PUNJAB BEVERAGE COMPANY (PVT.) LTD. VS CENTRAL BOARD OF REVENUE, C.B.R. HOUSE
2001 P T D 1446
[Lahore High Court]
Before Jawwad S. Khawaja, J
Messrs PUNJAB BEVERAGE COMPANY (PVT.) LTD.
versus
CENTRAL BOARD OF REVENUE, C.B.R. HOUSE and 4 others
Writ Petition No. 18757 of 2000, heard on 30/01/2001.
(a) Central Excises Act (I of 1944)‑‑‑
‑‑‑‑S.14‑‑‑Fresh inquiry‑‑‑Scope‑‑‑New information always justifies fresh inquiry even where earlier inquiries have been conducted with due diligence.
(b) Central Excises Act (I of 1944)‑‑‑
‑‑‑‑S.14‑‑‑Sales Tax Act (VII of 1990), S.37‑‑‑Inquiry‑‑‑Summoning of witness‑‑‑Powers of the Authorities‑‑‑Scope‑‑‑Authorities, under the provisions of S.14 of Central Excises Act, 1944 and S.37 of Sales Tax Act, 1990, have ample powers to summon witnesses for production of documentary evidence and also to testify in any proceedings before authorized Officer of the department.
(c) Central Excises Act (I of 1944)
‑‑‑‑S.14‑‑‑Sales Tax Act (VII of 1990), S.37‑‑‑Inquiry‑‑‑Anonymous complaint‑‑‑Validity‑‑‑Inquiry can be conducted on such complaint and the same cannot be dropped just for the reason that the contents of the anonymous complaint cannot be verified as the complainant is unavailable and has not furnished any documents in support of the facts alleged in the complaint.
(d) Central Excises Act (I of 1944)‑‑‑
‑‑‑‑S.14‑‑‑Sales Tax Act (VII of 1990), S.37‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Fresh inquiry‑‑‑Discovery of new material‑‑‑Issuance of show‑cause notice‑‑‑Earlier eight inquiries were conducted and the Authorities initiated another inquiry for the ninth time ignoring the results of earlier inquiries‑‑‑Validity‑‑‑Where the earlier inquiries were not termed as proper, diligent or complete, inquiries, fresh inquiry could be initiated.
Edulji Dinshaw Limited v. Income Tax Officer PLD 1990 SC 399; Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII, South Zone, Karachi and others 1992 SCMR 250; Attock Cement Pakistan Ltd. v. Collector of‑ Customs, Colleatorate of Customs and Central Excise, Quetta and 4 others 1999 PTD 1892; Al Abram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1992 PTD 1761 and Messrs Central Insurance Co. and others v. The Central Board. of Revenue, Islamabad and others 1993 SCMR 1232 ref.
(e) Central Excises Act (I of 1944)‑‑‑
‑‑‑‑S.14‑‑‑Penal Code (XLV of 1860), Ss. 193 & 228‑‑‑Inquiry‑‑‑Nature o proceedings‑‑‑Inquiry undertaken by an authorized Central Excise Officer under the provisions of S.14 of Central Excises Act, 1944, is a judicial proceeding within the meaning of Ss. 193 & 228, P.P.C.
Messrs Lever Brothers Pakistan Limited through Company Secretary v. Federation of Pakistan through Secretary, Ministry of Finance Islamabad and 3 others 1999 MLD 1925 and Muhammad Irfan Khan v. The Superintendent, Central Excise, ‑Moradabad and another AIR 1960 All. 40: ref.
(f) Res judicata‑‑‑
‑‑‑‑Principles of‑‑‑Proceedings before Administrative Authorities‑‑‑Principle of res judicata‑‑Applicability‑‑‑Principle of res judicata cannot be applied to the proceedings before the Authorities with the same strictness which it is applicable before Courts or Judicial Tribunals‑‑‑Where formal decision ha been reached by any administrative forum, such decision does not constitute bar to reopening and reconsideration of the same matter where the earlier decision is clearly open to some objection or the same is not reached after proper inquiry or fresh evidence having a material bearing on the" point decided in the previous decision, becomes available.
Commissioner of Income‑tax v. Wahiduzzaman PLD 1965 SC 171; Commissioner of Income‑tax v. Pakistan Industrial Engineering Agencies Ltd. PLD 1992 SC 562 and Messrs Farrukh Chemical Industries Ltd. v. The Commissioner of Income‑tax, South Zone, Karachi PLD 1983 Kar. 269 ref.
(g) Central Excises Act (I of 1944)‑‑‑
‑‑‑.‑S.14‑‑Sales Tax Act (VII of 1990), S.37‑‑‑Constitution of Pakistan. (1973), Art. 199‑‑‑Constitutional petition‑‑‑Maintainability‑‑‑Issuance of Show‑cause notice‑‑‑Where the Authorities had jurisdiction to issue the show?cause notice and no mala fides had been alleged against the Authorities, the petitioner was not allowed to‑circumvent the statutory process.
Al Ahram Builders (Pvt.) Ltd: v. Income‑ Tax Appellate Tribunal 1992 PTD 1761 ref.
(h) Central Excises Act (I of 1944)‑‑‑
‑‑‑‑S.14‑‑‑Sales Tax Act (VII of 1990); S.37‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition ‑‑‑ Maintainability ‑‑‑ Show‑cause notice, issuance of‑‑‑Efficacious remedy available‑‑‑Effect‑‑‑Where efficacious remedy under the relevant. statute is available, Constitutional jurisdiction of High Court cannot be exercised against mere issuance of notice by the Authority‑‑Constitutional jurisdiction of High Court can be invoked where the notice is issued by Authority lacking jurisdiction or where the appellate or revisional authority under such statute has already expressed its view on the controversy which is subject‑matter of the notice.
Adamjee Insurance Co. Ltd., Karachi v. The Central Board of Revenue, Islamabad and 3 others 1989 PTD 1090 ref.
Ch. Aitzaz Ahsan assisted by Uzair Karamat Bhandari for Petitioner.
A. Karim for Respondents.
Dates of hearing: 22nd, 23rd, 24th, 25th, 26th and 30th January, 2001.
JUDGMENT
JAWWAD S. KHAWAJA, J.‑‑‑The petitioner produces and markets aerated beverages under‑various brand names including Pepsi Cola. This, it is ‑authorized to do, under a franchise agreement with a foreign Company, named Pepsi Cola International (PCI). Such agreement, inter alia, requires the petitioner to purchase concentrate from PCI which is used by the petitioner in its production of beverages. The concentrate is sold by PCI in units and is used by the petitioner in quantities prescribed by formulations provided by PCI. As such, each unit of concentrate is sufficient, together with other inputs, to produce a particular number of bottles of aerated beverages. It is, therefore, possible, with reasonable accuracy to calculate the production of the petitioner on the basis of the number of concentrate units consumed by it. These facts are not disputed between the parties.
2. The C.B.R., it appears, received an anonymous complaint alleging that the production of beverages reported by the petitioner to the Central Excise and Sales Tax Department (and also to the Income Tax Department), was under‑stated as it was not commensurate with the units of concentrate purchased by the petitioner from PCI. As a result, it was alleged, substantial amounts of Central Excise and Sales Tax were evaded by the petitioner.
3. According to the learned counsel for the petitioner, the complaint was investigated by the Central Excise and Sales Tax Department (and the Income Tax Department) on various occasions. Particulars of the purported investigations are reported in the following documents:‑
(i) Letter, dated 30‑10‑1999 addressed by Mr. Yasim Tahir, Collector, Central Excise to the Member, Central Excise, C.B.R.
(ii) Letter, dated 6‑12‑1999 addressed by the Director‑General of Intelligence and Investigation (Customs and Excise) to the Member, Central Excise, C.B.R.
(iii) Letter, dated 14‑4‑2000 again from the Director‑General, (Customs and Excise) to the Member, Central Excise, C.B.R.
(iv) Letter, dated 9‑8‑1999 from the Deputy Commissioner of Income? tax, to the Commissioner of Income‑tax, Faisalabad.
(v) Letter, dated 10‑9‑1999 from the Commissioner of Income‑tax, Faisalabad, to the Regional Commissioner of Income‑tax, Central Region, Multan.
(vi) Letter, dated 6‑4‑2000 from the Commissioner, Income‑tax, Faisalabad, to the Regional Commissioner of Income Tax, Central Region, Multan.
(vii) Document, dated 9‑4‑1999 which, appears to be a note in RCIT's file to the effect that proceedings be dropped.
(viii) Report, dated 10‑8‑1999 by the, Inspecting. Commissioner of Income‑tax.
4. The nature, content and adequacy of the documents referred to in the preceding paragraph, are discussed below to the extent the same are relevant for the decision of this petition. It will suffice for the present to say that the said documents contain at best cursory and superficial reports in respect of the allegations made in the anonymous complaint. The reports in the aforesaid documents did not result in the institution of any contravention case by the Central Excise and Sales Tax Department against the petitioner.
5. Thereafter, it appears that information was obtained by the C.B.R. from PCPs Dubai office showing definite monthly sales figures of the petitioner for the period between July, 1997 and December. 1998. In a letter dated 31‑7‑2000 addressed by PCT. Dubai to the Secretary, C.B.R., among other things, it was mentioned that the aforesaid sales figures had been communicated by the petitioner to PCT and also that such figures were an accurate representation of the sales made by the petitioner as they were consistent with the quantities of concentrate sold by PCT to the petitioner. The figures of sale, disclosed by PCT to the C.B.R, are substantially more than the figures which the petitioner had reported in its Central Excise and Sales Tax records. More specifically, if the figures furnished by PCT are correct, it would follow that production of 2508112 crates, each containing 24 bottles of 250 ml., was suppressed in the petitioner's excise and sales tax records. It was on the basis of this material information that the C.B.R. through the Secretary, Central Excise, directed the Collector of Central Excise and Sales Tax, by letter, dated 2‑8‑2000 to immediately initiate a contravention case against the petitioner. The wording of the letter, dated 2‑8‑2000, to which objection has been taken by learned counsel for the petitioner, has been discussed in a later part of this judgment.
6. The Superintendent, Central Excise City Circle, Faisalabad thereupon prepared contravention case No.01 of 2000, dated 9‑8‑2000 and submitted it for adjudication. A notice, dated 12‑8‑2000 was consequently issued to the petitioner by the Collector (Adjudication) respondent No.4 requiring the petitioner to show cause, inter alia, as to why excise duty amounting to Rs.50,569,608 and sales tax amounting to Rs.42,095,129 to respect of the under reported production, be not recovered from the petitioner. In response to the said show‑cause notice, the petitioner has already entered appearance before the Collector (Adjudication) and has also submitted a comprehensive reply. It is the show‑cause notice, dated 12‑8‑2000 which has been impugned by the petitioner in the present proceedings.
7. The respondents have raised a preliminary, objection to the maintainability of the present petition on the ground that the petitioner has only been asked to show cause in a contravention case and in response the petitioner has already joined the proceedings before the Collector (Adjudication) by submitting a reply to the impugned show‑cause notice. According to learned counsel for the respondents, no adverse order has been passed against the petitioner which can be impugned in writ jurisdiction. The petitioner will, according to learned counsel, be afforded a full and adequate hearing by the Controller (Adjudication).
8. Learned counsel for the petitioner, on the other hand, has made various submissions to contend that the present writ petition is‑maintainable against the impugned show‑cause notice in the circumstances of this case. The main thrust of the petitioner's contention is that the petitioner has already faced eight inquiries. This, according to him, is sufficient to preclude any, fresh inquiry of the nature as has now been embarked upon by the Collector (Adjudication) through the issuance of impugned notice. Learned counsel has also argued that the principles of res judicata are applicable in the present case which bar the issuance of the impugned show‑cause notice. Furthermore, it has been contended that there is no fresh information available with the Central Excise and. Sales Tax Department to justify issuance of the show‑cause notice.
9. I have considered the above contentions of learned counsel for the petitioner and will take up the last one first.
10. Great stress was laid by learned counsel for contention that the dated 31‑7‑2000 received by the C.B.R. PCI?s Dubai Office available to Excise and Sales Tax Department when anonymous complaint against the petitioner, was earlier order to appreciate this submission it would be useful to reproduce the relevant part of the aforesaid letter which reads as under:‑‑‑
"Mr. Shuja‑ud‑Din,
Secretary (CEJ.)
Central Board of Revenue.
Islamabad.
Fax: 92 51 9205316
Dear M: Shuja‑ud‑Din,
Thank you for your letter of July 24th. I would first of all like to confirm that we will support your efforts in whatever way we can, to conclude your investigations.
Response to your specific questions:
(a) ........
(b) The sale of concentrate to a non‑franchised party is not allowed by Pepsi Cola Inc. under any circumstances and contravenes its Franchise Agreement.
(2) We have compiled the sales data you requested and it is detailed in the attachment. These are the monthly sales figures as communicated by Punjab Beverages. We believe them to be an accurate representation of the sales as they reconcile, within reason, to concentrate sales made by Pepsi Cola International (Pvt.) Ltd.
I sincerely hope the above helps. If you require any further assistance please do not hesitate to contact me or the Pepsi Cola Office in Lahore.
Yours sincerely,
Saad Abdul Latif
cc : Mr. Zein Abdalla
Mr. Mashkoor Alam."
11. Alongwith the above letter a table showing month‑wise sales of the petitioner for the period between July, 1997 to December, 1998, had been enclosed. It was for the very first time since the initiation of any investigation against the petitioner that this specific information had come to the knowledge of the Central Excise and Sales Tax Department. What is also significant is that the sales figures, given in the attachment to PCPs letter, were stated by PCI to have been communicated to it by Punjab Beverages.
12. Learned counsel for the petitioner was unable to substantiate from any material on record, his assertion that the information contained in the abovenoted letter, dated 31‑7‑2000, was available with any of the officers conducting the inquiries referred to in para. 3 above. It will be evident from the discussion of the purported reports of inquiry that not only was the aforesaid information unavailable in the earlier inquiries, no diligent effort was made by the concerned officers to gather this material data through inquiries from. PCI, Dubai. On the contrary, a vague and evasive letter with no sales figures had been issued by PCPs Lahore Office which finds mention in some of the so‑called inquiry reports referred to in para. 3 above.
13. I am in no manner of doubt that the information contained in PCP s letter of 31‑7‑2000 and the data enclosed therewith containing specific monthly sales figures, was at no time prior to 31‑7‑2000, available with the respondent department. Furthermore, the nature and source of the information, prima facie, lend credibility to it. This circumstance alone is sufficient to demolish the petitioner's argument that the earlier inquiries provide immunity to the petitioner against any further investigation, on account of their thoroughness and completeness. The case‑law cited by learned counsel for the petitioner in support of his contention, which has been discussed below, goes against the argument of the learned counsel for the petitioner, in the circumstances of the present case because, according to the ratio of the cited precedents, new information will always justify a fresh inquiry even where earlier inquiries have been conducted with due diligence. This finding by itself would be sufficient to dismiss the present petition and to direct the petitioner to proceed with its defence in the pending show cause proceedings before the Collector (Adjudication).
14. However, because of the great emphasis placed on them by the petitioner, I consider it necessary to examine and discuss the various documents referred to in para. 3 above which, learned counsel for the petitioner contends, are detailed, thorough and complete inquiry reports. At the outset I would like to say that the said documents are nothing of the sort. At best, the same can be termed as cursory and superficial probes which are lacking in depth‑and diligence, as discussed below.
15. As a backdrop to the discussion of the aforesaid documents, it is important to note that the total number of units of concentrate purchased by the petitioner from PCI during the relevant period between July, 1997 and December, 1998, is not in dispute. It is also not disputed that if the entire concentrate, so purchased, had been consumed by the petitioner in the manufacture of aerated beverages, the production would have corresponded to the data of monthly sales provided by PCI, Dubai with its letter of 31‑7‑2000. Furthermore, it is not in contention between the parties that the sales figures, reported by the petitioner in its Central Excise and Sales Tax Record, is short, in aggregate, by 2508112 crates when compared to the figures furnished by PCI. The details of the difference between the figures furnished by PCI and those reported to the respondent department by the petitioner, are given in the table which forms part of the impugned show? cause notice. The reason advanced by the petitioner to explain the difference between the two figures, is that the total number of concentrate units purchased by it from PCI, were not, in fact, consumed by it for the purpose of manufacturing aerated beverages. According to the petitioner, 2638 units of concentrate out of the total purchased from PCI, were sold by the petitioner to M/s. Al‑Raza Traders, Karachi, before the said' units had entered the premises of the petitioner. It is for this reason that the said 2638 units of concentrate had not been shown in the Excise and Sales Tax Record maintained by the petitioner. The reason given by the petitioner for making the aforesaid sale, is that the said units were in excess of the requirements of the petitioner and had only been purchased from PCI with the object of showing increased sales and good performance to PCI in order to protect and renew the franchise of the petitioner.
16. To the extent necessary, the various documents referred to in para. 3 above, are discussed as under:‑‑‑
(i) Letter, dated 30‑10‑1999 addressed by Mr. Yasin Tahir, Collector, Central Excise to the Member, Central Excise, C.B.R.
This document relates only to the eleven months' period from January, 1998 up to November, 1998 rather than the period between July, 1997 and December, 1998 which is subject‑matter of the impugned show‑cause notice. It is thus, clear from the face of this document that it does not even purport to cover the entire scope of the contravention case against the petitioner which is subject‑matter of the said notice. Furthermore, there is no in? depth examination of the matter purportedly being investigated, nor is there any concerted attempt to ferret out information from PCI and M/s. Al‑Raza Traders. The document itself concludes by saying that there is, prima facie, no evasion of Central Excise and Sales Tax.
(ii) Letter, dated 6‑12‑1999 addressed by the Director‑General of Intelligence and Investigation (Customs and Excise ) to the Member, Central Excise, C.B.R.
This document relates to the period between 1‑1‑1998 and 28‑2‑1999. As such, this document also does not cover the entire period which is subject‑matter of the show‑cause notice. It does appear from the document that certain information was sought by the Director‑General Intelligence and Investigation, from PCI Lahore and from Mr. Saeed Ullah Khan, Proprietor of M/s. Al‑Raza Traders. A verbal explanation proffered by the petitioner to explain the apparent discrepancy in figures, was accepted without further probe. A written statement submitted by Mr. Saeed Ullah Khan, was also considered. This written statement admits the purchase by Al‑Raza Traders of 2638 units of concentrate from the petitioner. But it is stated therein that the said units of concentrate were further sold to purchasers. It is noted in the report that Mr. Saeed Ullah Khan did not provide any names, addresses or particulars of the buyers who had purchased the concentrate from Al‑Raza traders. Mr. Saeed Ullah Khan was not questioned any further nor was he pressed to furnish information relating to the alleged purchasers.
Certain information was sought from PCPs Office in Lahore, which responded evasively by means of an imprecise letter containing no figures in respect of sales targets fixed by PCI or sales reported by the petitioner. PCI was not questioned any further either in relation to sales figures or in relation to the franchise agreement and violations thereof, if any.
(iii) Letter, dated 14‑4‑2000 again from the Director‑General (Customs and Excise) to the Member, Central Excise, C.B.R.
This document contains a brief and superficial probe into certain queries raised by the C.B.R. relating to the period between October, 1997 and June, 1998. As such, the period of inquiry, which is subject‑matter of the impugned show‑cause notice, is not covered in its entirety. It is noted in the document that although information was sought from M/s. Al‑Raza Traders the names, addresses and other particulars of persons who allegedly purchased the concentrate from M/s. Al‑Raza Traders, were not furnished by it. It is admitted in the document that Al‑Raza Traders was not pressed to provide the requisite information relating to sale by it of 3470 units of concentrate. The reasons given for not pressing Al‑Raza Traders for further information, are, firstly, that Al‑Raza Traders was not required to maintain any record under the Central Excise Rules, 1944; secondly, that registration of wholesalers had become effective from 1‑7‑1998 while the transactions being inquired into preceded that date and, thirdly, that the assessee (presumably Al? Raza Traders) is enjoying the status of an individual and is not required to maintain records. At this point, it is important to note that each unit of concentrate, as stated by the petitioner's representative in Court, costs Rs.60,000 and, as such, the 3470 units sold by Al‑Raza Traders would have a total worth of Rs.20,82,00,000.?
As in the case of Al‑Raza Traders, PCI was also not diligently . questioned. No information at all was sought from PCI, Dubai. Even the PCI office in Lahore was not pressed to furnish figures, agreements and correspondence which would have been relevant for the inquiry.?
The conclusion has been reached in this document that the allegations contained in the anonymous complaint, are based on presumptions and neither evidence has been furnished with the complaint nor can the same be obtained directly because of the anonymous nature of the complaint.?
Only the above noted three documents originate from the Central Excise and Sales Tax Department. The remaining five documents, referred to in para.3 (iv) to (viii), which are considered below, relate to the Income Tax. (iv) Letter, dated 9‑8‑1999 from the Deputy Commissioner of Income? tax, to the Commissioner of Income‑tax, Faisalabad.
The period covered by this document is from 1‑1‑1998 to 30‑11‑1998 and, as such, does not cover the period which is subject ?matter of the impugned show‑cause notice. It contains, in essence the same information which has been mentioned in the document referred to in para. 3 (i) and which has been examined above. However, what is significant is that the conclusion in the document is based in material part on the production figures contained in a table taken from the petitioner's own report to the Sales Tax Department. As such, in a circular manner the disputed figures, which are subject‑matter of the inquiry by the respondent? department have been used by the Deputy Commissioner of Income‑tax for the purpose of verifying the figures reported to the Income Tax Department.
(v) Letter, dated 10‑8‑1999 from the Commissioner of Income‑tax, Faisalabad, to the Re Tonal Commissioner of Income‑tax, Central Region, Multan.
This document is nothing more than a forwarding letter from the Commissioner of Income‑tax. Faisalabad, to the Regional Commissioner of Income‑tax enclosing the report, dated 9‑8‑1999 of the DCIT which has been referred to in the preceding sub‑para. It merely reproduces and paraphrases the contents of the DCIT's report and also makes reference to the Inspecting Assistant Commissioner's letter referred to in para. 3(viii) above. The document does not even purport to be an inquiry or investigation
(vi) Letter, dated 6‑4‑2000 from the Commissioner, Income‑tax, Faisalabad to the Regional Commissioner of Income‑tax, Central Region, Multan.
This document is not an investigation report at all and does not claim to be one. It merely contains comments on the document referred to in para. 3(iv) above and on certain assessment/appellate proceedings before the Income‑tax hierarchy relating to the petitioner.
(vii) Document, dated 9‑4‑1999 which appears to be a note in RCIT's file to the effect that proceedings be dropped.
This whole document comprises of two sentences which are reproduced as under:
"I agree with the suggestions of the CIT suggesting dropping of proceedings and passing of information to Karachi." and
"As proposed, proceedings should be dropped."
(viii) Report, dated 10‑8‑1999 by the Inspecting Assistant Commissioner of Income‑tax.
This document is a half page letter forwarding the report of the Deputy Commissioner of Income tax referred to in para. 3(iv) to the Regional Commissioner of Income‑tax.
17. From the discussion of the above‑referred documents it is obvious that the full extent of the alleged evasion of Central Excise Duty and Sales Tax, which is subject‑matter of the impugned show‑cause notice, has never been investigated so far. Even to the extent that any investigations have been held, they show a remarkable degree of apathy and lack of diligence on the part of the officers of the respondent‑department who were responsible for investigating the complaint made against the petitioner It is, in particular, worth noting that none of the means, permissible to the officers of the respondent‑department under law, to compel the production of evidence and witnesses was used effectively or with requisite vigors to gather such facts which are material to the case or which arose naturally from the initial probe into the matter.
18. It is equally apparent that there are at least three key sources of information relevant to the inquiry against the petitioner, namely, M/s. Al‑Raza Traders, PCI and the petitioner itself. In addition, material information could potentially be available with such other sources as banks, goods carrier etc. None of these sources has been properly tapped. Leads naturally arising have not been pursued. Only to illustrate this point it may, firstly, be seen that Al‑Raza Traders has not been pressed to furnish a list of the names of such persons who allegedly have purchased concentrate from it. The reasons for not pressing Al‑Raza Traders have been noted in para 16(iii) above. The said reasons are wholly irrelevant and show an extraordinary lack of diligence on the part of the officer concerned, namely, the Director‑General, Intelligence and investigation. The mere fact that Al‑Raza Traders is, not required to maintain any record under the Central Excise Rules, does not in any manner, preclude the Excise Department from pressing AI‑Raza Traders to furnish the names, addresses and other particulars of purchasers of concentrate. Likewise, the fact that registration of wholesalers etc., under the Sales‑ Tax Act, became effective from 1‑7‑1998 furnishes no basis for not seeking the requisite information from Al‑Raza Traders. The same can be said for the third reason given for not pressing Al‑Raza Traders for the aforesaid information. It is difficult to believe that the proprietor of Al‑Raza Traders could have forgotten the names, addresses and other particulars of the purchasers to whom, in aggregate, concentrate worth Rs.20,82,00,000 (Rupees twenty Crores and Eighty‑Two lakhs) was sold by Al‑Raza Traders. In fact the proprietor of Al‑Raza Traders has not claimed that it does not have or cannot furnish the requisite information. He simply has not been asked for the information. Furthermore, registration requirements in respect of wholesalers etc. became effective on 1‑7‑1998 even according to the Director‑General's own report of 14‑4‑2000. As such, there was nothing to prevent the concerned officer from seeking information for the period subsequent to the said date. Such information also would have identified the alleged purchasers of concentrate. In any event, in respect of at least six months of period (1‑7‑1998 to 31‑12‑1998) which is covered in the impugned show‑cause ‑ notice, the information about purchasers of concentrate is or should be available. No attempt whatsoever appears to have been made to get hold of this crucial information. The information would be significant as the veracity of the story put forth by Al‑Raza Traders, on which much rests, can be tested on the basis of the said information.
19. Likewise no serious and diligent efforts appear to have been made to gather information PCI. In particular, it would appear that the contents of the franchise agreement between PCI and the petitioner would be relevant, especially those terms and conditions which relate to breaches of the said agreement and the consequences thereof. At this point it may be noted that learned counsel for the petitioner acknowledge that there may have been a breach of the terms of the franchise agreement but such breach was, according to him, a matter purely between the petitioner and PCI. Information relating to action, if any, which may have been taken by PCI on becoming aware of a material breach of its agreement; other instances, if any, of unauthorized sales of concentrate and the treatment of bottlers by PCI, which were found to have committed material breaches of its franchise agreement, could have been sought from PCI together with any correspondence relating to the subject between the petitioner and PCI. None of this was done. Moreover, sales targets, if any, fixed by PCI and required to be achieved by the petitioner, were not sought from PCI for the period preceding the relevant period in 1997‑98 or the period subsequent thereto. Such sales targets coupled with the amount of concentrate purchased by the petitioner, could provide material bases for the investigation of the complaint against the petitioner. This lead also was not pursued in any of the so‑called inquiries referred to above.
20. Finally, the records of the petitioner itself appear not to have been considered thoroughly. The petitioner's explanation is that it had sold 2638 units of concentrate to M1s. Al‑Raza Traders during the relevant period. According to the learned counsel, this was not the first time that concentrate had beets sold by the petitioner. He pointed out that in the year 1992‑93 concentrate worth Rs.21,00,000, in the year 1993‑94 concentrate worth Rs.21,00,000 and in the year 1994‑95 concentrate worth Rs.5,00,000 had been sold by the petitioner. Since no figures for the years 1995‑96 and 1996‑97 were given by the petitioner, it may be assumed that during these two years the entire concentrate purchased by the petitioner, was consumed by it in the manufacture of aerated beverages. In these circumstances, the sale of concentrate running into tens of Crores, during the period being investigated, should itself have raised many questions in any diligent thorough and complete inquiry. However, as noted above, no such questions were raised and nor was information which otherwise should be readily available, considered in any of the documents referred to in para. 3. Furthermore, the petitioner was not asked to furnish any information relating to the year on year sales targets which PCI had snit for it or in respect of the increase in sales which had been required by PCI for the relevant period between 1‑7‑1997 and 31‑12‑1998 which necessitated the purchase of 2638 units of concentrate in excess of the requirements of the petitioner.
21. At this point I should also note that section 37 of the Sales Tax Act and section 14 of the Central Excises Act, among others, provide ample powers to the Central Excise and Sales Tax Department to summon witnesses for the production of documentary evidence and also to testify in any proceedings before any authorized Officer of the said department. The functionaries of the respondent‑department have proceeded in their superficial inquiries in a manner which indicates that they are not even aware of the powers available to them under the aforecited statutory provisions to reach the truth. In particular, I find it surprising in the extreme that the Director‑General of Intelligence and Investigation should conclude, as he has done in his letter of 14‑4‑2000, that the contents of the anonymous complaint cannot be verified because the complainant is unavailable and has not furnished any documents in support of the facts alleged in the complaint. I find it quite incredible that the officer at the head of the investigative wing of the respondent‑department should find himself so helpless, and be so ignorant of the scope and extent of his remit, in spite of the express and extensive powers of inquiry with which he is armed.
22. The possible queries, the potential for exercise of investigative powers and the line of questioning indicated in the preceding four paragraphs, are only to demonstrate the lackadaisical nature of the probes mentioned in paragraph 3 above and are by no means exhaustive. This Court, in the present proceedings, is not required to conduct any factual inquiry of its own nor does it have the time or inclination to do so. The point, however, remains that the so‑called inquiries, referred to in para.3 above, are grossly inadequate and lack the thoroughness required of a proper inquiry. Therefore, to refer to the aforesaid inquiries as thorough, detailed and complete inquiries sufficient to provide immunity to the petitioner against any further investigation (as has been asserted by learned counsel for the petitioner) can only be termed as audacious hyperbole.
23. This petition was admitted to regular hearing on 10‑10‑2000 by, another learned Bench of this Court on the question as to whether an inquiry can be held for the ninth time ignoring the result of earlier inquiries. This question is answered on the basis of the foregoing discussion by holding that none of the so‑called eight inquiries, referred to by learned counsel for the petitioner, can justifiably be termed as proper diligent or complete inquiries.
24. Before parting with my discussion in respect of the purported inquiries I need to note that only the first three were undertaken by the respondent‑department. The remaining five inquiries were by the Income Tax Department. Out of these five, in fact, only the first one, dated 9‑8‑1999, can be called, at best, a cursory probe, skimming superficially, the surface of the matter. The other four documents, mentioned in paragraph 3(v) to (viii), cannot at all be termed as inquiry reports without stretching the limits of the English language to breaking point. However, even if the Income Tax Department had, in. fact, conducted five full scale inquiries against the petitioner, the same could not have barred separate inquiries by the respondent‑department. This is obvious from the fact that the Income Tax Department operates, under a set of officers and an hierarchy which is different from that set‑up in the Central Excises Act and the Sales Tax Act. The Excise and Sales Tax Department, as such cannot be precluded from performing its duties and exercising its powers under the Central Excises Act and the Sales Tax Act respectively. To hold otherwise would lead to alarming results, including the absurd situation where the Central‑Excise and Sales Tax Department could be rendered powerless on account of any conclusion reached in an inquiry conducted by the Income Tax Department. There is no statutory provision or other legal principle which would justify.
25. I now advert to the case‑law which was copiously cited by learned counsel for the petitioner in support of the contentions which have been discussed above. He, firstly, referred to the case titled Messrs Lever Brothers Pakistan Limited through Company Secretary v. Federation of Pakistan through Secretary, Ministry of Finance, .Islamabad and 3 others (1999 MLD 1925) and the case titled Muhammad Irfan Khan v. The Superintendent, Central Excise, Moradabad and another (AIR 1960 Allahabad 402). On the basis of the said judgments, he contended that any inquiry, duly undertaken by an authorized Central Excise Officer, is a judicial proceeding within the meaning of sections 193 and 228, P.P.C. No authority is necessary in support of this legal proposition because the same is clearly set out in section 14 of the Central Excises Act, 1944 itself.. However, the purpose of the aforesaid legal provision is to ensure that the competent Central Excise Officer, while conducting an‑inquiry, has the necessary means to gather the truth. This objective is ensured through the penal provisions of section 193 and section 228, P.P.C. which are meant to deter perjury and fabrication of false evidence. In the present case, the aforecited precedents and statutory provisions are not material because, as noted above, there has been no proper inquiry at all.
26. In support of his other contention that no fresh inquiry could be initiated against the petitioner, in the facts and circumstances of the present case, learned counsel referred to the case titled Commissioner of Income-tax v. Wahiduzzaman (PLD 1965 SC 171), the case titled Commissioner of Income‑tax v. Pakistan Industrial Engineering Agencies Ltd. (PLD 1992 SC 562) and the case titled Messrs Farrukh Chemical Industries Ltd. v. The Commissioner of Income‑tax (South Zone), Karachi (PLD 1983 Karachi 269). The ratio of the aforecited precedents is that an earlier decision of an administrative authority will not be a bar to the reconsideration of matters considered and decided earlier. A fresh inquiry and decision would be permissible where the earlier decision is clearly open to some objection or if it is a decision which is not reached after proper inquiry or if fresh evidence having a material bearing on the point decided in the previous decision becomes available. The inadequacy of the earlier inquiries as well as the lack of diligence in conducting the same has been amply demonstrated in the foregoing discussion. Furthermore. I have also concluded that the information, contained in the letter, dated 30‑7‑2000, issued by PCI, Dubai, is information which is both definite and new. In view of these findings each of the precedents, cited by learned counsel for the petitioner, do not constitute authority in support of the stance adopted by the petitioner.
27. Learned counsel for the petitioner had also emphatically argued, as noted earlier, that the principles of res judicata were applicable to proceedings before the Central Excise and Sales Tax Department. According to him, the matter forming the subject of the impugned show‑cause notice, had been earlier inquired into through the inquiries and reports, referred to in para. 3 and discussed in para. 16 above. In support of this argument, he again referred to the cases cited in the preceding paragraph. I have considered the cited judgments in the context of this argument also. The case of Farrukh Chemical Industries v. CIT and that of CIT v. Pakistan Industrial Engineering Agencies Ltd., have both followed the case of CIT v. Waheed?uz‑Zaman. All three precedents relate to proceedings under the Income Tax Ordinance. In the case of CIT v. Waheed‑uz‑Zaman, the Honourable Supreme Court was of the view that where there is no statutory provision barring re‑opening of a matter, the applicability of the principle of res judicata depends .on the necessity of giving finality to litigation and the injustice of vexing a person twice in respect of the same matter. The applicability of such principle, according to the Honourable Supreme Court, was to be governed on the basis of considerations arising with respect to the particular statute under which a matter had been determined, the dominant consideration always being that the cause of justice was advanced. It was clearly held by the Honourable Supreme Court that the principle of res judicata could not be applied to proceedings before Income Tax Authorities with the same strictness with which it was applicable before Courts or Judicial Tribunals.
28. What is clearly deductible from the case of CIT v. Waheed‑uz?-principles of res judicata and their applicability to proceedings before administrative authorities would only arise where there is no statutory provision barring the reopening of a matter which has been earlier decided.
29. In the present case, as pointed out by learned counsel for the respondents, the Central Excises Act and the Sales Tax Act, are the governing statutes. These statutes in themselves provide for a specified period after which a matter cannot be, reopened. In the circumstances, the necessity for applying the principle of res judicata to the proceedings before any of the officers of the respondent‑department, does not arise in this case. Furthermore, it is clear from the discussion above that even if the principles of res judicata were to be applied to proceedings before officers of the respondent‑department, the facts of the present case do not justify the applicability of said principle. In the authorities, cited by learned counsel for the petitioner, it has clearly been held that even where a formal decision has been reached by any administrative forum, such decision will not constitute a bar to reopening and reconsideration of the same matter where the earlier decision is clearly open to some objection or if it is a decision which is not reached after proper inquiry or if fresh evidence having a material bearing on the point decided in the previous decision becomes available. On this basis and considering the circumstances narrated above, the case‑law, cited by learned counsel for the petitioner, in fact, goes against
30. I will now consider the respondents' preliminary objection to the maintainability of the present writ petition on the score that only a show? cause notice had been issued to the petitioner and no adverse order determining liability had been made against it. It was the contention of learned counsel for the respondents that the present petition was premature and that the petitioner should pursue its defence which had already been filed before the Adjudicating Authority in response to the impugned show‑cause notice.
31. In r6sponse to the aforesaid submissions of learned counsel for the respondents, learned counsel for the petitioner argued that a Constitutional petition can be tiled even to challenge the issuance of a show‑cause notice. This contention is not disputed by learned counsel for the respondents, who conceded that in an appropriate case a writ petition may be filed to challenge the issuance of a show‑cause notice. He, however, argued that the circumstances of the present case are not such as would justify the exercise of constitutional jurisdiction by this Court.
32. Learned counsel for the petitioner has made reference to certain precedents to argue that in the present case the impugned show‑cause notice can be assailed. In this regard, he has, firstly, referred to the case titled Edulji Dinshaw Limited v. Income Tax Officer (PLD 1990 Supreme Court 399). The ratio of the case does not, in any manner, advance the case of the petitioner. In the cited case the appellant therein received a notice under section 65 of the Income Tax Ordinance wherein the concerned Income‑tax Officer had expressed his intention to reopen an already concluded tax assessment. The Honourable Supreme Court after considering the circumstances of the precedent case, reached the conclusion that the appellant had, during the course of the concluded assessment, made full disclosure of all relevant facts and also that the Income Tax Authorities had completed the assessment consciously and with full application of mind. It was further found as a fact that there were new facts and circumstances justifying the issuance of a notice under section 65 of the Income Tax Ordinance. In fact, it was held by the Honourable Supreme Court that the full set of circumstances, mentioned by the Income Tax Authorities to support the issuance of a notice under section 65 of the Income Tax Ordinance, were in their entirety, available with the tax authorities when the previous assessment was finalized: It was, in these circumstances, that the Honourable Supreme Court proceeded to hold that the show‑cause notice was not justified. In the present case, I have found, as discussed above, that there has, in fact, been no proper inquiry let alone a formal adjudication. Furthermore, in the precedent case the assessment had been made after full scale assessment proceedings and after a conscious application of mind by the Income Tax Officer. In the present case, there has been no formal adjudication at all. Moreover, there is fresh information available with the respondent‑department and, equally importantly, there is potential for further information becoming available during the course of the show cause proceedings before the adjudicating authority. In these circumstances, Edulji Dinshaw's case is clearly distinguishable.
33. Learned counsel for the petitioner next referred to the case titled Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII, South Zone, Karachi and others (1992 SCMR 250). This precedent also is of no avail to the petitioner. In the said case there was no disputed question of fact before the Court. The matter, in contention, related to the interpretation of legal provisions alone, The opinion of the C.B.R. on the question of levy of tax by the Federal Government on capital gains arising from immovable property was found to be incorrect. It was, in these circumstances, that the Honourable Supreme Court proceeded to give its finding on the pure question of law which resulted in the resolution of the dispute between the appellant, namely, Julian Hoshang Dinshaw Trust an the Income Tax Department.
34. Learned counsel for the petitioner also referred to the case titled Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others (1999 PTD 1892) to support the maintainability of this petition. However, the facts of the cited precedent distinguish it from the circumstances of the present case. It was noticed by the Honourable Supreme Court in the cited authority, that at the time the matter in question was being agitated before the Balochistan High Court and even at the time when leave was granted to the appellant, there was no Tribunal constituted under section 46 of the Sales Tax Act. Instead a Member of the C.B.R. was entrusted with the responsibility of deciding the issues in contention between the Assessee and the Revenue. The Honourable Supreme Court in the circumstances, concluded that an administrative functionary, such as the Member, C.B.R, was, in no manner, qualified or competent to adjudicate on the matter in dispute. It was for this reason that the writ petition in the said case was entertained. In the present case, there is no such difficulty. The Collector Adjudication, who is seized of the matter, will be working as a quasi‑judicial forum and will not be obliged to follow any instructions of the C.B.R. in the exercise of his quasi‑judicial functions. Furthermore, any order, which .may be passed by the Collector (Adjudication) against the petitioner, would be appealable before an independent Appellate Tribunal which, as pointed out by learned counsel for the respondents, is being headed by a retired Judge of this Court. In these circumstances, the case of Attock Cement Pakistan Ltd. also does not help the petitioner.
35. Learned counsel for the petitioner next contended that the letter, dated 2‑8‑2000 issued by C.B.R., constituted dictation and amounted to usurpation of the powers of the Collector (Adjudication). This contention is misconceived. The aforesaid letter is addressed to the Collector, Central Excise and Sales Tax, Faisalabad, and not to the Collector (Adjudication). The wording of the letter also cannot be objected to because it merely sets out the position of the C.B.R. that there is, in its opinion, adequate material on the basis of which a contravention case can be successfully prosecuted against the petitioner. The said letter does not even purport to exert any influence on the Adjudicating Authority seized of the matter.
36. The proper course for the petitioner is to contest the impugned show‑cause notice. The petitioner has already taken the requisite step for such contest by filing its reply to the show‑cause notice. The matter, being agitated by the petitioner in the present petition, is entirely of a factual nature which must necessarily be determined by the competent Adjudicating Authority, namely, the Collector (Adjudication). The overwhelming weight of authority in the matter is against the petitioner on this point. In the case of Al Abram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal (1992 PTD 1761), it was held by the Honourable Supreme Court that the tendency to bypass' the remedies provided under statutory provisions and to press into service the Constitutional jurisdiction of the High Court which has developed lately, has to be discouraged. It was further held that only in cases where an impugned order or action is palpably without jurisdiction or is mala fide, should the jurisdiction under Article 199 of the Constitution be exercised. In the present case, the Collector (Adjudication) clearly has the jurisdiction to issue the impugned show‑cause notice. No mala fides have been alleged against him by the petitioner. It is, therefore, clear that based on the ratio of the case in Al Ahram Builders (Pvt.) Ltd., it would not be proper to entertain this petition and t9 thereby allow the petitioner to circumvent the statutory process.
37. I would also, at this point, refer to the case titled Adamjee Insurance Co. Ltd., Karachi v. The Central Board of Revenue, Islamabad and 3 others (1989 PTD 1090). In this case, it was stated as a general principle of law that the Constitutional jurisdiction of the High Court will not be exercised against the mere issuance of a notice by an authority which is competent under the law to issue the same, if an efficacious remedy is available under the relevant statute. The exception to the general rule was where the' notice was issued by an authority lacking jurisdiction or where the appellate or revisional authority under such statute had already expressed its views on the controversy which was subject‑matter of the notice. Learned counsel for the petitioner wanted to derive support from the case of Adamjee Insurance Co. Ltd., by stating that the C.B.R. had directed the Collector, Central Excises and Sales Tax, Faisalabad to initiate the contravention case against the petitioner. He, therefore, argued that any remedy under the Central Excise Act or the Sales Tax Act would not bar the petitioner from invoking the Constitutional jurisdiction of this Court. The argument of learned counsel for the petitioner is not legally well‑founded. Firstly, as noted above; the C.B.R. has not given any direction to the Collector (Adjudication) and, secondly, it is clear that the C.B.R. does not feature in any adjudicatory process provided under the Central Excises Act or the Sales Tax Act. Furthermore, if in the show cause proceedings against the petitioner, the Collector (Adjudication) passes an order with which the petitioner is aggrieved, the petitioner will have the right to file an appeal before an independent tribunal and if dissatisfied with the order in appeal, the petitioner will be entitled to a further appeal to be heard by two Judges of this Court. These are adequate substantive and procedural safeguards to ensure that the petitioner is dealt with in a manner which is fair and impartial.
38. Finally, I would refer to the case of Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others (1993 SCMR 1232) decided by the Honourable Supreme Court. Although the precedent case related to a matter arising under the Income Tax Ordinance, the observations of the Honourable Supreme Court therein relating to the functioning of the Central Board of Revenue, in administering the fiscal machinery under its control, ‑is equally relevant in the present case. I can do no better than to reproduce the relevant portion of the cited judgment which reads as under:‑‑‑
"Though the Central Board of Revenue has administrative control over the functionaries discharging their function under the Ordinance, but it does not figure in the hierarchy of the forums provided for adjudication of assessee's liability as to the tax. Any interpretation placed by the Central Board of Revenue, on a statutory provision cannot be treated as pronouncement by a forum competent to adjudicate upon such a question judicially or quashi?judicially. The Central Board of Revenue cannot issue any administrative direction of the nature, which may interfere with the judicial or quasi‑judicial functions entrusted to the various functionaries under a statute."
39. It is clear from the judicial pronouncements discussed above, firstly, that writ jurisdiction will not, as a general rule, be exercised by the High Court where administrative forums have been provided for by statute: The exceptions to the aforesaid general rule have been enunciated by the Courts in Pakistan, as discussed in the three preceding paragraphs of this judgment. The case of the petitioner does not fall in any of the recognized exceptions which would justify acceptance of the present writ petition. Secondly, learned counsel for the petitioner did not cite any precedent, and I believe that there is none, where the High Court itself embarked upon the determination of a factual controversy of the nature which has arisen in the present case.
40. Learned counsel for the petitioner then argued that the respondent No.5 Abdul Latif Anwar, who was the Superintendent, Central Excise City Circle, Faislabad, and who had prepared the contravention case against the petitioner, had made a statement in some disciplinary proceedings against him, that the petitioner had not evaded central excise duty or sales tax. Learned counsel, therefore, contended that in the light of such statement the contravention case prepared by the said respondent No.5, could not be prosecuted. This contention of learned counsel is wholly without merit. It will be for the adjudicating authority to consider the evidence before it. This would include the testimony and documentary evidence produced by the Collector of Central Excise and Sales Tax, Faisalabad, as well as the evidence which may be produced before the adjudicating authority by the petitioner, including the testimony of respondent No.5. The adjudicating authority will no doubt, take into consideration the evidence adduced before it and will be entitled to attach appropriate probative value to such evidence based on recognized legal principles. In the present proceedings, it is not possible to give a finding that the mere statement of respondent No.5 should be given absolute and total credence. Moreso, when, prima facie, credible evidence is available with the Central Excise and Sales Tax Department to justify the initiation of a contravention case against the petitioner.
41. Learned counsel for the petitioner also argued that the correct production and sales figures had been reported by the petitioner in the Central Excise and Sales Tax records maintained by it. He further stated that any figures, which the petitioner may have provided to PCI, could have been exaggerated on account of commercial considerations and, as such, could not be used as a basis for proceedings against the petitioner. Once again, it is not for this Court, while exercising Constitutional jurisdiction to comment upon this assertion of learned counsel. The Adjudicating Authority will consider the respective contentions of the petitioner and of the Collectorate, Central Excise and Sales Tax and attach such weight to the same as it considers appropriate.
42. In view of the foregoing discussion, I find that this petition is without merit. It is, therefore, dismissed with costs.
Q.M.H./M.A.K./P‑27/L ????????????????????????????????????????????????????????????????????? Petition dismissed.