Messrs PAK OCEAN VS GOVERNMENT OF PAKISTAN
2002 P T D 2850
[Karachi High Court]
Before Ata-ur-Rehman and Muhammad Mujeebullah Siddiqui, JJ
Messrs PAK OCEAN and others
Versus
GOVERNMENT OF PAKISTAN through Secretary, Ministry of Finance, Central Secretariat, Islamabad and others
Civil Petitions Nos. 970, 1068, 1349, 1541 of 1991, 519, 520, 871 and 872 of 1992, decided on 10/07/2002.
(a) Customs Act (IV of 1969)---
----Ss. 18(2) & 19---S.R.O. 702(I)/90, dated 1-7-1990---S.R.O. 584(I)/91---S.R.O. 585(I)/91, dated 27-6-1991---Constitution of Pakistan (1973), Arts. 2-A, 4, 18, 25 & 199---Constitutional petition---Imposition of regulatory duty on import of steel scrap in loose form, while excluding import of scrap in shredded and bundled forms---Reduction in rate of customs duty on shredded and bundled steel scrap, while leaving intact duty on import of scrap in loose form---Such change in duty structure was effected without reasonable classification and justification- Validity---Scrap in loose form was imported by small traders and such persons, who, did not have facility of furnace, while shredded scrap and bundled scrap was primarily imported by big investors and those having facility of furnace-.-End product i.e. billets, produced from scrap in shredded and bundled form and loose form was the same---No difference in duty structure on import of scrap in any of three forms prior to impugned Notifications S.R.O. 584 (I)/91 & 585(I)/91, dated 27-6-1991---Government had failed to specify any reasonable basis for separate classification of the import of scrap in bundled and shredded form in one category and import of scrap in loose form in other category---Such action was totally discriminatory against small investors/importers and provided undue advantage to big capitalists and investors---In absence of sufficient material justifying change in duty structure, treatment meted out to petitioners was arbitrary and mala fide---Such exercise entirely stood vitiated being violative of equal protection of law guaranteed by Arts. 4, 18 & 25 of the Constitution-- High Court accepted Constitutional petitions, struck down impugned Notifications S.R.O. 584(I)/91 & S.R.O. 585(I)/91, dated 27-6-1991 being un-Constitutional and directed respondent to stop charging of regulatory duty and refund regulatory duty and customs duty, if any charged in excess of customs duty prevailing before issuance of impugned notifications.
Ittefaq Foundry v. Federation of Pakistan PLD 1990 Lah. 121; Collector of Customs, Excise and Sales Tax, Peshawar, v. Messrs Flying Kraft Paper Mills (Pvt.) Ltd. 1999 SCMR 709; Messrs Central Insurance Co. v. The Central Board of Revenue, Islamabad 1993 PTD 766; M.A. Rahman v. Federation of Pakistan 1988 SCMR 691 and Iqbal Akhtar v. Ch. Muhammad Mushtaq PLD 1977 Lah. 1318 ref.
(b) Constitution of Pakistan (1973)---
----Arts. 2-A, 4, 18, 24 & 25---Mala fide and colourable act- Unreasonable act---Act without any basis and justification-- Constitutional status of such acts elaborated. An Act, which is established to be mala fide and colourable cannot be regarded as an action in accordance with law and the rights guaranteed under the Constitution. If an act is not reasonable and is without any basis and justification, it is always for extraneous and irrelevant, consideration and is bound to be struck down being manifestly against the fundamental right guaranteed in the Constitution. Such an Act of discrimination cannot be countenanced in an Islamic polity. Islam lays great emphasis on the equality before law, equal protection under law, equal treatment in law, equal opportunities, free competition in the regulation of trade, commerce and industries. No discrimination of any kind is sustainable in a country, the Constitution whereof provides that the State shall exercise its power and authority in accordance with the principles of freedom, equality, social justice and guarantees the fundamental rights and opportunity before law and economic justice.
Khalid Anwar for Petitioners.
Syed Tariq Ali, Standing Counsel for Respondents.
Date of hearing: 19th February, 2002.
JUDGMENT
MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---A common question of law has been raised in all the above petitions, therefore, all the above petitions have been heard together and are disposed of by this single judgment.
C.P. No. 970 of 1991 is treated as the leading petition and for the sake of convenience the facts are taken from the said petition.
Following relief has been sought in C.P. No. 970 of 1991:---
"This Hon'ble Court maybe pleased to---
(1) declare the imposition of regulatory duty on remeltable iron and scrap in loose form and the grant of exemption to importers of bundled and shredded scrap through Notifications No. S.R.O. 91, dated 27-6-1991, to exercise of power under sections 18(2) and section 19 are unlawful, mala fide, arbitrary, unreasonable, and in violation of Articles 4, 18, 24, 25, 77 read with Article 2A of the Constitution;
(2) declare that the exercise of discretionary power under sections 18(2) and 19 of the Customs Act can only be exercised in such manner and subject to such limitations as prescribed by law;
(3) direct the respondent No.3 to stop charging the petitioner the regulatory duty;
(4) direct the respondent No.3 to refund the customs duty charged and paid, if any, in excess of the just and proper rate;
(5) declare that section 31-A of the Customs Act is violative of the Constitution;
(6) direct the respondents to protect the L/Cs opened prior to 27-6-1991"
2. In all other petitions similar relief has been sought, although grounds have been couched in different language.
3. The relevant facts are that the petitioners are importers of remeltable iron and steel scrap in loose form, from various countries. The said scrap is classified under PCT heading No.72.04 (7204.4900). The said remeltable iron and steel scrap loose form, as well as bundled and shredded scrap are primarily used in the manufacturing of billets. All of them are classified as remeltable iron and steel scrap. The steel scrap in loose form is generally imported by small businessmen, while shredded scrap and bundled scrap is primarily imported by large businessmen who order huge consignments.
4. Prior to 27-6-1991 the customs duty on all forms of scrap was Rs.1,500 per metric ton and the sales tax was 12.5%. There was no difference in the duty structure of iron ad steel remeltrable scrap imported in Pakistan in loose, bundled or shredded form.
5. The petitioners entered into binding contract with sellers in foreign countries prior to 27-6-1991 for the import of remeltable iron and steel scrap. They opened irrevocable letter of credit as well. The consignment arrived after 27-6-1991. On arrival of consignment, the landed cost increased tremendously because of change in the duty structure and imposition of regulatory duty. Prior to 27-6-1991, there was no regulatory duty on import of scrap on any form. Vide Notification No.Nil/91, dated 27-6-1991, the respondent No.1, Government of Pakistan through Ministry of Finance, in exercise of powers under section 18(2) of the Customs Act, 1969 amended the Notification No. S.R.O. 702(I)/90, dated 1-7-1990 and imposed regulatory duty of Rs.1.500 per M.T. on all forms of remeltable iron scrap excluding bundled and shredded scrap of iron and steel. PCT heading No.7204.4100. On the same day another Notification No.Nil/91, was issued by the respondent No. 1, in exercise of powers under .section 19 of the Customs Act, 1969, thereby reducing the rate of duty on shredded and bundled iron and steel, from Rs.1,500 per M.T. to Rs.500 per M,T.
7. It is contended by the petitioners that the imposition of regulatory duty on remeltable iron scrap, excluding bundled and shredded scrap and the reduction in the rate of duty on bundled and shredded scrap is unlawful, arbitrary, unreasonable and ultra vires the Articles 4, 18, 24 and 25 of the Constitution. It is further averred that the said imposition of regulation duty is without reference to international ruling prices, proper analysis and investigation. According to petitioners, the grant of exemption to the importers of bundled and shredded scrap is unreasonable and arbitrary as both types are used for exactly the same purpose. The result of discrimination is that the iron and steel scrap imported in loose form by the petitioners has become very expensive as compared to the imports by big businessmen in the form of bundled and shredded scrap. The petitioners have further expressed grievance that the Customs Authorities have further increased the ITP value of the consignment imported by .the petitioners at U.S, Dollars 160 per metric ton, while they have reduced the ITP value of shredded scrap to U.S. Dollars 140 per M.T. According to petitioners this action is calculated to solely benefit the owners of the furnaces who are large imported of shredded scrap. The petitioners have alleged that the action per se is mala fide.
8. The petitioners have further submitted that while presenting the budget, the Hon'ble Finance Minister had assured the business community that no duty will be imposed de hors the budget. The petitioners on the said assurances had entered into binding contract with the sellers to import scrap. Similar assurances were given to the importers of sugar and the exporters of yarn and in pursuance of the said assurances benefit was extended to the importers/exporters of sugar yarn and their letters of credit opened up to a particular specified date were protected. It has been urged that the failure to protect letters of credit opened by. petitioners, vis-a-vis, as done in the case of sugar and yarn, is unreasonable and discriminatory. It is stated by the petitioners that tile effect of the Notifications, dated 27-6-1991, is the net increase in the duty to Rs.4,669 per M.T. in respect of the import of scrap in loose form while in the case of import of shredded scrap, the duty has been reduced to Rs.1,648 and on bundled scrap to Rs.1,608 per M.T. The said discrepancy in the rate of duty will have a crippling effect on the business of the petitioners who are small importers of remeltable iron and steel scrap and cannot afford to purchase bundled or shredded scrap. The very survival of the petitioner is at stake as the landed cost of the petitioners has increased to Rs.9,200. P.M.T. while the price of the remeltable iron and scrap in loose form is approximately Rs.6,200 P.M.T. The landed cost of the shredded and bundled scrap is considerably lower than its selling price of Rs.6,500. The petitioners in order to remain in the business have to sell at a loss of Rs.3,000 per metric ton. According to the petitioners, the schedule of duty payable after 27-6-1991 on remeltable iron and steel scrap in shredded, bundled and loose form is as under:---
| Name of Product | Rate of Duty | R. D. | Total Duty |
| | Per Metric Ton. | | |
| Shredded scrap | Rs.500 | - | Rs.1648 |
| Binded scrap | Rs.500 | - | Rs.160,8 |
| Loose Form | Rs.1500 | Rs.1500 | Rs.4669 |
9. Prior to the imposition of regulatory duty, the total duty on import of scrap on loose form was Rs.2,883 with the imposition of regulatory duty, there is an increase of Rs. 1,836 P.M.T. Prior to 27-6-1991, the importers of bundled scrap were also required to pay same amount as payable by importers of scrap in loose form but after 26-7-1991, they have to pay Rs.1,648 and Rs.1,608 per metric ton, only thus enabling the large importers and owners of furnaces to make windfall profits as their landed cost has fallen while that of the petitioners has increased. The grievance of the petitioners is that they have been arbitrarily and unreasonably discriminated against, vis-a-vis, the importers of shreded and bundled iron and steel scrap through the medium of imposition of regulatory duty and simultaneous exemption to the bundled and shredded scrap and the increase in the ITP value. They have pleaded that tile power to impose regulatory duty and simultaneously to grant reduction to sub-class cannot be done in a manner to cause loss to the petitioners. It is further contended that the power to impose regulatory duty has been exercised to cause irreparable loss to the petitioners for the reasons other than to protect any local industry or trade or balance anything whatsoever.
10. According to petitioners the exercise of powers under section 18(2) and section 19 of the Customs Act, is an exercise of discretion under a legislative framework. The power under section 18(2) is exercisable conditionally after properly ascertaining the correct price level and after proper investigation. The respondent No.1, has no original power of taxation and the delegated authority has been exercised in an oppressive and unjust manner. All the three forms of scrap imported in Pakistan were classified under the same PTC heading 72.04. There was no difference in the duties on all the 'three items of iron and steel scrap. Through the arbitrary exercise irrational classification based on no objective criteria has been made. A discriminatory treatment has been given to the importers of iron and scrap in loose form, vis-a-vis, the importers of iron and scrap in bundled and shredded form. According to the petitioners this distinction and discrimination is unlawful and violative of Article 25 of the Constitution read with Article 2A of the Constitution. The petitioners have assailed the imposition of regulatory duty on import of iron and steel scrap in loose form simultaneously granting exemption of iron and steel in bundled and shredded form and other reduction of custom duty on importers of bundled and shredded scrap as unlawful exercise of discretion and liable to be struck down because of the apparent mala fide as the purpose is to benefit the importers of shredded and bundled scrap and the owners of the furnaces who buy shredded scrap in bulk. It is alleged that it is ultra vires the fundamental rights and Article 18 and 24 of the Constitution and is consequently void.
11. The respondent No.3, in its para-wise comments has taken plea that the decrease on the duty of shredded and bundled scrap and the imposition of regulatory duty on remeltable scrap is in accordance with the provisions of Customs Act, 1969. Regarding the fixation of ITP, in respect of shredded scrap and the loose scrap at U.S. Dollars 140 per metric ton, and U.S. Dollars 160 per M.T. it has been stated that the value has been fixed considering the prices of shredded scrap in the international market. It has been alleged that the value of loose scrap is higher in the international market as compared to shredded scrap. According to respondent No.3, the loose remeltable scrap generally consists of large portion of rerollable and serviceable items/auto parts and for that reason the value of loose scrap has been fixed higher than the shredded scrap.
12. The comments of respondents No.2, has also been placed on record which are contained in the letter, dated 17th May, 1993, addressed to the Collector of Customs (Appraisement), Custom House, Karachi, which contains the rationale for reducing the rate of duty on shredded and bundled scrap and levying regulatory duty on scrap other than bundled and shredded scrap. It is stated in the above letter that the exercise to revise duty structure on iron and steel scrap was undertaken in early 1991 because Pakistan Steel, Re-melters as well as ship-breakers had shown reservations about the duty structure on scrap and the end products thereof and had persistently been agitating for its review.
Under the directive of the Finance Minister, a meeting was held on 21-2-1991 with the representatives of the three groups under the Chairmanship of Deputy Chairman, Planning Commission, to understand their problems regarding tax structure on the steel industry. During the meeting, all the groups strongly agitated against lower rate of duty on the import of re-rollable scrap and proposed that a uniform high rate of duty be fixed on all scrap other than shredded and bundled scrap, as was the case prior to 1987. Till 1987 all scrap other than shredded and bundled scrap was being assessed as one category at a uniform rate of duty which had not only eliminated the misdeclarition and the classification disputes in the import of scrap but also protected the interest of local industry adequately. To further analyse the price structure of iron and steel products a meeting was again held with the representatives of Pakistan Ship-Breakers Association and Pakistan Steel Re-Melters Association on 28-5-1991, under the Chairmanship of Deputy Chairman, Planning Commission. The representatives of Pakistan Steel Re-Melters Association pointed out that the local manufacturers of ingots and billets were facing adverse competition from the importers of re-rollable scrap and the low price of Pakistan Steel billets was affecting marketability of their products. The representatives of Ship-Breakers Association stated that ship-breaking industry had been on the decline since past few years due to high prices of ships meant for breaking. They expressed apprehension that any revision in the duty structure to the detriment of ship breaking industry will result in the total closure of this industry. It was pointed out to ship-breakers that in the previous meeting they had accepted a duty differential of Rs.500 between re-meltable scrap and ships for breaking and the position had not materially altered since then. They reluctantly accepted this position. After listening to the view points of the representatives of Pakistan Ship-Breakers Association and Pakistan Steel Melters Association, the following recommendations were formulated in the meeting under the Chairmanship of Deputy Chairman, Planning Commission:---
(i) Customs duty on shredded and bundled scrap falling under heading 72.04.4000 may be reduced from Rs.1,500 P.M.T. to Rs.500 P.M.T.
(ii) Customs duty on all other items under heading 72.04 may be fixed at Rs.3000 P.M.T.
(iii) Customs duty on ships for breaking may be reduced from Rs.1,500 P.M.T. to Rs.1,000 P.M.T.
These proposals were later on submitted to the ECC who approved this duty structure and accordingly the same was notified. It was the policy decision of the Government and the C.B.R. was bound to notify the same.
13. The above explanation and rationale was given by the C.B.R. in reply to the letter written by Collector of Customs (Appraisement) with reference to the plea taken on behalf of petitioners in this. Court in C.P. No. 970 of 1991 and C.P. No. 1541 of 1991. The C.B.R. was informed that the advocates for the petitioners have agitated a question of discrimination between; re-meltable scrap other than bundled and shredded scrap and re-meltable scrap in bundled and shredded form stating that both the categories of scrap are usable. for one and same purpose i.e. remelting and as such rationale of discrimination of levying customs duty of lesser rate of shredded and bundled scrap, vis-a-vis, remeltable scrap other than bundled/shredded need to be explained by the Government. The Collector of Customs, had further informed the C.B.R. that the High Court has directed the Collector to explain policy rationale of this decision. The Collector had requested that the rationale for policy decision to charge the two categories of scrap to different rates of customs duty -and the basis for increasing customs duty on one type of scrap and reducing on the other should be explained by the Federal Government. In reply to the above query the explanation was furnished as above. A comparative chart was also placed on record showing duty structure of waste and scrap of iron and steel from the year 1985 to the year 1992, which reads as follows:---
DUTY STRUCTURE OF WASTE AND SCRAP OF IRON OR STEEL
| | | 1985 | | 1986 | |
| PCT Heading No. | Description | Customs Duty | Sales Tax | Customs Duty | Sales Tax |
| 73.03 (Old) 72.04 (H.S) | Shredded & bundled | 30%Ad. Vol. | Free | Rs.418/m. ton | Free |
| | | | | | |
| 73.03 (Old) | Other than sharedded and bundled | 70%Ad. Vol. | Free | Rs.418/m. ton Rs.650/m. ton Net effect should be Rs.1070/m. ton | 12.5% |
| 1988 to 1991 | | | |
| Custom Duct | Sales tax | Customs Duty | Sales Tax |
| Rs. 1000/m. ton Statuary rate was @ Rs.1500/m. ton | Free | Rs.500/m. ton +10% Ad. Vol. | 12.5% |
| Rs.1070/m. ton | 12.5 % | Rs.1500/m. ton +10%Ad. Vol. + R. D @ Rs.1500/m. ton | 12.5 % |
14 Heard Mr. Khalid Anwar, learned counsel for the petitioners and Syed Tariq Ali, learned Standing Counsel for the respondents.
15. Mr. Khalid Anwar learned counsel for the petitioners submitted that all the three kinds of scrap namely loose form, bundled form and shredded form, are used for re-melting and manufacturing of iron ingots and billets: He has further submitted that the import of bundled and shredded forms require in large investment as well as possession of furnace for manufacturing of end, product and therefore, the big businessmen having large capacity can afford to import the iron scrap in bundled and shredded form. The small investors and businessmen can afford to import the scrap3 in loose form only. It is imported by small traders as well. He has submitted that the parawise comments and the explanation of C.B.R, placed on record, containing so-called rationale for increasing the duty on the import of scrap in loose form and reducing the duty on bundled and shredded form, does not contain any denial of the assertion that all the three kinds of scrap are used or manufacturing the same end product. He has-further contended that a comparative charge placed on record shows that before imposition of regulatory duty on re-meltable scrap other than bundled and shredded scrap, the landed costs of loose re-meltable scrap was Rs.7,148 while that of shredded scrap was Rs.7,314. The market sale price of loose re--meltable scrap was between Rs.7,200 to Rs. 7,400, with profit of Rs.52 to Rs.252 per ton. In the case of shredded scrap the market sale price was 7,500 to 7,600 per ton, with profit of Rs.186 to Rs.264 per ton. The market price of the billets manufactured from loose re-meltable scrap as well shredded scrap was from Rs.10,300 to Rs.10,500 per ton. After the imposition of customs duty, the structure of landed cost of loose re-meltable scrap from middle East has increased to Rs.9,075 while from the same sources the landed cost of shredded scrap has decreased to Rs.5,874. The market sale price of loose re-meltable scrap is Rs.6,000 to 6,200 per ton, with the result that such importers "have suffer loss of Rs.3,000 per ton on, sale of the scrap while the importers of shredded scrap earn the profit of Rs.600 per ton. The market sale, price of billets manufactured from both kinds of scrap was between Rs.10,300 to Rs.10,400. He has submitted that the respondents could not deny the end product of all the three kinds of scrap is same. He has further submitted that from 1966 to 1982 there was no difference of duty on the import of loose scrap and shredded scrap. He further submitted that according to the chart prepared by respondents themselves, the rate of customs duty was same on all the three kinds of imported scrap prior to the change in duty structure In support of his contention he has produced relevant extract from the Pakistan Customs Tariff, published the Customs House Karachi IIIrd, IVth and Vth Addition. He has further submitted that in the explanation containing so-called rationale no representation was given to the commercial importers, small traders and the small manufacturers. He has vehemently argued that the entire exercise was mala fide as in the rationale furnished on behalf of the respondents it is not shown that any protection was given to any local industry with the imposition of regulatory duty and change in the structure of customs duty whereby on the import of loose re-meltable Scrap custody duty of Rs.1,500 P.M.T. was retained while on import of shredded and bundled form it was reduced from Rs.1,500 to Rs. 500 P.M.T. It is manifestly against the principles of equality, equal protection for carrying on business, as well as the principles of justice firmly enshrined in Holy `Qur'an' and Sunnah. He' has contended that the entire exercise was mala fide and for the purpose of giving undue favour and advantage to big importers and investors thereby crippling and totally destroying the business carried on by the small traders and importers. According to him the impugned notifications are therefore, violative of Articles 2-A, 4, 18 and 25 of the Constitution and such are liable to be struck down being violative of the fundamental rights granted in the Constitution. Mr. Khalid Anwar has placed reliance on the following judgments:--
(1) Ittefaq Foundry v. Federation of Pakistan PLD 1990 Lah. 121;
(2) Collector of Customs Excise and Sales Tax, Peshawar v. Messrs Flying Kraft Paper Mills (Pvt.) Ltd. 1999 SCMR 709;
(3) Messrs Central Insurance Co. v. The Central Board of Revenue, Islamabad 1993 PTD 766;
(4) M.A. Rahman v. Federation of Pakistan 1988 SCMR 691 and
(5) Iqbal Akhtar v. Ch. Muhammad Mushtaq PLD 1977 Lah. 1318.
He has further submitted that the tax imposed by the impugned notifications on the import of scrap in loose form being arbitrary militates against the principles contained in Article 77 of the Constitution as well.
16. On the other hand Mr. Tariq Ali, learned Standing Counsel for the Federation has supported impugned notifications. He has reiterated the version contained in the parawise comments filed on behalf of respondent No.3 and in the letter, dated 17-5-1993, by the C.B.R. addressed to the Collector of Customs (Appraisement). He has contended that the petitioners can, import the scrap in bundled and shredded form instead of insisting for import of scrap in loose form. He has further stated that the relief can be given to the petitioners to the extent of import already made but no relief can be allowed in respect of the subsequent import.
17. Marshalling of facts, in the narrative part of judgment has sufficiently depicted the factual aspects. Now we will take up the judgments cited by Mr. Khalid Anwar in support of his contention that the impugned notifications militate against the principles of equality before the law and equal protection under the law, enshrined in the Constitution.
18. With all due deference to the learned counsel for the petitioners, we are of the opinion that the ratio in the cases of Iqbal Akhtar v. Ch. Mushtaq PLD 1977 Lah. 1318, M.A. Rehman v. Federation of Pakistan 1988 SCMR 691 and Messrs Central Insurance Co. v. The Central Board of Revenue Islamabad 1993 PTD 766, are not relevant to the issue under consideration.
19. In the case of Ittefaq Foundry v. Federation of Pakistan (supra), the relevant facts were that the petitioner was producer of semi-finished products for steel industry in Pakistan. It was primarily producing billets. It was contended that other producers were producing similar products with the nomenclature of ingot. According to petitioners, the billets and ingots were used for entirely identical purposes and products, and .the only difference was of implying different casting system and process for giving the shape. It was further stated that both ingots and billets were taxed or exempted from tax in absolutely identical, terms year after year and the petitioner on the assumption that the tax burden on goods produced by them would be the same, produced large quantities of goods. However, additional burden of Excise Duty and Sales Tax was imposed on the billets by the notification impugned in the cited petition which rendered the sale of billets produced by the petitioner un-saleable. It was pleaded that the change in the policy was calculated to cripple the petitioner who was engaged in producing the billets whose use was exactly the same as that of ingots.
20. The case of the petitioner in the cited case was that traditionally duties and taxes were akin in order to maintain parity of cost as both were meant to roll similar finished products and hence the cost of production of both the items had to be equivalent. It was pleaded that the levy of additional tax on billets places unreasonable burden on the producers of Billets specially the petitioner who is the major producer of billet in the private sector and as such this action was violative of Article 18 of the Constitution. It was urged that the Government had not disclosed any basis or reason for giving different treatment to the two products which were being taxed in the earlier years at the same rate. It was asserted that the delegated legislative authority was abused and was exercised in mala fide manner, which was directed to put the petitioner out of market.
In the written statement filed by Assistant Collector, Central Excise, a plea was taken that the ingots and billets were two distinct products and were separately classified under Pakistan Customs Tariff. It was further asserted that the cost of production of billets was muchless than the cost of production of ingots. It was argued on behalf of Government that though billets' and ingots were earlier subjected to identical rate of excise duty and sales tax and were being allowed exemption from tax duty on identical terms, but from that it cannot be inferred and that would not make both the products classifiable under one item. The plea of mala fide refuted contending that the Courts cannot go into, or question the right of the Government to exempt one or the other item and nobody can claim, as a matter of right, exemption from tax on any basis or that any other item has been exempted. It was also urged that the grant of exemption from tax is the matter of grace and exemption is granted by the Government taking into consideration various factors, which are not subject to inquiry, investigation or jurisdiction of the High Court.
22. Khalil-ur-Rehman Khan, J, (as his lordship then was) observed that the petitioner felt aggrieved as in the matter of allowing exemption from payment of Excise Duty and Sales Tax, the Federal Government in exercise of delegated power has given to its product, billet, a treatment different from that extended to the producers of ingot as eventually the producers of billet have been made to pay excise duty and sales tax at higher rates.
23. After a brief survey of the treatment given to the two items in earlier years it was observed that, the different treatment came to be accorded since 1989 by the Federal Government, in exercise of the delegated power vesting under section 12-A of the Central Excises and Salt Act, 1944 and section 7 of the Sales Tax Act, 1951. It was further observed that the plea that scientifically and technically and as per Pakistan Customs Tariff which follows Brussels Nomenclature and Harmonized Commodity Description and Coding System, both these products have been classified under separate heading and as separate items, is not relevant.
24. The contention that the delegated legislative power was abused and the levy of Excise Duty and Sales Tax on two products at different rates was discriminatory, unreasonable, irrational and prejudicial to the public interest was examined in the light of the provisions contained in Articles 4, 18 and 25 of the Constitution of Islamic Republic of Pakistan and the principle that the exercise of delegated legislative power like any other administrative or executive power can be subjected to judicial review on the ground of Wednesbury reasonableness. It was observed that the plea that discretion vesting in the Government, whether in the matter of tax or in the executive field, is to be exercised in a reasonable way was sought to be supported by citing the following judgments:--
(i) Associated Provincial Picture Houses .Limited v. Wednesbury Corporation (1947 AER 680); and
(ii) Congress v. Home Office (1976) 1 AER 697).
25. After referring the ratio of above judgments and the provisions contained in Articles 4, 18 and 25 of the Constitution of Islamic Republic of Pakistan, as well as various judgments from the Supreme Court of India, the following passage from the judgment in the case of Ajay Hasia etc. v. Khalid Mujib Sehravardi and others (AIR 1981 SC 487) was cited:
"The doctrine of classification which is evolved by Courts is not paraphrase of Article 14 nor is it the objective and end of that Article. It is merely a judicial formula for determining whether the legislative or executive action in question is arbitrary and therefore constituting denial of equality. If the classification is not reasonable and does not satisfy the two conditions referred to above, the .impugned legislative or executive action would plainly be arbitrary and the guarantee of equality under Article 14 would be breached. Wherever therefore, there is arbitrariness in State action whether it be of the Legislature or of the executive or of an authority under Article 12, Article 14 immediately springs into action and strikes down such State action. In fact,- the concept of reasonableness and non arbitrariness pervades the entire Constitutional Scheme and is a golden thread, which runs through the whole of the fabric of the Constitution: "
26. The learned Single Judge further placed reliance on the following passage from the judgment of Supreme Court of India in the case of Indian Express Newspapers (Bombay) Private Limited v. Union of India and others (AIR 1986 SC 515):---
"75. In India arbitrariness is not a separate ground since it will come within the embargo of Article 14 of the Constitution. In India any enquiry into the vires of delegated legislation must be confined to the grounds on which plenary legislation may be questioned, to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with 'the statute or that it offend Article 14 of the Constitution.
76. That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held in Tulsipur Sugar Company Limited v. Notified Area Committee, Tulsipur (1980) 2 SCR 1111; (AIR 1980 SC 882); Rameshchandra (1981) 2 SCR 886; (AIR 1981 SC 1127) and in Bates v. Lord Hailsham of St. Marylebone (1972) 1 WLR 1373. A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular 'discretionary .powers. In the latter case the question may be considered on all ground on which administrative action may be questioned, such as, non -application of mind, taking irrelevant matters, into consideration; failure to take relevant matters into consideration, etc., etc. On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say; the Constitution. This can only be done on the ground that it does not conform to the statutory or Constitutional requirements or that it offends Article 14 or Article 19(1)(a) of the Constitution. It cannot, no doubt be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant."
27. While dealing with the plea taken by the counsel for Federation, that the exemption from tax is the matter of grace and is granted by the Government taking into consideration, various factors which are not subject to inquiry, investigation or jurisdiction of the High Court, the learned Single Judge held as follows:---
"There is no cavil to the proposition that exemption exists only by virtue of Constitutional or statutory provisions and that the right to immunity is not inherent in the persons or property exempted and it cannot be claimed as a matter of right but in the Constitutional set-up, where fundamental rights are guaranteed, to be treated in accordance with law is recognized as inalienable right of a citizen. I do not accept the proposition that grant of exemption from tax is a matter of grace as the statutory functionaries while framing rules or notifications with a view to lessening the burden of the tax through grant of exemption from tax are not showing grace as a king, dictator or an absolute ruler would do in his pleasure but are discharging the functions assigned to them not in their pleasure but for achieving the objectives of the law and in public interest."
28. While dealing with the jurisdiction of the Court reliance was placed on the observation of Supreme Court of India in the case of Indian Express Newspapers (supra) as .follows:--
"We do not therefore, find much substance in the contention that the Courts cannot at all exercise judicial control over the impugned notifications. In cases where the power vested in the Government is a power which has got to be exercised in the pubic interest as it happens to be here, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The fact that a notification issued under section 25(1) of the Customs Act; 1962 is required to be laid before Parliament under section 159 thereof does not make any substantial difference as regards the jurisdiction of the Court to pronounce omits validity."
29. Further reliance was placed on the observation of Supreme Court of India in. the case of Ajay Hasia etc. v. Khalid Sehravardi and others AIR 1981 SC 487 which reads as under:--
"Article 14 must not be confused with the doctrine of classification. Unfortunately, in the early stages of the evolution of our Constitutional law, Article 14 came to be identified with the doctrine of classification because the view taken was that Article forbids discrimination and there would be no discrimination where the classification making the differential fulfils two conditions, namely (i) that the classification is founded on an intelligible differentia which distinguishes persons or thing that are grouped together from others left out of the group; and (ii) that the differentia has a rational relation to the object sought to be achieved by the impugned legislative or executive action."
30. The learned Single Judge thereafter observed that the question is, "whether power to grant exemption has been exercised reasonably and with a view to achieve the objectives of the law itself, and, whether the exercise of power is beyond the reach or power of judicial review vesting in this Court and if this power vests, what is the scope and vesting of power of judicial review".
31. Reference was made in this behalf to the statement of law contained at the page 413 of Corpus Juris Secudum (1954 Edition), which states that:-
"Exemptions are not based on the favouring of particular person or corporations at the expense of taxpayers generally, or granted on any idea of lessening the burdens of individual property owners, but are based on the accomplishment of public purposes, and are granted on the theory that they will benefit the public generally or as a reward or compensation for services rendered in the performance of some function deemed socially desirable. It has been stated that exemptions are favoured on the theory that the concession is due to quid pro quo for the performance of service essentially public by which the State is relieved pro quo from performing, and thus, where the exemption from taxation serves the public, and not a private interest, it cannot be regarded as a gift or donation of the public credit to, or in aid of, the individual, association, or corporation in whose favour the exemption is declared, but without that concurring prerequisite, an exemption becomes essentially a gift of public funds and indefensible both under public policy of equal taxation and under the Constitutional safeguard of illegal taxation. "
32. Further reference was made to page 417, where it is stated that, "the Legislature cannot delegate to the executive or administrative agencies or officers the power to exempt from taxation or to exercise uncontrolled discretion with respect to exemption, and as far as the power may be delegated the delegation must be regulated by some definition of policy and purpose".
33. It was further held that the test of reasonableness has been consistently applied by the Courts in England, United States and India. The following observation made by Lord Greene in the case of Associated Provincial Picture House Limited v. Wednesbury Corporation (1948) 1 KB 223) was referred:--
"It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word `unreasonable' in a rather comprehensive sense. It has frequently been used and is' frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must so to speak, direct himself properly in law. He must call his own .attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting `unreasonably'. Similarly there may be something so absurd that no sensible person could ever dream that it lays within the powers of the authority. Warrington L.J. in Short v. Poole Corporation (1926) 12 CH 66 gave the example of the red-haired teacher dismissed because she had red hair. That is unreasonable in one sense. In another sense it is taking into consideration extraneous matters It is so unreasonable that it might almost be described as being done in bad faith; and in fact all these things run into one another."
34. After referring the above judgments it was observed that the Supreme Court of India repelled the contention that the notifications granting exemption were beyond the reach of the administrative law, even though all the grounds that may be urged against an administrative order may not be available against them. The learned Single Judge of the Lahore High Court agreed with the observations of the Supreme Court of India. Thereafter, it was observed that the provisions contained in Articles 2A, 3, 4 and 25 of the Constitution of Islamic Republic of Pakistan were no way less to meaning and import than the due process of law' clause contained in the American Constitution.
35. It was further held that the judgments delivered by the superior Courts in Pakistan under 1956 Constitution or during the period when the fundamental rights were not in force were to be approached and understood keeping in view the afore-noted Articles of the present Constitution. The observations made by Cornelius, J, (as his lordship then was) in the case of Messrs East and West Steamship Company v. Pakistan (PLD 1958 SC 41), were also relied upon which read as under:-
"It has already been remarked, the fundamental right of freedom to conduct any lawful trade has been given by the citizens of Pakistan to themselves and may be regarded as an essential condition of their relationship among themselves, and with the State. The State has been directed inter alia by Article 29 of the Constitution to provide for all citizens within the available resources of the country facilities for work and adequate livelihood, trade is a form of livelihood which has received particular notice and protection in the Constitution under Article 12 (Article 18 of 1973 Constitution) and it is, therefore, only reasonable that the power of the State to regulate a trade by means of a licensing system should be construed in the light of the duty imposed upon the State by Article 29 (Article 38 of 1973 Constitution) to provide for all citizens facilities for adequate livelihood., It is also a general duty imposed upon. the State that it shall endeavour to secure the well-being of the people and as been seen above under conditions of free enterprise the well-being of the people requires that the conduct of trade carried on by individuals should no be interfered with so long as it is being lawfully carried on If the proviso to Article 12 (Article 18 of Constitution of 1973) be held to mean what the learned Attorney-General contends for, a result might follow which may be expressed somewhat in the following manner. The people of Pakistan first declare that those of them who wish to engage in trade, or are engaged in trade shall be free to enter or continue in their trade and to conduct that trade according to their discretion and choice, so long as it is lawful, In the next breath, the people of Pakistan proceed to, say that the State, namely the Executive, to' which they entrust the power vested in themselves, to be exercised for the advancement and well-being of the nation, may, in the guise of a licensing system, interfere in the minutest detail with every process and practice which any citizen-trader. The freedom which the citizens had guaranteed to themselves is thus placed entirely at the disposal of the Executive to respect or destroy as it pleases ....Manifestly, this is an interpretation which cannot be sustained. The people of Pakistan cannot be thought to have declared a Fundamental Right only to provide immediately after for its destruction by the Executive authority at its unrestrained discretion. Therefore, it is necessary in interpreting Article 12 that the substantial Fundamental Right of freedom of lawful trade should be preserved in the `posh-and-pull' of interpretation as against the powers vested in the Executive. As has already been pointed out above, the Executive was enjoined in clear terms to act for the well-being of the people and so as to provide them with facilities to earn adequate, livelihood for themselves e.g. by conducting lawful trade according to their discretion and choice, as befits an economy based on the principle of free enterprise ....It follows, therefore, that the power of regulating by a licensing system is not to be regarded as co-extensive with the power of control secured to a tradesman in respect of the implements and equipment of his trade and every operation that is required by the procedure of his trade. In principle also the words of a proviso are to be construed strictly and confined to the special case which its words enact; it could be wrong to construe those wounds as being co-expensive with those used in the purview, particularly where the effect might be of bringing about a repeal of the purview. Therefore, it seems to me, that it is incumbent upon a Court to interpret the words of the first proviso, to Article 12 in a limited sense, in contrast with the plenary sense in which the words of the main portion of the Article are to be understood. In my opinion, that limited sense is adequately expressed, in the extract which I have cited above from Halsbury's Laws of England in relation to the Statutory Regulation of Professions and Trades."
36. After referring to several judgments cited at the bar, the learned Single Judge of the Lahore High Court observed that one of the main pleas was that different treatment to the products which. are physically same and are similar or are put to the same use, would be violative of the equality clause and that where objects, persons or transactions essentially similar, are treated by the imposition of different rate of tax, discrimination may result on account of refusal to make a rational classification. Thereafter it was held that both ingots and billets were being akin for the purposes of charging sales tax and excise duty till June/July, 1989: It was further held that:-
"It cannot be disputed that taxability is to be determined by the Legislature under Article 77 of the Constitution and such power to remove the unfairness can be delegated as would entail enquiry into the assessment of changing factors which necessitated reduction of burden at the proper time and to the proper extent. Moreover, the grant of exemption with the view to remove an unfair burden in exercise of delegated legislative power in a Constitutional set-up has to be subjected to the rule of reasonableness and free from arbitrariness in the instant case, it was not shown that since June/July, 1989 what changes took place in the market and what relevant factors were considered for according different treatment to the two products which hithertobefore were being taxed at par."
37. Dealing with the power of State for giving different treatment to different persons on the basis of reasonable classification it was held that, "for the purpose of valid classification, what is required is not some imaginary or unsubstantial difference but a reasonable and substantial distinction having regard to the purpose of law".
38. Ultimately it was held that the different treatment given to billet, the product of the petitioner in the cited case was arbitrary and unreasonable and as such the additional burden placed was violative of equal protection of laws guaranteed by Article 4 read with Article 25 of the Constitution of Islamic Republic of Pakistan and that the charging of excise duty and sales tax on the basis of notification assailed in the cited petition was without lawful authority.
39. In the case of Collector of Customs, Excise and Sales Tax, Peshawar v. Messrs Flying Craft Paper Mills (Pvt.) Ltd., 1999 SCMR 709, the principles laid, down in the case of Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC, 582, were reiterated as follows:--
"Additionally, while there is a power in the Legislature and other taxing authorities to classify persons or properties into categories and to subject them to-different rates of taxes, there is none to target incidence of taxation in such a way that similarly placed persons are dealt with not only dissimilarly but discriminatory. "
40. The subject of equal protection of law and power of classification has been dilated upon in great detail by a Full Bench of the Dacca High Court in the case of Jibendra Kishore v. The Province of East Pakistan PLD 1957 Dacca 1. In this judgment reliance has been placed on a judgment from Supreme Court of India in the case of The State of Bombay and another v. F.N. Balsara AIR 1951 SC 318. It has been held by the Supreme Court of India as under:---
"(7) While reasonable classification is permissible, such classification must be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained, and the classification cannot be made arbitrarily and without any substantial basis.
41. It was further observed that the equal protection e has been borrowed from the American Constitution. A passage was quoted from the treatise Constitutional Law of the United States" (1936 Edition), passage 579 by Hugh Evander Willis as follows:-
"The guaranty of the equal protection of the laws means the protection of equal laws. It forbids class legislation, but does not forbid classification which rests upon reasonable grounds of distinction. It does not prohibit legislation, which is limited either in the objects' to which it is directed or by the territory within which it is to operate. It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and conditions both in the privileges conferred and in the liabilities imposed, `The inhibition of the amendment was designed to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation. It does not take from the States the power to classify either in the adoption of police laws, or tax laws, or eminent domain laws, but permits to them the exercise of a wide scope of discretion, and nullifies what they do only when it is without any reasonable basis. Mathematical nicety and perfect equality are not required: Similarity, not identity of treatment, is enough. If any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed. One who assails a classification must carry the burden of showing that it does not rest upon any reasonable basis."
42. Reference was made to a passage from Nichol's Book on Eminent Domain (3rd Edition, Volume 1, page 403), as follows:---
"Any classification which discriminates between persons and corporations which is based on a real difference, from the point of view of such .classification, is not violative of the equal protection clause, provided the distinction drawn is not arbitrary or unreasonable, and provided further that all persons within the particular category are accorded equal rights and privileges."
43. Ratio of the judgment in the case of State of West Bengal v. Anwar Ali 1952 SCR 284, was also referred which reads as follows:--
"In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguished those that are grouped together from others and (2) that that differentia must have a rational relation to the object sought to be achieved by the Act."
44. A Division Bench of this Court in the case of Pakistan Petroleum Workers' Union v. Ministry of Interior, 1991 CLC 13 (Karachi) considered the scope and connotation of the expression "equality before law" and "equal protection of law" under Article 25 of the Constitution of Islamic Republic of Pakistan, Saleem Akhtar, J. (as his lordship then was) observed that the concept of equality before law and principle of equal protection in law were for the first time given and firmly practised by the Holy Prophet (p.b.u.h)". He further held that: "Therefore, it can be traced as far back as 1,400 years, i.e. much before the Magna Carta, 14th Amendment of American Constitution, Declaration of Human Rights and the Theory or Rule of Law as enunciated by the Western Jurists".
45. It was further held as under:---
"The Constitution guarantees equality before law and equal protection of law to every citizen. Any arbitrary discrimination or unreasonable classification of classes are completely alien to the notions of equality before law and equal protection of law. The Constitution is not meant to serve any individual, it serves the nation and the country. Constitution envisages development of institutions and not individuals or class of individuals. It gives Government of Law and not individual. It is in this perspective that the provisions of the Constitution have to be interpreted to make it a living document which may accommodate the past, satisfy the present and serve the future.
The equality should not be in terms of mathematical calculation and exaction. The equality must be amongst the equals. The equality has to be between persons who are placed in the same set of circumstances. Article 25 does not envisage absolute equality of treatment to all persons in disregard of the attending circumstances. Article 25 forbids class legislation but not reasonable classification. However such classification should have some just and reasonable nexus with the object of the Act and cannot be arcade without any basis. Where any enactment provides different treatment, based reasonable classification having proper relation with the object of the Act and unfettered discretion has not been conferred on the administering agency it is not hit by Article 25.
Article 25 incorporates the concept of the rule of law. It prohibits, curtails and restricts enforcement of law or exercise of power under law which confers arbitrary powers with unfettered discretion. The law or the discretion conferred by it should be such that a citizen should know in the normal course and circumstances what the decision possibly could be. Every citizen has a right to know where he stands. This is another way to afford equal protection of law to every citizen."
46. A Division Bench of the Lahore High Court held in the case of Government of Pakistan v. Zafar Iqbal 1992 CLC 219, that, the equal protection theory prevents discriminate treatment of individual or a group of individuals at the expense of other individuals or classes of the people similarly situated. Evenhanded, fair treatment to every citizen is ordained by the Constitution.
47. Applying the above principles to the facts of the eases under consideration, we find that the scrap imported in shredded form, bundled form and loose form are by and large used for the same purpose. The only difference is that the scrap in the shredded and bundled form is imported by the big investors and those having the facility of Furnace. On the other hand, the scrap in loose form is imported by the small investors and traders and such persons who do not have the facility of Furnace at their own disposal. However, the end-product produced from the scrap in shredded form, bundle form and loose form is the same. Prior to the impugned Notification, dated 27-6-1991 there was no difference in the duty structure on the import of scrap in any of the three forms referred to above. Mere difference in PTC heading is inconsequential. The comments filed by the respondents does not disclose any basis for different classification of shredded and bundled scrap in one category and loose form in another category. Mr. Khalid Anwar has rightly argued with vehemence that in the absence of sufficient material justifying the change in duty structure, treatment meted out to the petitioners becomes arbitrary and mala fide with the result that the entire exercise stands vitiated being violative of equal protection of laws guaranteed by Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan. We further find substance in the contention of Mr. Khalid Anwar, that regulatory duty has been imposed on the import of scrap in loose form without any reason and there is not a single word to suggest that it has been imposed with the intention of protecting any local industry.
48. After a very careful consideration of the entire facts and the principles governing the equal protection of law and against the discriminatory treatment, enshrined in the Constitution of Islamic Republic of Pakistan, we are, of the considered opinion that, the change in the duty structure introduced through the two impugned notifications, dated 27-6-1991 under sections 39 and 18(2) of the Customs Act, 1969, whereby the custom duty on the import of shredded and bundled waste and scrap has been reduced to Rs.500 P.MT and the custom duty of 1500 PMT has been left intact on import of scrap in loose form and regulatory duty of Rs.1500 PMT has been imposed on the import of scrap in loose A form only, excluding import of scrap in shredded and bundles form suffers from arbitrariness. The Federal Government, has failed to specify any reasonable basis for separate classification of the import of scrap in bundled and shredded form in one category and the import of scrap in loose form in the other category. The effect of the impugned notification is that the small investors and trader, in porting scrap in loose form shall be totally ruined under the crushing burden of the duties so imposed and the big importers and investors having facility of furnace at their disposal all earn huge profit which cats be termed as a windfall profit. The action is totally discriminating against the small investors and importers and provides undue advantage to big capitalists and investors. It creates such an imbalance which has no justification at all, except that for the reasons best known to the competent authorities undue advantage is being dolled out to the big investors/capitalists at the cost of small investors, importers and traders. It is against the principle of free competition guaranteed under Article 18 of the Constitution, and the equal protection of law enshrined in Article 4 of the Constitution and militates against the principles of equality before law and entitlement for equal protection in law firmly ingrained in Article 25 of the Constitution of Islamic Republic of Pakistan. On the face of it", the impugned action is arbitrary, devoid of any reason, made of reasonableness and such arbitrary act cannot be termed but mala fide and colourable. An act which is established to be mala fide and colourable cannot be regarded as an action in accordance with the law and the rights guaranteed under the Constitution. If, an act is not reasonable and is without any basis and justification, it is always for extraneous and irrelevant consideration and is bound to be struck down being manifestly against the fundamental rights guaranteed in the Constitution. Such an act of discrimination cannot be countenanced in an Islamic polity. The Islam lays great emphasis on the equality before the law, equal protection under the law, equal treatment in law, equal opportunities, free competition in the regulation of trade, commerce and industries. No discrimination of any kind is sustainable in a country, the Constitution thereof provides that the State shall exercise its power and authority in accordance with the principles of freedom, quality, social justice and guarantees the fundamental rights and opportunity before law and economic justice.
49. We are, constrained to observe that, in spite of guarantees provided in the Constitution, the details whereof, we need not to dilate here, there is a constant tendency on the part of authorities concerned to violate the fundamental rights and the basic and fundamental principles under which the State should be governed and the conduct of the Government is to be regulated qua the citizens. Most unfortunate aspect is, that, when one set of people are out of power, they are grilled, oppressed and discriminated against by the men-in-authority. At that time they rush to the Courts for redress of their grievances, remembering, and reminding all the principles of equality before law, justice, equity and the fundamental rights guaranteed in the Constitution and they get relief from the Courts. However, when the same set of people are fortunate enough to occupy the driving seat and are saddled with the responsibility of running the State, they forget all those lofty principles of law, justice and equity and indulge in more worst kind of arbitrariness, discrimination and illegalities, for petty benefits, which they themselves had faced at the hands of other persons calling the shots.
50. Mr. Khalid Anwar, has mainly placed reliance on the judgment in the case of Ittefaq Foundry v. Federation of Pakistan, PLD 1990 Lahore 121. In the cited case it was contended that the petitioner was producer of billets and that there were other producers, producing ingots, the end-product whereof was same. In order to economically ruin the petitioner in the cited case, duty structure was changed in the year 1989 without reasonable justification and the change in the duty structure was against the rights guaranteed in Articles 4, 18 and 25 of the Constitution. The contention of the petitioner was accepted and the relief was allowed. However, with the change in fortunes, the persons were feeling the pinch of oppression in the case of Ittefaq Foundry v. Federation of Pakistan, became the rulers and thereafter, they very easily and conveniently managed to forge the treatment given to them and got the duty structure changed through notification assailed in these petitions, thereby deriving huge undue benefit at the cost of total destruction of the small importers and traders of the scrap in loose form.
51. Consequent to our finding, that, the Notifications, dated 27-6-1991 changing the duty structure under sections 18(2) and 19 of the Customs Act, 1969 are arbitrary, mala fide, unlawful and violative of the fundamental rights enshrined in Articles 18 and 25 of the Constitution of Islamic Republic of Pakistan read with Articles 4 and 2A, the petitions are allowed. We, declare that imposition of regulatory duty on remeltable iron and scrap in loose form and granting of exemption to the importers of bundled and shredded scrap through Notifications No. S.R.O. 584(I)/91 and S.R.O. 585(I)/91, dated 27-6-1991, in exercise of powers under section 18(2) and section 19 of the Customs Act, are violative of the fundamental rights guaranteed in the Constitution: The said notifications are hereby struck down being unconstitutional and direct the respondent No. 3, to stop the charging of the regulatory duty through impugned notification and to refund the regulatory duty and the customs duty if any, charged in excess of the custom duty prevailing before the issuance of the notifications which have been struck down by us.
All the petitions are allowed as above.
S.A.K./P-46/K Petitions allowed.