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Petitioner: CHARSADDA SUGAR MILLS LTD. VS Respondent: GOVERNMENT OF PAKISTAN AND OTHERS
Court Name: Peshawar High Court Judge(s): Qaisar Khan, Shah Zaman Babar Title: CHARSADDA SUGAR MILLS LTD. vs GOVERNMENT OF PAKISTAN AND OTHERS Case No.: Writ Petition No, 22 of 1969 Date of Judgment:1970-11-05 Reported As: PLD 1971 Peshawar 210 Result: Petition allowed
JUDGMENT
JUDGMENT QAISAR KHAN, J.--This is a writ petition under Article 98 of the Constitution filed by the Charsadda Sugar Mills Ltd., Charsadda (hereinafter referred to as the petitioner) against the Government of Pakistan through the Secretary, Ministry of Finance, the Central Board of Revenue through its Chairman and the Collector of Central Excise and Land Customs, Lahore. The petitioner has prayed for the following reliefs : -- (a)To declare that the Excise Duty on Production Capacity (Sugar) Rules, 1966 (hereinafter referred to as the Rules) were not good law and Notification No, S. R. 0. 87 (R)/66promulgated on 11-6-66 was not enforceable. (b)To declare that the notification directing the assessment of duty on the basis of production capacity could not be given effect to and in terms of the express provisions of section 3 (1) and section 3 (7), Central Excises and Salt Act of 1944, the only method of levying excise duty legally available to the respondents was on the basis of actual production of sugar. (c)To direct the respondents that any determination of the production capacity of ttie petitioner could only be done after inviting/permitting the petitioner to lead evidence relevant to the matter and that respondent No, 2 could not determine the production capacity of the petitioner's Sugar Mill otherwise than by giving the petitioner an opportunity of being heard and that the law contemplated their passing a speaking order in this behalf. (d)To declare and order for the reasons explained in paras. 18, 19, 20 and 21 of the writ that respondent No, 2 was bound to allow the petitioner rebate from payment of excise duty for a period of 41 days as against 32 days allowed by respondent No, 2. (e)To declare the order of respondent No, 2 fixing the production capacity of the petitioner at
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30,000 tons for the year 1966-67 and at 26,000 tons for the year 1967-68 as illegal and that as such no action could he taken on its basis. (f)To declare that the amendments introduced by the Finance Act, 1966 in section 3 of the Central Excises and Salt Act, 1944 were ultra vires. (g)To direct the respondents to levy and realize from the petitioner excise duty on the production of sugar on the basis of sugar actually produced by it in any year. (h)To direct the respondents to refund to the petitioner any amount realized from it in excess of its legal liability. (i)To grant any other or further relief that the Court may deem fit or proper in the circumstances of the case. In the exercise of its power under Article 131 of the Constitution read with item 43, Clause (ti) of the Taird Schedule thereof, the Central Government have exclusive powers to make laws for the levy, collection, etc. of the duty of excise. The excise duty on sugar manufactured at the sugar factories in Pakistan was levied at the rate of Rs, 14 per hundredweight under section 3 of the Central Act called the Central Excises and Salt Act of 1944 (hereinafter referred to as the Act) at item No, 8 of the First Schedule of the Act. Section 3 of the Act runs as follows :- "3(i) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in Pakistan and a duty on salt manufactured in, or imported by land into, any part of Pakistan, as, and at the rates, set forth in the First Schedule. (ii)The Central Board of Revenue may, by notification in the official Gazette fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specifically or under general headings, in the First Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force. (iii)Different tariff values may be fixed for different classes or descriptions of the same articles. (iv)Notwithstanding anything contained in subsection (1), the Central Government may, in lieu of levying and collecting duties of excise on excisable goods under that subsection, levy and collect, in such manner and at such rates as may be prescribed, duties of excise on the productive capacity of the plant or machinery, or a part thereof, manufacturing or producing excisable goods." 3. According to the Constitution (Sixth Amendment) Act II of 1966 which came into force on 31-3- 1966, clause (i) was added after clause (h) of item No, 43 of the First Schedule. Clause (i) runs as follows :- "(i) Taxes and duties on the production capacity of any plant, machinery, undertaking establishment or installation in lieu of the taxes and duties specified in items (b), (c) and ( f ) of this entry, or in lieu of any one or more of them. 4. In exercise of its power under Article 131 of the Constitution read with Clause (i) of Item 43 of the First Schedule thereof, the Central Legislature amended section 3 of the Act vide Finance Act XI of 1966. The Finance Bill of 1966 was introduced in the National Assembly on 11-6-65 and published in the Gazette, Extraordinary of Pakistan on the 17th of June 1966. It became Act on the 30th of June 1966 and was published in the Gazette, Extraordinary of Pakistan the same day. It was to be effective from the 1st of July 1966. According to the aforesaid amendment, subsection (iv) of section 3 of the Act was replaced by the following subsections (4), (5), (6) and (7)- "S. 3. Subsection (iv).--With the prior approval of the Central Government, the Central Board of Revenue may, in lieu of levying and collecting under subsection (i) duties of excise on excisable goods, by notification in the official Gazette, levy and collect duties on the production capacity of plants, machinery undertakings, establishments or installations producing or, manufacturing such goods and such notifications shall specify--
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(a)the guiding principles for the determination of production capacity, (b)the production capacity, as determined in accordance with such guiding principles, of the plants, machinery, undertakings, establishments or installations affected by it, (c)the duty or the rate of duty on production capacity, and (d)the manner of collection of such duty. (v) The production capacity of any plant or machinery or part thereof specified in a notification under subsection (iv) shall, upon an application made to the Central Government within thirty days of the notification by any aggrieved person, be reviewed by a Review Board constituted under subsection (iv) to which the application shall be referred; and the decision of the Review Board shall be final. (vi) The Central Government shall, for the purpose of subsection (v) constitute a Review Board consisting of the following :- (a)the Secretary to the Government of Pakistan, Ministry of Finance, who shall be the Chairman, (b)the Secretary to the Government of Pakistan, Ministry of Commerce, and (c)the Secretary to the Government of Pakistan, Ministry of Industries. (vii) The Central Board of Revenue may, by notification in the official Gazette, at any time, cancel a notification under subsection (iv); and where a notification is so cancelled or, for any reason whatsoever, cannot be given effect to, the duty under subsection (i) in lieu whereof the duty under subsection (iv) was levied by such notification, shall be levied and with necessary adjustment, collected for the financial year during which such notification is cancelled or for the period for which it cannot be given effect to." 5. In exercise of its power under subsection (iv) of section 3 of the Act read with section 37 thereof, the Central Board of Revenue with the prior approval of the Central Government made the following rules for the levy and collection of a duty on the production capacity of the plants and machinery of the factories manufacturing sugar, in lieu of the duty of excise leviable on sugar under subsection (i) of the said section. "1.--(1) These rules may be called the Excise Duty on Production Capacity (Sugar) Rules, 1966. (2) They shall come into force on the first day of July 1966. 2. Unless there is anything repugnant in the subject or context, words and expressions used in these Rules shall have the same meaning as in the Central Excises and Salt Act, 1944 (I of 1944) and the rules made under section 37 thereof. 3. The production capacity of the plant and machinery in each factory shall be determined with reference to-- (a) the manufacturers' declarations about the production capacity of his factory made to Government in any conection; (b)the daily-rated capacity of the factory for the crushing of sugarcane and beet ; and (c)the percentage of the yield of sugar from sugarcane and beet ; and (d)the actual production of sugar in the preceding years. 4. If a factory works for less than one hundred and sixty days in a financial year, then for each day, short of the said period of one hundred and sixty days, on which the factory does not work an abatement from duty leviable under rule 3 shall be allowed at the rate of one hundred and sixtieth of the total amount leviable for the financial year; Provided that, in the calculations for the purpose of allowing abatement under tnis rule, the following events shall not be taken into account, namely :- (1) any closure of the factory for a period of less than six days at a time, or (ii)any closure of the factory for more than a period of six days at a time about which advance notice was not given in writing to the proper officer ; or (iii)any closure of the factory for normal cleaning, repair or maintenance purposes.
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5. The annual amount of duty leviable in accordance with rule 3 for a financial year shall be paid on twelve equal monthly instalments : (1)Provided that, for the financial year 1966-67, if the manufacturer so desires, the total amount of duty may be paid in eight equal monthly instalments commencing from October 1966. (2)The proper officer shall deliver to a manufacturer, in the month of July a demand for the amount of duty due from the manufacturer under these rules, indicating both the total amount of duty for a financial year and the amount of the monthly instalment. (3)The monthly instalment for the month of July shall be paid by the 31st of July and the instalments due for subsequent months shall be paid by the twentieth day of the respective months. 6. Nothing in these rules shall apply to sugar manufactured by a factory and not cleared therefrom on payment of excise duty before the coming into force of these rules; nor shall these rules affect the liability of such sugar to excise duty under subsection (1) of section 3 of the Act. 7. The provisions of the rules made under section 37 of the Act, shall in so far as they are not inconsistent with these rules, apply to sugar and the manufacturers governed by these rules as they apply to excisable goods and manufacturers of excisable goods on which duties of excise are levied under subsection (1) of the section 3 of the Act. THE SCHEDULE S. No.Name of the Sugar Factory Annual Production Capacity Tons 1. Desh Bandu Sugar Mills Ltd., Charshahr3200 2. Kishwerganj Sugar Mills, Kashoreganj Mymensingh.4500 3. Zealpak Sugar Mills Ltd. Dewanganj My mensingh.12800 4. Rajshahi Sugar Mills, E.P.I.D.C., Harian, Rajshahi.12800 5. Sitabganj Sugar Mills (Private Ltd.) Setabganj, Dinajpur10200 6. North Bengal Sugar Mills (Private Ltd.) Gopalpur, Rajashahi19400 7. Rangpur Sugar Mills Limited, Rangpur19200 8. M/s. Carew & Co. Limited Darsana, Kushtia15400 9. Thakurgaon Sugar Mills E.P.I.D.C., Thakurgaon Road.13300 10. Jaipurhat Sugar Mills, Jaipurhat, Bogra.25600 11. Kushtia Sugar Mills, E.P.I.D.C., Jagatikushtia12800 12. Frontier Sugar Mills & Distillery, Takht-i-Bhai, Mardan.19000 13. Premier Sugar Mills Limited, Mardan 69700
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14. The Rahwali Cooperative Sugar Mills, Rahwali, District Gujranwala.10400 15. Kohinoor Sugar Mills, Jauharabad, Sargodha.23500 16. Leiah Sugar Mills, Leiah. 23100 17. Charsadda Sugar Mills Ltd., Charsadda35000 18. Crescent Sugar Mills & Distillery Lyallpur41900 19. Hyesons Sugar Mills Ltd., Jetha Bhutta, Khanpur.25000 20. Bannu Sugar Mills, Serai Naurang, Bannu16200 21. Fauji Sugar Mills, Tando Muhammad Khan, Hyderabad.24600 22. Habib Sugar Mills Ltd., Nawabshah 23700 23. Bawany Sugar Mills Ltd., Talhar, Hyderabad.19200 24. Mirpurkhas Sugar Mills Ltd., Mirpukhas19200 These production capacities of the various sugar mills were fixed for production of sugar both from beet and sugarcane. 6. These rules were published in the Gazette, Extraordinary of Pakistan on 11-6-66 and were to take effect from 1-7-66. The petitioner thereupon filed a review petition to the Revenue Board, set up under subsection (6) of section 3 of the Act and the Review Board by its order dated 24-10.66 reduced its production capacity to 30,000 tons for the year 1966-67 and 32,000 tons for the year 1967-68 and the succeeding years. By Notification No, S.R.O.1659 (K)/67 dated 23-9-67 the production capacity of the petitioner was reduced from 35,000 tons to 28,800 tons. This reduction was allowed on the ground that according to the amended rules duty on sugar produced from beet was not to be levied on production capacity basis. This notification does not indicate as to whether it applied to the production capacity for the year 1966-67 as well or not. According to counsel for the petitioner it did apply to the year 1966-67, while according to the counsel for the respondent it did not. It appears that this notification was issued without taking into consideration the order of the Review Board, reducing the production capacity of the petitioner from 35,000 tons to 30,000 tons for the year 1966-67 and to 32,000 tons for the year 1967-68, for if the order of the Review Board had been taken into consideration then the reduction for the year 1967-68 should have been from 32,000 tons to 28,800 tons and could not have been from 35,000 tons to 28,000 tons as given in the notification. 7. The petitioner again filed a review petition against the aforesaid notification dated 23-9-67 fixing its production capacity at 28,800 tons for the year 1967-68 and the Review Board by its order dated 16-2-68 reduced its production capacity to 26,000 tons for the year 1967-68. The net result of the above was that the production capacity of the petitioner was fixed for sugar produced from sugarcane and beet both during the year 1966-67 at 30,000 tons and for the sugar produced from the sugarcane alone at 26,000 tons for the year 1967-68 and the succeeding years. It is under these circumstances that the writ petition was filed. 8. The vires of the Act was questioned on the ground that subsection (4) of section 3 of the Act as
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substituted by the Finance Act of 1966 was ultra vires being against the provisions of the constitution as also on account of excessive and impermissible delegation of power which conferred upon respondent No, 2, the authority to impose tax, to determine the rate of duty and to lay down the guiding principles for determining the production on which tax was to be imposed, which in turn meant delegation of uncontrolled legislative powers without declaring with precision or at all the principle or policy of law imposing the tax. The vires of the rules was questioned on the ground that on 11-6-66 these could be made by the Central Government and not by the Central Board of Revenue as the Finance Act of 1966 received the assent of the President on 30-6-66. But before assailing the vires of the Act and the rules, the learned counsel for the petitioner Mr. Mahmood Ali Qasuri raised the following contentions alleging that the assessment of the production capacity was without lawful authority and of no legal effect even if the Act and the rules were intra vires :-- (i) That the assessm ent of the production capacity was arbitrary as no record was asked for from the petitioner and neither was any pro forma supplied by the petitioner nor any data collected by the respondents. (ii)That the production capacity of the petitioner was fixed by the Assessing Authority without giving the petitioner an opportunity of hearing and its order was, therefore, bad in law. (iii)That whenever there was a right of correction by a higher authority of an order, the order must be a speaking one giving reasons therefor, which had not been done. (iv)That the Mills should have been dealt the separately and (sic) assessing the Mills collectively at the same time showed that the Assessing authority could not and had not applied its mind to the case of the petitioner and had, therefore, not dealt with the case fairly, justly and equitably, which the authority was bound to do. (v)That according to the written statement of the res-pondents the Review Board had laid down certain principles of universal application which were nowhere disclosed and that the petitioner had a right to know those principles before his review petitions were disposed of. (vi)That the production capacity of all the Mills could not be determined at the same time on 11-6- 66 when the rules laying down the guiding principles were framed, that if these production capacities had been determined earlier, then these were not determined under the rules and the guiding principles were evidently not taken into consideration. (vii) That the production capacity of the petitioner's Mills could not be fixed at 30,000 tons for the year 1966-67 as against 26,000 tons for the year 1967-68, because the production capacity had to be the same for each and every year. (viii) That the rules were framed and published on 11-6-66 in exercise of powers under subsection (4) of section 3 of the Act read with section 37 thereof and that since subsection (4) of section 3 was nowhere in existence on 11-6-66, the rules could not be framed under the law which was not in existence and were, therefore, bad in law. (ix)That the liquidation period of two days had wrongly been added to the yearly working days of the petitioner's Mill while allowing rebate and that the same liquidation period had wrongly been subtracted from the breakdown period of 7 days. 10. The Advocate-General on behalf of the respondents met these contentions by alleging that there was no right of hearing before the Assessing Authority and that at any rate hearing was given to the petitioner by the Review Board, which was sufficient. According to the learned counsel the production capacity had been correctly determined in the case of the petitioner according to the relevant law and rules and that the liquidation period of 2 days had to be subtracted while counting the breakage period and had to be added to the yearly working days. 11. Now we proceed to deal with the aforesaid contentions seriatim :
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Points: (0, (iii) and (iv) are interconnected and, therefore, dealt with jointly. The learned counsel for the petitioner contended that there was no material whatsoever before the Assessing authority on which it could determine the production capacity of the petitioner and that the Assessing authority by dealing with the cases of all the Mills collectively had prejudiced the petitioner's case and had not acted justly, fairly and equitably because in the circumstances it was not possible for the authority to apply its mind to each and every case individually. He further contended that whenever there was a right of correction of a certain order by a higher authority, the order to be passed by the lower authority shout I be a speaking order giving reasons therefor; otherwise the higher authority would not be in a position to perform its duty properly. In this connection the learned counsel referred to the fixation of the production capacity of the Textile Mills and contended that before fixing the production capacity of the Textile Mills the Government appoint. ed a Committee vide Notification No, 5/16-CS (B&L)/67 dated 12-8-67, published in the Gazette, Extraordinary of Pakistan dated 12-8-67 for determining the production capacity of each mill, which Committee properly dealt with the case of individual Mill and on receipt of the report of the said committee regarding the production capacity of each mill, the Central Board of Revenue thereafter notified rules under section 3 (4) of the Act fixing the production capacity of each mill. According to the learned counsel that was the proper procedure which would have been followed in cases of the Sugar Mills as well for giving the Mills a proper opportunity of presenting their cases. Learned counsel for the respondents on the other hand contended that the Assessing authority had material before it in the form of statements annually received from the Mills regarding their actual production, on the basis of which to assess the production capacity and that the Assessing authority was an administrative body, which was not bound to write detailed orders, giving reasons therefor. Learned counsel for the petitioner met these contentions by alleging that the order of the Assessing authority did not show even this much that it had considered the statements sent by the petitioner and that even an administrative tribunal was bound to act judicially if it had to give a decision affecting the property of a person after considering evidence before it. For this he relied on Halsbury's Laws of England Third Edition, Volume II, pages 55-56. It is laid down there that; 'Even an administrative body in ascertaining facts or law may be under a duty to act judicially notwithstanding that its proceedings have none of the formalities of, and are not in accordance with the practice of, a Court of law. It is enough if it is exercising, after hearing evidence, judicial functions in the sense that it had to decide on evidence between a proposal and an opposition. A body may be under a duty, however, to act judicially although there is no form of lb inter partes before it; it is enough that it should have to determine a question solely on the facts of the particular case solely on the evidence before it. Moreover an administrative body, whose decision is actuated in whole or in part by questions of policy, may be under a duty to act judicially in the course of arriving at that decision." One of the authorities mentioned in Note (b) under para. 114 of the aforesaid Halsbury Laws at page 56 shows that even the duty of an Assessing authority has been held to be judicial. 12. After considering the arguments of the counsel for the parties, we have come to the conclusion that the assessm ent of the production capacity by the Assessing authority has been done in an arbitrary manner without the least, conforming to principles of natural justice as there is nothing to suggest that any material whatsoever was taken into consideration by the Assessing authority or that the case of each Mill had been dealt with by it fairly, justly and equitably. The order of the Assessing Authority was, therefore, bad in law and the order of the Review Board based on the said order was also bad in law in view of the principle laid down in the authority reported in Yousuf Ali v. Muhammad Aslam Zia and 2 others . 13. So far as point No, (ii) is concerned, the case of the petitioner is that the Assessing authority did not at all hear it while fixing the petitioner's capacity at 35,000 tons according to notification1
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dated 11-6-66 and also again did not hear the petitioner while fixing its capacity at 28,000 tons on 23-9-67. It was not denied by the respondents that no hearing was given to the petitioner for the foresaid assessm ents, but the contention of the learned counsel for the respondents was that since the Assessing authority was not acting judicially, and since there was no provision in the Act or the rules for any hearing, the petitioner was not entitled to be heard. For this reliance was placed on the authority reported in Tafazzal Hussain v. Government B of East Pakistan and another . Counsel for the petitioner on the other hand contended that the maxim audi alteram partem (no man shall be condemned unheard) was not confined to only judicial proceedings but extended to all proceedings even before administrative Tribunals which affected the person or the property of a party, that the absence of any provision as to notice in the statute could not override the principle of natural justice and that order affecting right to property could not be passed without affording an opportunity of hearing to the party. According to the learned counsel the right of hearing was deemed to be present in every enactment in the absence of any provision to the contrary Since there was no provision to the contrary in the Act or the…
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