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Petitioner: SANDAL DYE STUFF INDUSTRIES LTD. VS Respondent: FEDERATION OF PAKISTAN through JUDGMENT
Court Name: Lahore High Court Judge(s): Ihsan-ul-Haq Chaudhry Title:SANDAL DYE STUFF INDUSTRIES LTD. vs FEDERATION OF PAKISTAN through
JUDGMENT
Reported As: 2000 CLC 661 Result: Petition dismissed Judgment JUDGMENT ' The petitioner through this Constitution petition has prayed that the letter dated 22-6-1998 be declared without lawful authority. 2. The relevant background of the matter is that the petitioner is an importer of basic chemicals for Dyestuffs. It filed Writ Petitions Nos.7882 of 1996 and 358 of 1996 whereby it was claimed that it was not liable to pay Regulatory Duty in respect of L.Cs. And Bill of Entry mentioned therein. There were a large number of similar writ petitions filed by importers in different High Courts of the Country. The writ petitions on the subject filed at Lahore were heard by learned Division Bench of this Court. The main judgment was written in Writ Petition No,17231 of 1995 titled "Messrs Flying Board and Paper Products v. Central. Board of Revenue, Government of Pakistan etc.", which was accepted and it was held that withdrawal of the exemption of payment of Sales Tax cannot be given retrospective effect and the vested right already accrued cannot be interfered with. The respondents were also directed to refund whatever amounts they have received in violation of that judgment. The Department challenged the decision in the Honourable Supreme Court. The appeal was accepted vide judgment dated 12-1-1999, which is reported as Collector of Customs and others v. Ravi Spinning Ltd. And others 1999 SCM R 412. The Department after the decision of the Honourable Supreme Court issued demand notice, dated 22-6-1999 for payment of Regulatory Duty in the light of the judgment of Supreme Court of Pakistan. The petitioner has challenged the same through this writ petition, which came up for limine hearing on 30-6-1999 when the same was admitted to hearing and notices were issued to the Deputy Attorney-General. However, Mr. A. Karim Malik, Advocate appeared for the respondents and pointed out that Writ Petition No,10050 of 1999
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involving exactly the same controversy was pending before this Bench, therefore, my learned brother Malik Muhammad Qayyum, J., directed this petition also to be heard along with the aforementioned writ petition. However, Writ Petition No,10050 of 1999 was dismissed as infructuous on 15-7-1999. The respondents have appeared and contested the petition. 3. The learned counsel for the petitioner argued that earlier two Writ Petitions Nos.7882 of 1996 and 358 of 1996 filed by his client were accepted vide judgments dated 28-8-1996. The respondents did not challenge the decision, therefore, the same became binding and it cannot be now bye-passed or ignored. It was past and closed transaction and the impugned notice was, therefore, illegal. It was added that earlier judgment of learned Division Bench of this Court in favour of the petitioner was binding being judgment in personam. In this behalf, reliance is placed on the judgment in the case of Pir Bakhsh v. The Chairman, Allotment Committee and others PLD 1987 SC 145. It was argued that the judgment of the Honourable Supreme Court would operate prospectively and not retrospectively.. In this behalf, reliance was placed on Muhammad Yusuf v. The Chief Settlement Commissioner and Rehabilitation Commissioner, Pakistan, Lahore and others PLD 1968 SC 101, Income-tax Officer, Central Circle II, Karachi and another v. Cement Agencies Ltd. (PLD 1969 SC 322), Abdul Hakim and 2 others v. Saadullah Khan and 2 others PLD 1970 SC 63, Nainsingh v. Koonwarjee and others AIR 1970 SC 997. Haji Sultan Muhammad and another v. Muhammad Sadiq PLD 1973 SC 347, Mian Khalid Abdul Rauf v. Federation of Pakistan PLD 1987 SC 228 and Sakhi Muhammad and another v. Capital Development Authority, Islamabad PLD 1991 SC 777. The other argument was that the judgment of the Honourable Supreme Court in the case of Ravi Spinning Ltd. And others (supra), if read closely would also support the claim of the petitioner that it was not liable to pay Regulatory Duty. 4. On the other hand, Mr. A. Karim Malik, Advocate argued that the present petition is the exact copy of Writ Pettion No,10050 of 1999 except one para. It was, therefore, maintained that the petitioner intentionally and mala fide suppressed the factum of the aforementioned writ petition. The purpose was to secure interim relief. It was added that the representation has not been appended with the writ petition, therefore, it cannot be said as to whether the points now being raised were raised in the representation or not? It was submitted that Writ Petition No,10050 of 1999 was disposed of, therefore, the same points cannot be raised in the present writ petition. It was argued that the petitioner has pleaded the facts generally without reference to any letter of credit. It was added that the purpose was to avoid payment of the Regulatory Duty on one or the other pretext as long as possible. It was argued that the appeal could not be filed because the petitioner had impleaded the Lahore Collect orate also; therefore, six respondents could not decide who was to file the appeals. It was maintained that it was as factual controversy which has to be decided by the competent Authority in accordance with the facts and law applicable. It was added that the anxiety of the petitioner was to avoid the duty and so far it was successful as from 1996 it has very conveniently avoided the payment of Regulatory Duty by straightaway filing Constitutional petitions. It was argued that the petitioner should get the matter decided with reference to particular L.C. And Bill of Entry as held even in the judgment of Flying Board and Paper Products and then challenge the same in the forum provided under the Customs Act, 1969. 5. It was argued with reference to section 32(2) of the Customs Act, 1969 (hereinafter to be referred as Act of 1969) and section 39 of the Sea Customs Act, 1878 read with the provisions of Customs and Tariff Act (Act XIV) 1957 that as relevant S.R.Os. Were 'misconstrued' by this Court in the case of Flying Board and Paper Products, therefore, after authoritative interpretation by the Honourable Supreme Court the Department was well within its right to issue the impugned notice. This would be covered by the word 'misconstruction' as it was for the first time used in section 32(2) of the Act of 1969. It was argued that it was judgment in rem and not personam, therefore, not binding the moment it was set aside. In this behalf, reference was made to sections 41 and 56 of The Evidence
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Act and Article 55 of the Qanun-e-Shahadat Order, 1984. It was added that the judgment of the Honourable Supreme Court was binding on all and has to be given effect. In this behalf, reference was made to Articles 189 and 190 of the Constitution of Islamic Republic of Pakistan, 1973. It was pointed out with reference to Pir Baldish's case (supra), relied by the learned counsel for the petitioner, that the rule of stare decisis is not an inflexible and not applicable stricto senso to criminal; fiscal and Constitutional matters. It was explained that only law point was decided and not facts in earlier writ petitions. Now the same was to be applied by the concerned authority. It was yet to be seen whether to the given facts a particular S.R.O was applicable or not? It was added that the Honourable Supreme Court has given benefit to the importers only based in Gadoon Amezai while all other importers were found disentitled. 6. The learned counsel for the petitioner while summing up the arguments submitted that the facts have been properly narrated. The filing and acceptance of earlier petition was stated in para. 3 of the writ petition while the factum of Writ Petition No,10050 of 1999 was also mentioned. It was explained that in the note it was correctly stated that it was first petition because after the decision of the representation this was the first petition filed by it. In any case no mala fide was involved. It was argued that there was no merit in the argument of the learned counsel for the respondents that Article 189 of the Constitution, 1973 was not referred in Pir Bakhsh's case (supra). The same clearly was noted at page. 169 of the report. It was submitted that the petitioner did not give the details of letters of credit and bills of entry intentionally because the relief was being claimed purely on law point. It was argued that the judgment was announced on 12-1-1999 by the Honourable Supreme' Court but no notice within three months has been issued in terms of section 32(3) of the Act of 1969. It was added that the ratio decidendi of the case of Ravi Spinning Ltd. And others (supra) was that if there was no reference to Schedule I then no Regulatory Duty was to be paid. It was argued that S.R.O. 444, dated 13-6-1996 had not been discussed in the judgment in the case of Ravi Spinning Ltd. And others (supra) and the sanie was couched in quite different language than employed in the other S.R.Os., which were discussed by the Honourable Supreme Court. 7. I have given my anxious consideration to the arguments, gone through the record, provisions of law and precedent cases. The first question for determination is the effect of the decision in the earlier Writ Petitions Nos.7882 and 358 of 1996 filed by petitioner, which were heard alongwith a large number of similar petitions by learned Division Bench of this Court. The main judgment announced on 28-8-1996 was recorded in Writ Petition No,17231 of 1995. The concluding para. Of the judgment reads as under:--- "Resultantly, the impugned notification qua the withdrawal of the exemption in the payment of sales tax cannot be given retrospective effect and the vested right already accrued cannot be interfered with. Before concluding, we also direct the respondents to refund whatever amount they, have received from the petitioners in violation of aforesaid determination. There shall be no order as to costs." (pages-23 and 24) ' It is clear from the above that the impugned notification qua the withdrawal of the exemption in the payment of Sales Tax was declared illegal and Department was directed to refund whatever amounts have been received in violation of the said judgment. It was further held that the exemption in payment of Customs Duty envisaged under section 19 of the Customs Act of 1969 can now be altered after the inclusion of section 31-A in the Act of 1969 and the plea of vested right is no longer available. It was, however, held that exemption granted or incentive given cannot be frustrated simply by promulgation of notification imposing Regulatory Duty. The relevant portion of the judgment reads as under:- "In case of exemption granting notification if the same are holding the field then in that eventuality the regulatory duty cannot be claimed from them as it would amount to giving the benefit by one
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hand and taking away by another." (pages 20 and 21). 8. The writ petitions of the petitioners were simply disposed of in view of the legal position clarified in the judgment in case of Messrs Flying Board and Paper Products. The following is the text of the judgment announced in the writ petitions of the petitioner:-- "Tanvir Ahmad Khan, J.--- For the reasons recorded in our judgment of even date passed in Writ Petition 17231 of 1995 titled M/s Flying Board and Paper Products v. Central Board of Revenue, Government of Pakistan etc., this writ petition is disposed of in the terms mentioned therein with no order as to costs." It is clear from the above judgment that the aforementioned writ petitions were not accepted but simply disposed of for the reasons recorded in the judgment in the case of Messrs Flying Board and Paper Products while fate of the individual L.Cs. And Bill of Entry subject-matter of these writ petitions was left for the decision by the Department. This is admitted between the parties that the main judgment was challenged and was set aside by the Honourable Supreme Court vide judgment reported as Ravi Spinning Ltd. And others (supra), therefore, non-filing of appeals in the two writ petitions of the petitioner was of no legal consequence. 9. Assuming that the writ petitions of the petitioners had been accepted, the question for determination would be whether these were judgment in personam, therefore, due to the failure of the Department to challenge the same were binding on the respondents and a matter was past and closed? Whether S.R.O. 444, dated 13-6-1996 applied to the petitioner? The learned Division Bench has only adjudicated and declared the legal position without reference to the individual cases. The application or otherwise of S.R.O's. Was left to be considered as was clear from the following portion of the judgment:--- "However, before claiming the benefit of exemption, the conditions laid down in the exemption granting notification, the petitioners have to satisfy the respondents that their claim strictly falls within the purview of the exemption granting notification." (Page 19) ' Therefore, now the petitioner should secure the copies of individual orders and challenge the same in appeal. The writ petition is not competent. Moreover, the petitioner is raising self- contradictory pleas. If the S.R.O. 444 of 1996 has not been discussed by the Honourable Supreme Court in the judgment of Ravi Spinning Ltd. And others (supra), so is the position of the judgment of High Court. This renders the argument without merit. 10. This is not all. Mr. A. Karim Malik, Advocate has rightly pointed out with reference to para. 2 of the writ petition that the petitioner has pleaded that the goods imported by it were covered by S.R.Os. 487, 508, 444 and 555, dated 14-6-1995, 13-6-1996 and 12-6-1998 respectively and not only by S.R.O. 444 as argued by the learned counsel for the petitioner. This is not the end of the controversy. The learned counsel for the petitioner categorically argued that the petitioner has not referred to L.Cs. And Bill of Entry because the petitioner is seeking a declaration to the effect that letter, dated 22nd of June, 1999 was without lawful authority. The judgment of the Honourable Supreme Court was binding on all in view of the Article 189 of the Constitution of Islamic Republic of Pakistan, 1973 and I am afraid that this Court cannot readjudicate upon this issue once again while the Department was under legal obligation to decide the individual cases in the light of the rule laid down by the Honourable Supreme Court in the case of Ravi Spinning Ltd. And'others (supra). Moreover, through letter Department had based its demand on the orders passed in individual cases. Therefore, so long assessm ents were not set aside the amount demand be declared illegal. 11. The judgment declared only the legal position, therefore, it was not a 'judgment in personam'. It was in nature of 'judgment in rem'. The 'judgment in personam' is in short a declaration to one's rights personal and to property which would cover contract, title, property and marriage. He with reference to case of Pir Bakhsh (supra), heavily relied by the learned counsel for the petitioner,
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argued that this rule is not inflexible and is not attracted in criminal, fiscal and Constitutional matters. The relevant portion reads as under:--- "There is a distinction in what a case decides generally and as against all the world from what it decides between the parties themselves. Salmond 'on Jurisprudence', Twelfth Edition, at page 175, brings out this distinction in these words:- ' What it decides generally is the ratio decidendi or rule of law for which it is authority; what it decides between the parties includes far more than just this. Since it would be obviously impracticable if there were no end to litigation and if either party to a legal dispute were at liberty to reopen the dispute at any time, the law provides that once a case has been heard and all appeals have been taken (or the time for appeal has gone by) all parties to the dispute and their successors are bound by the Court's findings on the issues raised between them and on questions of fact and law necessary to the decision of such issues. According to this principle three matters are now res judicata between them and cannot be the subject of further dispute. But the Court's finding will not be conclusive except as between the same parties...Third parties not involved in the original case, however, will not be bound, nor will either of the original parties be bound in a subsequent dispute with a third party'. ' Elaborating further, it is the policy of the Courts to stand by the ratio decidendi, that is, the rule of law and not to disturb a settled point. This policy of the Courts is conveniently termed as the doctrine of rule of stare decisis. This rationale behind this policy is the need to promote certainty, stability, and predictability of the law. This, however, does not mean that this rule is inflexible. In this context, it will be of advantage to sum up what Hamoodur Rahman, C.J., in the case reported as Asma Jilani v. Government of the Punjab PLD 1972 SC 139, said- ' I am not unmindful of the importance of this doctrine but in spite of a Judge's fondness for the written word and his normal inclination to adhere to prior precedents I cannot fail to recognize that it is equally important to remember that there is need for flexibilit in the as 'lication of this rule for law of stand still nor can we become mere slaves of precedent' .... ' It will, thus, be seen that the rule of stare decisis does not apply with the same strictness in criminal, fiscal and Constitutional matters where the liberty of the subject is involved or some other grave injustice is likely to occur by strict adherence to the rule." ' Even the House of Lords has modified its present practice of giving strict adherence to its precedents. In this connection I would here refer to a Note published at page 77 in the case reported as Lloyds Bank Ltd. v. Dawson and others (1966)3 All ER 77, which reads:--- "Before judgments were given in the House of Lords on July 26, 1996, Lord Gardner, L.C., made the following statement on behalf, of himself and the Lords of Appeal in Ordinary:--- ' Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules. ' Their Lordships nevertheless recognize that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose, therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do. So. ' In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into. And also the especial need for certainty as to the criminal law. ' This announcement is not intended to affect the use of precedent elsewhere than in this House." ' There are, therefore, exceptions to the rigid adherence to this rule, and I am of the view that this Court being the Court of ultimate jurisdiction has power to review its own judgments. This doctrine
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should not be confused with res judicata which rests on a different principle. ' In American Jurisprudence 2nd, Volume 20, at page 521, the distinction between these two concepts is brought out in these words:-- "While res judicata applies only when the same parties, or their privies, are involved in the subsequent case as were involved in the prior case, the applicability of stare decisis is not affected by the fact that different parties are involved in the case where the precedent was established. Res judicata applies to decision of both law and facts. Stare decisis, on the other hand, is applicable only on questions of law. Res judicata is a rule of law that must be applied even where the decision binding as res judicata was, erroneous, whereas stare decisis is a judicial policy in which a certain flexibility is inherent, and which, therefore, does not prevent a Court from overruling its- prior decision if, upon re-examination thereof, it is convinced that the decision was erroneous. It has also been pointed out, as a difference between res judicata and stare decisis, that stare decisis is based upon the legal principle or rule involved in a prior case and not upon the adjudication which resulted therefrom, whereas res judicata is based upon the adjudication." ' Thus, in a given case. It is the thing the Court adjudges which constitutes estoppel under the doctrine of res judicata. But the reasons which the Court may give for the decision are not in themselves to be invoked as the estoppel under the doctrine of stare decisis. ' See Yazoo and M. V. R. Co. v. Adams 180 US 1 and Heisler v. Thomas Collier), Co.260 US 245. ' Here lies the distinction ' Cooley in his treatise "On the Constitutional Limitations", at page 50 while commenting on accepting adjudged cases as precedents, quotes Chancellor Kent saying:--- "A solemn decision upon a point of law arising in any given case becomes an authority in a like case, because it is the highest evidence which we can have of the law applicable to the subject, and the Judges are bound to follow that decision so long as it stands unreversed. Unless it can be shown that the law was misunderstood or misapplied in that particular case. If a decision-has been made upon solemn argument and mature deliberation. The presumption is in favour of its correctness, and the community have a right to regard it as a just declaration or exposition of the law, and to regulate their actions and contracts by it. It would, therefore, be extremely inconvenient to the public if precedents were not duly regarded, and implicitly followed. It is by the notoriety and stability of such rules that professional men can give safe advice to those who consult them, and people in general can venture to buy and trust, and to deal with each other. If judicial decisions were to be lightly disregarded, we should disturb unsettle the great landmarks of property. When a rule has once been deliberately adopted and declared, it ought not to be disturbed unless by a Court of appeal or review, and never by the same Court, except for very urgent reasons, and upon a clear manifestation of error and if the practice were otherwise, it would be leaving us in a perplexing uncertainty as to the law. This, in my view, is a very subtle exposition of a precedent being the highest evidence of the law and holds the field so long it is regarded as a good law on the principle of stare decisis." ' It is clear from the above that a general decision becomes an authority in like-case and the Judges are bound to follow the same so long as it stands unreversed. There is another very strict condition that the binding effect would disappear if it is shown that the law was misunderstood or misapplied in that particular case. Now in the case in hand the Honourable Supreme Court has reversed the judgment of High Court, so nothing is left in the judgment of High Court to follow. The controversy as to 'judgment in personam' and 'judgment in rem' is, therefore, not relevant beyond this stage. 12. The learned counsel for the Department argued that earlier the subject was governed by The Sea Customs Act (VIII of 1878) and section 39 of the said Act dealt with short levied, evasion etc. Of Customs Duty. The same was supplemented by the Customs and Tariff (Amendment) Act, 1957 (14
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of 1957). Ultimately the present Act of 1969 came into force and section. 31(3) is para materia to section 39 of the old Act but it extended the powers to reopen the matter besides the reasons of inadvertence etc. On the ground of misconstruction'. Subsection (3) of section 32 of Act, 1969 reads as under:--- "Where, by reason of any inadvertence, error or misconstruction, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within six months of the relevant date requiring him to show cause why he should not pay the amount specified in the notice." ' The word ' misconstruction' has not been defined in the Act or the General Clauses Act, therefore, we have to assign the dictionary meaning. In Chambers 21st Century Dictionary the word has been assigned following meaning:-- "misconstruction: an interpretation that is wrong or mistaken." ' The learned counsel for the Department argued…
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