SHADMAN COTTON MILLS LTD. VS FEDERATION OF PAKISTAN through the Chairman, Central Board of Revenue (Revenue Division), Islamabad, 2009 PTD-KARACHI-HIGH-COURT-SINDH 193 (2008)

(a) Customs Act (IV of 1969)---

----Ss. 19 & 217---Sales Tax Act (VII of 1990), S.13(2)(a)---Civil Procedure Code (V of 1908), S.9 & O. VII, R.11---Specific Relief Act (I of 1877), S.42---Suit for declaration---Plaintiff's claim for declaring its imported goods to be exempt from levy of customs duty and sales tax by challenging vires of subsequent withdrawal of exemption S.R.O. issued at relevant time---Validity---Government under special statutes (i.e. Customs Act, 1969 and Sales Tax Act, 1990), in exercise of its delegated powers, could issue notifications regarding incentive or imposition or withdrawal of customs duty and sales tax---Such delegated powers of Government could not be checked or limited by filing declaratory suit under S.42 of Specific Relief Act, 1877---No provision of such special statutes could be made dormant or redundant by filing a declaratory suit---No provisions of such special statutes or notifications issued thereunder could be checked or examined on any ground in civil Courts---Complete mechanism for claiming such relief was provided in both such special statutes and. in case of its refusal by relevant authority, plaintiff could avail remedies provided thereunder---Such suit was completely barred by S.217 of the Customs Act, 1969---Plaint in such suit was rejected under O. VII, R.11, C.P.C.

Messrs Shafiq Textile Mills Ltd. Karachi v. Federation of Pakistan and others 2007 PTD 1480; Messrs Rohi Ghee Industries (Pvt.) Ltd. v. Collector of Customs and others 2007 PTD 878 and Messrs Binaco Traders v. Federation of Pakistan and others 2006 PTD 1491 ref.

(b) Interpretation of statutes---

----Special law would normally prevail over ordinary law of land.

(c) Specific Relief Act (I of 1877)---

----S.42---Customs Act (IV of 1969), S.19---Sales Tax Act. (VII of 1990), S.13(2)(a)---No provision of special statute can be made dormant or redundant by filing a declaratory suit.

(d) Civil Procedure Code (V of 1908)---

----O. III, R. 2, O. VII, R. 11 & O. XXIX, R.1---Suit by Corporation through its Director---Non-filing along with plaint power of attorney in favour of such Director or resolution of Board of Directors authorizing him to sign, verify and present plaint---Effect---Plaintiff had not presented plaint through a proper agent or attorney---Plaint was rejected under O.VII, R.11, C.P.C.

(e) Specific Relief Act (I of 1877)---

----S.42---Customs Act (IV of 1969), S.19---Sales Tax Act (VII of 1990), S.13(2)(a)---Civil Procedure Code (V of 1908), O. VII, R.11---Constitution of Pakistan (1973), Art. 199---Suit for declaration---Vires of notifications issued under Customs Act, 1969 and Sales Tax Act, 1990 challenged in such suit after dismissal of constitutional petition filed thereagainst in High Court---Effect---Vires of such notifications could not be challenged in a civil suit---Plaint in such suit was rejected under O.VII, R.11, C.P.C.

Nishat Mills Limited v. Federation of Pakistan and other reported in 2005 PTD 495 rel.

None present for Plaintiff.

Raja Muhammad Iqbal for Defendant No.1.

S. Tariq Ali, Standing Counsel.

ORDER

ARSHAD NOOR KHAN, J.---By this I intend to dispose of application under Order VII rule 11 read with section 151, C.P.C. (C.M.A. No. 9172 of 2007) filed by the defendants for rejection of the plaint.

The facts leading rise to the present suit are that the plaintiff filed suit for declaration and perpetual injunction against the defendants stating therein that the plaintiff is a public company with the limited liability of shareholders registered under the Companies Ordinance, 1984 having its registered office at Hasrat Mohani Road, Karachi, engaged in the business of textile, spinning and export of yarn. It is further stated in the plaint that instant suit is being filed through Mr. Zahid Mazhar Puri, its director who is fully conversant with the facts of the case and is able to depose about the same, who is also duly authorized to sign and verify the pleadings and to institute the suit. It is further stated in the plaint that the defendants announced various fiscal incentives including complete exemptions from the payment of customs duty and sales tax on the import of the machinery and spares thereof vide S.R.O. No.554(I)/98, dated 12-6-1998. The plaintiff relying upon the said incentive imported various spare parts for replacement, in the existing plant and machinery installed in the plaintiffs mills. The said items are classified in various' P.C.T. headings and are used for the running of mills. It is further stated in the plaint that on arrival of the spares, the plaintiff filed bill of entry for the clearance of above said spares and claimed exemption from the payment of customs duty and sales tax under S.R.O. No.554(I)/98, dated 12-6-1998. The defendant No.2 admitted that the said goods are spares to be used for running of the plaintiffs existing plant and machinery but refused to allow exemption from the payment of customs duty and sales tax under S.R.O. 554(I)/98, dated 12-6-1998 on illegal interpretation of S.R.O. 479(I)/2003, dated 7-6-2003 on the premises that the goods were not eligible for exemption as the said exemption had been withdrawn, even though the contracts for the purchase of said spares were concluded and letters of credit were opened much earlier than the promulgation of S.R.O. 479(I)/2003 and that the refusal of grant of exemption is therefore illegal on the fact of it. The contracts for purchase of said spares were concluded and letters of credit for the import thereof had been opened long before the withdrawal of the exemptions. It is further stated in the plaint that a plain reading of notification makes it abundantly clear that S.R.O. No.479(I)/2003, dated 7-6-2003 has been implemented with retrospective effect and the denial of grant of exemption is colorable exercise of jurisdiction and amounts to mala fide in law. It is further stated in the plaint that the spares admittedly been integral part of the plant and machinery installed in the plaintiffs mills and the said machinery cannot function' without the said spares. It is also admitted position that the plaintiff imported the same for the replacement of the used spares and letters of credit were opened for withdrawal of exemption. The plaintiff has therefore vested right to claim the exemption from the payment of customs duty and sales tax accrued to the plaintiff as soon as the contracts were concluded and letters of credit were opened and the denial of exemption on the basis of subsequent withdrawal is violative of the dictum laid down by the Hon'ble Supreme Court. The plaintiff asked the defendant to implement the law in its letter and spirit but the defendant did not listed him. Plaintiff therefore filed the present suit with the following prayers:--

"Therefore, it is most respectfully prayed that a judgment and decree may kindly be passed in favour of the plaintiff and against the defendants with the declaration that the goods imported by the plaintiff are eligible for exemptions granted under S.R.O. 554(I)/98, dated 12-6-1998 and that the with drawal of exemption vide S.R.O. 479(I)/2003, dated 7-6-2003 is prospective and does not operate with retrospective effect.

It is further prayed that the defendants may kindly be permanently restrained from demanding and effecting recovery of the impugned sales tax and customs duty in any manner whatsoever.

It is further prayed that the defendants may kindly be restrained from recovering the impugned customs duty and sales tax from the plaintiff in any manner whatsoever."

The notice of the suit has been served on the defendants who also appeared and have also filed application under Order VII rule 11, C.P.C. stating therein that the suit is barred under section 217 of the Customs Act, 1969, hereinafter shall be referred to as "the Act, 1969" read with section 9, C.P.C. and that the plaintiffs have not availed the statutory remedy available under the relevant provisions of the Special Statute and the defendant No.2 is not corporation and could not be sued in his corporate name under Order I, Rule 3, C.P.C. and that the issue involved in the present suit has already been decided by this Court. Notice of this application has been served on the plaintiff but the plaintiff did not file any objection to this application.

The present application along with injunction application was fixed in Court on 17-3-2008, 12-5-2008, 8-9-2008 and 10-11-2008 but the counsel for the plaintiff did not remain present in Court, particularly on 12-5-2008, 8-9-2008 and on 10-11-2008 without any intimation, and on the insistence of the learned counsel for the defendant, I have heard him. He vehemently contended that the suit is hopelessly barred under section 217 of the Act, 1969 and effect of the S.R.O. could not be adjudged in an independent suit as such the suit is hit under the provision of section 217 of the Act, 1969 and is liable to be rejected. In support of his contention he has relied upon the case of Messrs Shafiq Textile Mills Ltd. Karachi v. Federation of Pakistan and others reported in 2007 PTD 1480, the case of Messrs Rohi Ghee Industries (Pvt.) Ltd. v. Collector of Customs and others reported in 2007 PTD 878 and case of Messrs Binaco Traders v. Federation of Pakistan and others reported in 2006 PTD 1491.

I have considered the arguments advanced on behalf of the defendants and have gone through the material available before me.

Admittedly the plaintiff imported certain spare parts which are necessary for running of the machinery of his mills and for the purposes of import of the goods the government from time to time declares the incentives to attract the imports by issuing S.R.Os. under the provision of section 19 of the Act, 1969 as well as under section 13(2)(a) of Sales Tax Act, 1990, hereinafter shall also be referred to as "the Act, 1990". These are the special powers available to the government to issue notifications regarding incentives or imposition of customs duty and sales tax etc. The powers of the government to issue such notifications under the Acts, 1969 and 1990 are, therefore, the delegations of powers from special statute and the said powers of the government delegated by the special statute could not be checked or limited by filing of a declaratory suit under section 42 of the Specific Relief Act. It is a well settled principle of law that special law will normally prevail over the ordinary law of the land. The power of the government therefore could not be fettered or restricted for issuance of notification regarding imposition or withdrawal of the customs duty and sales tax in view of section 19 of the Act, 1969 as well as under section 13(2)(a) of the Act, 1990. The plaintiff has admittedly challenged the vires of the two S.R.Os., stated c above, through present suit and the said S.R.Os. could not be challenged before the civil Court in view of section 217 of the Act, 1969, which impose complete embargo and restriction over the powers of the Civil Court to entertain and adjudicate upon any prosecution or action of public functionary done or intend to be done in good faith in pursuance of the Act, 1969. Section 217 of the Act, 1969 is usefully quoted herein below for the sake of convenience:--

"Protection of action taken under the Act.---No suit, prosecution or other legal proceeding shall lie against the Federal Government or any public servant for anything which is done or intended to be done in good faith in pursuance of this Act or the Rules (and notwithstanding anything in any other law for the time being in force no investigation or enquiry shall be undertaken or initiated by any government agency against any officer or official for anything done in his official capacity under this Act, rules, instructions or directions made or issued there-under without the prior approval of the Board).

No suit shall be brought in any civil Court to set aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of any tax made under this Act."

A plain reading of section 217 of the Act, 1969, completely shows that no suit or other proceedings or prosecution can be entertained or challenged by way of filing civil suit before a civil Court nor suit can be entertained by the Court for the act which has been done under the Act of 1969. The provision of Acts, 1969 and 1990 are independent and have been promulgated by way of special statute and no provision of special Act or Statute could be made dormant or redundant by filing a civil suit under section 42 of the Specific Relief Act. Since the provision of Acts, 1969 and 1990 could not be examined or limited by filing a suit, therefore S.R.Os. issued under the provisions of the aforesaid Acts could not be checked or examined on any ground in civil Courts. Even the mala fide have not been alleged against the defendants regarding issuance of S.R.Os. issued by the defendants therefore, I do not find any mala fide on the part of the Customs Authorities in issuing the S.R.Os. impugned herein.

Vires of S.R.O. 354(I)/98, dated 12-6-1998 was also considered by the Divisional Bench of this Court in the case of Nishat Mills Ltd v. Federation of Pakistan and others reported in 2005 PTD 495, and the petition was dismissed as such the vires of the said S.R.O. could not be examined in a civil suit.

The same controversy also arose before this Court in the case of Messrs Shafiq Textile Mills, supra, wherein, under the similar circumstances involved in the present suit, this Court was pleased to observe that the acts of the Customs Authorities were protected under the provisions of section 217(2) of the Act, 1969. The observation made by this Court in the case of Shafiq Textile Mills, supra, is usefully quoted herein below for the sake of convenience:--

"It is manifestly clear from the contents of the plaint that upon the refund claimed by the plaintiff show-cause notice dated, 27-3-1993 was issued under Customs Act, 1969 read with Notification bearing S.R.O. 533 amending S.R.O. 499(I)/91, dated 3-5-1991 upon reading of section 217 subsection (1) in exercise of the powers of the authority condition which reflects the cause are intended to be in good faith whereas the condition of good faith is attached to the exercise by the Customs Authority subsection (2) of the section 217 protect the official act done in good 'faith, whether under section 217 subsection (2) there is no condition that act must be done in a good faith to claim protection."

In the cases of Messrs Rohi Ghee Industries Ltd. and Binaco Traders, supra, filing of civil suits was observed to be hit under the provisions of section 217(2) of the Act, 1969, and dictum laid down in the aforesaid cases, is fully attracted in the circumstances of the present case.

It is also not disputed that the Acts, 1969 and 1990 provide a complete mechanism to claim exemption from the customs duty and sales tax by invoking the provision of both these Acts and the Customs Authorities are well within their powers to examine the case of the petitioner, whether it falls under the exemption clause or not and if the claim of the plaintiff falls within the provisions of the notifications issued under the Act, definitely the plaintiff may have benefit of it and, in case of his failure to obtain relief from the customs authorities, the procedure of the appeal before the appellate Court as well as before the Tribunal and Customs Reference before the High Court is available to the petitioner under the Act, 1969, and all these provisions of the Act provide substantive right to the plaintiff to avail remedy at proper stage instead of challenging the same in civil suit. In my humble opinion, the suit filed by the plaintiff is, therefore, completely barred under section 217 of the Act, 1969.

The plaintiff's firm is admittedly a public company registered under the Companies Act, 1984 as has been stated in para. 1 of the plaint and admittedly the plaintiffs have directors and the present suit has been filed by Mr. Zahid Mazhar Puri, director, who according to the plaint is fully conversant and authorized to sign, verify and present the plaint. Para. No.1 of the plaint is usefully quoted herein below for the sake of convenience:--

"That the plaintiff is a public company with the limited liability of share holders registered under the Companies Ordinance, 1984, having its registered office at 601-603, Commerce Centre, Hasrat Mohani Road, Karachi, engaged in the business of textile spinning and export of yarn. The instant suit is being filed through Mr. Zahid Mazhar Puri, its Director, who is fully conversant with the facts of the case. He is able to depose about the same. He is duly authorized to sign and verify the pleadings and to institute the instant suit."

It is therefore, evident that the plaintiffs have authorized Mr. Zahid Mazhar Puri, one of its director to sign, verify and present the plaint, but along with the plaint neither any power thereby authorizing him to sign, verify and present the plaint, has been filed nor any resolution of the board of directors has been produced to show that Mr. Zahid Mazhar Puri has been lawfully authorized on behalf of the plaintiffs to sign, verify and present the suit, which is manifest from the list of documents, filed along with the plaint, which is reproduced herein below:--

LIST OF DOCUMENTS

The list of documents attached with the plaint also shows that power or resolution of the Board of Directors of the plaintiffs thereby authorizing Mr. Zahid Mazhar Puri, has not been filed along with the plaint, as such the plaint appears to have not been filed by a duly constituted agent or an authorized person by the Board of Directors as such plaint has not been presented properly by the plaintiff through a proper agent or attorney.

For all the aforesaid reasons and circumstances, I find that the suit could not be finally succeeded and is completely barred under section 217 of the Act, 1969 as well as under order III rule- 2, C.P.C. The application is, therefore, allowed and the plaint is rejected under order VII rule 11, C.P.C. with cost.

S.A.K./5-108./KPlaint rejected.