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Petitioner: FECTO BELARUS TRACTOR LTD. VS Respondent: GOVERNMENT OF PAKISTAN through JUDGMENT
Court Name: Supreme Court of Pakistan Judge(s): Iftikhar Muhammad Chaudhry, Rana Bhagwan Das, Shakirullah Jan Title:FECTO BELARUS TRACTOR LTD. vs GOVERNMENT OF PAKISTAN through
JUDGMENT
Reported As: 2005 PTD 2286 Result: Order accordingly Judgment JUDGMENT IFTIKHAR MUHAMMAD CHUDHRY, J.---Petitioner seeks indulgence of the Court for initiating suitable action for contempt of Court in accordance with law against the persons or any other person is mentioned in the list appended with the application or against anyone else, who is involved for violating the judgments dated 19th February, 2001 passed in Civil Review Petition No. 80 of 1999 by this Court. 2. In view of the importance of the matter, we consider it appropriate to look into the background of the case. It is significant to note that as far back as 1994 the Government of Pakistan launched a scheme for providing tractors to the agriculturists/farmers under the Awami Tractor Scheme, through Agricultural Development Bank of Pakistan, at subsidized rates. To achieve the object, the payment of Customs Duty and Sales Tax was exempted in terms of S. R. 0 . No. 921(I)/1994, dated 22nd September, ' 1994 and S.R.O.No.1189(I)/1994, dated 11th December, 1994. Accordingly the scheme was implemented and on the accomplishment thereof, the S.R.Os referred to hereinbefore were substituted with S.R.O. No.388(I)/1996, and S.R.O. 414(1)/1996, dated 13th June, 1996 respectively in pursuance whereof 10% Customs. Duty and 18% Sales Tax on the import of Tractors were imposed. Subsequent thereto the Government of Pakistan launched Awami Tractor Scheme No. II for importing 10,000 Tractors. As the petitioner succeeded in fulfilling the specified conditions for the import of Tractors including the one to sell a Tractor at a price' of Rs.2,30,000, therefore, the letter of authorization was issued to it on 26th June, 1996 by the Ministry of Food, Agriculture and Livestock Government of Pakistan (hereinafter referred to as `MINFAL'). The
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contents of letter expressly provided that all concession provided under the first phase of scheme would be available to the petitioner as well and directions were issued to it to open letter of credit before 30th June, 1996. This letter was followed by another letter, dated 27th June, 1997, issued by the "MINFAL", by way of a corrigendum, stating therein that the authorization letter issued in favour of the petitioner for the second phase of Awami Tractor Scheme was subject to amendment to the extent that the fixed price of the Tractor would be enhanced in the event of any fluctuation in the Exchange rate of US Dollars over Rs:3-5.72. Furthermore, it was clarified that price of Rs.2,30,000 as agreed upon by the petitioner, was on the assumption that no Sales Tax had been imposed and that concession provided under S.R.O. No.921(I)/1994, dated 22nd September, 1994 would continue in favour of petitioner for the import of the Tractors. It was the case of the petitioner that despite clear directions noted hereinabove Ministry of Finance imposed upon it Sales Tax at the rate of 18%. Customs Duty at the rate of 10% and the Service Charges at 2% respectively, therefore, it invoked the jurisdiction of learned Lahore High Court for the redressal of its grievance, by filing Constitution Petition No. 21972 of 1996, but could not get relief as the petition was dismissed having become infructuous in view of the statement made by learned Deputy Attorney-General, representing the Government of Pakistan that the matter in issue was examined by the. Economic Co-ordination Committee (hereinafter referred to as "ECC") and the attention of the Court was drawn towards the approval granted by the competent authority whereby certain adjustment had taken place for the Awami Tractor Scheme. Leaving the petitioner at liberty to file fresh petition to question the adjustment made by the ECC, the High Court disposed of the petition vide order, dated 24th February, 1997. 3. Petitioner preferred ICA, which was allowed on 4th August, 1997 declaring that petitioner was entitled to avail all concessions like exemption from the payment of Customs Duty and Sales Tax, in the same manner and to the same extent, which were made available under the original Awami Tractor Scheme qua the import of 10,000 Tractors by it under the authorization letter, dated 26th June, 1996 and respondents Nos. 1 and 2 were restrained from withdrawing or amending the same to the disadvantage of the petitioner. 4. Against the order of ICA Bench, the respondents approached this Court by filing petition for leave to Appeal being No.1084-L of 1997 wherein on 9th October, 1997, leave was granted and finally the appeal was accepted on 1st September, 1999. Contents of the concluding para. Read as under thus:-- "In the result, there appears to be force in the contentions raised by the learned Attorney-General. Resultantly, the appeal is allowed and the judgment of the High Court is set aside. There will, however, be no order as to costs in view of the questions raised by the parties." 5. Petitioner preferred a Civil Review Petition being No.80 of 1999 wherein following prayer was made:-- "It is, therefore, respectfully prayed that the order and judgment, dated 1-9-1999 may graciously be reviewed and the appeal of the Respondents may kindly be dismissed." The above-noted review petition was allowed vide judgment, dated 19th February, 2001. Concluding para. Therefrom read thus:-- "(37). To sum up, it is crystal clear that withdrawal of SRO exempting the payment of customs duties and the sales tax would not be applicable to the second phase of the scheme for the import of tractors because the Government itself after the withdrawal of notification had resiled from it to the extent of the import to be undertaken by the petitioner. Secondly, relying upon. Al-Samrez case referred to hereinabove, the sales tax like the customs duty could not be levied upon the import by the petitioner because the petitioner is protected on the doctrine of estoppel as well as under the Economic Reforms Act, 1992.
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For the foregoing reasons, we would review the judgment with the result that the judgment of the Lahore High Court, dated 4th August, 1997 is restored, earlier judgment of this Court, dated 1st of September, 1999 rendered in C.A. No. 1176 of 1997 recalled and appeal dismissed with costs." 6. It appears that during pendency of the petition for leave to appeal, a request was made by the official respondent that the operation of the judgment 4th August, 1997 passed by the learned High Court in I.-C.A. No. 84 of 1997 may be suspended. Request so made was allowed by way of granting interim relief in chamber on 1st September, 1997. However, while granting leave to appeal on 9th October, 1997 the condition of interim order was modified, thereby directing the petitioner to furnish Bank Guarantee or Bank Guarantees of a Scheduled Bank to the satisfaction of the Collector Customs concerned within a period of one month or earlier. Accordingly, on acceptance of their Appeal No.1176 of 1997, the Bank Guarantees were got encashed by them. 7. However, after the decision of Civil Review Petition No.80 of 1999 vide judgment, dated 19th February, 2001, petitioner approached the Central Board of Revenue (hereinafter referred to as CBR') for refund of the amount, paid towards the Customs Duty as well as Sales Tax and Service Charges. As needful was not done, therefore, petitioner filed instant petition for initiating action for contempt of Court against the respondents. 8. From the above facts following question emanates for consideration:--- Whether respondents have committed contempt of Court by not refunding the Customs Duty, Sales Tax and the Service Charges to the petitioner in view of the judgment, dated 19th February, 200.1 in C.R.P. No.80 of 1999? 9. Learned counsel contended that as a matter of right petitioner was entitled for refund of Customs Duty, Sales Tax and Service Charges amounting to Rs.493,467,838 (four hundred ninety three million, four hundred sixty seven thousand and eight hundred and thirty eight) which were illegally recovered from it by encashing its unconditional bank guarantees furnished by it in pursuance of order of this Court, dated 9th October, 1997 but instead of doing needful the Customs Department vide letter, dated 11th May, 2001, asked the petitioner to submit a certificate from a Chartered Accountant, confirming whether the incidence of Sales Tax has not been passed on to the consumers and reiterated this demand knowing well that the bank guarantee had been furnished unconditionally. However, petitioner without prejudice to its case in good faith obtained a certificate from their Chartered Accountant and submitted the same clarifying that during the period from 1st July, 1996 to 30th June, 2000, the Sales Tax has not been charged on the invoices raised by the Company but surprisingly instead of fulfilling the requirement as aforesaid, the C.B.R., while defying the order of this Court, dated 19th February, 2001, declined to accede to the request of the petitioner on the plea that it had set up a committee to look into the issue i.e. Whether the burden of Sales Tax has been passed on or not by the petitioner vide letter, dated 9th April, 2002. According to him this device was adopted with a view to flout/violate/reverse the judgment of this Court. He emphasized that the C.B.R. Had no legal authority to raise such objection for the first time. Though this plea was available to them at the time of hearing of CRP No.80 of 1999, thus the respondents were estopped from raising this plea. 10. He argued that petitioner furnished bank guarantee equal to the amount of Customs Duty, Sales Tax and Service Charges in pursuance of leave granting order, dated 9th October, 1997 in Civil Petition No.1084-L of 1997, therefore, as soon as the judgment passed in Civil Appeal No.1176 of 1997, dated 1st September, 1999 was recalled on 19th February, 2001, the petitioner as a matter of right was entitled to the refund of the amount but C.B.R. On one pretext or the other deferred the payment in clear violation of the judgment passed in Civil Review Petition No.80 of 1999, dated 19th February, 2001. According to him the C.B.R. Could not be allowed on any ground, whatsoever, to non-implement the judgment, including the questions which are now being raised for the first time.
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11. On the other hand learned Attorney General for Pakistan assisted by Mr. Muhammad Afzal Siddiqui, Advocate Supreme Court contended that at the time of hearing of the Review Petition before this Court and even in the earlier litigation there was no question before the Court for determination "whether incidence of Sales Tax has passed on to the consumer of Tractor or not". He emphasized that the burden of Sales Tax has to be shared ultimately by the purchaser, therefore, to ascertain the correct position a committee was constituted by the C.B.R., who had no intention to flout/violate/severe the judgment of the Court, although judgment dated 19th February, 2001 contained no directions for the refund of Customs Duty, Sales Tax and Service Charges. Besides, in the meantime, respondents had received evidence that Tractors had been sold by the petitioner at higher rate ranging between Rs.399,000 to 4,35,000, inclusive of Sales Tax, etc. Qua the price fixed by the `MINFAL" i.e. Rs.2,30,000, therefore, it had become all the more necessary to probe into the matter. 12. Learned Attorney-General also contended that the principle of unjust enrichment is fully invoked in the judicial system of this country notwithstanding the fact whether adjustment of the tax has got the statutory backing or not because if it is established that incidence of Customs Duty and Sales Tax have been passed on to the consumers by the importer, then latter is not entitled to the refund of the same. 13. It may be noted that instant proceedings have been instituted for initiating action for contempt of Court against the C.B.R. And its officers. A careful perusal of the judgment, dated 19th February, 2001, reveals that on accepting the review petition, the judgment in Civil Appeal No. 1176 of 1997, dated 1st September, 1999 .Was recalled as a result whereof the judgment, dated 4th August, 1997 of Lahore High Court stood restored. These two judgments do not contain any direction that petitioner would be entitled to refund of Customs Duty and Sales Tax etc. Automatically. For convenience sake concluding para from the judgment of High Court, dated 4th August, 1997 is reproduced hereinbelow:-- "(18). For the foregoing reasons, we accept this appeal, set aside order, dated 24-2-1997 passed by the learned Single Judge and hereby declare that the appellant is entitled to avail all these concessions as regards exemption from the payment of the customs duty, sales tax, service charges and other taxes in the same manner and to the same extent which were made available under the original Awami Tractor Scheme in relation to import of 10,000 Tractors by it under the authorization, dated 26-6-1996 and respondents 1 and 2 are hereby restrained from withdrawing or amending the same to the disadvantage of the appellant. The parties are however left to bear their on costs." 14. Learned counsel for petitioner in order to substantiate his plea relied upon the following judgments:-- 1. Hadkinson v. Hadkinson (1952) 2 All E.R. 566: 2. The State v. Muhsin Tirmizey (PLD 1964 (W.P.) Lahore 434): 3. Dr. A.N.M. Mahmood v. Dr. M.O. Ghani VC. (PLD 1967 Dacca 67) 4. Ekka Tonga Mazdoor Union v. The Aligarh Municipal Board (AIR 1967 Allahabad 93) 5. Syed Aftab Ejaz v. The State (PLD 1978 Lahore 361) 6. Sri Kirshna Singh v. Mathura Ahir (1981) 4 SCC 421 7. Issacs v. Robertson (1984) 3 All E.R. 140 It is observed in this case that order made by the Court of unlimited jurisdiction in the course of contentions between orders that are 'void' in the sense that they can be ignored with impunity by those persons to whom they are addressed, and orders which are `voidable', in the sense that they may be enforced until set aside, since any order must be obeyed unless and until it is set aside and there are no orders which are void ipso facto without the need for proceedings to set them aside. 8. X. Ltd. And another v. Morgan Grampian (Publishers) Ltd. And others. (1990) 1 All E.R. 616
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9. Rana Muhammad Akram Khan v. The State (1993 PCr.LJ 2044) 10. Anil Sharma v. Virmani (1996 Cr. Li 3137). "Learned counsel contended that in this case the Court has held that it is settled proposition of law that the Contempt of Court cannot go behind the order. The opposite parties cannot be permitted to judge the merits themselves of an order quashed by High Court or they cannot be permitted to defy the Court's order on the ground that the order is not correct. If this is to be permitted, the entire judicial structure will fall down and every person will defy the orders on the ground that the order is not correct." Therefore, learned counsel's submission was that in instant case, the C.B.R. Had absolutely no authority to appoint a Committee for the purpose of ascertaining as to whether the incidence of burden of Sales Tax has been passed on or not.. 11. M.F.M. Y Industries Ltd. v. Collector of Customs (PLD 1996 Karachi 542) Learned counsel contended that in this judgment it has been held that it is totally unprecedented that a department would await the advice from the administrative agency before the implementation of the order, as it had happened in the instant case that the concerned Collector instead of refunding the amount, approached the C.B.R. To avoid the effect of the judgment, therefore, strictly in accordance with the observation made in this reported judgment instant application has been filed for the proceedings of contempt of Court. 12. Abhijit Tea Company Ltd. v. Terai Tea Co. (P.) Ltd. (1996) 1 SCC 589 13. Naveed Nawazish Malik v. Ghulam Rasool Bhatti (1997 SCMR 193) It is held in this case that to disobey or disregard an order, direction or process of Court which a person is legally bound to obey, wilful breach of any undertaking given to a Court, any act intended to or which tends to bring the authority of the Court or the administration of law into disrespect or disrepute and to obstruct, interfere, interrupt or prejudice the, process of law or the due course of any judicial proceeding fall within the category of contempt of Court. 14. Al-Jehad Trust v. Federation of Pakistan. (PLD 1997 SC 84) 15. Government of Sindh v. Muhammad Hussain (2000 SCMR 1241) 16. M. Adil Hayat Khan v. Government of Sindh (PLD 2002 Karachi 131) It is held in this case that the act of justifying the disobedience of the Court's Order, which is very clear and can be understood by any person who has passed the High School Examination in Pakistan reflects his stubborn and unreasonable attitude. 17. Wyatt Tee Walker et al. v. City of Birmingham (US Supreme Court Reports (388 US 307) "In this case it is held that as a general rule, an unconstitutional statute is an absolute nullity and may not form the basis of any legal right or legal proceedings. Yet until its unconstitutionality has been judicially declared In appropriate proceedings, no person charged with its observance under an order or decree may disregard or violate the order or the decree with immunity from a charge of contempt of Court; and he may not raise the question of its unconstitutionality in collateral proceedings on appeal from a judgment of conviction for contempt of the order or decree..... 15. Learned Attorney-General contended that in absence of a specific direction to refund Sales Tax to petitioner or for that matter Customs duty, no criminal liability of contempt of Court can be imposed upon the C.B.R. Or its Officers. He referred to the following judgments:- 1. Hayat Ahmed Khan v. Bashir Sadiq (PLD 1952 Lahore 48). -------------------- In my opinion answer must be in negative. Firstly if contravention of an order is to be visited with penalties of a criminal nature that order may be in clear and precise terms, setting out the obligations resting upon the person affected in clear and unmistakable language. The obligation must not rest upon any implication to be derived from any words used in respect of other matters by the Court, it must be couched in express terms and must be brought directly to the notice of the party."
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2. State of Pakistan v. Mehrajuddin (PLD 1959 SC (Pak.) 147) In this judgment it has been held as follows:-- "It is true that the usual method of enforcing a judgment granting an order of mandamus is by commitment for contempt but such a mandamus must be of an absolute nature. An order directing the reinstatement of a person in a great public Department is not one which can be executed on the instant. It involves a great many considerations such as seniority, suitability, salary, and treatment of the period of absence etc., which are exclusively within the competence of the relevant executive authorities and can only be decided by those authorities after a good deal of examination and care, involving the exercise of discretion and judgment in regard to many complex matters. Therefore, an order directing the reinstatement of a person cannot be regarded as an absolute order of mandamus, non-compliance with which may peremptorily be visited by a proceeding in contempt. In the present cases, the orders of mandamus were themselves incompetent and therefore, for that reason as well, the High Court should have hesitated before issuing the notices in contempt which they did. Learned Attorney-General in view of above observation stated that firstly neither this Court nor the High Court had issued absolute direction for the refund of the Customs Duty and Sales Tax, etc., therefore, the C.B.R. Acted within its jurisdiction and was competent in law to ascertain as to whether incidence of Sales Tax had been passed on or not. 3. Qadeer Ahmad v. Punjab Labour Appellate Tribunal (PLD 1990 SC 787). ................................................... In order to make out a case for contempt, it was necessary to establish a specific direction and its breach by the party. In the case in hand no express order was passed in the judgment which was being utilized by the appellants for claiming payment of back-benefits. Therefore, in fact no breach had taken place for which the respondent could be held in contempt." Learned Attorney-General heavily placed reliance on this judgment and argued that comparative study of the judgment of Lahore High Court, dated 4th August, 1997 as well as the judgment of this Court in Review Petition, clearly demonstrate that no directions were made for the refund of the Customs Duty. Sales Tax and Service Charges by any of these Courts. 4. Muhammad Sadiq Leghari Registrar High Court of Sindh (PLD 2002 SC 1033). "We may observe here at the very outset that a distinction has to be made between a case of contempt of Court based on defiance or violation of a judicial order in the nature of temporary injunction by a party whereby such party was restrained from acting in a particular manner but in spite of service of notice or having come to know of the passing of such order, acts in a manner to alter the position to his advantage so as to frustrate the temporary injunction and an act of mere non-submission of a report called for by the Court by an Officer of the Court. In the former case, the Court would take strict view and mere act of defiance of the judicial order would be itself justify raising of presumption that the doer of the act was guilty of contempt of Court unless he proves otherwise whereas in the latter case, it has to be determined on application of judicial mind as to whether the appellant deliberately did not submit the report on account of having personal interest in any of the parties to cause damage to the other party in the case in which the report was called or had any personal interest which, if proved or established would make the act of non-submission of the report mala fide. In the absence of any of these factors and element of contumacy, his conduct could not be held to have suffered from mala fides or contempt of Court. It has been held in the case of Behawal v. The State PLD 1962 SC 476 that mere noncompliance of an order, in the absence of contumacy, would not amount to contempt of Court." 16. From the judgments relied upon by both the sides, inter alia, following principles emanate:-- (1) Orders made by a Court of unlimited jurisdiction in the course of continuous litigation are either regular or irregular. It is misleading to draw distinction between orders that are "void", in the sense that they can be ignored with impunity by those persons to whom they are addressed, and orders
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which are "voidable" in the sense that they may be enforced until set aside, since any order must be obeyed unless and until it is set aside and there are no orders which are void ipso facto without the need for proceedings to set them aside. [1984 (3) All ER 140 (Issacs v. Robertson]. (2) If a contravention of an order is to be visited with penalties of a criminal nature that order must be in clear and precise terms, setting out the obligations resting upon the person affected in clear and unmistakable language. The obligation must not rest upon any implication to be derived from and words used in respect of other matters by the Court; it must be couched in express terms and must be brought directly to the notice of the party. (Hayat Ahmed Khan v. Bashir Sadiq (PLD 1952 Lahore 48). 17. In view of the principles discussed in above judgments, it is contended by the learned Attorney- General that without prejudice to his other pleas, in absence of any specific directions to refund Sales Tax and Customs Duty etc, and for lack of contumacious acts by the C.B.R. Or its officers, no proceedings for contempt of Court can be initiated against them, therefore, he prayed for the rejection of the application. 18. We have considered the arguments of both the sides, keeping in view the relevant record maintained by this Court, pertaining to C.P.S.L.A. No. 1084-L of 1997, C.A. 1176 of 1997 and C.R.P. No. 80 of 1999 as well as judgment of Lahore High Court, Lahore passed in I.-C.A. No.84 of 1997 in Writ Petition No.1972 of 1996, concluding paras wherefrom have already been reproduced hereinabove. A careful perusal of above orders indicates that vide order, dated 9th October, 1997, passed by this Court at the time of granting leave to appeal. Bank Guarantee was furnished by the petitioner but in the decision of Civil Review Petition No.80 of 1999, dated 19th February, 2001, no directions were made to refund Customs Duty or sales Tax, therefore, it is held that the amount received by the respondents…
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