabinet, observing and directing as follows: "3. It is not the case that SRO 833(I)/2018 was issued by the Revenue Division without lawful authority or that it was issued with any malafides. It is accepted both by the learned Assistant Attorney General and learned counsel for the Customs that SRO 833 was to follow in consequence of a SRO under section 3(1) of the Imports and Exports (Control) Act, 1950, also by the Federal Government albeit through the Commerce Division, which was to be issued prior to or at least simultaneously with SRO 833 to expressly permit the import of vintage cars, but that was not so done, nor was SRO 833 recalled. The comments on behalf of the Federal Government concede that "This anomaly in the policies lead to confusion and litigation". We are therefore of the view that in issuing the consequent SRO 833 to fix duty and taxes on import of vintage cars, the Federal Government held out and represented to citizens that the requisite SRO permitting the import of vintage cars had also been issued, or at least that import of vintage cars is not forbidden any more. After all, otherwise, there was no point in fixing duty and taxes on the import of vintage cars if the import remained prohibited. Therefore, the Petitioners acted, to their detriment, on an act / representation made by the Federal Government. The argument of the Customs amounts to saying that before acting upon SRO 833 to import a vintage car, a citizen should have first verified whether the representation in SRO 833 that a vintage car was importable, was in fact correct or not. That argument if accepted would be catastrophic to the presumption of correctness attached to official acts.7 Conversely, it is not difficult to imagine the chaos that would ensue if executive orders requiring action are not implemented on unwarranted excuses of verifying the underlying competency. There is another aspect of the matter. It is apparent that SRO 833 was issued for lack of coordination between the Revenue Division and the Commerce Division of the Federal Government resulting from a failure to adhere to the Inter-Division Procedure set-out in Rule 8 of the Rules of Business, 1973. The consequence of such failure cannot be permitted to turn prejudicial to the case of the Petitioners. 4. Adverting now to the relief sought by the Petitioners; in our view, thus far, no writ can be issued to the Customs to release the vintage cars when SRO 902(I)/2020 i.e. the Import Policy Order issued under section 3(1) of the Imports and Exports (Control) Act, 1950, does not expressly permit the import of such vehicles. However, clause 21 of that very Import Policy Order provides: "21. Relaxation of prohibitions and restrictions.-- (1) In terms of section 21 of the General Clauses Act, 1897, the Federal Government may, for reasons to be recorded, allow import in relaxation of any prohibition or restriction under the Order. (2) The Federal Government may relax the requirement of re-export on goods imported on temporary on such conditions as it may deem fit.
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(3) The Federal Government may issue import authorization in respect of any item for which relaxation is made under sub-paragraph (1) or for which import authorization is required under this Order. (4) The Federal Government shall issue the aforesaid condonation or authorization on its letter- head, consecutively number and duly embossed." 5. Thus, the Import Policy Order vests a certain discretion in the Federal Government to allow an import in relaxation of a prohibition therein. Mr. Shahab Imam, learned counsel for the Customs had also disclosed during the course of arguments that the Federal Government had in the past exercised such discretion to issue a one-time import permit for a vintage car. Regardless of that, in our view, clause 21 of the Import Policy Order does cater to an import made bonafide with unintended consequences, as is the case of these Petitioners. Therefore, we dispose of these petitions with a direction to the Federal Government to consider the case of these Petitioners for a one-time relaxation / permit of import under clause 21 of the Import Policy Order, 2020 in respect of vintage cars falling under SRO 833(I)/2018 already imported by them, and to decide the same with 10 days keeping in mind the observations above. For said purposes, a copy of these petitions shall be forwarded by the learned Assistant Attorney General to the Commerce Division of the Federal Government, which shall be treated as applications under clause 21 of the Import Policy Order." 7. The content and wording of the summary then prepared by the Ministry of Commerce for consideration by the Cabinet is of particular significance, which reads as follows: "F.No.5(21)/2020-DD(M&I) Government of Pakistan Ministry of Commerce *** SUMMARY FOR THE CABINET Subject: ONE-TIME RELAXATION IN PROHIBITION OF IMPORT OF VINTAGE CARS OR OTHERWISE IN LIGHT OF DECISION OF THE SINDH HIGH COURT DATED 10.09.2021 PASSED IN CP NO. 5430/2020 AND CONNECTED CPs. In terms of Sr. No.10 of Appendix-C, Import Policy Order (IPO), 2020 import of secondhand/used vehicles of Chapter 87 is not allowed except those specifically exempted therein (Annex-I). As such, the resident Pakistanis cannot import used vehicles including vintage/classic cars. 2. Federal Board of Revenue (Revenue Division) issued SRO 833(I)/2018 dated 3rd July 2018 whereby a cumulative duty of $5000/per unit has been levied on import of vintage cars/jeeps (PCT 8703), which are over fifty years old (Annex-II). However, the said SRO could not be given effect because of ban on import of vintage cars in IPO, as submitted at Para-1 ante. To make a corresponding amendment in the IPO, a Summary for the ECC was moved by Commerce Division in January 2019 wherein, among other proposals, a proposal was submitted for allowing import, and import-cum- export of vintage cars. However, the said proposal was not approved (Annex-III). 3. Meanwhile some of the cars imported on the basis of SRO 833(I)/2019 arrived in the country. The importers of these cars then started approaching different High Courts with the plea that they had imported cars on the strength of aforesaid SRO and were unaware of any ban in IPO, therefore, their cars might be released. Some Courts allowed release of imported cars (Annex-IV), while others declined petitions on the grounds that the said SRO is not an SRO issued under section 3(1) of Imports and Exports (Control) Act, 1950, hence the said SRO does not operate to amend the conditions of IPO (Annex-V). 4. Keeping in view the divergent interpretation by various benches, the Chief Justice Sindh High Court constituted a Larger Bench to decide the question of importability of vintage cars in the light of SRO 833(I)/2018 and IPO in vogue. Besides Ministry of Commerce, Federal Board of Revenue
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(Revenue Division) and Collector of Customs (East & West), Karachi were impleaded as Respondents. 5. The said Larger Bench vide its Judgment dated 10.09.2021 (Annex-VI), while disposing of the Constitutional Petitions tabulated below, in principle agreed with Ministry of Commerce s point of view vis--vis import of vintage cars, i.e. their import cannot be allowed unless an appropriate amendment is made in the IPO in terms of section 3(1) of the Imports and Exports (Control) Act, 1950. However, the Court by a majority of 2 to 1 Judges directed the Federal Government to consider these petitions as applications under Para-21 of IPO for grant of one-time relaxation/condonation of prohibition in favour of already imported vintage cars, and decide the case within 10 days. CP-wise detail of cars is given as under:-
SR. No.CP NO.DESCRIPTION OF VEHICLEBILL OF LADING DATE 1D- 5430/2020Rolls Royce Silver Cloud (1960) 04.10.2020 2D- 5536/2020Bentley S1 (1956) Vin 20.02.2019 3 D-1196/2021Two Bentley Cars (1967 & 1947) Vin No. SBH 3054 & B219AJ respectively26.12.2020 4 D-1434/20211965 Ford Mustang VinNo.5F07T63289526.12.2020 5 D-3911/2021Vehicle (Classic) Chevrolet Corvair (1965) Vin No. 105375W189647 11.05.2021
6. Operative part of the Judgment is reproduced below: "The Import Policy Order vests a certain discretion in the Federal Government to allow an import in relaxation of a prohibition therein.... In our view, clause (Para) 21 of the Import Policy Order does cater to an import made bona fide with unintended consequences, as is the case of these Petitioners. Therefore, we disposed of these petitions with a direction to the Federal Government to consider the case of these Petitioners for a one-time relaxation/permit of import under clause 21 of the Import Policy Order, 2020 in respect of vintage cars falling under SRO 833(I)/2018 already imported by them, and to decide the same within 10 days keeping in mind the observation above." 7. Besides the above tabulated petitioners, there are other people who have imported vintage cars and their consignments are stuck-up at various ports because of ban in the IPO. On the strength of
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above referred Judgment of the Honorable Sindh High Court, some petitioners, whose petitions are pending adjudication before different High Courts, have also started approaching Ministry of Commerce for grant of one-time relaxation in favour of their already imported vintage cars. However, it is likely that if one such application is accepted, then similar other petitioners/applicants will approach the Ministry for grant of one-time relaxation. 8. Under Para-21 of the Import Policy Order (IPO), 2020 the Federal Government is empowered to allow imports in relaxation of any prohibition or restriction as contained in the IPO. 9. The Prime Minister, being Minster-in-Charge of Ministry of Commerce has seen and is pleased to approve submission of the cases (vehicles) mentioned at para-5 of the Summary for decision of the Cabinet. However, to the extent of cases mentioned at para-7 ante, the Prime Minister has desired that a separate Summary may be moved after gathering complete details of the vehicles mentioned therein, if so required (Annex-VII). 10. In view of the foregoing, decision of the Cabinet is solicited to the extent of vehicles mentioned at para-5 of the Summary. (Muhammad Sualeh Ahmed Faruqui) Secretary Islamabad, the October , 2021." 8. Equally, it is important to reproduce the impugned Decision that followed, which simply states that: "The Cabinet considered the summary titled One-Time Relaxation in Prohibition of Import of Vintage Cars or Otherwise in Light of Decision of the Sindh High Court dated 10.09.2021 Passed in CP No.5430/2020 and Connected CPS dated 27th October, 2021, submitted by the Commerce Division and did not approve the one-time relaxation in prohibition of import of vintage cars, proposed in para 10 of the summary." 9. Proceeding with her submissions, learned counsel for the Petitioner in in CP No. D. 7029/21 argued that the issuance of the SRO constituted a representation by the Federal Government that such import was permitted and had given rise to a legitimate expectation that the Corvair would be released upon payment of the duty prescribed therein. As such, the Corvair had been imported by the Petitioner on such a bona fide belief, hence the Respondents were now estopped from taking a contrary stance and the impugned Decision disallowing the release thereof was an arbitrary and unreasonable exercise of discretion under paragraph 21 of the Import Policy Order 2020. It was pointed out that the Impugned Decision was not a speaking-order, as no reason had been assigned for refusing the release of the Corvair other than mere mention in the Summary (in paragraph 7 thereof) that "If one such application is accepted, then similar other petitioners/applicants will approach the Ministry". It was submitted that the impugned Decision thus offended Section 24-A of the General Clauses Act 1897, and that such a floodgates argument could also not be invoked in the present case as the SRO had been rescinded since the time that the Petitioner had filed his Goods Declaration, hence the number of further cases, if at all, was likely to be negligible. Additionally, attention was invited to the comments filed on behalf of the Ministry of Commerce, whereby additional justification was sought to be provided through the assertion that the impugned Decision had been "guided by economic and environmental considerations. On the economic policy side, Government cannot allow spending of FOREX on non-essential and ultra- luxury items like vintage cars, while on the environment protection side, the Government rejected the proposal because it could cause air pollution". It was argued that such contentions were completely fallacious as the Respondents had failed to consider that no prejudice or harm would be caused to the public exchequer as payment for the Corvair had already been made, which would go to waste if the same were not cleared/released under Paragraph 21 of the Import Policy Order 2020, and that the exchequer would in fact only be benefited by such clearance/release as
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the duty of USD 5,000/- would be realized in such an event. Furthermore, it was pointed out that while the Respondents were contending on the one hand that the Corvair could not be released on the aforementioned pretext, they were nonetheless seeking to pave the way for it to be brought into the country by a third party through process of an auction. She submitted that the conduct of the Respondents was mala fide and prayed that the Petition be allowed so as to set aside the impugned Decision and direct the Respondents to allow a one-time relaxation in prohibition or restriction of the import of the Corvair under paragraph 21 of the Import Policy Order 2020. 10. For his part, learned counsel for the Petitioner in the connected matter adopted the aforementioned submissions in toto, and prayed for release of the Mustang accordingly. 11. In the wake of such submissions, the learned DAG candidly conceded that the Summary and impugned Decision were defective for the reasons pointed out, and declined to defend the same. 12. However, learned counsel appearing for the Collectorate of Customs Appraisement (East), Karachi (the "Collectorate") sought to defend the impugned Decision, submitting that the clearance/release of the Subject Vehicles had been rightly refused. However, he conceded that if the Subject Vehicles were to be auctioned, the end result would be that they would be released/cleared in favour of the auction purchaser(s) for domestic use, and was at a loss to explain why release/clearance ought not to take place in favour of the Petitioners as a one-time measure. 13. We have considered the arguments advanced in light of the material on record. 14. Needless to say, for purpose of making a determination under the Import Policy Order in terms of the judgment in the Prior CPs, the Cabinet was required to exercise its discretion bona fide, ascribing valid reasons, and while attending to the matter before it upon considering all relevant factors and without being influenced by extraneous or irrelevant considerations. Indeed, a process or decision falling short of that, would be arbitrary or capricious, with it being well settled that a decision of a public authority/functionary that is bereft of reasons, or if made without considering relevant considerations or is based on irrelevant/extraneous considerations, does not satisfy the test of reasonableness. 15. If any authority is required in that regard, one need look no further than the judgments of the Honourable Supreme Court reported as Brig. Muhammad Bashir v. Abdul Karim and others PLD 2004 Supreme Court 271, Asadullah Mangi and others v. Pakistan International Airlines Corporation and others 2005 PLC (C.S) 771, In re: Corruption in Hajj Arrangements in 2010 PLD 2011 SC 963, and Secretary, Government of Punjab and others v. Khalid Hussain Hamdani and 2 others 2013 SCMR 817. 16. In the case of Brig. Muhammad Bashir (supra) it was stated that: "There is ample power vested in the High Court to issue directions to an executive authority when such an authority is not exercising its power bona fide for the purpose contemplated by the law or is influenced by extraneous and irrelevant considerations." 17. In the same vein, it was observed in Asadullah Mangi s matter as follows: "We are conscious of the fact, as it is a well-entrenched legal proposition that an action which is mala fide or colourable is not regarded as action in accordance with law. Similarly, action taken upon extraneous or irrelevant considerations is also not action in accordance with law. Therefore, action taken upon no ground at all or without proper application of the mind of an authority would also not qualify as an action in accordance with law and would, therefore, have to be struck down as being taken in an unlawful manner." 18. In re: Corruption in Hajj Arrangements in 2010, it was held that if the action or decision in question is perverse or is such that no reasonable body of persons, properly informed could come to, or is arrived at by misdirecting itself and adopting a wrong approach or is influenced by irrelevant or extraneous matters, the Court would be justified in interfering with the same.
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19. In the case of Khalid Hussain Hamdani (supra), the Apex Court observed that 13. In the administrative law, the authority is vested with a certain amount of discretion and the said discretion has to be exercised by applying independent mind uninfluenced by irrelevant or extraneous…
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