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Official Citation: 2002 PLD 208
Court / Jurisdiction: Supreme Court of Pakistan
Year of Decision: 2000
Decision Date: 2000-09-26
Parties: PAKISTAN through Ministry of Finance Economic Affairs and another vs FECTO BELARUS TRACTORS LIMITED
This judicial decision was delivered by the Supreme Court of Pakistan on 2000-09-26. The matter involves proceedings between PAKISTAN through Ministry of Finance Economic Affairs and another and FECTO BELARUS TRACTORS LIMITED, officially reported as 2002 PLD 208. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.
Case cited as PLD 2002 Supreme Court 208
Court Name: Supreme Court of Pakistan Judge(s): Sh. Riaz Ahmad, Rana Bhagwan Das, Mian Muhammad Ajmal Title:PAKISTAN through Ministry of Finance Economic Affairs and another vs
FECTO BELARUS TRACTORS LIMITED Case No.: Civil Appeal No,1176 of 1997 Civil Review Petition No,80 of 1999 Date of Judgment:2000-09-26 Reported As: PLD 2002 Supreme Court 208 Result: Petition allowed Judgment ORDER SH. RIAZ AHMED, J.---This appeal out of petition under Article 188 of the Constitution of. Islamic Republic of Pakistan, 1973 read with Order XXVI, Rule 1 of the Supreme Court of Pakistan Rules, 1980 seeks review of the judgment of this Court, dated 1-9-1999 delivered in Civil Appeal No,1176 of 1997. Background of the litigation between the parties is that in 1994, the Government of Pakistan launched the Awami Tractor Scheme under which tractors were to be imported into Pakistan for being supplied to the local farmers and a Notification was accordingly issued to the effect that import of tractors under the said Scheme would be exempted from the payment of customs duty and sales tax etc. And initially the Agricultural Development Bank of Pakistan (ABDP) on behalf of the Government of Pakistan entered into agreements with the foreign tractor manufacturers including Minsk Tractor Works for the purchase of the tractors by directly opening Letters of Credit imported 20,000 tractors and supplied the same amongst the local farmers on credit basis though the Government had received over 120,000 applications/bookings for the purchase of the said imported tractors. 2. After the completion of, the first phase of the Awami Tractor Scheme, the Federal Government proposed a second phase in 1996. The petitioner which is a public limited company engaged in the manufacturing, assembling and sale of Belarus Model Tractors being one of the interested parties made proposals for the second phase of the Awami Tractor Scheme. On 16th of June, 1996 a meeting was held chaired by the Secretary, Ministry of Food, Agricultural and Livestock at Islamabad wherein the petitioner besides others also participated. Petitioner was intimated that
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the Government had approved the second phase of Awami Tractor Scheme which was to be processed on the terms and conditions noted below: (a) A base price of Rs,2,30,000 ex-Karachi was fixed for the petitioner. Different phases prices were fixed for different parties. The petitioner price was one of the lowest offered. (b) If Letter of Credits were opened by 30th of June, 1996, sales tax at 18% would be exempted on the import of tractors, and (c) All concessions provided under the first phase of the scheme would be available. 3. 'As stated above the concession provided in the first phase of the scheme included complete exemption from the payment of customs duty and sales tax in terms of SRO No, 921(1)/94, dated 22-9-1994 and SRO 1189(1)/94, dated 11-12-1994 which was modified by Ministry of Finance, Revenue and Economic Affairs, Pakistan vide Notification No,SRO 388(1)/96 and SOR 414(1)/96, dated 13th of June, 1996 imposing 10% customs duty and 18% sales tax on the import of tractors generally. 4. Pursuant to the decision taken in the meeting, dated 16th of June, 1996 (ibid) specifying the conditions for the import of tractors under the second phase, the petitioner was issued Letter of authorization on 26th of June, 1996 by Ministry of Food Agricultural and Livestock Pakistan and was permitted to import 11000 Belarus Tractors Model MTZ-50 providing expressly that all concessions provided under the first phase of the scheme would be available to the petitioner as well. The petitioner, however, was bound down to sell the tractors at the rate of Rs,2,30,000 and had to open the Letter of Credit before 30th of June, 1996. The said authorization letter did not at all specify that 11000 tractors should be imported physically until 31st of December, 1996. 5. Subsequently, on 27th of June, 1996, Ministry of Food, Agricultural and Livestock Pakistan issued a corrigendum directing that the authorization letter issued in favour of the petitioner qua 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 dollar over Rs,35.72. Furthermore, it was also 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 SRO No, 921(1)/94, dated 22-9-1994 would continue in favour of the petitioner for the import of the said tractors. 6. Grievance of the petitioner was that on the basis of the aforesaid letter of authorization granting concession for the import of these tractors in terms of Notification SOR 921(1)/94 and SRO 1189(1)/94 having the effect of grant of concession through statutory order on behalf of the Federal Government, it opened the Letter of Credits, entered into agreements for the import of tractors to Pakistan and spent huge amount of money, yet the Ministry of Finance Pakistan was bent upon to impose sales tax @ 18% on the import of the said tractors, customs duty @ 10% and service charges 2% respectively and obviously due to the imposition of the aforesaid duties, petitioner was absolutely unable to supply the tractors at the rate of Rs,2,30,000 per unit. 7. In the circumstances narrated above, the petitioner invoked the Constitutional jurisdiction of the Lahore High Court with an unambiguous prayer that: "Respondents 1 and 2 may be restrained from attempting to withdraw or amend the concessions granted under the second phase of the Awami Tractor Scheme in so far as they relate to the import of 10,000 tractors by the petitioner as per authorization granted to the petitioner under SRO No,921(I)/94. It is further prayed that respondents I and 2 may be directed not to impose any further customs duty, sales tax, regulatory duty, service charge and any other tax or duty on the 10,000 tractors being imported by the petitioner in the public interest. Any other relief which this Hon'ble Court may find just and necessary may also be granted." 8. A learned Single Judge of the Lahore High Court disposed of the aforesaid writ petition as having become infructuous as the learned Deputy Attorney-General representing the Federation of Pakistan had apprised the Court that the matter in issue was examined by the Economic
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Coordination Committee and the attention of the Court was drawn to the approval granted by the competent Authority whereby certain adjustments had taken place for the Awami Tractor Scheme, therefore, it was left open for the petitioner to file fresh petition to call in question the aforesaid adjustments. 9. The order of the learned Single Judge of the Lahore High Court, dated 24th of February, 1997 in Writ Petition 21972 of 1996 was assailed in an Intra-Court Appeal which was accepted by learned Judges of the Lahore High Court in terms of their order, dated 4-8-1997 whereby order of the learned Single Judge was set aside and it was declared that petitioner was entitled to avail all 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 qua the import of 10000 tractors by it under the authorization, dated 26-6-1996. As a consequence of the aforesaid direction, respondents 1 and 2 (in the I.C.A.) were restrained from withdrawing or amending the same to the disadvantage of the petitioner. 10. The respondents called in question the aforesaid order of the learned Judges of the Lahore High Court and vide order, dated 9th of October, 1997 this Court granted leave to appeal against the aforesaid judgment of a Division Bench of the Lahore High Court passed in I.C.A. No,84 of 1997 to consider as to whether keeping in view inter alia the above Notifications, respondent No,1, viz. Fecto Belarus Tractors Limited is liable to pay any Customs Duty and Sales Tax and finally in view of the acceptance of the appeal by this Court, judgment of the Lahore High Court was set aside in terms of judgment, dated 1-9-1999 which is under review before us. Before proceeding further it would be necessary to examine the scope of review conferred upon this Court by virtue of Article 188 of the Constitution and the relevant provision contained in Order XXVI, Rule 1 of the Supreme Court Rules, 1980 reads as under: "Subject to the law and practice of the Court, the Court may review its judgment or order in a civil proceeding on grounds similar to those mentioned in Order XLVII, rule 1 of the Code and in a criminal proceeding on the ground of an error apparent on the face of the record." Order XLVII, rule 1 of the Code of Civil Procedure reads as follows: "Application for review of judgment.---(1) Any person considering himself aggrieved- (a) (b) (c) and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the Court which passed the decree or made the order." 12. It may be submitted mat there is distinction between the review and rehearing and the attempt to reargue the appeal at review stage is not permissible. We are fortified in this view by the judgment of this Court reported as 1982 SCMR 350 and 1152, 1983 SCMR 177 and 1986 SCMR 1021. However, if the Court has overlooked some material questions of fact or of law which would have a bearing on the decision or there is otherwise B some apparent mistake or error on the face of the record, then of course the power of review can be exercised. As far as error apparent on the face of the record is concerned, it should be so manifest, so clear as could not be permitted by any ,Court to remain on record. Such error may be an error of fact or of law but must be self-evident and floating on surface. The orders based on erroneous assumption of material facts, or without adverting to a provision of law, or a departure from undisputed construction of law and
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Constitution, may, however, amount to error apparent on face of record. It must have also a material bearing on the fate of the case. These propositions were enunciated by this Court in the judgment reported as PLD 1979 SC 741, 1975 SCMR 115 and PLD 1984 SC 67. In another case reported as 1998 SCMR 908 (Sikandar Abdul Karim v. The State) the expression "error. Apparent on the face of record" was interpreted. While discussing its connotation, it was held that where an error of law or fact is discovered in an order by reading the order itself without reference to any other material, such an error would fall within the category of "an error apparent on the 'face of record. Failure of the Court while passing an order to notice or take into consideration a statutory provision, which if so considered would have changed the final outcome of the case would also amount to an error apparent on the face of the order". 13. Obviously, the case in hand seeking review of the judgment of this Court is to be decided in the light of the principles enumerated above. The precise question to be considered by this Court in deciding this Review. Petition revolves around the construction of the authorization letter, dated 26- 6-1996 and the legal implications arising therefrom in the light of the Economic Reforms Act, 1992 and also to explain the applicability of section 31-A of the Customs Act. In addition thereto, we have also to examine whether the doctrine of promissory estoppel can be invoked and as to whether there is a provision pari materia to section 31-A of the Customs Act in the Sales Tax Act. The case of the respondent Federal Government as canvassed in this Court was that in the light of the provision of section 31-A of the Customs Act, the petitioner was liable to pay the customs duty and other charges at the rate obtaining at the time of the import of tractors in terms of section 31-A of the Customs Act which reads as under:-- "Effective rate of duty.--(l) Notwithstanding anything contained in any other law for the time being in. Force or any decision of any Court, for the purposes of sections 30 and 31, the rate of duty applicable to any goo& shall include any amount of duty imposed under section 18, section 2 of the Finance Ordinance, 1982 (XII of 1982), and section 5 of the Finance Act, 1985 (I of 1985), and the anti- dumping or countervailing duty imposed under. The import of goods. Anti-dumping and Countervailing Duties, Ordinance, 1983 (III of 1983), and the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption or concession from duty whether before or after the conclusion of a contract or agreement for the sale of such goods or opening of a letter of credit in respect thereof. (2) For the purpose of determining the value of any imported or exported goods, the rate of exchange any foreign exchange is to be converted into Pakistan currency shall he the rate of exchange in force,-- (a) in the case of goods referred to in clause (a) of section 30, on the date (preceding the date), referred to in that clause; (b) in the case of goods referred to in clause (b) of the aforesaid section, on the date (preceding the date) referred to in that clause; and (c) in the case of goods referred to in section 31, on the date referred to in that section." 14. In fact section 31-A of the Customs Act, 1969 was a declaratory provision of law legislated to nullify the dictum of law laid down by the Supreme Court in Al-Samrez's case reported in 1986 SCMR 1917 wherein it was held that exemption from payment of customs duty or any increase in the rate of customs duty etc. cannot be withdrawn or made applicable retrospectively in respect of the consignment of which tirm commitments were made by the importer prior to the withdrawal of exemption or increase in the rate of customs duty. 15. It may be stated here that section 31-A of the Customs Act was inserted into the Customs Act, 1969 by virtue of Finance Act, 1988 (VI of 1988) and became effective on 26th of December, 1988. In the case reported as Yaseen Sons v. Federation of Pakistan PLD 1989 Kar.361, it was held that section 31-A of the Customs Act was a valid piece of legislation and its legality or validity could not
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be questioned unless and until it was shown that this provision was violative of any provision of the Constitution. Similarly, in another case reported as Hajira Rashid Gardezi v. The Deputy Collector of Customs PLD 1989 Lahore 38, it was laid down that section 30 read with section 31-A of the Customs Act affect the principles behind section 19 of the Customs Act and it cannot, therefore, be said that the liability for payment of the duty would still stand on the basis of the earlier exemption Notification which has been withdrawn. However, in cases reported as Federation of Pakistan v. M. Afzal & Sons and others (C.As. 210 to 215 of 1977), decided on 29-8-1991 following Al-Samrez case 1986 SCMR 1917, the view was modified in the judgment reported as.Federation of Pakistan v. Amjad Hussain Dilawari 1992 SCMR 1270. In this case while interpreting the effect of withdrawal of exemption from the payment of customs duty under section 31-A of the Customs Act it was held that where a particular article was exempted from payment of customs duty under section 19 of the Customs Act which exemption was later withdrawn, the benefit of exemption was available only in respect of those goods which were imported between the date, exemption was granted and the date it was withdrawn provided the bill of entry had been filed with the customs authorities before the date of withdrawal of exemption. 16. In the context of the case in hand, vide SRO No,921(1)/94, dated 22-9-1994, the Federal Government exempted tractors and their parts from whole of customs duty and sales tax if imported by the importer authorized by the Ministry of Food, Agriculture and Livestock. Further on 11-12-1994 in terms of SRO No,1189(1)/94 CKD components of tractors were exempted from whole of customs duty and sales tax if imported by local manufacturers. 17. The provisions of section 31-A with reference to section 19 of the Customs Act were again interpreted by this Court in the judgment reported as Molasses Trading and Export Limited v. Federation of Pakistan 1993 SCMR 1905 and it was held that merely because section 19 of the Customs Act. 1969 has not been mentioned in section 31-A (ibid) would not mean that the legal effect of the exercise of power under section 19 of the Customs Act read with section 21 of the General Clauses Act is not within the purview of section 31-A of the Customs Act. Withdrawal of exemption or concession by section 31-A of the Customs Act has a reference to the provision of section 19 of the said Act. Non obstante clause in section 31-A has the effect of setting at naught the effect of Supreme Court judgment in Al-Samrez Enterprise's case reported as 1986 SCMR 1917. The consequences that followed from the Act of withdrawal or modification of an exemption notification under section 31-A, Customs Act shall take effect with reference to the date of its issue irrespective of the fact that the contract for the import of goods and the letter of credit had come into existence prior to such date. The Courts would, therefore, have to give effect to this withdrawal or modification of concession, notwithstanding the decision of Supreme Court in the case of Al- Samrez Enterprise 1986 SCMR 1917. 18. The next aspect of the case to be considered is whether withdrawal of exemption under section 31-A, Customs Act has any nexus with the payment of sales tax. Answer obviously is in the negative. The import of the tractors by petitioner in the second phase of the scheme had been exempted from the payment of sales tax vide SRO No,1189(1)/94. The petitioner had concluded the contract with the exporter in respect of the imported goods and the letter of credit had also been opened in favour of the supplier. The subsequent withdrawal of exemption from the sales tax could not be pressed into service for protecting the levy of sales tax by the latter Notification because the contract had already been concluded between the importer and the supplier of the tractors, and therefore, the provisions of section 31-A of the Customs Act could not be invoked for the protection of levying the sales tax. We are fortified in this view by the judgment reported as Yaseen Sons v. Federation of Pakistan 1990 CLC 1989 and Al-Samrez case reported as 1986 SCMR 1917 as also in the case titled Crescent Pak Industries v. Central Board of Revenue 1990 PTD 29 relied upon in another judgment reported as Muhammad Abdullah v. Government of Pakistan PLD 1992 Kar.266.
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19. Evidently, this important legal aspect escaped the notice of this Court while delivering the judgment sought to be reviewed and, therefore, it is an error apparent on the face of the record which can be set at right and this aspect of the case can be reviewed. 20. It was vehemently argued that doctrine of promissory estoppel was fully attracted to the facts and circumstances emerging in the instant case. Recapitulating the brief history of the scheme for the import of tractors for agriculturists, Syed Sharifuddin Pirzada, Senior Advocate Supreme Court contended that in 1994 Awami Tractor Scheme was introduced for the import of tractors without levying the customs duty and the sales tax etc. And thus in this behalf SRO No,921(1)/94 was issued on 22-9-1994 exempting the import of tractors from the payment of customs duty and the sales tax. This decision was taken pursuant to the meeting held by the Secretary Food to the Government of Pakistan which was approved by the then Prime Minister of Pakistan and it was decided that the tractors will not be sold at a price more than Rs,2,30,000 per unit and the letter of credit had to be opened by 30-6-1996. On 26-6-1996 the Cabinet in its meeting decided to approve the scheme, dated 24-6-1996 and it was also decided that 10% regulatory duty should not be imposed. On 16-6- 1996 another Cabinet meeting was held in which it was decided to authorize the petitioner to import the tractors on the same terms and conditions which were made applicable in the case of Agricultural Development Bank of Pakistan while implementing the original first phase and the petitioner had installed the assembling plant for tractors as well. It was further contended that concessions as were applicable in the first phase would be made available to the petitioner provided letter of credit was opened by 30-6-1996 which the petitioner admittedly had opened on 26-6-1996. It was further asserted that by resiling from these conditions of contract by respondents, it was not possible for the petitioner to sell a unit of tractor at the rate specified by the Government of Pakistan, and through the applicability of the doctrine of promissory estoppel the Government of Pakistan could not impose the customs duty as well as the sales tax and the regulatory duty. In this behalf, reliance was placed on doctrine of promissory estoppel as well as the Economic Reforms Act XII of 1992. 21. The doctrine of promissory estoppel was attended to in the judgment impugned. In fact, the judicial activism innovated the doctrine of promissory estoppel. One of the earliest judgments on the subject is the case of Collector of Central Excise and Land Customs and others v. Azizuddin Industries Ltd. (PLD 1970 SC 439). In respect of excise duty it was held that the appellant had set up cigarette factory at Chittagong. On the basis of Notification exemption was granted from the payment of whole excise duty leviable thereon in respect of all excisable goods produced or manufactured. It was held that an executive authority cannot in exercise of the rule-making power or the power to amend, vary or rescind an earlier order take away the rights vested in the citizens by law. This doctrine was reiterated and reinforced by this Court in Al-Samrez Enterprises v. Federation of Pakistan 1986 SCMR 1917 wherein it was held that the exemption Notification is the basic right to public-at-large and it will be inequitable and unjust to deprive a person who acts upon such assurance of the right to exemption and expose him to unforeseen loss in the business transaction by suddenly withdrawing the exemption after he has made legal commitments. It is in this perspective-that a right is created in his favour and a subsequent withdrawal of exemption cannot be given retrospective operation by an executive act 'to destroy this right. 22. As already observed earlier to nullify the dictum of Al-Samrez case, section 31-A was incorporated in 1988 and inserted into the Customs Act,. 1969. The provision of section 31-A of the Customs Act was interpreted by this Court in the judgment reported as Mian Nazir Sons industries Ltd. And another v. The Government of Pakistan and others 1992 SCMR 883 and it was held that doctrine of promissory estoppel could not he invoked against Legislature or law framed by it because the Legislature cannot make a representation. But
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inapplicability of the doctrine of necessity as against the legislation was also laid down in another case 'reported as PLD 199! SC 546. 23. It will be necessary to touch the true concept of the doctrine of promissory estoppel. Before proceeding further this doctrine has been variously called 'promissory estoppel' requisite estoppel', 'quasi estoppel' and 'new estoppel'. It is a principle evolved by equity to avoid injustice and though commonly named 'promissory estoppel'. It is neither in the realm of contract nor in the realm of estoppel. The true principle of promissory estoppel seems to be that where one party has by his words or conduct made to the other'a clear and unequivocal promise which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or 11 intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. The doctrine of…
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