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Petitioner: Messrs THARPARKAR SUGAR MILUS LTD. VS Respondent: FEDERATION OF PAKISTAN Through Secretary, Revenue Division And Chairman,Central Board Of Revenue, Government Of Pakistan, Islamabad AndAnother
Court Name: Sindh High Court Judge(s): Amanullah Abbasi, Ghous Muhammad Title:Messrs THARPARKAR SUGAR MILUS LTD. vs FEDERATION OF PAKISTAN Through
Secretary, Revenue Division And Chairman,Central Board Of Revenue, Government Of Pakistan, Islamabad AndAnother Case No.:Constitutional petition No.D-2269 of 1995Civil Petition No.695/L of 1996C.P. No.B-1584 of 1992C. P. No.D-1044 of 1993C.P. No.D-122 of 1993 Date of Judgment:1995-03-07 Reported As: 1996 MLD 1221 Result: Order accordingly Judgment ORDER AMANULLAH ABBASI, J.--- The petitioner has requested for relief as under:--- "(i) Direct the respondent No.2 to clear all the goods of the petitioner which are covered by proforma invoices finalised prior to 30-6-1995 and attached as Annexure F-3 and F-4 under the Notification S.R.O. 484(1)/92 dated 14-5-1992 and without raising any demand for any duties, taxes or charges. (ii) Srike down the V SRO dated 4-10-1995 which has imposed concessionary rate of duty and taxes as also SRO dated 29-10-1995." It is the case of the petitioner that he secured permission from the Government of Sindh, Department of Industries and Mineral Development vide letter dated 14-12-1989 to establish a new Sugar Mill in the District of Tharparkar. The sanction was accorded to establish a Sugar Mill within the territorial limits of Samaro, Kot Ghulam Muhammad and Umar Kot in District Tharparker with an instal capacity of 4,000 tons of sugarcane crushing per day. The National Development Finance Corporation agreed to finance the project and accorded its acceptance vide letter-dated 14-1- 1990. It is the case of the petitioner that he was a victim of administrative inefficiencies and development financial institutions. The Government of Sindh also revised petitioner's location in a manner to restrict the operation in Kot Ghulam Muhammad vide unilaterally vide letters dated 9-1- 1990 and 15-3-1990. The petitioner filed Constitutional Petition No.D-343/1991. However, Government of Sindh restored the availability of the territorial limit of Kot Ghulam Muhammad vide letter dated
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2-6-1990. The Investment Corporation of Pakistan another financial institution also conveyed its consent to finance the petitioner's Project vide letter dated 25-4-1990. Petitioner has further stated that the process of political victimization increased and without any show-cause notice and with intention to withdraw the permission accorded to petitioner to establish Sugar Mill, the establishment of New Sugar Mill was placed in the negative list in Sindh vide letter dated 9-2--1991. In this manner, the entire investment in terms of money, time, energy and efforts put by the petitioner into the proposed project was reduced to a naught. It is the case of petitioner that despite the ban on establishing Sugar Mill in the Province of Sindh, the Department of Industries accorded a sanction to establish a fresh Sugar Mill to one Hameer Soomro which confirmed the mala fide action of Government. The petitioner one again approached the Government in late 1993. The Government of Sindh revived its earlier sanction dated 14-12-1989 to establish a Sugar Mill vide letter dated 15-12-1993. The petitioner has also mentioned other facts which delayed his project and he wanted to avail the benefit of incentives assured under SRO 484(I) of 1992 dated 14-5-1992 where under complete exemption was granted from all duties and taxes. Relying upon this SRO the petitioner finalized contracts with Foreign Exporters prior to 30-6-1995. However, the delay in opening letters of credit is due to the mala fide intention of the National Development Finance Corporation. The respondent No.1 without a show-cause notice withdrew illegally the concession available under SRO 484(I) of 1992 by another SRO dated 4-10-1995. In terms of this new SRO a limited concession has been made available only for those consignments, which have been imported through letters of credit established prior to 30-6-1995. It is the case of petitioner that the machinery is lying in bond whereon heavy demurrage has been levied. The respondent No.1 has imposed a regulatory duty dated 29-10-1995 on imports of machinery. According to the petitioner he had acquired vested rights in terms of SRO 484(1) of 1992 which cannot be withdrawn and Federal Government had no power to take away vested rights which are protected by the "protection of Economic Reforms Act, 1992". The present application under Order 39, Rules 1 and 2 read with section 151, C.P.C. Has been submitted by petitioner requesting that the respondents be directed to release the goods of - petitioner in terms of S.R.O. 484(1)/1992 dated 14-5-1992 as being exempt from all duties and taxes. The respondents have given a different version through counter-- affidavit of Mr. Ahmed Mujtaba, Assistant Collector of Customs, Appraisement (Law). In paragraph I 1 of the counter affidavit, it is stated that SRO 484(1)/92 allows exemption from customs duty and sales tax to machinery imported during the period commencing on 1st December, 1990 and ending on 30-6-1995. This S.R.O. Is subject to section 30 of the Customs Act, 1969 therefore, the value and rate of duty shall be applicable as on the date, the manifest is delivered and the bill of entry is filed. It is further stated in paragraph 12 of the counter-- affidavit that the crucial date for the determination of the value and the rate of duty are the dates when the manifest is delivered or the date when the bill of entry is filed. All other dates are irrelevant as was evident from the provisions of section 18.30 and 31-A of the Customs Act; 1969. In this case the manifest was filed after the expiry date of SRO 484(1)/92 due to which the petitioner is no more entitled for the benefit of SRO as the conditions thereof were not duly fulfilled. Furthermore no benefit is to be granted to the party as 30-6-1995 was declared by the Government as working days and normal functions were carried Gift on the said date. The SRO 484(1)/92 applies to machinery imported during the period commencing from 1st December 1990 and ending on the 30-6-1995. This SRO is subject to section 30 of Customs Act, 1969. The value and rate of duty shall be applicable as on the date the manifest is delivered and the bill of entry is filed. The petitioner's machinery for which bill of entry was filed does not qualify for exemption as the relevant conditions in terms of SRO 484(1)/92 were not fulfilled by the petitioner/Importer. The petitioner was entitled to take benefit of SRO 484(1)/92 provided the manifest was delivered and the bill of entry was based upon the maifest was filed on or before 30-6-1995. It is further stated
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that the vessel arrived on 30-6-1995 and accordingly Import General Manifest was filed after 30-6- 1995. Resultantly, the goods imported are liable to be released against payment of standard rate of duty/taxes leviable thereon. SRO dated 4-10-1995 allows exemption from Customs duty and sales tax in excess of 25 % liveable thereon read with SRO 484(1)/92 dated 14-5-1992. This was the relief allowed by the Government for machinery consignments arrived after 30-6-1995. If the goods do not qualify the conditions mentioned in S.R.O. 484(1)/92, the same are liable to be released against payment of leviable, duty/taxes and standard rate. Full exemption in terms of SRO 484(1)/92 dated 14-5-1992 cannot be granted as the goods in question arrived after 30-6-1995 (if not being manufactured locally). The learned Advocate for the petitioner has submitted that the petitioner had acquired vested rights on the SRO 484(1)/92, dated 14-5-1992 and this concession cannot be withdrawn because petitioner had acted under assurance mentioned in this SRO. Mr. Farogh Naseem, Advocate for the petitioner has cited number of decisions wherein in identical circumstances the goods were released subject to furnishing of indemnity bonds to the satisfaction of the Customs Authorities. He has referred to order of Hon'ble Supreme Court in Civil Petition No.695-L of 1996 dated 11-2-1996 which is as under:--- "The learned counsel states that in a number of similarly placed cases and the identical facts the High Court had directed the release of goods on furnishing of indemnity bond. That being so the goods of the petitioner may also be released on the furnishing of indemnity bond to the satisfaction of the Collector of Customs." He has also re(erred to order in W. P. No. 1221 of 1995 and W. P. No. 1174 of 1995 the relevant portion of the order, dated 8-10-1995 in W.P. No. 1221 of tF 1995 is as under:--- "In view of the above, ad interim relief is granted to the petitioner with the direction that machinery be released to the petitioner on furnishing of indemnity bond in terms of SRO No.484(I)/92 dated 14-5-1992 to the satisfaction of the Collector of Customs, Karachi." Similar is the order in W. P. No. 1174 of 1995. The learned Advocate for the petitioner has also referred the decisions reported in PLD 1987 Kar. 63. He has also relied on decision reported in 1993 SCMR 6Q He has also placed reliance on decisions reported in 1986 SCM R 1917 on point of creation of vested rights. The arguments and contentions of the petitioner and respondents have been examined. According to respondents SRO 484(1)/92 allows exemption from Customs duty and Sales Tax to machinery imported during the period commencing from 1st December, 1990 and ending on 30-6-1995. The value and rate is determined as on the date the manifest is deliverer and bill of entry if filed. This SRO cannot be made applicable to the goods, which arrived after 30-6-1995. The goods of petitioner arrived on 30-6-1995 and manifest was filed after 30-6-1995 after the expiry of SRO 484(1)/92. Accordingly it can be said that benefits of SRO 484(1)/92 were available in all cases where Import General Manifest was filed prior to 30-6-1995 and bill of entry was also submitted before this date There is a dispute of few days only and according to petitioner delay was caused because of political victimization otherwise he was entitled to benefits of SRO 484(1)/92. The counter-affidavit filed by Mr. Ahmed Mujtaba Memon Assistant Collector, Customs mentions that duty is chargeable on a standard rate of duty/taxes. It is stated that vessel arrived on 30-6-1995 but it has not been clarified in the affidavit as to how much amount is payable by petitioner. The petitioner wants the machinery for installation as allowed and the respondents want duty/taxes. The amount is not mentioned. The learned Advocate for the petitioner has submitted that vested rights were created because all contracts were prior to 30-6-1995. In similar cases the Hon'ble Supreme Court and Lahore High Court, following the order of Supreme Court in Petition A No.695- L/1996 dated 11-2-1996, we order that the machinery in question be released to the petitioner on
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furnishing of indemnity bond to the satisfaction of Collector of the Customs, Karachi. The petition may be fixed for regular hearing within three months. (Sd.) Amanullah Abbasi, J. DR. GHOUS MUHAMMAD, J.---I have gone through the order proposed to be delivered by my learned brother i.e. Amanullah Abbasi, J., on the application for interim relief. I quite agree with the conclusion arrived at by my learned brother, however, I would venture to record my own reasons for arriving at the said conclusion because the listed application was argued at some length. 2. The relevant facts for a just disposal of the matter are that the petitioner secured a sanction to set up a sugar mill from the Government of Sindh through letter, dated 14-12-1989. It is alleged by the petitioner that the sanction was withdrawn through letter, dated 9-2-1991 on the pretext that sugar mills in Sindh were on the negative list. Despite the same the sanction of the petitioner was awarded to someone else. In this respect the petitioner has attached documents marked Annexures A-2, B-1 and B-3. On these alleged facts the petitioner has tried to forward the case that right from inception the project has been subject to political harassment and victimization. Thereafter, the sanction earlier accorded to the petitioner stood revived vide Government of Sindh's letter dated 15-12-1993, while it is also alleged that the financial institutions responsible for according loans to the project of the petitioner's on mala fide reasons further delayed the project. 3. It is alleged by the petitioner that while relying upon SRO 484(1)/92 dated 14-5-1992 (hereafter referred to as "SRO 484"), the petitioner finalised contracts with foreign exporters all prior to 30-6- 1995 (as per list' enclosed Annexure F-3 and F-4) to import plant and machinery which were not locally manufactured, for the purposes of installing the same in the petitioner's sugar mill proposed to be set up in a rural district i.e. Tharparkar. 4. It is alleged by the petitioner that it submitted documents to the concerned financial institutions to establish letters of credit for the purposes of import while moving 29 applications, out of which 25 were submitted to the financial institutions prior to 30-6-1995 and the remaining four were part and parcel of the earlier applications. It is alleged by the petitioner that the financial institution established letters of credit of 13 applications prior to 30-6-1995 while the remaining letters of credit were opened after the said date It is alleged by the petitioner that the delay has been caused due to the harassm ent caused by the Government as also the mala fide stance of the financial institutions to thwart the petitioner's project. 5. It is the case of the petitioner that the Government through 2 other Notifications i.e. S.R.O.-(1)/95, dated 4-10-1995 and. S.RO. (1) /95, dated 29-10-1995 imposed customs duty and sales tax including regulatory duty to the detriment of the petitioner thus undermining the petitioner's exemption under S.R.O. 484. 6. Mr. Muhammad Farogh Naseem, the learned counsel for the petitioner has contended that the petitioner has acquired a vested right to seek clearance of its imported plant and machinery in issue under S.R.O. 484 since while relying upon the said S.R.O. 484:--- (i) the petitioner had finalized all the contracts of import of the plant and machinery with the foreign exporters during the pendency of the said S.R.O. 484 i.e., prior to 30-6-1995 and it was immaterial that the goods arrived thereafter; (ii) the petitioner had established the letters of credit of major portion of the total value of the plant and machinery prior to 30-6-1995, while the subsequent letters of credit which were established after that day were essentially part and parcel of the earlier letters of credit; (iii) delay, if any, was not attributable to the petitioner and the same was due to harassment by the Government and the mala fide stance of the financial institutions. In support of this the learned counsel for the petitioners has placed as Annexure C-1 and E-3, which are essentially letters dated 7-12-1993 and 3-5-1994 issued by the Government of Pakistan Finance Division (Investment Wing),
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confirming that the petitioner's project had been politically victimized and that delay, if any, had been occasioned due to no fault of the sponsor's/petitioner's. 7. Mr. Muhammad Farogh Naseem, the learned counsel for the petitioner in support of his contention that vested rights in the facts of the case had accrued to the petitioner which could not be destroyed or taken away, has relied upon the following:--- (i) Associated Trading Co. Ltd. v. C.B.R., PLD 1987 Kar. 63; (ii) Al Samrez Enterprises v. Federation of Pakistan 1986 SCM R 1917; (iii) W.P. No.1174 of 1995 recently filed in the Lahore High Court, Rawalpindi Bench in which interim orders had been passed; (iv) W.P. No.1221 of 1995 recently filed in the Lahore High Court, Rawalpindi Bench in which interim orders had been passed; (v) Civil Petition No.695-L of 1996 recently filed in the Supreme Court in which also interim orders have been passed; 8. In further support of his above contention, Mr. Muhammad Farogh Naseem has forwarded the proposition that in a fiscal tax matter one a petition is admitted the Courts as a matter of course ought to grant interim relief, since the very fact that the petition has been admitted confirms that the petitioner has made out a prima facie case. In this respect the learned counsel has placed reliance upon: --- (i) Inayat Hussain v. Union of India (1980) 122 ITR 227; (ii) Gulistan Textile Mills v. Federation of Pakistan 1994 PTD 58.1; (iii) Kamran Industries v. Collector of Customs PLD 1996 Kar. 68 p.100 M; 9. The learned counsel for the petitioner has further placed reliance upon a number of orders/decisions to state that while granting interim relief in a tax matter the Court ought also to consider the convenience of both parties. The Court in this regard ought not to put the petitioner on terms which are extremely onerous or which would amount to directly or indirectly making available funds, which are part of the disputed amount. The learned counsel stated that if such onerous terms are given the same would be completely against the concept of writ jurisdiction. In regard to this proposition as also by way of illustration as to how in some other tax matters the Superior Courts have granted interim relief, reliance has been placed upon:--- (i) M/s. Usman Glass Sheet Factories Ltd. v. Assistant Collector, Customs PLD 1968 Dacca 276; (ii) M/s. Inter Ocean Cargo Services, Karachi v. Federation of Pakistan 1992 PTD 1411; . (iii) M/s. Nasir Flour Mills (Pvt Ltd., Karachi v. Federation of Pakistan1994 PTD 1421; (iv) M/s. International Tea Traders v. Federation of Pakistan 1994 PTD 1422; (v) Pakistan Paper Products v. Income Tax Officer, C.P. No.B-1584 of1992; (vi) Mansoor Ali v. Federation of Pakistan C. P. No. D-1044 of 1993 (vii) Abdul Cadir Adam Saedat v. Federation of Pakistan C.P. No.D-122 of 1993. In the end Mr. Farogh Naseem has pressed that the idea of any interim injunction is to protect the weaker against the stronger 1987 CLC 1322 while in this case the petitioner, as assessee, a tax payer, who has placed reliance upon the Government's exemption has imported plant and machinery for its proposed project while in this case if an interim relief is not accorded great hardship would ensue, millions would be lost, feasibility of the project will be disturbed, and it is in the interest of all concerned that the interim relief be granted. 10. Mr. Farooq H. Naek, the learned Deputy Attorney-General appearing for the respondents has vehemently opposed the listed application while propounding the following objections:--- (a) the petition is premature as the bills of entry have neither been filed nor any assessment made thereon, while in default whereof it is not possible to determine as to whether the petitioner is entitled to the exemption under S.R.O. 484 and whether the petitioner is able to meet the conditions of the said S.R.O. 484. In this regard he has cited section 30 of the Customs Act, 1969;
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(b) Mr. Farooq H. Naek, the learned D.A.-G. Has further stressed that a person can only be entitled to the benefit of S.R.O. 484 if, inter alia, three important conditions stated therein are fulfilled--- (i) the proposed plant and machinery to be imported is not locally manufactured; (ii) the imports are made before the cut off dated (i.e. 30-6-1995) spelt out in the S.R.O. 484; (iii) the proposed unit is to be set up in some rural area as stated in Table of S.R.O. 484; After spelling out the above conditions the learned D.A.-G. Has emphatically stressed that the petitioner has not been able to meet any of the conditions listed above in view whereof it is not entitled to the exemption under S.R.O. 484. 11. Mr. Farogh Naseem the, learned counsel for the petitioner in his reply to the objections of the learned D.A.-G. Has stated that the same are not tenable at all in that:--- (a)Article 199 of the Constitution not only envisages an impugned action, which has already taken place but also a 'threatened action'. Furthermore, one the C.B.R. Has already taken a stance by issuing 2 subsequent notifications in suppression to S.R.O. 484, it would be complete exercise in futility to wait for any assessm ent/order by the Collectorate who would not go against the orders of the C.B.R. In this respect reliance has been placed on:-- (i) S. Abdullah & Co. v. Collector of Customs PLD 1992 Kar. 258; (ii) Baluchistan Textile Mills Ltd. v. C.B.R. 1984 CLC 2192. (b) Also the very fact that the respondents have filed a counter-affidavit to the main petition in which at various places it had been categorically stated that the petitioners are not entitled to the benefit under S.R.O. 484, the contention of the D.A.-G. That the petition is premature since the department has not taken a decision as to whether or not the petitioner is in fact entitled to the benefit under S.R.O. 484, is completely misplaced; (c)the listed application has to be allowed since although a counter-- affidavit to the main petition has been filed, no counter-affidavit to the interim application/affidavit has been moved; (d)as regards the objection of the learned D.A.-G. That the conditions spelt out in S.R.O. 484 have not been met by the petitioner, Mr. Farogh Naseem stated that this is only an attempt to entangle the Court with facts that are neither in issue nor the same can possibly be in dispute in that--- (i)there is no dispute that the plant and machinery in issue are not locally manufactured as the same have been confirmed by the letter of C.B.R. Dated 14-9-1995 attached as Annexure I. Also in this regard there is no specific denial in the counter-affidavit; (ii)there is little doubt that the petitioner's unit is proposed to be set up in a rural area i.e., District Tharparkar. In this respect the petitioner has attached letter of Government of Sindh dated 14-12- 1989 and 15-12-1993 attached as Annexures A-2 and C-2 confirming the location, while there is no denial to that extent in the counter-affidavit; (iii)as regards the cut off date argument put forward by the learned D.A.--G. The counsel for the petitioner reiterated his argument on the front of vested rights, as summarized in paragraph 6 above. 12. I have gone through the record and analyzed the arguments of both sides. I am of the view that the contention of the learned counsel for the petitioner carries force that one a petition in a tax matter is admitted that ipso facto shows that the petitioner has made out a prima facie case, in view whereof interim relief may be granted. As regards as to what would constitute a prima facie case many decisions can be cited for the point that a prima facie case would not necessarily mean something that would definitely succeed but for which something could be said in favour by the petitioner. On this score the case of Inayat Hussain cited above and relied by the counsel for the petitioner is quite relevant. Furthermore, while examining the merits I also feel that there is a prima facie case since in the decision of Associated Trading Company Limited v. C.B.R. Cited above it has clearly held that if during the pendency of an exemption notification contracts with foreign exporters are finalized the petitioner acquired a vested right to seek clearance of goods in terms of
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the said notification. In this respect the two orders from the Lahore High Court, Rawalpindi Bench, in W.Ps. Nos. 1174 of 1995 and 1221 of 1995 relied upon by the counsel for the petitioner are quite relevant as in both cases, the Lahore High Court while construing the same S.R.O. 484 on more or less identical facts has admitted the petition and granted interim relief while placing reliance upon the case of Associated Trading Company. Furthermore I have also perused the recent order and Memo. Of the petition filed in the Supreme Court in Civil Petition No.695-L/96 touching upon the same S.R.O. 484 where one again on more or less similar facts (i.e. That the contracts of imports have been finalized with the foreign exporters before 30-6-1995 and that some letters of credit have been established before that date and the remaining letters of credit established thereafter are to be construed as part and parcel of the earlier letters of credit), interim relief has been granted by the Hon'ble Supreme Court, despite the judgment in Molasses Trading v. Federation of Pakistan 1993 SCM R 1905, the import of section 31-A of the Customs Act and that S.R.O. 484 itself spells out that the machinery has to be imported between 1-12-1990 and 30-6-1995. I have further been able to place my hands on M/s. M.Y. Electronics Industries (Pvt.) Ltd. v. Government of Pakistan 1994 SCM R 2123 where a Full Bench of the Honourable Supreme Court while continuing the interim relief has granted leave to examine…
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