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Petitioner: GATRON (INDUSTRIES) LIMITED VS Respondent: GOVERNMENT OF PAKISTAN and others
Court Name: Supreme Court of Pakistan Judge(s): Wajihuddin Ahmed, Irshad Hasan Khan, Munir A. Sheikh Title: GATRON (INDUSTRIES) LIMITED vs GOVERNMENT OF PAKISTAN and others Case No.:Civil Appeal No,223 of 1994Customs Notification No, S.R.O. 1284(1)/90C.P. No,
JUDGMENT
Reported As: 1999 SCMR 1072 Result: Appeal allowed Judgment JUDGMENT IRSHAD HASAN KHAN, J.---This appeal with leave of the Court is directed against the judgment of the High Court of Balochistan, Quetta, passed in Civil Petition No,69 of 1993. 2. Leave was granted in the above appeal to consider whether the exemption available to the petitioner's industry situated in the Industrial Estate, Hub Tehsil, Province of Balochistan, under Customs Notification No,S.R.O.1284(I)/90, dated 13-12-1990, could not be withdrawn in view of the Protection of Economic Reforms Act, 1992? The notification, dated 13th December, 1990 is reproduced below for ready reference:-- Government of Pakistan Ministry of Finance NOTIFICATION Islamabad, the 13th December, 1990. CUSTOMS S.R.O. No,1284(I)/90.--In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), subsection (2) of section 2 of the Finance Ordinance, 1982 (XII of 1982) and section 31 of the Sales Tax (Amendment) Act, 1990 ( VII of 1990), the Federal Government is pleased to exempt such plant and machinery as is not manufactured locally and is imported during the period commencing on the 1st December, 1990 and ending on the 30th June, 1995, for setting up new units and for expansion or balancing, modernization and replacement of existing units,-- (a) in areas other than mentioned in Table-I, from whole of the Customs Duty, surcharge and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969, or, as the
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case may be, the Finance Ordinance, 1982, or the Sales Tax (Amendment) Act, 1990, and (b) in the areas specified in Table-II from so much of the customs duty leviable thereon under the First Schedule to the Customs Act, 1969, as is specified in column 3 of the said Table and whole of the sales tax chargeable thereon under the Sales Tax (Amendment) Act, 1990, subject to the conditions set-out below, namely:- (1) For the purpose of this notification, machinery shall mean-- (i) machinery operated by power of any description, such as is used in any industrial process including mining and extraction of timber, (ii) apparatus and appliances, including metering and testing apparatus and appliances specially adopted for use in conjunction with machinery specified in item (I) above; (iii) power generating plant for operation item (I) above; (iv) mechanical and electrical control and transmission gear adapted for use in item (I) above; and (v) component parts of machinery as specified in items (i), (ii), (iii) and (iv) above, identifiable as for use in or with such machinery. (2) The importer shall, at the time of import of machinery, make a written declaration on the bill of entry to the effect that the machinery has been imported for a project located in areas other than those specified in Table-I or for the areas specified in Table-II, as the case may be. (3) The importer shall furnish an indemnity bond in the Form set-out below to the extent of customs duty, surcharge and sales tax exempted under this notification. The said indemnity bond shall be discharged subsequently on the production of a certificate from the Assistant Collector, Customs and Central Excise, to the effect that the plant and machinery imported for setting up new units or expansion or balancing, modernization and replacement of existing units located in the areas enjoying benefit of concession under this notification, have been duly installed in the aforesaid areas. (4) The certificate of installation referred to in condition (3) shall be submitted to the Collector of Customs not later than one year from the date of importation of the plant and machinery to which it relates. (5) The plant and machinery released under this Notification shall not, within a period of eight years from its importation, be used in any area which is not eligible for the same concession. In case this condition is violated the amount of customs duty, surcharge and sales tax exempted under this Notification and penalties that may be imposed in this behalf shall be recovered under section 202 of the Customs Act, 1969 (IV of 1969). TABLE-I Sr. No, Area 1. The Municipal or Cantonment Board limits of Karachi and 40 kilometres area around these limits. 2. The Municipal or Cantonment Board limits of Lahore and 30 kilometres around these limits. 3. The existing limits of Municipal Corporations, Municipal Committees and their Cantonment Boards and 10 kilometres areas around Municipal Corporations and their Cantonment Boards, in Provinces of Sindh and Punjab excluding Bahawalpur, D.G.Khan, Sukkur and Larkana Divisions. 4. Areas falling within the limits of Islamabad Capital Territory and HubTehsil in the Province of Balochistan. TABLE-II
FORM [See condition (3) ] (On appropriately stamped non judicial paper) INDEMNITY BOND
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3. The Government of Pakistan, Ministry of Industries, vide Circular No,6(12)90-Policy, dated the 17th December, 1990 announced a new package for rural industrialisation with a view to make it more comprehensive and broad-based. It inter alia offered tax incentives and concessions to encourage industrialisation in rural areas and to promote industrial development and growth in areas in some distance away from large cities, towns and municipal centres. The definition of rural areas is given in paragraph 1 of the Circular which reads thus:-- Definition of Rural Areas: (1) Rural Areas in the context of Rural Industrial Development Incentives shall mean all Rural Areas excluding:-- (a) Major Industrial Estates of Hub, Nooriabad, Chuunian, Hattar and Gadoon and areas up to 10 Kilometres outside their limits. 4. The Hub Industrial Estate was outside the prescribed distance from the concerned Municipal Corporation/Committee. However, Economic Coordination Committee of the Cabinet while its meeting held on 31-3-1992 took the decision for including the Hub Industrial Estate in the definition of rural area. 5. Details of incentives and concessions approved by the Government are incorporated in Paragraph 3 thereof. Sub-paragraphs (i) and (ii) relevant to the controversy in hand are as under:- "(i) Five years income-tax holiday will be available to all industries set up in Rural Areas provided such industries are set up between 1st December, 1990 td 30th June, 1995. These concessions will be applicable only to income generated from that particular industry. (ii) Imported machinery for Rural Industries would be totally exempted from the payment of customs duty, sales tax and import surcharges, provided such machinery is not manufactured locally. Import licence fee has also been reduced from 6 per cent. To 2 per cent. For all such industries established in the rural areas. Paragraph 3 provides that the abovementioned incentives will be available from the date, necessary S.R.O. Has been issued by the concerned Ministries/Divisions. 6. The appellant claims concessions and exemptions on the basis of the statutory Notification No,S.R.O. 1284(1)/90, dated 13-12-1990 on the ground that his unit is situated in the Hub Industrial Trading Estate in Hub Tehsil. However, the above notification of 13-12-1990 was superseded by S.R.O. 50(1)92, dated 28-1-1992 whereby the tax exemption made available under the first notification in respect of the units located in the Hub Industrial Trading Estate were continued. It is also pleaded that the machinery and plant imported by the appellant continued to remain exempt from the whole of the customs duty and sales tax. Later the surcharge was abolished. The second notification was superseded by S.R.O. 484(I)/92, dated the 14th May, 1992, hereinafter referred to as the third notification, whereby machinery which is not locally manufactured and is imported for installation in a unit in the Hite remains exempt from customs duty in excess of 10% ad val and whole of sales tax. 7. The appellant pleads that acting on the policy framed by the Government and the first notification, it decided to avail the benefit accruing thereon, applied for licence which were issued in their favour on payment of 2% import license fee. In consequence, the appellant executed contract with foreign supplier and established letter of credit in their favour to import the machinery under the B.M.R. Scheme. It is pleaded that when the machinery and equipments imported by the appellant for the expansion/balancing of its plant imported against the abovementioned import licences arrived at Karachi, they filed a Bill of Entry for placing the goods into Bond, sought benefit under the notifications, in that Hite was within a rural area. Their claim was, however, rejected by the Principal Appraiser, respondent No,5 herein, vide order dated 18-3- 1993 with the following grounds:--
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"The benefit of S.R.O.484(I)/92, dated 14-5-1992 cannot be extended to rural area as Hub is not covered under rural area. Therefore, if approved the party may be asked to pay duties/taxes accordingly." 8. Needless to observe that the Economic Coordination Committee took notice of the summary, dated March 18, 1992 submitted by the Ministry of Industries and took the following decisions:- "The E.C.C., in the light of clear rules on the subject, did not consider it proper to modify its earlier decision taken in the meeting of 27th January, 1992 and directed that the prescribed distance from the outer boundary of the Municipal Corporation may be defined by the concerned district administration where so required. The E.C.C. Agreed that the industrial estates of Hub, Nooriabad, Chunnian, Hattar and Gadoon may be included in the definition of rural areasprovided they fall outside the prescribed distance from the concerned Municipal Corporation/Committee limit. The E.C.C. Also approved the proposal contained in para. 7 (c) of the summary. The E.C.G. Further directed that for the purposes of bringing clarity to the instructions on the subject, the Chairman, C.B.R. Would, in supersession of all previous instructions, prepare a master statutory notification/circular and get it cleared from the Diputy Chairman, Planning Commission and the Law Justice Division before issue." 9. Mr. S. Sharifudding Pirzada, learned Senior Advocate for the appellant has also drawn our attention to the following documents on record:-- (i) O.M. No,6(100/90-Policy, dated 13-5-1992 whereby in view of the revised definition of rural area and confirmation by the Chief Secretary, Balochistan, by telex/fax message No,S.O.I.(I.N.D.)/2-2/92, dated the 11th and 12th May, 1992, took the view that "Hub Industrial Estate is not located in the limits of Municipal Committee limit and falls in the Rural Areas". (ii) Letter dated 17-5-1992 from Government of Balochistan wherein it was confirmed that Hub Industrial Estate falls outside the prescribed distance from the concerned Municipal Corporation/Committee limits. (iii) Certificate of the Deputy Commissioner, Lesbella is to the following effect:-- TO WHOM IT MAY CONCERN As confirmed by the Secretary, Local Government in his letter, dated 26th May, 1993, the Town of Hub does not have a Municipal Committee or a Municipal Corporation. The Hub Industrial Trading Estate and Gatron (Industrials) Limited. Plot No,M-2. S.E.C-M H.I.T.E. Main R.C.D. Highway. Hub Chowki, Lesbella District are Located beyond ten kilometres prescribed distance of Municipal Committee/Municipal Corporation in Balochistan for the purpose of rural area. Further, the nearest Municipal Committee from H.I.T.E. And Gatron is Khuzdar which is 380 Kilometres away and the nearest Municipal Corporation from H.I.T.E. And Gatron is Quetta which is also 700 Kilometres away.' (iv) Unsigned parawise comments filed on behalf of the respondents. Mukhdoom Ali Khan, Advocate Supreme Court also appeared in the High Court has made a statement at the bar that the above comments were filed by the Deputy Attorney-General wherein, with reference to paragraph 3 of the writ petition it was avered:- "Yes. However, the decision of the E.C.C. As well as circular of the Ministry of Industries dated 2-3- 1992 stipulated that these Industrial Estates would be treated as rural areas provided they fall outside the prescribed distance from the concerned Municipal Committees limits. Revenue Division was of the view that the Government of Balochistan was taking into account the limits of Municipal Corporation/Committee of the Province of Balochistan whereas the measurement of distance of Hub Industrial Estate should be taken from the periphery of Karachi Municipal Corporation, which is 20 Kilometres and, therefore, does not qualify for treatment as rural area.' (v) Letter No,PS/SECY/L.G/27, dated 12-1-1993 of Local Government Department, Balochistan, whereby it was stated, "The Hub Industrial Trading State and Plot No,B-189 to B-206 were located
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beyond ten kilometres prescribed distances of Municipal Committee/Municipal Corporation in Balochistan for the purposes of rural area. (vi) Letter dated 30-8-1993 of the Government of Pakistan wherein under paragraph 3 thereof it was stated that the Government of Balochistan have confirmed that Hub Industrial Estate does not qualify for treatment as 'rural areabecause the Municipal/Cantonment limits of Karachi and 10 Kilometres area around these limits do not fall in the rural area'. In paragraph 6 thereof it is stated with reference to the decision of the E.C.C. That 'Hub Industrial Estate definitely falls outside the prescribed distance from the concerned Municipal Corporation/Committee limit (Lasbella District) as confirmed by the Government of balochistan. The periphery of Karachi Municipal Corporation is not relevant while measuring the distance for grant of fircal concessions etc. In the case of Hub Industrial Estate, which is located in Balochistan Province'. (vii) Notification No,S.R.O.1056(I)193, dated 1st November, 1993, whereby amendments were made in the Notification No,S.R.O. 484(1)/92, dated the 14th May, 1992 whereby Hub Tehsil in the Province of Balochistan was omitted. This notification was in the nature of corrigendum correcting the earlier notification. It was pleaded that the notification being declaratory, it can be issued retrospectively. (viii)Order dated 11-2-1998 passed by the Customs Excise and Sales Tax Appellate Tribunal, Karachi Bench in Customs Appeals Nos.K-187-A of 1997 and K-236 of 1997, whereby the ruling of the Board of Revenue with regard to applicability of S.R.O. 484(1)/92 for rural industrialization covering Balochistan was followed. It is to the following effect:- I am directed to refer to your letter-dated the 28th May, 1997 on the subject noted above. The case has been examined in the C.B.R. And it is held that the whole area of Balochistan except Hub Tehsil was exempt from whole of customs duty and sales tax under S.R.O. 484(1)/92, dated 14-5-1992. The condition of Municipal limits and 30 Kilometres around them was not applicable in the Province of Balochistan." 10 Being aggrieved with the order of the Principal Appraiser, dated 18-3-1993, the appellant approached the High Court through a Constitution petition for the redress of grievance. The learned Members of the Division Bench called for comments from the respondents. Counter- affidavit was filed on behalf of respondents. The assertion of the appellant in the writ petition was that the goods and machinery imported by the appellant were locally manufactured. As to the claim of the appellant seeking exemption of whole of the customs duty, on the basis of the bill of entry filed by them for placing the goods in the Bonds, the respondents took the following stance vide paragraph 14 of their counter-affidavit which reads thus:- "Para. No, 14.---As regards the contents of para. 14 it is submitted that plant and machinery imported for setting up new units for expansion or balancing moderanisation and replacement of existing units are exempt from Customs duty in excess of 10% Adv. And whole of sales tax vide Serial No,2(I) of the Table II of S.R.O. .484(1)/92, dated 14th May, 1992. No amendment in this S.R.O. Or a new notification has been issued by the Government till date to the effect of petitioners claim as pleaded in this para. Hence, the action taken by the respondents is legal and with lawful authority. The respondents are bound to charge duty to the extent of 10% Adv. Under the relevant S.R.O. And the issuance of S.R.O. 484(1)/92 in this regard is a conscious decision of the Government. As regards petitionersclaim that demand of duty/taxes is contrary to the doctrine of promissory estoppel, it is submitted that the doctrine of promissory estoppel in the instant case is not relevant as it does not operate against a statute or the rules made thereunder for there can be no estoppel against law. The alleged issuance of office memorandum and circular by Ministry of Industries and the Chief Controller of Imports respectively cannot hold field against statute or law. In view of the judgment of the High Court of Sindh in Civil Petitions Nos.D-581, D-1637/ 87 of 1987, promissory estoppel is not applicable in respect of statutes."
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11. The learned Division Bench of the High Court, while dismissing the petition, inter alia, took the view that mere policy of the Government as reflected in the notification was not justiciable, unless a legal cover was given to it and that in any case, the policy had been streamlined by the Government of Pakistan in the notification, dated 14th May, 1992, wherein industries situated in Hub Tehsil were excluded from the concession of Tax Holiday etc. It was further observed that Notification S.R.O. 484(1)/92, dated 14th May, 1992, had been issued in exercise of powers conferred on the Government under section 19 of the Customs Act and subsection (8) of section 13 of the Sales Tax Act, 1990. The said notification excluded the benefits of total concession and exemptions in respect of industries established in Hub Tehsil in the Province of Balochistan. It was further observed that in Table-II, Hub Industrial Trading Estate finds mentioning therein but is entitled to the extent of exemption subject to the conditions as laid down therein. 12. The learned High Court also took the. View that the doctrine of promissory estoppel was not applicable in the facts and circumstances of the present case. It was further held that no vested right had accrued in favour of the appellant at the time of execution of contract for import of machinery and that the S.R.O., dated 28-2-1992 had been superseded vide notification, dated 14th May, 1992. It was observed:- "In other words when the petitioner-company executed contract with the foreign seller for importing plant it was the S.R.O.No,484(I)/92 which. Was holding the field and, thus, the petitioner's company can take benefit of only those concessions and exemptions as are stipulated in the impugned S.R.O. We are holding so because no vested right had accured to the petitioner's company till the impugned S.R.O. Was issued." 13. The writ petition was dismissed with the observation to allow the appellant to take such benefits as were available under Table-II of S.R.O. 484(1)/92, dated 14th May, 1992. 14. Let us first of all deal with preliminary objections raised by Mr. Yawar Ali, learned Deputy Attorney-General and Mr. Ayyaz Zahoor, learned Advocate Supreme Court for the contesting respondent. The first objection is that a Constitution petition filed by the appellant before the High Court was not maintainable, in that, they failed to exhaust the departmental remedies under the hierarchy of the Customs Authorities. This plea is untenable. The appellant has clearly stated in paragraph 15 of the Constitution petition filed before the High Court that the remedy of appeal and revision was of no use to them as the respondents Nos.4 and 5 therein being subordinate authorities were acting under the dictaion of the respondent No,1 who has issued Annexure Gto the writ petition impugned therein. 15. Be that as it may, it is well-settled that the rule about invoking the Constitution jurisdiction only after exhausting all other remedies, is a rule of convenience and discretion by which the Court regulates its proceedings and it is not a rule of law affecting the jurisdiction. A Constitution petition is competent if an order is passed by a Court or Authority by exceeding its jurisdiction even if the remedy of appeal/revision against such order is available, depending upon the facts and circumstances of each case. In the instant case, the appellant clearly stated in paragraph 15 of the writ petition the reasons for not exhausting the departmental remedies. In any event, the learned Judges of the High Court rendered the impugned judgment on merits of the case after hearing at length the submissions of the learned counsel for the parties. The appellants never pressed any objection as to the maintainability of the Constitution petition before the High Court. Thus, visualized, the discretion exercised by the High Court, in the facts and circumstances of the case, to entertain the petition and decide it on merits does not suffer from any illegality. In view of the above discussion, the first preliminary objection is over-ruled. 16. The second preliminary objection is to the effect that the dispute raised by the appellant before the Customs Authorities was only with regard to rural areas and not in respect of applicability of the Notification No,S.R.O.1284(I)/90, dated 13-12-1992. To support his plea, Mr. Ayyaz Zahoor, the
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learned Advocate Supreme Court has drawn our attention to the Bill of Entry presented by the appellant for claiming benefit on the basis of S.R.O. 484(1)/92, dated 14-5-1992 and SRO 500(I)/83 dated 26-1-1988. It was further argued that even in the High Court the appellants did not claim any benefit under Notification No,S.R.O. 484(1)/90 dated 13-12-1990 and the dispute between the parties was basically with regard to the rural area as well as the applicability of doctrine of promissory estoppel, therefore, the appellant cannot be permitted to raise a new point which was neither urged nor discussed by the learned High Court in the impugned judgment. 17. It is true that the question of allowing benefit to the appellant under c S.R.O. 1284(1)/90, dated 13- 12-1990 was not raised before the High Court, nevertheless this Court allowed the appellant to raise this point of law at the time of leave which was accordingly granted to consider the same as it related to the very fundamental of the issues involved therein. Clearly, this was within the competence of this Court. It is well-settled that even *ere leave is not granted on a point, this Court is competent to allow the same to be canvassed in appeal if it is necessary for doing complete justice, in any case or matter, pending before it, as contemplated by clause (1) of Article 187 of the Constitution. It is also well-settled that a pure question of law could be raised at any stage of the,appeal depending upon the facts and circumstances of each case. Refer Haji Abdulllah Khan and others v. Nisar Muhammad Khan and others (PLD 1965 SC 690), wherein it was held that in proceeding before Original and Appellate Courts and not in Revisional Courts whose jurisdiction to interfere is determined by the statute that creates the jurisdiction, a question of law can be raised at any stage. It would be advantageous to produce the following passage from the above judgment: A reference, however, to the judgment of the High Court shows that in the opinion of the learned Judges even a pure question of law could not be allowed to be raised in appeal for the first time. The learned Judges say; 'to allow the question of law or of fact to be raised in appeal for the first time would clearly prejudice the other party and, thus, defeat the ends of justice.It may be pointed out that it is the duty of the Court itself to apply the law. A party is not bound to engage a counsel, Whatever law becomes applicable on the admitted or proved, facts law has to be given effect to whether or not it has been relied upon by a partv." (The underlining is ours by way of emphasis). 18. Refer Elahi Cotton Mills Ltd. v. Federation of Pakistan (PLD 1997 SC 582), wherein one of the questions arose whether there was any conflict between the provisions of the protection of Economic Reforms Act, 1992 and section 80-D of the Income Tax Ordinance XXXI of 1979 which was effected through financial year 1991. A Full Bench of this Court comprising of five Hon'ble Judges allowed to consider this question although it was neither raised nor…
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