PAKISTAN through Secretary, Ministry of Finance VS LUCKY CEMENT LTD., PESHAWAR, 2003 PTD-SUPREME-COURT 95 (2002)

(On appeal from the judgment, dated 25‑5‑2001 passed by Peshawar High Court, Peshawar in Writ Petition 1144 of 1997).

Central Excises Act (I of 1944)‑‑‑

‑‑‑‑Ss. 2(17) & 4(2)‑‑‑Constitution of Pakistan (1973), Art. 185(3)‑‑ Excise duty, inclusion in retail price‑‑‑Duties of excise on cement were declared by High Court not to form part of retail price and the manufacturers of cement were not liable to pay such duties of excise forming part of retail price of cement‑‑‑Contentions of the Authorities were that the provisions contained in Ss.4(2) & 2(17) of Central Excises Act, 1944, had been misconstrued and misinterpreted by ignoring its true signification, purport and meaning which resulted in serious miscarriage of. justice, that the excise duty being tax was included in `retail price' as envisaged in S.4(2) of the Central Excises Act, 1944, which included all taxes and charges which aspect of the matter escaped notice; that `retail price' had not been understood in its true perspective which included excise duty that provisions as contained in Art. 199 of the Constitution could not have been invoked without approaching forums concerned .available under the hierarchy of excise laws for the redressal of their grievance, if any, and that the manufacturers could not be considered as aggrieved party because it collected duty from the customers which was credited to the public exchequer and such duties were paid by the consumers and thus Constitutional jurisdiction as conferred upon High Court under Art. 199 of the Constitution could not be invoked‑‑‑Leave to appeal was granted by Supreme Court to consider the contentions raised by the Authorities.

G.G. in Council v. Madras Province AIR (32) 1945 PC 98; Hirjina & Co. (Pak.) Ltd. v. Commissioner of Sales Tax 1971 SCMR 128;. Altas Battery Ltd. v. Superintendent, Central Excise and Land Customs PLD 1979 Kar. 545; Atlas Battery Ltd. v. Superintendent, Central excise and Land Customs PLD 1984 SC 86; Commissioner of Income‑tax v. Hamdard Dawakhana (Waqf) PLD 1992 .SCMR 847 Income‑tax Officer v. Chappal Builders 1993 SCMR 1108; Ejaz Shafi v. Federation of Pakistan PLD 1997 Kar, 604; Zafar Ali Khan v. Government of Pakistan 1997 PTD 1829; Indo Ashi Glass Company v. Income‑tax. Officer 1978 PTD 2860; Central Board of Revenue v. Sheikh Spinning Mills Ltd. 1999 SCMR 1442; Deputy Collector v. Premier. Tobacco Industries Ltd. 1993 SCMR 447 and Collector of Customs and Central Excise, Customs House, Multan v. Pakistan Daries, Kabirwala 2001 PCTLR 550 ref.

M. Sardar Khan, Senior Advocate Supreme Court and Tasleem Hussain, Advocate‑on‑Record for Petitioners (in both Petitions).

Raja Muhammad Akram, Senior Advocate Supreme Court for Respondents (in both Petitions).

Date of hearing: 26th September, 2002.

ORDER

JAVED IQBAL, J.‑‑‑The above captioned civil petitions, for leave to appeal have been directed against the judgment, dated 25‑5‑2001 passed by learned Peshawar High Court, Peshawar, whereby the writ petition preferred on behalf of respondents has been accepted declaring that the duties of excise on cement must not form part of retail price and ~be petitioners were not liable to pay such duties of exercise forming part of the retail price of cement. The above captioned petitions are being disposed of by this order arising out of the same judgment.

2. Precisely stated the facts of the case are that respondent is limited company incorporated under the Companies Ordinance, 1984 with the name and style of Messrs Lucky Cement Limited, Jamrud Road, Peshawar and Messrs Cherat Cement Limited which 'manufacture and supply cement which is excisable commodity. The entire controversy revolves around the fact that petitioners are charging excise duty pursuant to the provisions as contained in section 4(2) of the Central Excises Act, 1944 (hereinafter referred to as the Act) and the excise duty is a part of retail price leviable on retail price including excise duty which according to respondent is in violation of section 4(2) of the Act and according to them duties of excise on cement must not form part of retail price and they are required to pay excise duty on retail price without including excise duty. The writ petition preferred on behalf of respondent has been accepted with the observation that "present system of realization of duties of excise on the "Retail Price" inclusive of excise duty is illegal and without lawful authority, the duties of excise on cement must 'not form part of retail price and the petitioners are not liable to pay duties of excise forming part of the retail price of cement," hence these petitions.

3. It is, inter alia, contended by Mr. M. Sardar Khan, learned Senior Advocate Supreme Court on behalf of petitioners as under:‑‑

(i) The provisions as contained in sections 4(2) and 2(17) of the Act have been misconstrued and misinterpreted by ignoring its true signification purport and meaning which rested in serious miscarriage of justice.

(ii) The excise duty being tax is included in "retail price" as envisaged in section 4(2) of the Act which includes all taxes and charges which aspect of the matter escaped notice.

(iii) The "retail price" has not been understood in its true perspective which includes excise duty.

(iv) The provisions as contained in Article 199 of the Constitution of Islamic Republic of Pakistan could not have been invoked with out approaching forums concerned available under the hierarchy of excise laws for the redressal of their grievance, if any.

(v)The respondent could not be considered as aggrieved party because it collects duty from the customers which is credited to the public exchequer and such duties paid by the consumers and thus Constitutional jurisdiction as conferred upon High Court p under Article 199 of the Constitution of Islamic Republic of Pakistan cannot be invoked.

In order to substantiate the contentions as agitated in support of petition reference has been made to the following authorities:‑‑‑

(1) G.G. in Council v. Madras Province AIR (32) 1945 Privy Council 98, (2) Hirjina & Co. (Pak.) Ltd. v. Commissioner of Sales Tax 1971 SCMR 128, (3) Altas Battery Ltd. v. Superintendent, Central Excise and Land Customs PLD 1979 Kar. 545, (4) Atlas Battery Ltd. v. Superintendent, Central Excise and Land Customs PLD 1984 SC 86, (5) Commissioner of Income‑tax v. Hamdard Dawakhana (Waqf) PLD 1992 SCMR 847, (6) Income‑tax Officer v. Chappal Builders 1993 SCMR 1998, (7) Ejaz Shafi v. Federation of Pakistan PLD 1997 Karachi 604, (8) Zafar Ali Khan v. Government of Mistan 1997 PTD 1829, (9) Indo Ashi Glass Company v. Income‑tax Officer 1008 PTD 2860 and (10) Central Board of Revenue v. Sheikh Spinning Mills Ltd. 1999 SCMR 1442.

4. Raja Muhammad Akram, learned Senior Advocate Supreme Court for caveator controverted the view point as canvassed by Mr. M. Sardar, learned Senior Advocate Supreme Court on behalf of petitioners and contended as follows:

(i) The excise duty is being charged in violation of the provisions as contained in section 4(2) of the Act which amounts to double taxation by misreading the concept of "retail price" as no additional excise duty can be levied or collected on excise duty. According to the‑learned counsel the duties of excise on cement cannot form part of "retail price", and therefore, the respondent is not liable to pay duties of excise forming part of the retail price on cement.

(ii) The amount of duty payable on the retail price must be included in the retail price and then the duties of excise must be calculated and paid on this consolidated amount but such lawful procedure has not been followed.

(iii) In pursuance of the provisions as contained in section 4(2) of the Act "retail price" is to be determined inclusive of all charges and taxes except sales tax and, therefore, the excise duty is to be determined on the price of cement after included in it all charges and taxes.

(iv) The physical statute imposing taxes/duties should be given a strict consideration and unless the duty is imposed in a categoric manner by the statute itself the same cannot be levied by the Excise Authorities which would be in violation of provisions as contained in section 4(2) of the Act.

(v) The language as employed in section 4(2) of the Act being free from any ambiguity does not call for any scholarly interpretation and the words "inclusive of charges and taxes" simply means that the same excludes the duties of central exercise which cannot be imposed by the. Excise Authorities in an arbitrary manner.

(vi) There is no rationale behind the view of the petitioners that a tax which is being charged on the value must first form a part of the value and then that tax again be charged on the value so determined.

In order to substantiate his view point reliance has been placed on the following authorities:‑‑‑

(i) Deputy Collector v. Premier Tobacco Industries Ltd. 1993 SCMR 447 and (ii) Collector of Customs and Central Excise, Customs House, Multan v. Pakistan Daries, Kabirwala 2001 P.C.T.L.R.550.

5. We have carefully examined the respective contentions as agitated on behalf of the parties in the light of relevant provisions of the Act and also perused the judgment impugned. We are of the considered opinion that the abovementioned contentions need serious consideration and, therefore, leave to appeal is granted in both the petitions so that the provisions as contained in sections 4(2) and 2(17) of the Act could be thrashed out as authoritative judgment is needed to set the controversy at naught. Status quo shall be maintained till disposal of appeals.

Q.M.H./M.A.K./P‑81/SC Leave granted.