KARIM GHEE AND OIL MILLS (PVT.) LTD., KARACHI VS FEDERATION OF PAKISTAN, 2005 PTD-KARACHI-HIGH-COURT-SINDH 634 (2004)

Customs Act (IV of 1969)‑‑

‑‑‑‑S.31‑A‑‑‑Customs Rules, 2001, R.296(1)(g)‑‑‑Sales Tax Act (VII of 1990), S.6(lA)‑‑‑S.R.O. 176(1)/2004 dated 22‑3‑2004‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑‑Duty and tax remission for exports‑‑‑Petitioner, who was engaged in the manufacture and export of vegetable ghee, on the basis of Duty and Tax Remission for Export Scheme introduced by the.‑Federal Government, entered into an agreement dated 19‑8‑2003 with foreign importers to export 5000 metric tons of vegetable ghee to them for which there was no duty, tax etc.‑‑‑Export of goods including vegetable ghee, though was not liable to any tax, duties etc, however import of input goods/raw material used in its manufacture was subject to duty/tax at the stage of import with a right to seek refund of the duty/tax paid on the import and such input/raw material which was used in the manufacture of goods which ultimately were to be exported out of Pakistan‑‑‑Petitioner was stated to have been authorized to import 2500 metric tons of duty/tax free Palm Oil and 2500 metric tons of Palm Olien and such indemnity was furnished in terms of Duty and Tax Remission for Export Scheme on 3‑9‑2003‑‑‑Petitioner had claimed to have imported so far 546 metric tons of Palm Olien under the approval and was still to import 2500 metric tons of duty/tax free Palm Oil and 1954 metric tons of Palm Olien and that it had manufactured and exported 326.7 metric tons of vegetable ghee to its purchasers abroad and still it was under contractual obligation to export 4673.3 metric tons of vegetable ghee‑‑‑Grievance of the petitioner was that Federal Government had issued S.R.O. 176(1)/2004 dated 22‑3‑2004 whereby rule 296(l)(g) of Customs Rules, 2001 was amended to the effect that Duty and Tax Remission for Export Rules Were made inapplicable, inter alia in the case of exporters of vegetable ghee‑‑ Validity‑-‑Held, doctrine of "promissory estoppel" could not be pressed into service against the legislature more particularly when admittedly no Letter of Credit had been opened by the petitioner before 23‑3‑2004, hence no vested right appeared to have been created in his favour‑‑ Exemption granted to the petitioner in terms of order dated 5‑9‑2003 therefore, could be withdrawn by Notification S.R.O. 176(1)/2004 dated 22‑3‑2004.

Messrs Inter Globe Commercial (Pvt.) Limited v. Government of Pakistan 2004 PTD 21; Messrs Afreen International (Pvt.) Limited Karachi v, Collector Customs (Appraisement) Dry Port and others 2003 PTD 2015; Messrs M.Y. Electronics Industries (Pvt.) Limited and others v. Government of Pakistan through Secretary Finance, Islamabad and others 1998 SCMR 1404; Alsamraiz Enterprise v. Federation of Pakistan 1986 SCMR 1917 and Pakistan v. Fecto Belarus Tractors Limited PLD 2002 SC 208 distinguished.

Khalid Jawed Khan for Petitioner.

S. Ziauddin Nasir; Standing Counsel fur Respondent No.1.

Raja Muhammad Iqbal for Respondent No.2.

Date of hearing: 4th November, 2004.

ORDER

S. ALI ASLAM JAFRI, J.‑‑‑The only question of law to be decided in this petition, as determined by this Court vide its order, dated 10‑8‑2004 , appears to be, "whether the exemption granted to the petitioner in terms of order, dated 5th September, 2003, can be withdrawn by Notification S.R.O. 176(1)/2004, dated 22nd March, 2004".

2. The facts forming the background of this petition appear to be that the petitioner who is engaged in the manufacture and export of vegetable ghee on the basis of duty and tax remission for export (DTRE) scheme introduced by Respondent No. l entered into an agreement, dated 19‑8‑2003 with Messrs Ittefag Dastgir Zada Ltd., Kabul, Afghanistan, to export 5000 metric tons of vegetable ghee to the said company in Afghanistan for which there is no duty, tax, etc. Though, export of goods including vegetable ghee is not liable to any tax, duties, etc., however import of input goods/raw material used in its manufacture was subject to duty/tax at the stage of import with a right to seek refund of the duty/tax paid on the import and such input/raw material which was used in the manufacture of goods ultimately exported out of Pakistan. The petitioner states to have been authorised to import 2500 metric tons of duty/tax free palm oil and 2500 metric tons of palm olien and such indemnity bond was furnished in terms of DTRE Rules on 3‑9‑2003. The petitioner claims to have imported so far 546 metric tons of palm olien being the input goods/raw material for the manufacture of vegetable ghee and under the approval, the petitioner is still to import 2500 metric tons of duty/tax free palm oil and 1954 metric tons of palm olien. The petitioner claims to have manufactured and exported 326.7 metric tons of vegetable ghee to its purchaser in Afghanistan and still under contractual obligation to export 4673.3 metric tons of vegetable ghee.

3. Grievance of the petitioner is that or, 22‑3‑2004 the Respondent No.1 has issued S.R.O. 176(1)/2004 whereby Rule 296(l)(g) was amended to the effect that DTRE Rules were made inapplicable, inter alia, in the case of exporters of vegetable ghee. After issuance of the said S.R.O. an issue arose as to whether the restriction imposed would apply only to those cases where input goods/raw material has already been imported/acquired by the date of issue of notification of whether it would also apply where there is a valid permission but the input/raw material has not been imported/acquired by that time. Respondent No.1 vide letter, dated 20‑4‑2004 issued a clarification that amendment could be applicable to all cases where input goods/raw material have not been imported/acquired by 22‑3‑2004. The Respondent No.1 has taken the said decision on the basis of section 31A of the Customs Act, 1969, and subsection IA of section 6 of the Sales Tax Act, 1990, and has been made applicable to the petitioner by Respondent No.2 vide letter, dated 8‑5‑2004.

4. In this view of the matter, the petitioner has prayed for a declaration that S.R.O. 176(1)/2004, dated 22‑3‑2004 cannot operate with retrospective effect and has no application to the D.T.R.E. approval granted to the petitioner on 3‑9‑2003 and 3‑11‑2003 under the Customs Rules, 2001, by Respondent No.2. Applicability of section 30A of the Customs Act, 1969, and section 6A of the Sales Tax Act, 1990, to DTRE imports under Customs Rules 2001 has also been called in question. It has further prayed that letter/direction, dated 20‑4‑2004 issued by Respondent No.1 be declared to be illegal and violative of the vested rights and interest of the petitioner. A direction has also been sought against the respondents to allow the petitioner duty/tax free imports of approved input/raw material as per DTRE approval, dated 3‑9‑2003 as amended vide corrigendum, dated 3‑11‑2003.

5. In response to the notice issued, parawise comments have been filed on behalf of the respondents defending S.R.O. 176(1)/2004 amending Rule 296(1)(g) of Customs Rules. It is stated that in view of the said notification/S.R.O. the petitioner is not entitled to further import inputs from 22‑3‑2004 onwards. It has been stated that respondent No.1 is authorized under the statutory provisions of section 31A of the Customs Act, 1969, and subsection (1A) of section 6 of the Sales Tax Act which categorically say that all written promises made prior to the withdrawal of any exemption, if not availed during the period when exemption was available, are also, ipso facto, rendered ineffective, vitiated and invalidated on such withdrawal. DTRE approvals are also written promises. Section 31A of the Customs Act and section 6A of the Sales Tax Act are very much applicable to the petitioners' case and the S.R.O. in question has been legally and validly issued and holds field. The petitioner is not entitled to import further quantity of inputs under the DTRE approval granted to him by respondent No.2 after issuance of S.R.O. 176(1)/2004 dated 22‑3‑2004. It is further stated that petitioner has not acquired any vested rights and interests as the petitioner has only made a written promise and had not actually imported the full quantity of raw material prior to 22‑3‑2004. The respondents have therefore, prayed for dismissal of the petition having no merits.

6. We have heard Mr. Khalid Jawed Khan, learned counsel for the petitioner, Mr. S. Ziauddin Nasir, Standing Counsel for Respondent No. 1, and Raja Muhammad Iqbal, learned counsel for Respondent No.2.

7. The main thrust of the arguments of learned counsel for the 'petitioner is that in view of DTRE scheme as prevalent at the relevant time the petitioner had entered into an agreement on 19‑8‑2003 with a purchaser in Afghanistan for export of 5000 metric tons vegetable ghee and till the S.R.O., dated 22‑3‑2004 was promulgated he had imported only 546 metric tons of palm olien out of which he has manufactured 326.7 metric tons of vegetable ghee and, has exported it to its purchaser in Afghanistan hence he is entitled to further import the remaining quantity despite promulgation of the S.R.O. in question which cannot deprive the petitioner of his vested rights created under DTRE scheme and such vested rights cannot be taken away. DTRE scheme cannot be nullified and the petitioner is entitled to import the entire quantity of 5000 metric tons of raw material for the said purpose. It is further contended that the petitioner has acquired vested rights and interest which cannot be withdrawn through the S.R.O. in question and the respondents are estopped from acting in any manner nullifying the effect of DTRE. It is further contended that section 31A of the Customs Act and section 6(1‑A) of the Sales Tax Act are not applicable to DTRE approvals already issued, with respect to vegetable ghee prior to the date of amending notification issued by respondent No.1. Learned counsel further contended that section 30 of the Customs Act, 1969, has no relevance to the cases under DTRE Rules as the input goods/raw material imported are not for the purpose of home consumption to which section 30 is restricted. Lastly it is urged that the S.R.O. in question is arbitrary, mala fide and contrary to the provisions of law and violative of Articles 18 and 25 of Constitution of Pakistan. It is further contended that the petitioner has already entered into an agreement with the purchaser in Afghanistan and in case of non‑supply/export as agreed, he shall suffer irreparable loss. In support of his contentions Mr. Khalid Jawed Khan, learned counsel for the petitioner, has placed reliance on the case of Messrs Inter Globe Commercial (Pvt.) Limited v. Government of Pakistan (2004 PTD 21) delivered by a Division Bench of this Court of which one of us (Anwar Zaheer Jamali, J.) was a member. We find that the facts of the case and the rule laid down therein is altogether different from the facts and question of law to be replied in this case. With reference to disputed questions of facts it has been held that High Court in exercise of its Constitutional jurisdiction could not enter into such questions. Again Mr. Khalid Jawed Khan, learned counsel for the petitioner, has also referred to the case of Messrs Arfeen International (Pvt.) Limited Karachi v. Collector Customs (Appraisement) Dry Port and others (2003 PTD 2015). This case too has no relevance to the facts and law involved in the case in hand. With reference to section 31A of the Customs Act Mr. Khalid Jawed Khan, learned counsel for the petitioner, has referred to Messrs, M.Y. Electronics Industries (Pvt.) Limited and others v. Government of Pakistan Through Secretary Finance Islamabad and others (1998 SCMR 1404) wherein legislative background of section 31A of Customs Act, 1969, was taken into consideration with reference to Alsamraiz Enterprise v. Federation of Pakistan (1986 S.CMR 1917). We find that this case too is of no help to the petitioner as with reference to doctrine of promissory estoppel it has been held that "a general promise without any time limitation cannot bind the Government for all times to come". It has been further held as under:‑‑

"In the cases before us, the appellants are invoking the doctrine of promissory estoppel against the Government on the basis of alleged inducements and representations contained in the exemption Notification No.517(I)/89, dated 3‑6‑1989, No.480(I)/88, dated 26‑6‑1988 and 48(1)/88, dated 26‑6‑1988. These notifications do not contain any time limitation during which these exemptions were to remain operative. The appellants have failed to bring on record any material to establish that the Government either before or after issuance of these notifications made any representation to the industries in GAIE that these exemptions will remain operative for any specified period. In the absence of the period having been specified in these notifications regarding their validity, the exemptions under these notifications could be availed by the appellants only during the period these ‑notifications were operative. These exemptions ceased to be available from the date the above notifications were superseded or withdrawn. The learned counsel for the appellants have, however, argued that as no time limit was mentioned in the above exemption notifications, they were entitled to reasonable notice by the Government before withdrawal of these exemptions."

8. Learned counsel has also referred to Pakistan v. Facto Belarus Tractors Limited (PLD 2002 SC 208) where the Hon'ble Apex Court while dealing with the effect of withdrawal of exemption granted earlier under section 31A of the Customs Act, 1969, examined its nexus with the payment of sales tax and came to the conclusion that provisions of section 31A of the Customs Act could not be pressed into service to withdraw the said exemption obviously because at that time there was no pari materia provision in the Sales Tax Act, such as in the Customs Act. Indeed, the rule laid down by the apex Court is binding upon all Courts subordinate to it but the said judgment was delivered by the

in Review Petition No. 80 of 1999 which was heard on 26th September, 2000. Learned counsel while referring to said authority has ignored that section 6 of the Sales Tax Act was amended by insertion of subsection (1‑A) through Sales Tax (Amendment) Ordinance, 2002, on 7th June, 2002 in order to meet such eventualities and it is pari materia to section 31A of the Customs Act. It shall be beneficial to reproduce here the said provision of law:‑‑

"(6) (1A) Notwithstanding anything contained in any other law for the time being in force, including but not limited to the Protection of Economic Reforms Act, 1992 (XII of 1992), and notwithstanding any decision or judgment of any forum, authority or Court whether passed, before or after the promulgation of the Finance Act, 1998 (III of 1998), the provisions of section 31A of the Customs Act, 1969 (IV of 1969), referred to in subsection (1) shall be incorporated in and shall be deemed to have always been so incorporated in this Act and no person shall be entitled to any exemption from or adjustment of or refund of tax on account of the absence of such a provision in this Act, or in consequence of any decision or judgment of any forum, authority or Court passed on that ground or on the basis of the doctrine of promissory estoppel or on account of any promise or commitment made or understanding given whether in writing or otherwise, by any Government department or authority. "

9. Mr. Raja Muhammad Iqbal, learned counsel for Respondent No.2, has vehemently opposed to the petition and argued that in view of well‑settled proposition of law that doctrine of Promissory Estoppel cannot be pressed into service against legislature and that Sales Tax Act, 1990, has been duly amended on 7th June, 2002, the petition is liable to 'be dismissed having no merits. Mr. Ziauddin Nasir, learned Standing Counsel for respondent No. 1, has also argued on the same lines:

10. We have given due consideration to the arguments of learned counsel for the petitioner and learned counsel for Respondents Nos. l and 2. After examining the material on record and relevant provisions of law as referred to above we have reached at a conclusion that doctrine of "promissory estoppel" cannot be pressed into service against the legislature more particularly when admittedly no LC was opened by the petitioner before 23‑3‑2004 hence no vested rights appear to have been created in his favour. Point for 'determination is, therefore, replied in affirmative.

11. Resultantly, this Constitution petition is dismissed in limine along with the listed application.

M.B.A./K‑39/KPetition dismissed.