PUNJAB BEVERAGE COMPANY (PVT.) LTD. VS CENTRAL BOARD OF REVENUE
2001 P T D 3929
[Supreme Court of Pakistan]
Present: Muhammad Bashir Jehangiri and Javed Iqbal, JJ
Messrs PUNJAB BEVERAGE COMPANY (PVT.) LTD.
through. General Manager (Administration)
versus
CENTRAL BOARD OF REVENUE and 4 others
Civil Petition for Leave to Appeal No.417 of 2001, decided on /01/.
nd
February, 2001 (On appeal from the judgment of the Lahore High Court, Lahore, dated 13‑2‑2001 passed in W.P. No. 18757 of 2000).
(a) Central Excises Act (I of 1944)‑‑‑
‑‑‑‑S.14‑‑‑Sales Tax Act (VII of 1990), S.37‑‑‑Adjudication by Competent Authority‑‑‑Principles of res judicata‑‑‑Applicability‑‑‑Principles of res judicata are applicable to the proceedings under S.14 of Central Excise Act, 1944 and S.37 of Sales Tax Act, 1990‑‑‑Where the element of formal adjudication (by the Competent Authority) which is the main prerequisite before doctrine of res judicata can be pressed into service is lacking,, principles of res judicata would have no application.
(b) Res judicata‑‑‑
‑‑‑‑Doctrine of‑‑‑Applicability‑‑‑Principles‑‑‑Mere issuance of show‑cause notice‑‑‑ Doctrine of res judicata is of universal application and in fact a fundamental concept in the organization of every jural society‑‑‑Justice requires that every cause should be once fairly' tried and public tranquillity demands that having been tried once all litigation about that cause should be concluded for ever between those parties‑‑‑Term "res judicata" signifies that the matter in dispute has been considered and finally settled and the adjudication has a conclusive effect upon the rights determined‑‑‑Where dispute is yet to be settled which is at its initial stage and merely a show cause notice has been issued and the prescribed process has just been initiated/commenced, such process cannot be stopped under the garb of doctrine of res judicata‑‑‑Doctrine of res judicata can only be pressed into service where the matter has been heard, adjudicated and finally decided.
Law of Res Judicata by Hukam Chand 1894; Gul Hassan & Co. v. Federation of Pakistan 1995 CLC 1662; Rabat Mahmood v. Tariq Rashid PLD 1993 Kar. 648; Muhammad Anwar v. Messrs Associated Trading Co. Ltd. 1989 MLD 4750 and Mir Afzal v. Qalandar PLD 1976 Azad J&K 26 ref.
(c) Constitution of Pakistan (1973)‑‑‑
‑‑‑‑Art.199‑‑‑Constitutional petition‑‑‑Jurisdiction of High Court ‑‑‑Scope‑‑ Disputed question of fact‑‑‑Superior Courts should not involve themselves into a thorough probe or in‑depth investigation of disputed questions of fact which necessitate taking of evidence‑‑‑In‑depth investigation can conveniently and appropriately be done by the forums available in the hierarchy‑‑‑Constitutional jurisdiction .is primarily meant to provide expeditious and efficacious remedy in a case where illegality, impropriety and t1agrant violation of law regarding action of the authority is apparent and can be established without any comprehensive inquiry into complicated, ticklish controversial and disputed facts‑‑‑Controversial questions cannot be decided by High Court in exercise of powers as conferred upon it under Art. 199 of the Constitution.
State Life Insurance Corporation of Pakistan v. Pakistan Tobacco Co. Ltd. PLD 1983 SC 280; Attaur Rehman Khan v. Dost Muhammad 1986 SCMR 598; Muhammad Akhtar v. President, Cantonment Board, Sialkot Canu. 1981 SCMR 291; Mian Muhammad v. Government of West Pakistan 1968 SCMR 935; Zahid Hussain v. Dharmumal 1971 SCMR 110; Zuhra Begum v. Sajjad Hussain 1971 SCMR 697; Landale & Morgan (Pak.) Ltd. v. Chairman, Jute Board, Dacca 1970 SCMR 853; Mahboob Alam v. Secretary to Government of Pakistan 1969 SCMR 217; Umar Daraz v. Muhammad Yousaf 1968 SCMR 880 and Saghir Ali v. Mehar Din 1968 SCMR 145 ref.
(d) Sales Tax Act (VII of 1990)‑‑‑
‑‑‑‑S. 37‑‑‑Central Excises Act (I of 1944), S.147‑Constitution of Pakistan (1973), Arts. 185(3) & 199‑‑‑Evasion of sales tax and excise‑duty ‑‑‑Inquiry into the matter‑‑‑Issuance of show‑cause‑notice‑‑‑Contention of the petitioner was that the matter had already been adjudicated by the Authorities and the matter could not be reopened subsequently‑‑‑Validity‑‑‑Allegation of evasion of sales tax and excise duty running into billions of rupees‑‑‑Where the matter had never been inquired into properly no bar could be imposed on a thorough and an honest probe‑for which no restriction was laid in Central Excise Act, 1944, or Sales Tax Act. 1990, which were the governing statutes‑‑‑No question of law of general importance having been raised by the petitioner leave to appeal was refused.
(e) Constitution of Pakistan (1973)‑‑‑
‑‑‑‑Art. 199‑‑‑‑Constitutional petition ‑‑‑Alternate remedy‑‑Interference by High Court in exercise of jurisdiction under Art. 199 of the Constitution‑‑ Effect‑‑‑Where a particular statute provides a self‑contained machinery for the determination of questions arising under the statute where law provides a remedy by appeal or revision to another Tribunal fully competent to give any relief, any indulgence to the contrary by the High Court is bound to produce a sense of distrust in statutory Tribunals‑‑‑Petitioner without exhausting his remedy provided by the statute tiled Constitutional petition‑‑‑Constitutional petition, in circumstances, was not maintainable.
Shahid Agency v. Collector of Customs 1989 CLC 1938; Ali Hussain v. Presiding Officer PLD 1989 Kar. 157; Bhagan v. State PLD 1990 Quetta 41; Mojakkir Ali v. Regional Transport Authority PLD 1967 Dacca 6 and Azizur Rahman v. F.A.T.A. Development Corporation PLD 1988 Pesh. 9 ref.
(f) Constitution of Pakistan (1973)‑‑‑
‑‑‑‑Art. 199‑‑‑Constitutional jurisdiction‑‑‑Invoking of ‑‑‑Pre‑conditions‑‑ Paramount consideration in exercise of Constitutional jurisdiction is to foster justice and right a wrong‑‑‑Before a person can be permitted to invoke the discretionary power of a Court, it must be shown that the order sought to be set aside has occasioned some injustice to the parties‑‑‑Where the order passed by the Authority does not work any injustice to any party, rather it cures a manifest illegality, then the extraordinary jurisdiction ought not be allowed to be invoked.
Rehmatullah v. Hameeda Begum 1986 SCMR 1561; Rafique Alam v. Deputy Settlement Commissioner 1990 CLC 1346; Muhammad Baran v. Member (Settlement and Rehabilitation) PLD 1991 SC 691 and Raunaq Ali v. Chief Settlement Commissioner PLJ 1973 SC 42 ref.
Aitzaz Ahsan; Advocate Surpeme Court and M.ehr Khan Malik, Advocate‑on‑Record for Petitioner.
Nemo for Respondent.
Date of hearing: 22nd February, 2001.
ORDER
JAVED IQBAL, J.‑‑‑This petition for leave to appeal is directed against judgment, dated 13‑2‑2001 passed by learned Lahore High Court, Lahore, whereby the Constitutional petition preferred on behalf of petitioner has been dismissed.
2. Precisely stated the facts of the case as enumerated in the judgment are to the effect that "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. 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 understated as it was not commensurate with the units of concentrate purchase 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. Eight inquiries were got conducted against the petitioner but no intervention case was got initiated by the Central Excise and Sales Tax Department but "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 PCI, 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 PCI 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 PCI to the petitioner. The figures of sale, disclosed by PCI 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 PCI are correct, it would follow that production 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". In pursuance of said directions, a notice, dated 12‑8‑2000 was issued to the petitioner by the Collector (Adjudication) 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 in respect of the under reported production be not recovered from the petitioner. The petitioner in response to the above show‑cause notice has furnished a detailed reply and the matter is pending adjudication before the learned Collector (Adjudication). The issuance of notice, dated 12‑8‑2000 was assailed before learned High Court by means of Constitutional petition preferred on behalf of the petitioner which has been dismissed. The main grievance of the petitioner seems to be that no such notice could have been issued as about eight inquiries were held on the same issue but nothing could be established against the petitioner and thus fresh notice could not be issued due to the principles of res judicata which would be applicable in proceedings under section 14 of the Central Excise Act, 1944 and section 37 of the Sales Tax Act, 1990 and after holding eight inquiries the matter should be treated as "finally decided" which cannot be re‑opened. It is also the grievance of the petitioner that in view of letter, dated 2‑8‑2000 addressed by the C.B.R., through its Secretary, directed the Collector of Central Excise and Sales Tax for initiation of a contravention case the question of any fair and transparent adjudication does not arise as the adjudication authority being subordinate to C.B.R. would have to abide by the directions contained in the said letter. It is also the case of petitioner that finality must be attributed to the result of inquiries and investigations conducted by Income‑tax, Wealth Tax, Excise and Sales Tax Authorities, for the reasons that their findings are concurrent, consistent and support the plea of the petitioner. It is also the case of petitioner that the closed return/payment of excise duty cannot be re‑opened‑ in view of the principle enunciated in section 65 of Income Tax Ordinance and moreso, the final determination of tax/duty duly verified by different inquiries cannot be re- inquired. The impugned judgment has also been criticized on the ground that the learned High Court has not examined the legal and factual aspects of the controversy in its true perspective which resulted in serious miscarriage of justice and petition has been dismissed due to certain extraneous considerations which are based on conjectural presumptions having no legal footings whatsoever. It is pointed out that after having eight inquiries no fresh inquiry could be held as no new information whatsoever had been received from any reliable source and thus it would be an exercise to harass the petitioner with ulterior motives because higher sales figures to the principal was considered and probed into in all the previous inquiries and concurrent findings favourable to the petitioner had been arrived at. It is mentioned that the learned High Court has miscalculated the value of the concentrate and it escaped notice that the petitioner had sold certain quantity of concentrate which resulted in serious prejudice. It is explained that convincing and concrete documentary evidence has not been considered without any rhyme or reasons such as the receipts of the Zilla Council, Faisalabad, octroi receipts of Karachi District, truck receipts, bank agreement, sales invoices and certificate from the buyer and the agreement arrived in view of the provisions as contained in sections 138H and 138E of the Income Tax Ordinance, 1979, between Al‑Raza Traders and the Income‑tax Authorities having substantial bearing on the controversy and thus it is a case of sheer non‑reading and misreading of evidence.
4. We have heard Mr. Aitzaz Ahsan, learned Advocate Supreme Court on behalf of the petitioner who confined his contentions to the points as elaborated hereinabove. All the contentions as agitated have been examined with care and caution in the light of relevant provisions of law and record of the case. The impugned judgment has been perused thoroughly. We have not been persuaded to agree with the prime contention of Mr. Aitzaz Ahsan, learned Advocate Supreme Court that in view of the principle of res judicata which is applicable to proceedings under section 14 of the Central Excise Act, 1944 and section 37 of the Sales Tax Act, 1990, no show‑cause notice could have been issued as the matter had attained finality and the petitioner was absolved from accusation of evasion of duty and concealment of production simply for the reason that principle of res judicata would have no application as the element of formal adjudication (by the competent Authority) which is the main prerequisite before doctrine of res judicata could be pressed into service is, lacking. No formal adjudication whatsoever has been made in this case. We are conscious of the fact that: "The doctrine of res judicata is of universal application and in fact a fundamental concept in the organization of every jural society. Justice requires that every cause should be once fairly tried and public tranquillity demands that having been tried once all litigation about that cause should be concluded for ever between those parties. The maintenance of public order, the repose of society and the quiet of families requires that what has been definitely determined by competent Tribunals shall be accepted as irrefragable legal truth. If it were not for conclusive effect of all such determinations there will be no end of litigation and no security for any person; the rights of parties would be involved in endless confusion and great injustice often done under cover of law, while the Courts if stripped of their most efficient powers would become little more than advisory bodies; and thus the most important function of Government that of ascertaining and enforcing their rights ‑ would go unfulfilled". Hukam Chand, Law of Res Judicata (1894); Gul Hassan & Co. v. Federation of Pakistan 1995 CLC 1662; Rahat Mahmood v. Tariq Rashid PLD 1993 Kar. 648; Muhammad Anwar v. Messrs Associated Trading Co. Ltd. 1989 MLD 4750 and Mir Afzal v. Qalandar PLD 1976 Azad J&K 26.
5. A bare perusal of what has been reproduced hereinabove would reveal that the term res judicata signifies that the matter in dispute has been considered and finally settled and the adjudication has a conclusive effect upon the rights determined. It is worth mentioning that in this case dispute is yet to be settled which is at its initial stage and merely a show‑cause notice has been issued and the petitioner has contested it by furnishing its comprehensive reply meaning thereby that the prescribed process has just been initiated/commenced which cannot be, stopped under the garb of doctrine of res judicata. Had the matter been finally decided by the forums provided under the hierarchy of relevant laws the doctrine of res judicata would have come in the way and constituted a bar in initiation of fresh action. We are of the considered opinion that the doctrine of res judicata can only be pressed into service where, the matter has been heard, adjudicated and finally decided.
6. We, have carefully examined all the inquiries held so far on the subject‑matter. We have deliberately reserved our comments lest it may cause any prejudice but suffice it to say that "obliging conclusion" cannot unveil the realities. Had these inquiries been comprehensive and well‑founded there would have been no justification to hold another inquiry. But where an inquiry is not comprehensive than even if the conclusions are concurrent and consistent could not render any assistance to the petitioner. It is worth mentioning that the implication of information received from P.C.I., Dubai vide letter, dated 31‑7‑2000 on the basis whereof show‑cause notice has been issued is to be assessed by the adjudicating authority.
The question that up to what extent the disclosure of P.C. I. made while vide letter dated 31‑7‑2000 can be taken into consideration falls within the jurisdictional domain of the Collector (Adjudication) and let it be decided in the manner as may be deemed fit and proper by him. The observation made by the learned High Court on this point are unexceptionable and hardly calls for any interference which ate reproduced hereinbelow for read reference:‑‑‑
"I am in no manner of doubt that the information contained in P.C.I.'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 petitioners' 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 Controller (Adjudication). "
7. Mr. Aitzaz Ahsan learned Advocate Supreme Court has heavily relied upon the documentary evidence i.e. "Zilla Council receipts of the Faisalabad District Council; octroi receipts of Karachi District; truck receipts; bank statements; sales invoices and certificate from the buyer (an income‑tax payee of long standing)" which could conveniently be brought to the notice of the Controller (Adjudication) for its proper appreciation. We are not persuaded to agree with Mr. Aitzaz Ahsan that learned High Court should have appreciated the compromise executed between Al‑Raza Traders and the Income‑tax Authority for the reason that sale of enhanced quantity, whether it could have been sold, its effect on production and its quantity are the questions which could not have been decided by the learned High Court because in none of the inquiries Al‑Raza Traders had been examined properly for certain obvious reasons and we are deliberately avoiding our comments. Even otherwise such controversial questions could not be decided by High Court in exercise of powers as conferred upon it under Article 199 of the Constitution of Islamic Republic of Pakistan. In this regard reference can be made to cases titled State Life Insurance Corporation of Pakistan v. Pakistan Tobacco Co. Ltd. PLD 1983 SC 280. The superior Courts should not involve themselves into a thorough probe or an in‑depth investigation of disputed question of fact which necessitate taking of evidence. In our considered view this can conveniently and appropriately be done by the forums available in the hierarchy. The Constitutional jurisdiction is primarily meant to provide expeditious and efficacious remedy, in a case where illegality, impropriety and flagrant violation of law regarding impugned action of the authority is apparent and can be established without any comprehensive inquiry into complicated, ticklish, controversial and disputed facts. In this regard we are fortified by the dictum laid down in Attaur Rehman Khan v. Dost Muhammad 1986 SCMR 598; Muhammad Akhtar v. President, Cantonment Board, Sialkot Cantt. 1981 SCMR 291; Mian Muhammad v. Government of West Pakistan 1968 SCMR 935; Zahid Hussain v. Dharmumal 1971 SCMR 110; Zuhra Begum v. Sajjad Hussain 1971 SCMR 697; Landale & Morgan (Pak.) Ltd. v. Chairman, Jute Board, Dacca 1970 SCMR 853; Mahboob Alam v. Secretary to Government of Pakistan 1969 SCMR 217; Umar Daraz v. Muhammad Yousaf 1968 SCMR 880 and Saghir Ali v. Mehar Din 1968 SCMR 145.
8. The apprehension as canvassed by Mr. Aitzaz Ahsan learned Advocate Supreme Court that in view of the directions for registration of contravention case against petitioner contained in C.B.R.'s letter there is no possibility of fair adjudication seems to be devoid of merits which revolves around a baseless presumption that since the Controller (Adjudication) is under the subordination of C.B.R:, therefore, he would be influenced by the said letter because in case of any prejudice or grievance appeal can be filed before the Tribunal whose Chairman is a learned Judge of the High Court and accordingly the apprehension as mentioned hereinabove cannot be made a sole ground to debar the Controller (Adjudication) to adjudicate upon the matter. Even otherwise C.B.R. does not figure it directly in the process of adjudication. As mentioned hereinabove a show‑cause notice has already been issued which is being contested and the petitioner has furnished its reply but simultaneously it is contended by Mr. Aitzaz Ahsan that the Controller (Adjudication) has no authority and jurisdiction to dilate upon the subject- matter which objection can be agitated before the Controller (Adjudication) so that it could be dealt with properly in accordance with law. We are of the considered view that specific allegation of evasion of sales‑tax and excise duty worth whereof runs into billions were never inquired, into properly and accordingly no bar can be imposed on a thorough and an honest probe for which no restriction is available in the Central Excise Act of the Sales Tax Act which are the governing statutes. By now it is well‑settled that "where a particular statute provided a self‑contained machinery for 'the determination of questions arising under the Act as where law provides a remedy by appeal or revision to another Tribunal fully competent to give any relief, any indulgence to the contrary by the High Court is bound to produce a sense of distrust in statutory Tribunals. Where, therefore, a petitioner without exhausting his, remedy provided by the statute under which he complained had filed a writ petition, it was held that the application in the circumstances would not lie". Shahid Agency v. Collector of Customs 1989 CLC 1938; Ali Hussain v. Presiding Officer PLD 1989 Kar. 157; Bhagan v. State PLD 1990 Quetta 41; Mojakkir Ali v. Regional Transport Authority PLD 1967 Dacca 6; Azizur Rahman v. F.A.T.A. Development Corporation PLD 1988 Pesh. 9. Let we mention here at this juncture that "paramount consideration in exercise of Constitutional jurisdiction is to foster justice and right a wrong. Therefore, before a person can be permitted to invoke this discretionary power of a Court, it must be shown that the order sought to be set aside had occasioned some injustice to the parties. If it does not work any injustice to any party, rather it cures a manifest illegality; then the extraordinary jurisdiction ought not be allowed to be invoked". Rehmatullah v. Hameeda Begum 1986 SCMR 1561; Rafique Alam v. Dy. S.C. 1990 CLC 1346; Muhammad Baran v. Member (Settlement and Rehabilitation) PLD 1991 SC 691; Raunaq Ali v. C.S.C. PLJ 1.973 SC 42. The controverted questions of fact, adjudication on which is possible only after obtaining all types of evidence having by the parties can be determined only by the forums concerned and in such‑like cases Constitutional petition would not be competent subject to certain exceptions. In this regard we are fortified by the' dictum laid down in case titled State Life Insurance Corporation of Pakistan v. Pakistan Tobacco Co. Ltd. PLD 1983 SC 280. In the light of criterion as mentioned hereinabove the case in hand has also been examined and we are of the view that the question of any injustice does not arise because the adjudication process has just been commenced and only a show‑cause notice has been issued. We have also perused the dictum as laid down in various authorities relied upon by Mr. Aitzaz Ahsan, learned Advocate Supreme Court which hardly renders any help to .the petitioner as the facts are distinguishable and law laid down therein cannot be made applicable to this petition.
9. In the light of foregoing discussion we are not inclined to grant leave as no question of law of general importance having been raised. The Controller (Adjudication) is, however, directed ‑to decide the dispute in accordance with law and without being influenced by the observations made in the impugned judgment being tentative in nature or the directive as given by the C.B.R. in its letter, dated 2‑8‑2000. The petition is accordingly dismissed.
Q.M.H./M.A.K./P‑38/5Petition dismissed.