1998 P T D 2728

[Supreme Court of Pakistan]

Present: Saiduzzaman Siddiqui, Raja Afrasiab Khqn and Mamoon Kazi, JJ

Messrs M. Y. ELECTRONICS INDUSTRIES (PVT.) LTD.

through Manager and others---Appellants

versus

GOVERNMENT OF PAKISTAN through Secretary Finance,

Islamabad and others---Respondents

Civil Appeals Nos. 599, 601 to 604, 606 to 608, 610, 612 to 614, 619, 621 to 623, 625 to 632, 666, 667, 739 of 1994, 740 of 1995 and Civil Petition No. 413 of 1995, decided on 11/05/1998.

(On appeal from the judgment of Peshawar High Court dated 15-5-1994 passed in W.Ps. 578/93, 525/92, 1347/91, 189/93, 1354/91, 1756/91, 1797/91, 1182/92, 1314/91, 2022/91, 41/93, 1333/91, 1097/92, 56/91, 1379/91, 1764/91, 1589/91, 1265/91, 1589/91, 1951/91, 1357/91, 1468/91, 1646/91, 1645/91, 21/92, 1718/91, 1865/91, 1166/94, dated 1-2-1995 and 1007/95 dated 17-8-1995 respectively).

(a) Sales Tax Act (IX of 1990)---

----S. 6---Constitution of Pakistan (1973), Art. 185(3)---Words "charged and paid" as used in S.6, Sales Tax Act, 1990---Connotation---Leave to appeal was granted to examine as to whether it was correct to say that by using words "charged and paid" in S.6 of the Sales Tax Act, 1,990, the whole Customs law will apply.

(b) Constitution of Pakistan (1973)---

----Arts.73 & 185(3)---Amendments in fiscal laws---Money bill ---Scope.-- Leave to appeal was granted to examine the question as to whether amendments could be made in fiscal laws by Money Bill which did not go to the Senate and what was the scope of Money Bill.

(c) Customs Act (IV of 1969)---

----S.31-A---Constitution of Pakistan (1973), Art.185(3)---Application of S.31-A, Customs Act. 1969---Doctrine of legitimate expectations-- Application---Leave to appeal was granted to examine as to whether cases fell outside the scope of S.31-A of the Customs Act, 1969 by invocation of doctrine of legitimate expectations.

(d) Customs Act (IV of 1969)---

----S. 31-A---Legislative background of S.31-A, Customs Act, 1969.

Al-Samrez Enterprise v. Federation of Pakistan 1986 SCMR 1917 ref.

(e) Customs Act (IV of 1969)--

----Ss.31-A & 19---Exemptipn---Insertion of S.31-A, Customs Act, 1969-- Effect---Language of S.31-A of the Act is wide enough to include within its ambit all those cases where exemptions had been withdrawn after the insertion of S.31-A in the Act as well---Withdrawal of exemption-- Consequences---Right to claim exemption from customs duty under, a notification issued under S.19, Customs Act, 1969 remains available to a party only as long as the exemption notification holds the field---As soon as the exemption notification is withdrawn, the payment of customs duty on the imported articles is to be determined in accordance with the provisions of S.30, Customs Act, 1969---Principles.

The effect of insertion of section 31-A in the Customs Act is that when exemption from payment of customs duty granted by the Government under section 19 of the Act is withdrawn, then notwithstanding the fact that while exemption was enforced, the party had opened a letter of credit or concluded the contract with the foreign suppliers, the amount of customs duty payable on the goods would be that which might have become payable as a result of withdrawal of the exemption. It is, therefore, quite clear that the right to claim exemption from customs duty under a notification issued under section 19 of the Act remains available to a party only as long as the exemption notification holds the field. However, as soon as the exemption notification is withdrawn, the payment of customs duty on the imported articles is to be determined in accordance with provisions of section 30 of the Act. The contention that section 31-A was inserted in the Act with the sole object of doing away with the effect of the judgment of Supreme Court in Al-Samrez's case and therefore, the exemptions granted by the Government after insertion of section 31-A are not controlled by section 31-A does<not appear to be correct.

Section 31-A was inserted in the Customs Act by section 5(2) of Finance Ordinance II of 1988 which provided that section 31-A shall be deemed always to have been so inserted in the Act, meaning thereby that it was given retrospective effect from the date the Customs Act, 1969 came into effect. There is nothing in the language of section 31-A to justify the interpretation that this section applied only to the cases covered by the judgment of Supreme Court in Al-Samrez's case or to those cases only, which did not acquire the character of pastend closed transaction on the date of insertion of section 31-A in the Act. The language of section 31-A is wide enough to include within, its ambit all those cases where exemptions have been withdrawn after the insertion of section 31-A in the Act, as well.

Al-Samrez Enterprise v. Federation of Pakistan 1986 SCMR 1917; Mian Nazir Sons Industries Ltd. v. Government of Pakistan 1992 SCMR 883; Federation of Pakistan v. Amjad Hussain Dilawari 1992 SCMR 1270; Molasses Trading & Export (Pvt.). Ltd. v. Federation of Pakistan 1993 SCMR 1905; Federation of Pakistan v. Punjab Steel Limited 1993 SCMR 2267 and Government of Pakistan v. Muhammad Ashraf PLD 1993 SC 176 ref.

(f) Qanun-e-Shahadat (10 of 1984)---

----Art.114---Estoppel---Promissory estoppel, doctrine of---Enforcement-- Limitations enumerated.

The doctrine of promissory estoppel is founded on equity. It arises when a person acting on the representation by the Government or a person competent to represent on behalf of the Government, changes his position to his detriment, takes a decisive step, enters into a binding contract or incurs a liability. In such case, the Government will not be allowed to withdraw from its promise or representation. However, a general promise without any time limitation cannot bind the Government for all times to come. The enforcement of doctrine of promissory estoppel against the Government or a Government functionary competent to represent on behalf of the Government is, however, subject to the following limitations: --

(i) the doctrine of promissory estoppel cannot be invoked against the Legislature or the laws framed by it because the Legislature cannot make a representation;

(ii) promissory estoppel cannot be invoked for directing the doing of the thing which was against the law when the representation was made or the promise held out;

(iii) no agency or authority can be held bound by a promise or representation not lawfully extended or given ;

(iv) the doctrine of promissory estoppel will not apply where no steps have been taken consequent to the representation or inducement so as to irrevocably commit tire property or the reputation of the party invoking it; and

(v) the party which has indulged in fraud or collusion for obtaining some benefits under the representation cannot be rewarded by the enforcement of the promise.

Army Welfare Sugar Mills Ltd. v. Federation of Pakistan 1992 SCMR 1652 quoted.

(g) Customs Act (IV of 1969)----

----S. 31-A & 19---Qanun-e-Shahadat (10 of 1984), Art.114---S.R.O. No.517(1)/89 dated 3-6-1989---S.R.O. No.480(1)/88 dated 26-6-1988-- S.R.O. No.481(1)/88 dated 26-6-1988---Exemption---Doctrineof promissory estoppel ---Invocation---Notification providing exemption did not contain any time limitation during which such exemption were to remain operative---Nothing was available on record to establish that the Government, either before or after issuance of exemption notifications, made any representation to the industries concerned that the exemptions will remain operative for any specified period---Effect---Held, in the absence of any period having been specified in said notifications regarding their validity, the exemption under the notifications could be availed by the concerned industries only during the period these notifications were operative--Exemption allowed by the notifications ceased to be available from the data those notifications were superseded or withdrawn---Doctrine of promissory estoppel therefore was not invocable in circumstances.

Gadoon Textile Mills v. WAPDA 1997 SCMR 641 and Collector of Central Excise and Land Customs v. Azizuddin Industries Ltd PLD 1970 SC 439 distinguished.

(h) Customs Act (IV of 1969)----

----Ss. 31-A & 19---Exemption---Rule that the vested right under the exemption notification could not be taken away by an executive action-- Application---Principle----Time bound exemption notification could, however, be taken away by a legislative measure:

Rule that the vested right under the exemption notification could not be taken away by an executive action is applicable only to a case where the Government first granted exemption for a specified period and then attempt to withdraw the same thus defeating the vested right through an executive action. However, even vested right under an exemption notification which is a time-bound, could be taken away by a legislature measure.

Army Welfare Sugar Mills Ltd, v. Federation of Pakistan 1992 SCMR 1652 and Collector of Central Excise and Land Customs v. Azizuddin Industries Ltd. PLD 1970 SC 439 ref.

(i) Sales Tax Act (III of 1951)--

----S.3(5)---S.R.O. 517(1)/89 dated 3-6-1989---Exemption---Vested right of assessees--- Nature---Withdrawal of exemption---Effect---Withdrawal of exemption from payment of sales tax granted by Government under Notification No.S.R.O. 517(1)/89 dated 3-6-1989 through notification dated 9-5-1991 was only prospective in operation and could not take away or interfere with any of the vested right of the assessees---Principles---No period having been specified in the notification allowing the exemption, power of the Government to withdraw the notification was not circumscribed by any other condition---Effect of withdrawal of the exemption granted by Government would be that all contracts entered into for import of raw material and components before the date of withdrawal of the exemption and all these consignments in respect whereof irrevocable letters of credit were established before the date of withdrawal of the notification would continue to enjoy exemption from payment of sales ,tax; beyond that the assessees will not be entitled to, any further concession in respect of exemption from payment of sales tax.

The withdrawal of exemption from payment of sales tax granted by the Government under Notification NO.S.R.0.517(1)/89 dated 3-6-1989 through notification dated 9-5-1991 was only prospective in operation and could not take away or interfere with any of the vested right on the appellants.

The question which arises for consideration in this behalf is, what is the effect of withdrawal of notification dated 9-5-1991 on the vested rights which the assessees acquired under notification dated 3-6-1989 with regard to exemption from payment of sales tax on raw material and components import for exclusive manufacturers of goods by recognized industrial units located in GAIE. The notification dated 3-6-1989 issued by the Government was not time-bound. It is, therefore, quite clear that the exemption from payment of sales tax under the notification dated 3-6-1989 was available till such time the notification was withdrawn by the Government. The withdrawal of notification is dated 9-5-1991. Therefore, the withdrawal of exemption from payment of sales tax would be applicable from 9-5-1991. This withdrawal, however, would not affect the rights of the assessees to claim exemptions from payment of, sales tax in respect of import of raw material and components for which contracts were already entered into and letters of credit were established in favour of foreign suppliers before the date of withdrawal of notification. The notification issued on 9-5-1991 withdrawing the exemption, however, itself provided that the notification would not affect the raw material and components imported against irrevocable letters of credit opened on or before 8-5-1991. The power to issue a notification included the power to withdraw the said notification and exercise of this power by the Government is unconditional. Therefore, to the extent of exercise of that power by the Government, no exemption could be taken.

The notification dated 3-6-1989 issued by the Government granting exemption from payment of sales tax was not for any specific period. In the absence of period having been specified in the above notification, the power of the Government to withdraw the notification was not circumscribed by any other condition. In these circumstances, the effect of withdrawal of the exemption granted by the Government would be that all contracts entered into for import of raw material and components before the date of withdrawal of the exemption and all those consignments in respect whereof irrevocable letters of credit were established before the date of withdrawal of the notification, would continue to enjoy exemption from payment of sales tax. Beyond that the assessees will not be entitled to any further concession in respect of exemption from payment of sales tax.

Crescent Pak. Industries (Pvt.) Ltd. v. Government of Pakistan 1990 PTD 29 and Ahmed Investment (Pvt.) Ltd. v. Federation of Pakistan 1994 PTD 575 approved.

(j) Customs Act (IV of 1969)---

----Ss.31-A & 19---Constitution of Pakistan (1973), Arts. 24 & 185-- Exemption granted to the industries located in GAIE---Withdrawal of such exemption---Contention was that the exemption was in the nature of property right, which could not be taken away by the Government without payment of compensation and that the withdrawal of the exemption notification, in these circumstances amounted to violation of the right of property guaranteed under Art. 24 of the Constitution---Such argument was neither raised before the High Court which decided the Constitutional petition nor the point had been raised in the memo. of appeal before Supreme Court and leave granting order also did not mention the point---Supreme Court in circumstances, declined to consider the contentions and reserved opinion to be expressed in some other appropriate case in future.

Syed Sharifuddin Pirzada, Senior Advocate Supreme Court and Ch. Fazal-e-Hussain, Advocate-on-Record for Appellant (in C.A. No. 599 of 1994.

Abdul Hameed Qureshi, Advocate-on-Record for Appellant (in C.A. No. 601 of 1994).

Zahoor Qureshi, Advocate-on-Record for Appellant (in C.As. Nos. 602 and 603 of 1994).

Zahoor Qureshi, Advocate-on-Record for Appellant (in C.A. No.604 of 1994).

Abdul Latif Yousafzai, Advocate Supreme Court for Appellant (in C.A. No. 606 of 1994).

Abdul Hameed Qureshi Advocate-on-Record for Appellant (in C-.A. No. 607 of 1994).

Fakhurddin G. Ibrahim, Senior Advocate Supreme Court and Ejaz M. Khan, Advocate-on-Record for Appellant (in C.A. No. 610 of 1994).

Fakhurddin G. Ibrahim, Senior Advocate Supreme Court and Ejaz M. Khan, Advocate-on-Record for Appellant (in C.A. No. 612 of 1994).

Fakhurddin G. Ibrahim, Senior Advocate Supreme Court and Ejaz M. Khan, Advocate-on-Record for Appellant (in C.A. No. 613 of 1994).

M. Sardar Khan, Senior Advocate Supreme Court and Ch. Akhtar Ali, Advocate-on-Record for Appellant (in C.A. No. 614 of 1994).

Abdul Hameed Qureshi, Advocate-on-Record for Appellant (in C. A. No. 619 of 1994).

Abdul Latif Yousafzai, Advocate Supreme Court and Abdul Hameed Qureshi, Advocate-on-Record for Appellant (in C.A. No. 621 of 1994).

Abdul Latif Yousafzai, Advocate Supreme Court and Abdul Hameed Qureshi, Advocate-on-Record for Appellant (in C.A. No. 622 of 1994).

Qamarul Islam Abbas, Advocate Supreme Court and Anwar H. Mir, Advocate-on-Record for Appellant (in C.A. No. 623 of 1994).

Syed Afzal Haider, Advocate Supreme Court and S. Abul Aasim Jafari, Advocate-on-Record for Appellant (in C.A. No. 625 of 1994).

Ch. Aitzaz Ahsan, Advocate Supreme Court and Ijaz Ahmed Khan, Advocate-on-Record for Appellant (in C.A. No. 626 of 1994).

Syed Afzal Haider, Advocate Supreme Court and S. Abul Aasim Jafari, Advocate-on-Record for Appellant (in C.A. No. 627 of 1994).

Hafizur Rahman, Advocate Supreme Court for Appellant (in C.A. No. 628 of 1994).

Ijaz Hussain Batalvi, Senior Advocate Supreme Court and A. Zafar, Advocate Supreme Court for Appellant (in C.A. No. 629 of 1994).

M. Akram Shaikh, Senior Advocate Supreme Court for Appellant (in C. A. No. 630 of 1994).

Ch. Aitzaz Ahsan, Advocate Supreme Court for Appellant (in C.A. No. 631 of 1994).

Ch. Aitzaz Ahsan, Advocate Supreme Court for Appellant (in C.A. No. 632 of 1994).

Ahmad Hussain Bokhari. Advocate Supreme Court for Appellant (in C.A. No..666 of 1994).

Ali Subtain Fazli, Advocate Supreme Court for Appellant (in C. A. No. 667 of 1994).

Nemo for Appellant (in C.A. No. 739 of 1994).

Ch. Fazal-e-Hussain, Advocate-on-Record for Appellant (in C.A. No.740 of 1995).

M. Akram Shaikh, Senior Advocate Supreme Court and Ejaz M. Khan, Advocate-on-Record for Petitioners (in C.A. No. 413 of 1995).

S.M. Zafar, Senior Advocate Supreme Court. M. Azam Khan, A.-G. N.-W.F.P., Mian Tariq Mahmood, Dy. A.-G. Pakistan and Imtiaz M. Khan,

Advocate-on-Record for Respondents (in all Cases except C.P. No.413 of 1995).

S.M. Zafar, Senior Advocate Supreme Court and Mian Tariq Mahmood, Dy. A.-G.

Pakistan for Respondents (in C.P. No. 413 of 1995).

Dates of hearing: 19th, 20th, 23rd and 27th February, 1998.

JUDGMENT

SAIDUZZAMAN SIDDIQUI, J--We propose to dispose of the above-mentioned 29 civil appeals by a common judgment as they arise from the same impugned order and the points of law arising therein are identical. Leave was granted in the above appeals to consider the following contentions:--

"(1) Whether it is correct to say that by using words "charged and paid" in section 6 of the Sales Tax Act by Finance Act, 1990, the whole Customs law will apply.

(2) Can amendments be made in fiscal laws by Money Bill which does not go to the Senate and what is the scope of the Money Bill?

(3) Do the present cases fall outside the scope of section 31-A of the Customs Act, 1969 by invocation of doctrine of legitimate expectations.

8. The interim relief granted earlier shall continue."

2. We have heard Mr.S.S. Pirzada, Senior ASC, in Civil Appeal No.599 of 1994, Mr. Aitzaz Ahsan, ASC, in Civil Appeals Nos. 626, 631' and 632/94, Mr. Aijaz Hussain Batalvi in Civil Appeal No.629/94, Mr. Abdul Latif Yusufzai in Civil Appeals Nos. 621, 622, 606 and 614 of 1994, Mr. Fakharuddin Ibrahim in Civil Appeals Nos. 610, 612 and 613/94, Mr. Muhammad Akram Shaikh in Civil Appeal No.630/94, Mr. Fazal Hussain in Civil Appeal No.740 of 1995, Mr. Ali Sibtain Fazli in Civil Appeal No.667/94, Mr. Qamarul Islam Abbas in Civil Appeal No.623 of 1994, Mr. Mirza Hafizur Rehman in Civil Appeal No.628 of 1994 and Mr. Sardar Khan in Civil Appeal No. 614 of 1994 for appellants and Mr. S.M. Zafar, Senior ASC for the respondents in the above appeals. We may mention here that none of the learned counsel for the appellants addressed any argument on point No.2 noted in the leave granting order. However, they raised many other legal contentions besides those mentioned in the leave granting order, which will be referred at appropriate stage.

3. Mr. S.S. Pirzada, the learned Sr. ASC for appellant in Civil Appeal No.599 of 1994, firstly, contended that in terms of SRO (1)/89 dated 3-6-1989, the appellant was entitled to avail of the exemptions from payment of duties and taxes at least for a period of 5 years on the basis of deletion programme submitted by it to the authorities in respect of various products manufactured by it in the industrial unit established in Gadoon Amazai Industrial Estate (G.A.I.E.). The learned counsel further contended that in any case the appellant was entitled to additional quota in terms of the decision of E.C.C. dated 31-3-1992 on the basis of the recommendations of Customs Authorities which has been illegally withheld by the authorities.

4. Mr. Aitzaz Ahsan; the learned counsel for appellants in Civil Appeals Nos.626, 631 and 632 of 1994 raised the following contentions in support of the appeals :--

(i) That the Government induced the appellants to establish industries in the far-flung and under-developed area of Gadoon Amazai Industrial Estate (G.A.I.E.) by offering them total exemptions from payment of Customs duty, Surcharge, Iqra Surcharge and Sales Tax on import of machinery and raw material. The appellant acting on the above representations of Government established their industry by investing huge amounts in G.A.11 and therefore, the Government is estopped from withdrawing these exemptions on the principle of promissory estoppel and doctrine of locus poenitentiae.

(ii) That the withdrawal of exemption of customs duty etc. without hearing the appellants and without giving them an opportunity of hearing is wholly without jurisdiction.

(iii) That section 31-A of the Customs Act, 1969 (hereinafter to be called as the Act) was incorporated in the Act to do away with the effect of the decision of this Court in the case of Al-Samrez Enterprise v. Federation of Pakistan (1986 SCMR 1917). Section 31-A, ibid, therefore, has no application in the present cases.

(iv) That the exemption from payment of customs duty, Iqra Surcharge, Surcharge and Sales Tax having been granted by the Government after incorporation of section 31-A, ibid, the provision of section 31-A could not override the grant of these exemptions.

(v) That the appellants having acted on the representations of the Government has acquired vested rights in the exemptions granted to them, which could not be taken away by an administrative action (decision of the notification dated 3-6-1989).

(vi) That the exemptions granted to the appellants were in the nature of a valuable property right which could not 'be taken away without payment of compensation. The action of the Government withdrawing the exemption notification in the circumstances, amounted to depriving the appellants of their property right which violated Articles 4 and 24 of the Constitution.

(vii) That in any case, the withdrawal of sales tax exemption by the Government could not be defended on the strength of section 31-A of the Act.

5. Mr. Fakharuddin G. Ibrahim, the learned Sr. ASC for the appellants in Civil Appeals Nos.610, 612 and 613 of 1994 adopted the arguments of Mr. S.S. Pirzada and Mr. Aitzaz Ahsan and further contended that the High Court having found the reasons given by the Government for withdrawal of exemption as ludicrous and insipid, ought to have held the withdrawal of Exemption as illegal and of no legal effect. Mr. Fakharuddin further contended that section 31-A ibid, deals only with the effect of judgment of this Court in Al-Samrez's case. The section, according to learned counsel, only lays down that the rate of duty will be that which is applicable on the date of presentation Bill of Entry irrespective of the date of contract or opening of letter of credit by the importer. This section, it is contended by the learned counsel, neither validated the illegal withdrawal of exemption by the Government nor it provided that the exemption granted by the Government could no longer be availed by the appellants. Mr. Fakharuddin also argued that withdrawal of exemption by the Government in the case of appellants negated the principles of policy contained in Article 37(a) of the Constitution.

6. Mr. Akram Shaikh, the Sr. ASC appearing for appellants in Civil Appeal No.630 of 1994, besides adopting the arguments of the learned counsel who preceded him, contended that the power to grant or withdraw exemption is a very important executive power. It has the effect of making or unmaking of an entrepreneur. Elaborating his contention, the learned counsel contended that by granting exemption the Government may provide ample opportunity to an entrepreneur to enrich itself while by withdrawing the exemption it may financially ruin an entrepreneur. The learned counsel accordingly urged that keeping in view the consequences arising from the exercise of this power, the Court would not allow the Government to withdraw the exemption, if the effect of such withdrawal would be to destroy the appellants financially. The learned counsel further argued that the Government had no locus poenitentiae after the appellants acting on the representations of the Government took a decisive step and invested huge amount in establishing industries in the far-flung area of G.A.I.E.

7. Messrs Ijaz Hussain Batalvi, Abdul Aziz Yusufzai, Fazal Hussain, Ali Sibtain Fazli, Qamarul Islam Abbas, Mirza Hafizur Rahman and Sardar Khan, counsel in other appeal, also adopted the above arguments.

8. In reply to the above contentions of the learned counsel for the appellants Mr. S.M.Zafar, the learned counsel for the Federal Government submitted as follows:--

(1)That the Federal Government granted exemption to the industries set up in GAIE from payment of whole of the customs duty and sales tax on import of raw materials and components on terms and conditions mentioned in SRO 517(1)/89 dated 3-6-1989. This exemption-was granted without any time limit.

(2)In the same manner, the Government also granted exemption from payment of Surcharge and Iqra Surcharge on imports of raw material and components by Industrial Units set up in GAIE in accordance with the terms and conditions laid down in S.R.O. 517(1)/89 dated 3-6-1989, vide Notifications Nos. SRO 486(1)88 & 481 (1)/888 dated 26-6-1988 respectively.

(3)The exemptions granted under SRO 517 (1)/89 dated 3-6-1989, S.R.O. 480 (1)/89 and SRO 481 (1)/88 dated 26-6-1988 were later withdrawn by the Government vide SROs. 419(1)/91, 420(1)/91 and 421(1)/91 dated 9-5-1991 respectively. However, the withdrawal ofthese exemptions did not affect the import of raw material made against an irrevocable letter of credit established on or before 8-5-1991.

(4)The appellants and others filed Constitutional petitions before the Peshawar High Court, under Article 199 of the Constitution challenging the withdrawal of exemptions by the Government. During pendency of these petitions, the Government on 31-3-1992 offered to all the industrial units set up in GAIE one time relief for a period of one year preceding the date of withdrawal of Notification No.517(I)/89 dated 3-6-1989 from payment of Customs Duty, Sales Tax, Surcharge and Iqra Surcharge to the extent of 25 % of, the value of the duty on imported raw material and components. The cut of date for availing this concession by the Industrial Units in GAIE was fixed as 15-5-1992. However, at the suggestion of the Peshawar High Court, where these writ petitions were pending, this date was extended for another 15 years from 29-6-1992. This concession offered by the Federal Government was availed by 108 Industrial Units of GAIE including the appellants in Civil Appeal No.599/94 M/s. M.Y. Electronics, Civil Appeal No.612/94 Khyber Spinning Mills Gadoon Ltd. and Civil Appeal No.740/95 Shadab Saigal (Pvt.) Ltd. In these circumstances, the writ petitions filed by these appellants before the Peshawar High Court were not maintainable so also the appeals filed by them before this Court arising from the judgment of Peshawar High Court.

(5)That 27 Industrial Units in GAIE felt aggrieved by the manner of calculation of 25% compensation, offered by the Government, by the concerned authorities. These industrial Units filed separate writ petitions before the High Court of Peshawar in 1996 to challenge the method of calculation of 25 % compensation by the authorities. The appellant in Civil Appeal No.612/94 was also one of the writpetitioners in those cases. The Peshawar High Court dismissed all the writ petitions. The appellant in Civil Appeal No.612/94 challenged the decision of Peshawar High Court before this Court in CPLA No.1293/97 which was disposed of on the basis of the statement made by the Deputy Attorney-General. In these circumstances, the appellant in Civil Appeal No.612/94 was neither entitled to continue his pending writ petition before the Peshawar High Court nor he was entitled to challenge the dismisssal of his writ petition before this Court in the above appeal. .

(6)Similarly M/s. M.Y. Electronics, appellants in Civil Appeal No.599 of 1994, first instituted Writ Petition No.1735 of 1991 before the Peshawar High Court challenging the withdrawal of exemption. They withdrew the said petition and applied for availing of the 25 compensation offered by the Government. Later on they filed another Writ Petition No.578 of 1993 before the Peshawar High Court alleging that 25% compensation announced by the Federal Government was not fully allowed. The writ petition was dismissed by the impugned judgment against which they have filed the above appeal before this Court. During pendency of the appeal, the appellants filed 3 C.M.As. wherein they prayed that their quota be re-fixed in accordance with the decision of E.C.C. dated 31-3-1992 and they are prepared to withdraw the appeal. 1n these circumstances, this appeal is also not maintainable.

(7)That M/s. Shadab Saigal (Pvt.) Ltd. (Civil Appeal No.740/95) straightaway applied for availing the concession offered by Federal Government on the basis of the decision of E.C.C. dated 31-3-1992. After availing that concession, they filed Writ Petition No.1166/94 before the Peshawar High Court challenging the withdrawal of exemptions by the Government. The writ petition was dismissed in limine and against the decision of Peshawar High Court they filed the above appeal. In these circumstances, neither the writ petition filed before the Peshawar High Court by them not the present appeal is maintainable.

(8)That the Federal Government never offered any inducement to the Industrialists to set up industries in GAIE. The GAIE was established by the Provincial Government of N.-W.F.P. and the development works in GAIE were carried on by Sarhad Development Authority. The Federal Government offered exemption from Customs Duty Surcharge, Iqra Surcharge and Sales Tax to those industrialists who were interested in setting up industries in GAIE. These exemptions were offered by Government by way of helping and to those who were interested in setting up industrial units in GAIE and did not constitute any representation on the part of Government that in case industries are set up in GAIE, they will continue to enjoy these exemptions for all time to come.

(9)That the exemptions offered by the Federal Government were not time bound and therefore, it could be withdrawn at any time. Such withdrawal was fully covered by section 31-A of the Act.

(10) That Surcharge and Iqra Surcharge being customs duties, their ''r" withdrawal was also protected under section 31-A of the Act as originally enacted.

(11) That principles of legitimate expectancy or promissory estoppel pleaded by the appellants have no application as these principles do not override statutory provisions (sectionf31-A of the Act).

(12) That the exemptions offered to industries in GAIE on the basis of deletion programme under SRO 517(1)/89 dated 3-6-1989 was not time bound. In fact, the condition of 5 years mentioned in the said SRO was the period during which the industries which were availing exemption on 'the basis of deletion programme were required to achieve a minimum deletion of imported components to the extent of 75 % of the C & F value of the inputs of the manufactured items.

(13)That principle of promissory estoppel pleaded by the appellants, if at all attracted in the cases, it only saved those inputs of raw material and components for which contracts were finalised and letters of credit were established before the date of withdrawal of the notification.

(14) That the exemptions granted by the Government from time to time cannot be treated as property right. The concept of property and property right under the American Jurisprudential concept is totally different. Similarly, the approach of Indian Courts based on American concept of property and property right is distinguishable.

(15) That the power to grant exemption included the power to withdraw the exemption. No fetter on the power of Government in this regard could be placed on the principle of promissory estoppel or legitimate expectancy.

9.The learned counsel for the parties cited number of decided cases from English, Indian and Pakistani Courts in support of their respective contentions. They also referred to various passages from Corpus Juris Scandum to support their respective pleas. These cases and material will be referred and considered later in this judgment at the appropriate stage.

10.Before considering the above contentions raised in these appeals, it will be appropriate to dispose of the objection of Mr. S.M. Zafar, the learned counsel for the respondents, regarding maintainability of Civil Appeal No.599/94-M.Y. Electronic Industries (Pvt.) Ltd v. Government of Pakistan and others; Civil Appeal No.612/94 M/s. Khyber Spinning Mills Gadoon Ltd. v. Government of Pakistan and others and Civil Appeal No.740 of 1995 M/s. Shadab Saigal (Pvt.) Ltd. v. Government of Pakistan and others. The objection of Mr. S.M. Zafar, the learned counsel for the respondents regarding maintainability of these appeals is, that during the pendency of the writ petitions filed before the Peshawar High Court to challenge the withdrawal of duties and taxes by the Government the Federal Government offered one time relief to all under production industries in GAZE equal to 25 % of the total duty value of raw material imported for one year immediately preceding the withdrawal of SRO 517 (1)/89 dated 3-8-1989. The last date for filing applications to avail this concession was fixed as 15-5-1992. However, at the suggestion of the learned Judges of Full Bench of Peshawar High Court, this date was further extended by 15 days on 29-6-1992. The condition for grant of this concession was that the party before availing the concession was to withdraw the writ petition if filed in the Court and no further litigation in this behalf was to be resorted to. 108 industries of GAIE including appellants in Civil Appeals No.599/94, 612/94 and 740/95 availed of this concession. Before availing this concession M/s. M.Y. Electronics applied for withdrawal of pending Writ Petition No.1735/91 which was dismissed on 25-10-992. In August, 1993. M/s. M.Y. Electronics filed fresh Writ Petition No.578/93 before the Peshawar High Court challenging the withdrawal of exemptions of Customs Duty Surcharge, Iqra Surcharge and Sales Tax on the goods produced by them. This petition was disposed of alongwith several other petitions and against the judgment of Peshawar High Court, Civil Appeal No.599/94 has been filed by the appellants. During the pendency of Civil Appeal No.599/94, the appellants moved application before this Court, stating that it is willing to withdraw its appeal if it is allowed additional quota as recommended by the concerned authorities Mr. S.M. Zafar, accordingly, argued that the appellant in these dicurcumstances could not maintain the above appeal wherein it has challenged the withdrawal of duties and taxes. According to Mr. Zafar the appellant in Civil Appeal No.599/94 after availing the concession offered by the Government could only agitate that the concession granted to him by the authorities was not in accordance with his entitlement as laid down in the E.C.C. decision dated 31-3-1992.

11.Referring to Civil Appeal No.740/95, filed by M/s. Shadab Saigal (Pvt), Ltd., Mr. S.M. Zafar contended that the appellant in this case fully utilised and availed the concession/quota offered by the Government on the terms and conditions that he will not resort to any further litigation and therefore, he was not entitled to file Writ Petition No.1166/94 in the Peshawar High Court challenging the withdrawal of duties and taxes by the Government. The writ petition filed by the appellant having been dismissed in limine by the High Court and rightly so no appeal against the judgment of Peshawar High Court was maintainable before this Court in the above circumstances.

In so far Civil Appeal No.612/94 is concerned, the contention of Mr. S.M. Zafar is that M/s. Khyber Spinning Mills, like many others in GAIE, applied for availing the one time relief offered by the Federal Government. However, M/s. Khyber Spinning and 26 others were aggrieved by the method adopted by the authorities in calculating the quota which they claimed, were entitled under the scheme announced by the Government. They accordingly, filed separate writ petitions before the Peshawar High Court challenging the quota determined in their favour by the authorities under the scheme of Government. The writ petitions were dismissed by a consolidated order dated 28-7-1997. M/s. Khyber Spinning preferred C.P.L.A. 1293/97, against the order of Peshawar High Court before this Court which was dismissed on 18-12-1997. In these circumstances, it is contended by Mr. S.M. Zafar, that neither the appellant was entitled to pursue his Writ Petition No. 2022/91 filed before the Peshawar High Court challenging the withdrawal of duties and taxes nor it was open to it to file Civil Appeal No.612/94 before this Court.

12. Mr. S.S. Pirzada, the learned counsel for appellant in Civil Appeal No.599/94, in reply to the above objections of Mr. S.M. Zafar, regarding maintainability of the appeal, contended that Writ Petition No.1735 of 1991 was withdrawn from the Peshawar High Court with permission of the Court to file a fresh writ petition, if necessary. The learned counsel, accordingly, argued that the first Writ Petition No.578/93 was filed when the authorities did not act in accordance with the scheme of Federal Government, which was fully competent under the law. The learned counsel further contended that during pendency of the appeal filed before this Court against the judgment of Peshawar High Court, the appellant filed application stating that in case it is allowed the concession in terms of the scheme of Federal Government based on the report of customs authorities, he would not press its appeal and the appellant is still prepared to abide by its statement.

13. We are of the view that the objection raised by Mr. S.M. Zafar regarding maintainability of Civil Appeals Nos.599 and 612 of 1994 and 740/95 is not sustainable. It is an admitted position that one time relief of 25 % of the total duty value of raw material imported for one year immediately preceding the withdrawal of SRO 5700) dated 3-6-1989, was offered by the Federal Government to the industries in GALE on the basis of the decision of Economic Coordination Committee of the Cabinet dated 31-3-1992. The respondents have produced a copy of the decision of E.C.C. in these cases which was to the following effect: --

"Compensation claim of Investors in Gadoon Amazai Industrial Estate arising out of withdrawal of SRO 517.

DECISION

The Economic Coordination Committee of the Cabinet took note of the summary dated March 20, 1992 submitted by the Ministry of industries and took the following decisions:

(a) One time relief of 25% (of the total duty value of raw material imported for one year immediately preceding the withdrawal of SRO 517) would be provided to all existing units which are under production in Gadoon Amazai Industrial Estate, on the basis of pro forma "S" approved by the CBE.

(b)The ECC approved the proposal contained in para 3(ii) of the Summary.

(c)The ECC further directed that to pre-empt the possibility of acceptance of any fake claims, the claims of all investors should be examined rigorously to allow only genuine claims where investors had made firm commitments.

(d)The ECC of the Cabinet also directed that all claims should be processed and finalised on top priority basis.

The ECC of the Cabinet further directed that the last date for submission of claims by the investors of Gadoon Amazai should be extended up to May 15, 1992."

The above decision of ECC did not require withdrawal of any pending case from the Court or an undertaking by the industry desirous of availing the above concession that it will not agitate or litigate any further in this regard, before applying or availing these concessions. Apart from it, no objections appear to have been taken before the Peshawar High Court by the respondents to the maintainability of Writ Petitions Nos.2022/91 and 578/93 filed by M/s. Khyber Spinning and M.Y. Electronics respectively, on the ground that they had applied and availed the concession in terms of E.C.C. decision dated 31-3-1992. We may also mention here that these appellants have disputed that they were allowed quotas in accordance with the decision of E.C.C. In these circumstances, we are not inclined to dismiss these appeals as not maintainable.

14. We now turn to other contentions raised in these appeals. However, before dealing with the contentions which are common in all the appeals, it will be appropriate to first dispose of the contentions which arise only in some of the appeals.

Mr.S.S. Prizada, the learned counsel in Civil Appeal No.599/94, contended that the appellant in this case was entitled to avail of the exemptions from payment of Customs Duty, Surcharge, Iqra Surcharge and Sales Tax in terms of SRO 517(1)/89 dated 3-6-1989 for minimum period of five years on the basis of deletion programme submitted by it to the concerned authorities and which was duly approved. It is accordingly, contended by Mr. Prizada, that the Government was not competent to withdraw the exemption before expiry of five years. This contention of Mr. S.S. Prizada was adopted by some of the learned counsel in other appeals. Mr. S.M. Zafar, the learned counsel for the respondents however, contended that except in Civil Appeals Nos.599/94, 621/94 and 625/94 the above argument based on deletion programme is not applicable to other appeals We do not intend to decide here the controversy whether, the arguments relating to deletion programme are applicable in all those appeals where the learned counsel adopted the submission of Mr.S.S. Pirzada. This controversy can be decided by the authorities concerned on the facts of each case in accordance with our decision in this regard. The deletion programme of an industrial units is regulated in terms of para. (iii) of S.R.O. 517(1)/89 dated 3-6-1989 which reads as follows:

(iii) In case when concession is claimed on components, the manufacturer shall chalk out deletion programme spreading over a maximum period of five years within which period he shall achieve a minimum deletion to the extent of 75% of the C&F value of the inputs of the manufactured items, and the continued availability of the exemption under this notification shall be contingent upon (a) the achievement of progressive annual deletion as approved by the Central Board of Revenue or the Ministry of Industries as the case may be and (b) use of locally manufactured deleted items."

According to the above provision, the deletion programme is applicable to an industry which is producing finished goods with the help of components imported from foreign country for incorporation in the end product. Para (iii) of the SRO 517(1)/89 dated 3-6-1989, reproduced above, requires all such industries to prepare a deletion programme spread over a, maximum period of five years based on an annual progressive deletion of foreign components from the end produce, so that by the end of five years the manufacturer is in a position to do away with 75 % of the imported components by replacing them with locally produced one. This deletion programme is to be submitted by all such industries to the concerned authorities and their entitlement to avail of the exemption from payment of Customs Duty, Surcharge, Iqra Surcharge and Sales Tax depended upon successful adherence of deletion programme submitted by them. The outer limit of five years mentioned in para. (iii), reproduced above, is the maximum time allowed to an industry desirous of availing of the exemption from payment of duties and taxes to comply with the terms of the SRO in order to become entitled to avail these exemptions. However, this time limit could not be construed as the period during which these exemptions, offered by the Government under the above SRO, could not be withdrawn. The language of the notification does not admit of any such interpretation. The fact that the deletion programme to be submitted by the manufacturers under para. (iii) of the SRO dated 3-6-1989 was to spread over a period of five years, did not imply that the exemptions from taxes and duties were also to remain operative for the same period. The compliance of deletion programme within a period of five years was a condition imposed by the authorities on the industry desirous of availing the exemptions under the above SRO but this condition correspondingly imposed no obligation on the authorities to keep the exemptions alive for full five years period. We are, therefore not impressed by the arguments that the appellants were entitled to avail of the exemptions under SRO 517(1)/89 dated 3-6-1989 for five years and as such withdrawal of exemption before expiry of five years period was illegal and arbitrary.

15. We now revert to other contentions in these appeals which are common in all the above appeals. The learned counsel for the appellants have vehemently relied on the following observations of the High Court in the impugned judgment in support of their contentions that a vested right was acquired by the appellants and therefore, on the principles of promissory estoppel, legitimate expectancy and locus poenitentiae the Government was not entitled to withdraw the exemptions granted to the appellants until such time the conditions which were the basis for grant of exemptions continued to exist:

"8.It is pertinent to note that the factual background which prompted the Government to set up an Industrial Estate in the remote, backward and economically unviable and unprofitable area of Gadoon has neither been denied in the written statement nor controverted at the time of arguments by the learned counsel for the respondents. The main reason for withdrawal of the exception as given in the written statement by the respondents and reiterated in the arguments on their behalf was, 'furthermore as a result of granting such concession to the industries in Gadoon Amazai Industrial Estate the existing identical units elsewhere in Pakistan were placed in highly disadvantageous position and various industries particularly those based on imported raw material, practically, faced almost complete bankruptcy situation'. It is thus admitted fact that the concessions were withdrawn because other industrial units in other parts of country were placed in disadvantageous position and, therefore, the industrialists in those areas protested against the continuance of these concessions. This is, however, very bleak and insipid and rather ludicrous reasons. It could not be contested that these concessions were not in form of bounty or charity which could be recalled at the sweet will of the respondents but rather it is admitted position that there were granted and considered due to the inhabitants of the area because of their willingness and sacrifices to stop poppy cultivation and thus to do away with their only source of income and instead to earn their livelihood through sources provided by the industries to be installed in the area. Similarly it could not be challenged that the industrialists not of their own opted to instal the industries in this unattractive and far-flung area but they were prevailed upon through various promises and incentives to set up industries. In this admitted background it would be very difficult for the respondents to justify on any standard their action of unilateral withdrawal of the concessions. The ground that the industrialists in other parts of the country protested and, therefore, they were unable to carry out the promise solemnly made by it can hardly be a reason for rescission of the Notification ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...

10. To sum up the foregoing discussion we have on one hand found that the petitioners have made out a good case for interference in our writ jurisdiction on grounds of vested rights, promissory estoppel and locus poenitentiae and reasonable expectation but on the other hand we have also found that the legislature has since inserted section 31-A in the Customs Act on 26-12-1988 and in the presence of the said provision promises made by the Federal Government and the Government of N.-W.F.P. and the Chief Minister werenot to legally bind down the Federal Government which has the power and authority to withdraw and rescind Notification No.SRO 51 : (I)/89 dated 3-6-1989 on account of section 31-A of the Customs Act. We have nevertheless to observe that in view of the high promises made by the Government, the "ahl-e-waqoo" of the Industrial Estate of Gadoon Amazai in the poppy growing area as already discussed in the judgment at different places we wouldremark that the Federal Government must honour its promises and undertakings. In this context we shall also refer to the components deletion programme to spread over a period of five years and so if the exemption of the import duty on raw material is also made to spread over a period of five years in gradual deletion and also extended in minimum exemption on import of raw material for some further period the same would not on one hand prove detrimental to the industrial growth in the other parts of the country and would at the same time also prove as a measure of some incentive to the Industrial Estate of Gadoon Amazai. Government may further in its own wisdom after taking into consideration the overall situation of different industries chalk out an exemption programme for certain industries and may withhold the exemption on import duty on raw material of certain other industries if the same are found not in the larger national interests. In the context notice may also be taken of the fact that as many writ petitions were withdrawn on assurances by the Federal Government in extending certain concessions to the investors to the extent of 25 % compensation for the dated 16-12-1993. As such our above observations and suggestions are not off the point."

The learned counsel for the appellants also argued that the appellants could not be deprived of these exemptions without considering their viewpoints and without affording them an opportunity of hearing. It is additionally contended that the exemption granted to the appellants was a property right which could not be taken away by the Government without payment of compensation and therefore, withdrawal of exemption by the Government was in breach of fundamental right guaranteed under Article 24 of the Constitution. The above last two contentions were neither raised before the High Court nor they are urged in the memo. of appeal before this Court. These have been raised for the first time in the arguments by Mr. Aitzaz Ahsan, the learned- counsel for the appellants in Civil Appeals Nos.626, 631 and 632 of 1994.

16. The withdrawal of exemptions is defended by the respondents on the strength of section 31-A of the Act. The moot point in the above appeals therefore is. whether withdrawal of exemptions of Customs Duty, Surcharge, Iqra Surcharge and Sales Tax on import of raw material, machinery and components granted by the Government to industrial units located in GALE could be defended on the strength of the provisions of section 31-A of the Act. To understand the argument in its true prospective, it will be advantageous to state here briefly the legislative background of section 31-A of the Act. This Court in the case of Al-Samrez Enterprise v. Federation of Pakistan (1986 SCMR 1917) ruled that the exemption granted by the Government through a notification issued under section 19 of the Act on the import of goods could not be withdrawn retrospectively so as to affect the vested right acquired by a party by taking a decisive step acting on the notification. The opening of a letter of credit by a party in favour of foreign supplier was considered in that case as sufficient to create a vested right -in favour of the party which could not be taken away or destroyed by the withdrawal of the exemption on a date subsequent to the opening of letter of credit. To overcome the effect of the judgment of this Court in Al-Samrez's case, the Government inserted section 31-A by Finance Ordinance II of 1988 in the Act after section 31 which was as follows:

31.-A. Effective rate of duty.---(1) 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 goods 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 (II1 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 of which any foreign exchange is to be converted into Pakistan currency shall be rate of exchange in force--

(a)in the case of goods referred to in clause (a) of section 30, on 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 referred to in that clause; and

(c)in the case of goods referred to in section 31, on the dates referred to in that section.

3 .In section 156, in 'subsection (1). in the table, in column 1. in Serial 8 in column 2 for the words "ten years" the words "fourteen years" shall be substituted.

4.For the First Schedule, Schedule set out in the First Schedule to thisOrdinance shall be substituted."

The effect of insertion of section 31-A in the Act was directly considered by this Court in the following cases:

(i)Mian Nazir Sons Industries Ltd. v. Government of Pakistan (1992 SCMR 883).

(ii)Federation of Pakistan v. Amjad Hussain Dilawari (1992 SCMR1270).

(iii)Molasses Trading & Export (Pvt.) Ltd. v. Federation of Pakistan (1993 SCMR 1905).

(iii)Federation of Pakistan v. Punjab Steel Limited (1993 SCMR 2267).

In Mian Nazir Sons Industries' case, supra, the appellant, a manufacturer of Polypropylene bags, entered into contract with a foreign supplier for import of 696 metric tones of Polypropylene granules. Under a notification issued by the Government under section 21 of the Act, the imported consignment could be cleared from customs without payment of customs duty which was in excess of 50% ad valorem of the goods imported: After part of the goods arrived at Karachi and contract was concluded, the Government rescinded the above notification. The sescission of the notification by the Government was challenged on the ground that a vested right was created in favour of the appellant. The Court repelled the argument. Although the case did not relate to grant of exemption under Section 19 of the Act and was a case of concession only under Section 21 of the Act which did not absolve the importer from the liability of payment of customs duty, the following pertinent observations of the Court may be reproduced here with respect:

"Learned counsel in support of his arguments has also placed reliance on Federation of Pakistan v. Muhammad Aslam (1986 SCMR 916), Union of India v. Anglo-Afghan Agencies (AIR 1968 SC 718) and Motilal Padampat Sugar Mills Co. Ltd. v. The State of Uttar Pradesh (AIR 1979 SC 621). The two Indian decisions proceed on the basis of promissory estoppel in respect of governmental action. In the case of M.P. Sugar Mills the question was whether a representation made with regard to the exemption from payment of sales tax, which was acted upon could be withdrawn to the detriment of the person so acting. The case of Anglo-Afghan Agencies also dealt with the question of promissory estoppel in relation to import trade policy notified under section 3 of the Imports and Exports (Control) Act, 1947. A distinction was drawn in these cases between actions or representations of the Government which are in the domain of executive or administrative authority and those that are legislative in character. In a recent case which specifically dealt with the doctrine of promissory estoppel,' this Court in Pakistan v. Salauddin (PLD 1991 SC 546) has held that the same cannot be invoked against Legislature or laws framed by it because the Legislature cannot make a representation. The case of Muhammad Aslam from this Court also dealt ' ~h the Import Policy and the right to obtain an import licence. Therefore the cases relied upon are distinguishable. In the case in hand the question is whether a concession once extended under section 21 on the basis of which contract was entered into, created vested rights so as to deprive the competent authority from rescinding such a special order. As it is not disputed that the payment of duty is not discharged in such a case it is idle to pursue the matter, because no vested right would accrue in favour of an importer to refuse payment of duty subsequently upon sescission or revocation of such an order. Additionally as discussed hereinabove, section 31-A now clearly stipulates that any amount of duty which becomes payable in consequence of withdrawal of a concession from duty, even though such withdrawal takes place after the conclusion of a contract for the sale of goods or opening of a letter of credit, would now be payable in terms of section 30 with reference to the date of filing of the Bill of Entry."

In Federation of Pakistan v. Amjad Hussain Dilawari this Court relying on its earlier decision in the case of Federation of Pakistan v: M. Afzal & Sons Civil Appeals Nos.210 to 215 of 1977 (decided on 29-8-1991, held as follows:

"5.The decision in the case of Federation of Pakistan v. M. Afzal & Sons and others connected appeals (C.As. 210 to 215 of 1977) was delivered by a Bench of five Judges of this Court on 29-8-1991. In terms of the decisions in these appeals it was held that where a Particular article was exempted from payment of customs duty under section. 19 of the Customs Act, 1969, which exemption was later withdrawn, the benefit of exemption was available only in respect of those goods which were imported between the date the exemption was granted and the date it was withdrawn, provided the bills of entry had been filed with the Customs before the date the exemption was withdrawn. In AI-Samrez's case (1986 SCMR 1917), which was a judgment delivered by four Judges of this Court, the said benefit was held to be available if between the date the exemption was granted and the date it was withdrawn effective steps had been taken by the importer to conclude his contract with the exporter and open the letter of credit, in terms of his contract, irrespective of the fact that his goods arrived or bills of entry were filed after the date the exemption had been withdrawn. By the rule laid down by the larger Bench in Federation of Pakistan v. M. Afzal & Sons (supra), the rule laid down in Al-Samrez's case (supra) now stands modified and it is not only necessary to show that between the date an exemption was granted and the date it was withdrawn, the importer had been granted the import license and taken all effective steps to conclude his contract to purchase the goods and open letter of credit in terms thereof, but that the bill of entry was also filed by the importer with the Customs before the date the exemption was withdrawn. "

In Molasses Trading and Export (Pvt.) Ltd, supra, this Court in its majority opinion after analyzing the extent of the power of legislator to nullify the effect of the judgment of the Court through legislative measures made the following observations on the scope of section 31-A of the Act:

"With these preliminary observations I Would now analyse the provisions of section 31-A. A plain reading of the said section would show that, it opens with non obstente clause excluding the application of any other law for the time being in force or any decision of any Court. It then lays down that for purposes of sections 30 and 31 (the last-mentioned section is not relevant here) the rate of duty applicable to any goods shipped is inclusive of two components, namely, any 'amount' of duty imposed under section 18 and certain other specified taxing statutes and then comes the most relevant clause which comprises the second component included in the rate of duty, which reads as follows: 'and the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption of 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'. In order to bring out the true import and meaning of this part of the section I have rearranged the various phrases thereof and added a few words thereto placed in the brackets the text of which would then read as follows:

(1)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 goods shall include the amount that may have become payable in consequence of withdrawal of exemption from duty, whether (the withdrawal is) before or after the conclusion of a contract or agreement for the sale of such goods or opening of letter of credit thereof.

A plain reading of this text would show that by a mandate of law the rate of duty, which was a matter pertaining to the taxability or liability of the duty, has now to include the amount not only of the duty imposed under section 18, but also the amount that would notionally become payable if the exemption is withdrawn, irrespective of whether the withdrawal takes place before or after the conclusion of a contract for the sale of goods or opening of a letter of credit. It is easy now to see that the distinction between chargeability and playability of a duty under the Act has been effectively destroyed because the rate would now include the quantified amount of duty that would be payable as a result of withdrawal of exemption from duty. The direction that this will be the position whether the withdrawal is before or after the conclusion of a contract or opening of a letter of credit has the effect of destroying the doctrine of vested rights on the basis of which the decision in the case of Al-Samrez Enterprise was given. In ordinary concept the rate does not include the quantum or the total amount payable, but the Legislature has mandated that it shall be included within the rate of duty by the fiction created in law. Therefore the argument of the learned counsel that the position has unchanged in spite of section 31-A, because its provisions been confined to operate only for the purposes of sections 30 and 31, is not tenable, because under the changed law section 30 not only deals with rate of duty, but the amount payable under section 18 of the Act as well as in consequence of withdrawal of exemption, destroying the vested rights that may have accrued on account of the conclusion of contract for the sale of goods or opening of a letter of credit.

In the light of the foregoing it would appear that while section 30 was not relevant to resolve the question whether the withdrawal of exemption would relieve a party from the payment of duty under the existing law before the amendment, section 31-A has now radically changed the effect of section 30 by including the quantified amount of duty which becomes payable by virtue of the withdrawal notification. Therefore, in the new dispensation section 30 has become relevant even for purposes of exemption. The mere fact that section 19 has not been mentioned in the new section, does not mean that the legal effect of the exercise of power under section 19 read with section 21 of the General Clauses Act, is not within the purview of section 31-A. The language employed clearly refers to the withdrawal of exemption or concession, which evidently has reference to the provisions of section 19. Accordingly there is no -substance in the contention of the learned counsel that the newly inserted section has restated in different words the position that already stood, under the un-amended law. For the same reasons it cannot be held that the non obstente clause does not have the effect of setting at naught the effect of the judgment of this Court in the case of Al-Samrez Enterprise, because as discussed above the new law is a departure from and is in conflict with the position expounded in Al-Samrez Enterprise. For the same reasons the argument of the learned counsel for the appellants is without substance that section 31 has not achieved the obesect of defeating the consequences of exemption granted under section 19 beyond the date on which any notification of modification of withdrawal of exemption is issued, or to nullify the judgment in the case of Al- Samrez Enterprise. The language of section 31-A, as discussed above, clearly envisages and stipulates that the consequences that flow from the act of withdrawal or modification of an exemption notification, 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 L.C. had come into existence prior to such date. This effect has been now prescribed by a mandatory provision of law by legislative fiat, to use the phrase earlier mentioned. The Courts would therefore have to give effect to its notwithstanding the decision in 'the case of Al-Samrez Enterprise.

There is another aspect of the matter, which may also be mentioned. The exposition of law made in the case of Al-Samrez Enterprise took into consideration the law as it stood on the date when that decision was rendered. As shown hereinabove, the law has changed by the insertion of the new section 31-A materially affecting the enunciation of the law made therein. Therefore the changed state of law that has come into effect was not contemplated in that decision and it cannot therefore be urged with any justification, that the principles laid down therein would still apply to the interpretation of the provisions of law discussed therein. In this view of the matter the argument that the deeming clause takes back the insertion of section 31-A to the time of the enforcement of the Act in 1969 and theref6re the non obstante clause will not eclipse the decision in the case of Al-Samrez Enterprise, loses all force.

My conclusion therefore is that section 31-A has effectively achieved the purposes for which it was enacted as explained above. The only other position produced by section 31-A depriving an importer of the right to be protected against any change in the quantum of exemption, on the basis of which he has entered into a contract for the sale of goods to be imported and opened a letter of credit or performed other acts, to what extent this section can be given retrospective effect and whether such retrospective effect can be given so as to affect past and closed transactions.

It is clear from the provisions of section 5 of the Finance Act, 1988 that by the device of the deeming clause the newly-inserted section 31-A is to be treated as part and parcel of the Act since its enforcement in 1969. Undoubtedly, therefore, the section is retrospective in operation. It is agreed on all hands that the well -settled principles of interpretation of statutes are that vested rights cannot be taken away save by express words or necessary intendment. It also cannot be disputed that the Legislature, which is competent to make a law, has full plenary powers within its sphere of operation to legislate retrospectively or retroactively Therefore vested rights can be taken away by such a legislation and it cannot be struck down on that ground. However, it has also been laid down (Province of East Pakistan v. Sharafatullah PLD 1970 SC 5111) that a statute cannot be read in such a way as closed or any facts or events that have already occurred. In that case the following postulation has been made:

In other words liabilities that are fixed or rights that have been obtained by the operation of law upon facts or events for or perhaps it should be said against which the existing law provided are not to be disturbed by a general law governing future rights and liabilities unless the law so intends'

This is an important principle, which has to be kept in mind in the context of the present cases. Reference may also be made to another principle, which has been followed in several decisions but to quote from Mehreen Zaibun Nisa v. Land Commissioner, Multan (PLD 1975 SC 397) where it was observed:

'When a statute contemplates that a state of affairs should be deemed to have existed, it clearly proceeds on the assumption that in fact it did not exist at the relevant time but by a legal fiction we are to assume as if it did exist.' The classic statement as to the effect of a deeming clause is to be found in the observations of Lord Asquith in East End Dwelling Company Ltd. v. Finsbury Borough Council (1952) AC 109) namely:

'Where the stature says that you must imagine the State of affairs, it does not say that having done so you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.'

However, in that case the aforesaid principle was subjected in its application to a given case to a condition that the Court has to determine the limits within which and the purposes for which the Legislature has created the fiction. It has been quoted from an English decision that 'when a statute enacts that something shall be deemed to have been done which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to'.

In the light of the aforesaid principles it cannot straightaway be held that the mere fact that section 31-A has been given retrospective ,effect, it will affect even the past and closed transactions or all the vested rights that have accrued. It is in this context. that the remaining. contentions of the learned counsel for the appellants are to be examined.

It has been urged on behalf of the appellants that as the bill of entry was presented in all these cases before 1st July, 1988, when section 31-A was enacted and enforced, their cases are past and closed transactions.

There seems to be a great deal of force in this submission. Before the insertion of section 31-A the position was that upon the presentation of a bill of entry, by virtue of section 30 of the Act the levy of duty was crystallised. As explained in the case of Al Samrez Enterprise, the liability to tax was created under section 18 with reference to this date, because it is the rate of duty by application of which the tax liability can be quantified or assessed. Simultaneously, any benefit of exemption also takes effect on the same date because in the very nature of things, the liability is wiped off by virtue of the exemption at the same time. Therefore, this is the crucial point of time at which, by operation of law the liability is discharged. In other words, the rights and liabilities of the importers attained fixity on the said crucial date. Inevitably therefore a vested right has been created and the transaction is closed by the quantification of the tax, if any, or by the discharge of liability on that date. The mere fact that any proceedings remained pending for assessment of the tax by a statutory functionary for the purpose of recovery of the dues will not prevent the law from operating and producing the result of closing the transaction. This is on the simple principle that every functionary is bound by the provisions of law and has to pass a lawful order, which alone is protected. Besides on this' date the liability to pay tax and the exemption from payment are matters of mere calculation in terms of section 30 read with sections 18 and 19 of the Act, because the rate and value of the goods become fixed with reference to this date. "' indeed no adjudicative process is involved in such a matter. Viewed in this perspective, if effect is given to the provisions of section 31-A so as to undo the discharge of the liability which had already taken effect, it will amount to re-opening a past and closed transaction. The simple reason is that under the existing law there was no further liability to pay the tax and by giving retrospective operation to the new dispensation a liability is being created for the payment of the tax. I cannot see anything in the language of section 31-A, expressly or by necessary intendment, to that effect. Such result is therefore not a necessary corollary of the fiction created by the deeming provisions of section 5 of the Finance Act, 1988. Otherwise also it will be contrary to the principle, mentioned above, namely, that liabilities once fixed or rights created by operation of law upon facts or events, must not be disturbed by a general provision given retrospective effect unless such intention is clearly manifested by the language employed. In the case of Mehreen Zaibun Nisa (supra) retrospective effect was not given to the changed. law so as to invalidate certain acts of Legislature, although the entry in the relevant legislative list had been changed with retrospective effect."

The majority opinion in Malasses Trading and Export (Pvt.) Ltd. was referred with approval in the case of Federation of Pakistan v. Punjab Steel (supra) and Government of Pakistan v. Muhammad Ashraf (PLD 1993 SC 176).

17. The effect of insertion of section 31-A in the Act is that when exemption from payment of customs duty granted by the Government under section 19 of the Act is withdrawn, then notwithstanding the fact that while exemption was enforced, the party had opened a letter of credit or concluded the contract with the foreign suppliers the amount of customs duty payable on the goods will be that which may have become payable as a result of withdrawal of the exemption. It is therefore, quite clear that the right to claim exemption from customs duty under a notification issued under section 19 of the Act remains available to a party only as long as the exemption notification holds the field. However, as soon as the exemption notification is withdrawn, the payment of customs duty on the imported articles is to be determined in accordance with the provisions of section 30 of the Act. The contention of the appellants that section 31-A was inserted in the Act with the sole object of doing away with the effect of the judgment of this Court in Al-Samrez's case and therefore, the exemptions granted by the Government after insertion of section 31-A are not controlled by section 31-A does not appear to be correct. Section 31-A was inserted in the Act by section 5(2) of Finance Ordinance 11 of 1988 which provided that section 31-A shall be deemed always to have been so inserted in the Act, meaning thereby That it was given retrospective effect from the date the Customs Act, 1969 came into effect. There is nothing in the language of section 31-A (ibid), to justify the interpretation that this section applied only to the cases covered by the judgment of this Court in Al-Samrez's case or to those cases only, which did not acquire the character of past and closed transaction on the date of insertion of section 31-A in the Act. The language of section 31-A (ibid) is wide enough to include within its ambit all those cases where exemptions have been withdrawn after the insertion of section 31-A in the Act, as well.

At this stage, we may also dispose of another connected argument of Mr. Aitzaz Ahsan relating to interpretation of section 31-A. Mr. Aitzaz Ahsan contended that 'Surcharge' and ' Iqra Surcharge' were levied under section 2 of Finance Ordinance, 1982 and section ' 5' of the Finance Act, 1985 respectively. Section 31-A as originally enacted amongst others, provided that the rate of duty applicable to any goods shall also include the amount of duty imposed under section 2 of Finance Ordinance, 1982 and section 5 of Finance Act, 1985. However, by section 2(4) of the Finance Act of 1991, the words "section 2 of the Finance Ordinance (XII of 1982) and section 5- of the Finance Act, 1985 (1 of 1985) and the anti-dumping or countervailing duty imposed under the Import of Goods (Anti-Dumping and Countervailing Duties Ordinance, 1983 (111 of 1983)" appearing in section 31-A were omitted, with the result the withdrawal of Surcharge and Iqra Surcharge through the impugned notifications could not be defended on the strength of section 31-A of the Act. In reply to the above argument-of Mr. Aitzaz Ahsan, Mr. S.M. Zafar, the learned counsel for the respondents contended that on the date the two notifications withdrawing the exemptions from payment of Surcharge and lqra Surcharge were issued by the Government, the words "section 2 of the Finance Ordinance, 1982 and section 5 of Finance Act 1985" were very much part of section 31-A of the Act and as such the withdrawal of 'Surcharge' and 'Iqra Surcharge' were fully covered and protected by section 31-A of the Act. The contention of Mr. S.M. Zafar appears to be well founded. The notification withdrawing the exemptions of Surcharge and Iqra Surcharge were issued by the Government on 9th of May, 1991 while the Finance Act of. 1991 received the assent of President of Pakistan on 20-6-1991 and it was published in the Gazettee of Pakistan, Extraordinary, Part I of 27-6-1991. Therefore, on the date the notifications withdrawing the exemptions from payment of 'Surcharge' and ' Iqra Surcharge' were issued, section 31-A also covered the cases of withdrawal of exemptions from payment of Surcharge and Iqra Surcharge. We therefore, find no force in the above submission of learned counsel for the appellants.

The next contention of appellants in these appeals is that the observations of the High Court in the impugned judgment fully established the allegations of appellants that the Government held out promises and inducements to the industrialists by offering them exemptions from payment of various duties and taxes in case they established industries in the underdeveloped area of GATE. The appellants having acted on the inducements offered by the Government invested huge amounts in establishing various industrial units in GATE. It is accordingly contended that in these circumstances the Government could not be allowed to withdraw these exemptions on the principle of promissory estoppel.

18. The learned counsel for the respondent, on the other hand, argued that firstly, no inducement was offered by the Federal Government to any industrialist for establishing industries in GATE. The GATE, it is contended by the learned counsel for the respondents, was established by the Provincial Government of N.-W.P.F. and it was developed by the Sarhad Development Authority. The exemptions from payment of various duties and taxes offered to industries in GATE was part of the policy of Government to encourage investment in GATE. Such exemptions were granted in routine from time to time throughout Pakistan to various other categories of importers as a part of policy of Government. The exemption notifications issued by the Government contained no words or expression to indicate that the Government was holding out any specific promise to the industrialists in GATE so as to create any promissory estoppel against them. It is, accordingly, contended by Mr. S.M. Zafar that in these circumstances no case for promissory estoppel is made out against the Federal Government. The learned counsel, in the alternative, contended that even if it is held that the Government was bound not to withdraw the exemption on principle of promissory estoppel, such a plea cannot succeed against a statutory provision (section 31-A of the Act).

19. The doctrine of promissory estoppel is founded on equity. It arises when a person acting on the representation by the Government or a person competent to represent on behalf of the Government, changes his position to his detriment, takes a decisive step, enters into a binding contract or incur a liability. In such case, the Government will not be allowed to withdraw from its promise or representation. However, a general promise without any time limitation cannot bind the Government for all times to come. The enforcement of doctrine of promissory estoppel against the Government or a Government functionary competent to represent on behalf of the Government is however, subject to the following limitations as held by this Court in the case of Army Welfare Sugar Mills Ltd. v. Federation of Pakistan (1992 SCMR 1652):

"(i)The doctrine of promissory estoppel cannot be invoked against the Legislature or the laws framed by it because the Legislature cannot make a representation;

(ii) promissory estoppel cannot be invoked for directing the doing of the thing which was against the law when the representation was made or the promise held out;

(iii)no agency or authority can be held bound by a promise or representation not lawfully extended or given;

(iv) the doctrine of promissory estoppel will not apply where no steps have been taken consequent to the representation or inducement so as to irrevocably commit the property or the reputation of the party invoking it; and

(v)the party which has indulged in fraud or collusion for obtaining some benefits under the representation cannot be rewarded by the enforcement of the promise. "

In the cases before us, the appellants are invoking the doctrine of promissory estoppel against the Government on the basis of alleged inducements and representations contained in the exemption Notifications No.517(I)/89 dated 3-6-1989, No.480(1)/88 dated 26-6-1988 and 481(1)/88 dated 26-6-1988. These notifications do not contain any time limitation during which these exemptions were to remain operative. The appellants have failed to bring on record any material to establish that the Government either before or after issuance of these notifications made any representation to the industries in GAIE that these exemptions will remain operative for any specified period. In the absence of the period having been specified in these notifications regarding their validity, the exemptions under these notifications could be availed by the appellants only during the period these notifications were operative. These exemptions ceased to be available from the date the above notifications were superseded or withdrawn. The learned counsel for the appellants have, however, argued that as no time limit was mentioned in the above exemption notifications, they were entitled to reasonable notice by the Government beforewithdrawal of these exemptions. In support of their contention, they have relied on the following observations in the case of Godoon Textile Mills v. WAPDA (1997 SCMR 641):--

"67. There is no doubt that there is a distinction between an exemption granted from the payment of taxes for certain period on certain conditions and a concession, which does not lessen the monetary burden of the beneficiary of the concession but it only defers his liability as was done in the above report in the case of Mian Nazir Sons Industries Ltd. (supra). However, we may observe that though in the case in hand the word "concession" was used while granting the above reduction of 50 % in the payment of electricity tariff but factually it was part of the representation for inducing the prospective investors to establish their factories in G.A.I.E. There was no period specified for the above concession. In this view of the matter, the above concession could not be for all times to come and, therefore, it could be withdrawn by giving a reasonable notice. In fact, Mr. Abdul Hafeez Pirzada .has not contested the above legal position. In the instant case, WAPDA has not withdrawn the above concession in respect of all the industries situated in G.A.I.E. but has prepared a negative list containing certain industries, which have been denied the above concession. The other industries continued to enjoy the above 'concession. Pursuant to decision of E.C.C. WAPDA through its letter dated 23-2-1995 notified that the above concession would be up to 28-8-1999 excluding the consumers mentioned in the negative list, but by a subsequent letter dated 8-3-1995, it reduced the above terminus ad quem to 2-6-1997."

The above case relied by the appellants is distinguishable. In that case, there was no statutory provision, which protected the withdrawal of the concession by WAPDA. In the present case, the respondents have relied upon a statutory provision protecting the withdrawal of exemption. As earlier pointed out by us, the promissory estoppel is not applicable against a statutory provision. The appellants have also relied on the case of Collector of Central Excise and Land Customs v. Azizuddin Industries Ltd. (PLD 1970 SC 439 in support of their contention that the exemption once granted to backward areas could not be taken away even through a Constitutional Amendment. In that case, the respondent was granted permission to establish a factory at Chittagong. Through a notification under rule 8 of the Central Excise Rules, 1944, the Government exempted from payment of whole of Excise Duty leviable on excisable goods manufactured or produced in the areas which included Chittagong Hill Tracts for a period of 4 years with 'effect from 1-7-1961. In response of this notification, which extended incentive to economically backward area, the respondent applied for shifting the site of his factory from Chittagong to Chittagong Hill Tracts. On 9th September, 1961, the permission granted to respondent to establish a cigarette factory in Chittagong was amended and accordingly, respondent established its Mill in the area of Chittagong Hill Tracts. In spite of amendments in the original SRO and the enforcement of 1962 Constitution, the respondent continued to enjoy the exemption granted to factories located in Chittagong Hill Tracts. However, on the passing of Constitution (First Amendment) Act, 1964, on 10-1-1964, Chittagong Hill Tracts were excluded from the definition of Tribal Areas. As a consequence of this amendment the exemption enjoyed by the respondent from payment of excise duty on cigarettes produced in the factory of respondent was withdrawn. The respondent filed writ petition in the High Court of then East Pakistan which upheld the contention of respondent that the right of exemption vested in the respondent for a period of four years could not be taken away during the currency of that period. The Government took the matter in appeal before this Court. While considering the extent of power exercisable under section 12-A of the Central Excise and Salt Act (LI of 1944) and section 21 of General Clauses Act by the Authority, this Court observed as follows:--,

"It was argued by Mr. Brohi that the Notification dated the 28th February, 1964, was without lawful authority, as the reasons on which it was based, namely, the exclusion of the district of Chitagong Hill Tracts was not relatable to the grant of exemption. The exercise of power under section 12-A to grant exemption as `well as the power to withdraw the exemption under section 21 of the General Clauses Act is unconditional. It i's, therefore, not open to Courts to go behind the Notification of the 28th February, 1964, on the ground that the exercise of power by the Central Government was improper. However, if the grant of exemption was subject to the existence of certain conditions and the withdrawal of exemption was also made conditional on the happening of certain eventuality, then the Government could not withdraw the exemption unless the requirement of law was fulfilled. As no such conditions are provided in section 12-A in the instant case, the High Court had no authority to make its own surmises as to the propriety of reasons which had motivated the issue of the Notification dated the 28^th February, 1964.

The next question which arises in this case is whether the' Notification of the 28th February, 1964, which purported to destroy completely the rights vested in the respondent by the Notifications dated the 30th June, 1961, and the 17th May, 1963, is valid in law. It is a settled rule 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 very question fell for decision before the Court in Civil Appeal No.3-P of 1965 (Government of Pakistan v. Messrs Mardan Industries Limited). Dealing with the validity of the latter Notification dated the 19th May, 1964, it was observed:

It is well-settled that no statute shall be construed so as to have a retrospective operation unless its language is such as plainly to require such construction. We understand that 17 lacs cigarettes, which had been seized before issue of the impugned notification have been released and the Excise Department does not claim any excise duty in respect of the said cigarettes.'

The respondent had acquired a vested right of exemption from the levy of excise duty on all the goods produced or manufactured by it for a period of four years under the Notification of the Central Government referred to above. That vested right could not, therefore, be taken away by an executive action. The Notification dated the 28th February, 1964, being completely destructive of the right vested in the respondent-company was in this view without lawful authority and of no legal effect."

The above case relied by the learned counsel for tile appellants is, therefore, also distinguishable as in that case the exemption from payment of excise duty granted by the Government was to remain effective for a specified period. The observations of this Court in Azizuddin Industries Limited's case that the vested right under the exemption notification could not be taken away by an executive action are therefore, applicable only to a case where the Government first granted exemption for a specified period and then attempt to withdraw the same thus defeating the vested right through an. executive action. However, even vested right under an exemption notification which is a time-bound, could be taken away by a Legislature measure as held by this Court in Army Welfare Sugar Mills Ltd.'s case, supra, in the following passage at pages 1696 and 1697 of the report:--

"It may be mentioned that by now, it is well-settled provision of law obtaining in Pakistan that if an exemption from payment of excise duty or any other tax, has been granted for a specified period on certain conditions and if a person fulfils those conditions, he acquires a vested right, he cannot be denied the exemption before the expiry of the specified period, through an executive instrument like a notification, but he can be denied his vested right by a legislative provision, like section 31-A which has been incorporated in the Customs Act in 1969 nullifying the effect of the judgment of this Court in the case of Al-Samrez Enterprises (supra) as has been held by the author of the above judgment, Zafar Hussain Mirza, J., in a recent unreported majority judgment dated 24th September, 1991 in Civil Appeals Nos.915-K to 918-K all of 1990 (Molasses Trading and Exports (Pvt.) Ltd. v. Federation of Pakistan and others wherein his Lordship observed as follows:

'For the same reasons it cannot be held that the non obstante clause does not have the effect of setting at naught the effect of the judgment of this Court in the case of Al-Samrez, because as discussed above the new law is a departure from and is in conflict with the position expounded in Al-Samrez Enterprises. For the same reasons the argument of the learned counsel for the appellants is without substance that section 31 has not achieved the object ' of defeating the consequences of exemption granted under section -19 beyond the date on which any notification of modification of withdrawal of exemption is issued, or to nullify the judgment in the case of Al-Samrez Enterprises. The language of section 31-A, as discussed above, clearly envisages and stipulates that the consequences that flow from the act of withdrawal or modification of an exemption notification, 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 L.C. had come into existence prior to such date. This effect has been now prescribed by a mandatory provision of law by legislative fiat, to use the phrase earlier mentioned. The Courts would therefore, have to give effect to it notwithstanding the decision in the case of Al-Samrez Enterprises.

In the case of Federation of Pakistan v. Ch. Muhammad Aslam (supra) and the case of Pakistan v. Salahuddin and 3 others (supra), this Court pressed into service the doctrine of promissory estoppel in order to compel the Government to honour the Gift Scheme relation to import of tractors, bus and truck chassis and the reconditioned machinery respectively as the parties had acted upon the representation to their detriment before the amending notifications were issued.

It is, therefore, evident that the doctrine of promissory estoppel is available in Pakistan against the Government and its functionaries, subject to inter alia limitations highlighted by one of us, Shafiur Rehman, J., in the case of Pakistan v. Salahuddin (supra)."

20. The next contention of the appellants in the above ,appeals is that total exemption from payment of sales tax in respect of raw material and components which were imported for the exclusive use by the manufacturer of goods of recognized industrial units located in GAIE was also allowed by the Government under its Notification No.SRO 517 (1)/89 dated 3-6-1989. The exemption from payment of sales tax was withdrawn by notification issued on 5-5-1991. It is vehemently contended by the appellants that in so far the withdrawal of exemption from payment of sales tax is concerned, it was only through the executive order, namely, the SRO dated 5-5-1991 and therefore, withdrawal of exemption from payment of sales tax could not be defended on the basis of insertion of section 31-A in the Act. The learned counsel for the respondents, on the other hand, contended that in view of section 3, subsection (5) of the Sales Tax Act, 1951, the tax levied under section 3 of the Sales Tax Act, 1951 shall be deemed to be a customs duty for the purposes of the Act and therefore withdrawal of exemption from payment of sales tax would also be saved by insertion of section 31-A in the Act.

Section 3 (5) of the-Sales Tax Act, 1951 relied by Mr. S.M. Zafar is as follows:

"The tax in respect of goods mentioned in clauses (a) and (b) of subsection (1) shall be payable at the same time and in the same manner as the customs duties under the Customs Act, 1969 (IV of 1969), and the provisions of the said Act and the rules made thereunder shall so far as may be and with the necessary modifications, apply for the purposes of this Act as they apply for the purposes bf the said Act."

In the case of Crescent Pak. Industries (Ltd.) v. Government of Pakistan (1990 PTD 29) a learned Division Bench of the High Court of Sindh considered the affect of section 3(5) of the Sales Tax Act with reference to the argument that the withdrawal of the exemption of sales tax could be given effect to retrospectively, in view of insertion of section 31-A in the Act, as follows: ,

"4.There is little to argue on the point that the Sales Tax Act of 1951 and the Customs Act of 1969, though taxing statutes, operate in different fields. To our minds what section 3(5) of the Sales Tax Act, 1951, achieves is the introduction of machinery operating under the Customs Act to realizations under the Sales Tax Act, as well. There is a clear distinction between charging provisions of a statute and the machinery part thereof. It is axiomatic that mode and manner of recovery does not alter the nature of a tax nor can a tax be introduced or imposed by implication. We are clear in our minds that it is only payability which is covered by section 3(5) of the Sales Tax Act and not the imposition or levy of sales tax, which is provided for elsewhere in the Sales Tax Act itself. Merely, because of the invocation of section 3(5) of the Sales Tax Act and the application of the Customs Act, 1969, pursuant thereto sales tax is not divested of its inherent attributes and does not become Customs duty and, Therefore, the introduction of section 31-A in the Customs Act, cannot take away vested rights under the Sales Tax Act and does not make any difference whatever on that score.

5.The above conclusion is strengthened on the language of section 31-A of the Customs Act itself. Nowhere in that provision the word "tax" is found to be employed and throughout the tenor of the provision the Legislature has and obviously on purpose, chosen to use the expression duty or duties by which nomenclature is underscored a limitation to specified duties only and not to any tax going by that name, such as sales tax. This also stands to reason as the protection against vested rights, if otherwise lawful, was considered in the context of Customs Act only which deals with specific duties alone. For this reason. cover was not intended to be extended to any other rights failing under a different statute not mentioned in section 31-A ibid. It is manifest therefore, that section 31-A has no nexus with sales tax levied under the Sales Tax Act, 1951.,

6.On the above rationale, the dictum of the Supreme Court of Pakistan, in AI-Samrez Enterprise's case and the principle underlying the same escapable applies to this case, since the application of the doctrine invoked thereunder was not limited to Customs duty alone. No vested rights of exemption in relation to the levy of sales tax can, accordingly, be affected adversely once the same have matured and come to occupy the field. The withdrawal of exemption, therefore, under section 7 of the Sales Tax Act w.e.f. 26-6-1988 could not be given effect to retrospectively so as to infringe petitioner's rights, which on payment and opening of Letters of Credit, on 18-6-1988, had duly been established. Even otherwise, it is well settled that a notification operates only prospectively and not retrospectively. The-imposition of sales tax, by withdrawal of exemption through. Notification dated 26-6-1988, thus, can only be prospective and not retroactive.

A similar argument, that the withdrawal of sales tax would be applicable even to the contracts entered into before the withdrawal of the exemption in view of insertion of section 31-A in the Act, was-repelled in the case of Ahmed Investment (Pvt.) Ltd. v. Federation of Pakistan (1994 PTD 575) by another Division Bench of High Court of Sindh as follows:--

"3.Mr. Amanullah Khan has contended that withdrawal of exemption through a notification can only be prospective but retrospective effect cannot be given to a notification withdrawing exemption so as to infringe rights already accrued. Reference has been made to the case of Al-Samrez reported in 1986 SCMR 1917. Further, contention made by the learned counsel is that although section 31-A was introduced in the Customs Act to meet such a situation but no corresponding amendment has been introduced in the Sales Tax, Act. Reliance has been placed by the learned counsel on the cases of Punjab Steel Limited v. Deputy Collector of Customs, Dry Port, Lahore PLD 1989 Lah. 237, Crescent Pak. Industries (Pvt.) Limited v. Central Board of Revenue 1990 PTD 29 and Rachna Chemical Industries v. Government of Pakistan 1991 PTD 1 which clearly support the petitioner's case so far as the withdrawal of exemption from sales tax is concerned.

4.It may be pointed out that following the decision in the case of AI- Samrez 1986 SCMR 1917 several petitions were decided by this Court as it had been held that once a vested right was created in favour of the petitioners, the same could not be subsequently taken away by withdrawal of a notification. Thereafter section 31-A was introduced in the Customs Act to meet such a situation but admittedly no such corresponding amendment has been made in respect of the sales tax. Since the goods imported by the petitioner had already arrived at the Karachi Port and Bills of Entry had also been presented to the Customs Authorities in respect thereof, therefore, in view of the principle laid down in Al-Samrez's case, the petitioner had acquired a vested right which could not be taken away by subsequent withdrawal. We are consequently of the view that the cases cited by Mr. Amanulah Khan are fully attracted to the present case, so far as withdrawal of exemption from sales tax is concerned. However, the petitioner would be liable to pay customs duty at the enhanced rate i.e. at the rate of Rs.1,500 per metric ton in view of section 31-A of the Customs Act."

We are inclined to agree with the view expressed in the above two cases decided by two different Division Benches of the High Court of Sindh with regard to the applicability of section 31-A of the Act to the withdrawal of the exemption of sales tax by the Government. We, accordingly, hold that the withdrawal of exemption from payment of sales tax granted by the Government under Notification No.SRO 517 (1)/89 dated 3-6-1989 through notification dated 9-5-1991 was only prospective in operation and could not take away or interfere with any of the vested right of appellants.

21. The next question which arises for consideration in this behalf is, what is the effect of withdrawal of notification dated 9-5-1991 on the vested rights which the appellants acquired under notification dated 3-6-1989 with regard to exemption from payment of sales tax on raw material and components import for exclusive manufacturers of goods by recognized industrial units located in GAIE. We have already held that the notification, dated 3-6-1989 issued by the Government was not time-bound. It is, therefore, quite clear that the exemption from payment of sales tax under the notification dated 3-6-1989 was available till such time the notification was withdrawn by the Government the withdrawal of notification is dated 9-5-1991. Therefore, the withdrawal of exemption from payment of sales tax would be applicable only from 9-5-1991. This withdrawal, however, did not affect the rights of the appellants to claim exemptions from payment of sales tax in respect of import of raw material and components for which contracts were already entered into and letters of credit were established in favour of foreign suppliers before the date of withdrawal notification. The notification issued on 9-5-1991 withdrawing the exemption, however, itself provides that the notification will not affect the raw material and components imported against irrevocable letters of credit opened on or before 8-5-1991. The power to issue a notification included the power to withdraw the said notification and exercise of this power by the Government is unconditional as held by this Court in Azizullah Industries Ltd.'s case, supra. Therefore, to the extent of exercise of that power by the Government, no exemption could be taken. The learned counsel for the appellants has, however, contended that as the appellants have made huge investments in the industries on the representation of the Government, the Government could not withdraw the exemption from payment of sales tax abruptly. In our view, the contention of the learned counsel for the appellants cannot succeed for the reason that the notification dated 3-6-1989 issued by the Government granting exemption from payment of sales tax was not for any specific period. In the absence of period having been specified in the above notification, the power of the Government to withdraw the notification was not circumscribed by any other condition. In these circumstances, the effect of withdrawal of the exemption granted by the Government would be that all contracts entered into for import of raw material and components before the date of withdrawal of the exemption and all those consignments in respect whereof irrevocable letters of credit were established before the date of withdrawal of the notification would continue to enjoy exemption from payment of sales tax. Beyond that the appellants will not be entitled to any further concession in respect of exemption from payment of sales tax.

22. The last contention of the appellants in these appeals is, that the exemption granted by the Government to the industries located in GAIE was in the nature of property right, which could not be taken away by the Government without payment of compensation and that the withdrawal of the exemption notification, in these circumstances, amounted to violation of the right of property guaranteed under Article 24 of the Constitution. Lengthy arguments were addressed on this aspect of the case by both the sides. However, we find that this argument was neither raised before the Peshawar High Court which decided the writ petitions nor this point has been raised in the memo. of appeal before this Court. This point is also not mentioned in the Leave Granting Order of this Court. In these circumstances, we are not inclined to consider this contention in the present cases and reserve our opinion to be expressed in some other appropriate case in future.

23. Before patting with these cases, we would like to express that we fully share the views of learned Judges of the Full Bench of Peshawar High Court that GAIE being a remote, backward and economically unviable and unprofitable area, it could not have attracted the industrialists and entrepreneurs for installation of new industrial units in the area but for the incentives offered by the Government in the shape of total exemptions from payments of taxes and duties on imports of machinery, raw material and components. It would, therefore, be fair and just that the incentives offered by the Government in the form of exemptions from payment of customs duties, sales tax etc. on imports of machinery, raw material and components would have been allowed to those industrialists, who have set up their industrial undertakings in GAIE for a reasonable period of about 5 to 10 years from the date their industrial units started production. With these observations, there appeals are dismissed but the parties are left to bear their respective costs.

M.B.A./M-152/SAppeal dismissed.