SHAHTAJ SUGAR MILLS LTD. through Chief Executive VS ADDITIONAL SECRETARY, GOVERNMENT OF PAKISTAN, MINISTRY OF FINANCE, KARACHI
2009 P T D 1544
[Supreme Court of Pakistan]
Present: Tassaduq Hussain Jillani, Muhammad Akhtar Shabbir and Ghulam Rabbani, JJ
SHAHTAJ SUGAR MILLS LTD. through Chief Executive
Versus
ADDITIONAL SECRETARY, GOVERNMENT OF PAKISTAN, MINISTRY OF FINANCE, KARACHI and others
Civil Petition No.1295-L of 2004, decided on 01/06/2009.
(On appeal from the judgment of the Lahore High Court, Lahore, dated 12-2-2004 passed in Writ Petition No.1283 of 1989).
(a) Central Excise Rules, 1944---
----R.11---Contract Act (IX of 1872), S. 72---Customs Act (IV of 1969), S.33---Sales Tax Act (VII of 1990), S.66---Excise duty, tax, charges deposited by the tax payer by mistake, error under coercion, or misconstruction, can be refunded to him--Period for refund of claim of deposit of the duty or other taxes or charges, having been provided, which would be reckoned from the date of deposit of said duty or charge.
Colony Thai Textile Mills Ltd. v. Assistant Collector, Central Excise and Land Customs, Faisalabad and another PLD 1980 Lah.377 ref.
(b) Central Excise Rules, 944---
----R. 11---Constitution of Pakistan (1973),, Art.185(3)--Levy of Regulatory Excise Duty on manufacture of sugar---Manufacturer by depositing the Regulatory Duty without challenging the levy of the duty or any protest and not claiming the refund within one year, was estopped to agitate the claim after six years, and the principle of laches and waiver would also come into play against the manufacturer---Principles.
Income Tax Officer, Central Circle II, Karachi and another V. Cement Agencies Ltd. PLD 1969 SC 322; Octavius Steel and Company Ltd. v. The Commissioner of Income Tax, Dacca PLD 1960 SC 371; Mst. Attiyya Bibi Khan and others v. Federation of Pakistan 2001 SCMR 1161 and Commissioner of Income Tax v. Shahnawaz Ltd. and others 1993 SCMR 73 fol.
Central Board of Revenue and others v. Colony Thal Textile Mills Ltd. 1981 SCMR 303 and Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan PLD 19998 SC 64 distinguished.
Ijaz-ul-Ahsan, Advocate Supreme Court and Mahmood-ul-Islam, Advocate-on-Record for Petitioners.
Izhar-ul-Haq Sh., Advocate Supreme Court for Respondent No.3.
ORDER
MUHAMMAD AKHTAR SHABBIR, J.---This petition for leave to appeal is directed against the judgment of the. Lahore High Court, Lahore, dated 12-2-2004 passed by a learned counsel single Judge of the Lahore High Court, Lahore in Writ Petition No.1283 of 1989.
2. The facts giving rise to the filing of the present petition are to the effect that the petitioner, a limited company is engaged in manufacturing of sugar on which it paid Central Excise Duty from time to time. The Federal Government imposed Regulatory Excise Duty on 12-4-1975 w.e.f. 7-4-1975 at the rate of Rs.16.60,% per cwt on clearance of sugar. The case of the petitioner is that the said Excise Duty was payable on the sugar manufactured from 7-4-1975 onwards (7-4-1975 to 14-4-1975), whereafter the sugar mill stood closed for the season but instead of doing so, the duty was imposed on the entire stock of the sugar cleared from 7-4-1975 to 6-6-1975. Resultantly, the petitioner-Co., had been forced to pay .a duty of Rs.17,50,981.44 for a total sugar quantity of 5,274.040 tons cleared from 7-4-1975 to 6-6-1975 while Regulatory Duty was only payable on the quantity of sugar manufactured from 7-4-1975 to 14-4-1975 adding up to 717.171 tons of sugar at the rate of Rs.16.60 per cwt, amounting only to Rs.2,38,100.77. In this way an excess amount of Rs.15,12,880.47 was collected by respondent, No.3 from the petitioner-Co., illegally and without any lawful authority and it was entitled for refund of the same.
3. A number of manufacturing units including Colony Thal Textile Mills Limited, Mimi-wan, had challenged the levy of excise duty on stock manufactured before the date of third notification, whereby the excise duty was charged on cotton yarn, twist and threat or yarn of man-made fibres, superseding the notification, dated 29-6-1979 granting exemption of the excise duty, through Writ Petition No. 4246 of 1979 which was decided on 2-11-1980 in favour of the taxpayers and reported as Colony Thal Textile Mills Ltd. v. Assistant Collector, Central Excise and Land Customs, Faisalabad and another (PLD 1980 Lah. 377). This decision had been maintained by a learned Division Bench of the High Court in I.C.A. No.73 of 1980, which order was maintained by this Court in case of Central Board of Revenue etc. v. Colony Thal Textile Mills Ltd. (1981 SCMR 303):
4. After the said decision, the petitioner-Co., on 17-5-1981 made an application for refund of Rs.69,16,184,59, the excess excise duty paid and other charges and expenses incurred. This application was rejected by respondent No.3 on 6-3-1982, holding that the claim was barred by limitation. The said order was challenged by the petitioner by filing an appeal under section 35 of the Central Excise and Salt Act, 1944 r/w Rule 213 of the Excise Rules, 1944, which was dismissed by the Collector (Appeals), respondent No.2 on 8-8-1982. The said order was further challenged by the petitioner through a revision petition under section 36 of the Act before the Addl. Secretary, Ministry of Finance, Central Board of Revenue, respondent No.1, which too met with failure on 30-7-1988.
5. Learned counsel for the petitioner contended that in view of the rule laid down by this Court in case of Central Board of Revenue, supra (1981 SCMR 303) the levy of excise duty was to be determined from the time of manufacture of goods in question. He has further added that as per the dictum laid down by this Court in Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan (PLD 1998 SC 64), if one party under a mistake of fact or law, has paid some money to another party including the Government Department, which was not due by law or contract or otherwise, that must be re-paid' in view of section 72 of the Contract Act, 1872 and forcefully contended that if the customs duty or any other levy has been realized and its realization was outside the statutory authority, the provisions providing limitation of six months were not attracted and any payment of excise duty or any other tax without knowledge that the same were exempted under a notification, was refundable on the same footing as there was no lawful, imposition thereof and that where some money not lawfully due, had been received by the Government, the plea of limitation would be violative of morality and justice; that the application for refund of excess duty was made within one year of the decision by this Court, dated 2-11-1980, in case of .Central Board of Revenue, supra (1981 SCMR 303); that the learned single Judge and the Division Bench of the Lahore High Court have failed to apply their minds to the contentions raised by the petitioner before them and deliberately avoided the decision on merits; that the respondents themselves have delayed the disposal of the case of the petitioner causing heavy delayed the disposal of the case of the petitioner causing heavy loss to it, inasmuch as the refundable amount had lost its substantial value over the years due to inflation.
6. While, on the other the learned, the learned counsel for the respondent, Revenue Department, vehemently opposed the arguments of the learned counsel for the petitioner, contending that the petitioner itself has voluntarily deposited the excise duty on the sugar, manufactured without any protest; that the petitioner had made application for refund of excise duty after the decision rendered by the High Court in such-like matters and that the judgment of the Court would not be applicable to other past and closed transactions; that the principle laid down in Pfizer Laboratories Ltd., supra would not be beneficial to the petitioner in view of the expiry of statutory period of one year; that there was a factual controversy involved in the matter, as such, the writ petition before the High Court was not maintainable.
7. We have heard the arguments of the learned counsel for the parties, perused the record with their assistance. The petitioner-mills manufactured/produced sugar by processing the sugarcane and the Government of Pakistan through Central Board of Revenue had imposed the Regulatory Duty on it at the rate of Rs.16.60 per cwt vide letter, dated 12-4-1975, for further ready reference the relevant portion of the said letter is reproduced as under:--
"I am directed to enclose herewith a copy of the notification, dated the 7th April, 1975, whereby Regulatory duty on sugar at the rate of Rs. 16.60 per cwt. has been levied with effect from 7th April, 1975. Regulatory duty is payable by the manufacturers at the time of clearances of sugar. However, in the event of non-realisation of regulatory duty at the time of clearances, the Provincial Governments are requested that funds due from them to the manufacturers may be placed at the disposal of the Federal Government for adjustment of the Regulatory duty involved. Normally in the event of non-payment of central excise duty the clearance are liable to be a stopped but with a view to ensure smooth and continuous supply to the consumer, it is not advisable to resort to this course of action. The Provincial Governments are, therefore, requested to cooperate in the recovery of the Regulatory duty in the manner indicated above."
There is no dispute to the imposition of the Regulatory duty by the Government on the manufacture of sugar by the sugar mills. The power/authority of the Government to levy the excise duty has not been challenged by the petitioner and the dispute is only with regard to the quantity and period of collection thereof. It is evident from the letter, dated 12-4-1975 issued by the Central Board of Revenue that the Regulatory duty was payable by the manufacturers at the time of clearance of sugar. The case of the petitioner is that the Government could levy the Regulatory duty on the sugar manufactured from 7-4-1975 to 14-7-1975 as thereafter the sugar mill was closed for the reason. The petitioner in its writ petition nowhere stated or mentioned the quantity of sugar manufactured during this period. In sub para. 1 of para. 3 of the writ petition, it has made out the case that the excise duty was payable on sugar manufactured from 7-4-1975 to 14-4-1975, the date on which the sugar mill was closed for the reason but instead of that the duty has been levied on the entire stock of the sugar which was cleared from 7-4-1975 to 6-6-1975. As earlier observed, the duty was levied on the sugar at the time of clearance thereof and not from the date i.e. 7-4-1975 to 14-4-1975. The petitioner had deposited the Regulatory duty with the department. The learned counsel for the petitioner submitted that the department is bound to refund the excess amount of duty received up to Rs.68,55,821.02. There is no second opinion to this legal proposition that the excise duty, tax, charge, deposited by the tax payer by mistake, error or under coercion, misconstruction, can be refunded to him, relevant provisions in this regard have been provided by the legislation in different laws, which are reproduced as under:--
(i) "Section 72 of the Contract Act, 1872, stipulates that a person to whom money has been paid, or anything delivered by mistake or under coercion must pay or return it.
(ii) Section 33 of the Customs Act, envisages that no refund of any Customs Duty or charges claimed to have been paid or over-paid through inadvertence, error or misconstruction, would be allowed, unless such claim was made within six months of the date of payment and in case of provisional payments made under section 31, the said period of six months would be reckoned from the date of adjustment of duty after its final assessment.
(iii) Section 66 of the Sales Tax Act, 1990 further provides that no refund of tax paid or over-paid through inadvertence, error or misconception would be allowed, unless the claim was made within one year of its payment.
(iv) Rule 11 of the Central Excise Rules, 1944 contains that no duty which has been paid or adjusted in an account-current maintained with the Collector under Rule 9, and of which re-payment of whole or in part, was claimed in consequence of the same having been paid through inadvertence, error or misconstruction, would be refunded and no payment in duty would be allowed, unless a written complaint was lodged with the proper officer within one year-from the date of such payment or adjustment, as the case may be."
In all the referred provisions of different laws, the period for refund of claim of the deposit of the duty or other taxes or charges, has been provided, which would be reckoned from the date of said duty or charge.
8. In the instant case the duty was levied or imposed on the manufactured sugar by the sugar mills w.e.f. 7-4-1975 and was recoverable at the time of clearance thereof. The petitioner, admittedly, deposited the duty claimed by the Government, on the sugar cleared from the premises, and at the time of clearance or deposit of the said duty it did not object to the same, which would mean that it was deposited voluntarily without any protest. Had the petitioner any objection to the deposit of the duty either it would have not deposited the same or ought to have deposited the same under protest. The application for refund of the duty was made for the first time before the competent authority after a decision rendered by the High Court in case of Colony Thal Textile Mills, (PLD 1980 Lahore 377) and the judgment of this Court, dated 2-11-1980 in the same case, while the duty was paid by the petitioner much earlier from the date of decision by this Court in the colony Thal Textile Mill's case, supra. First application before the Collector has been filed by the petitioner-Company on 17-5-1981 after one year of the judgment passed by this Court in the case referred to above. The petitioner had availed of the alternate remedies available under the law and in this regard final order rejecting the prayer of the petitioner was passed by the Addl. Secretary on 28-8-1988. This Court had passed a judgment in case of Pfizer Laboratories Ltd. v. Federation of Pakistan (PLD 1998 SC 64) involving the same question. Learned counsel forcefully stressed that in view of the judgment of this Court in Messrs Pfizer Laboratories Ltd., supra, the petitioner was also entitled for refund of the Regulatory duty deposited by it. It is pertinent to note that in that case the petitioner from the very first day objected the payment of the duty and resorted to remedies available under the law upto this Court but the facts in the case in hand are distinguishable. The petitioner in the instant case for the first time approached the competent authority after the judgment passed by this Court in Colony Textile Mills, supra and as observed in the preceding paragraph, a specific period has been provided for the purpose of claim of refund of the excess duty, charges etc., in the relevant laws and a specific period of one year, has been provided for claiming the same under Rule 11 of the Central Excise Rules, 1944. The petitioner after the expiry of the said period had initiated the proceedings for the first time in 1981. It is a settled proposition law that the judgment of this Court would be operated from the date of its pronouncement and would not be effective retrospectively, as such, the case of the petitioner is a past and closed transaction. In view of the principle laid down by this Court, in case of Income Tax Officer, Central Circle II, Karachi and another v. Cement Agencies Ltd. (PLD 1969 SC 322), wherein it was held that the decision of this Court does not affect past and closed transactions, as such, on the basis of the judgment pronounced by the Court, proceedings finally disposed of in accordance with law, cannot be re-opened. This judgment was based by this Court on the case of Octavius Steel and Company Ltd. v. The Commissioner of Income Tax, Dacca (PLD 1960 SC 371). In this respect further reference can be made to the case of Mst. Attiyya Bibi Khan and others v. Federation of Pakistan (2001 SCMR 1161), wherein it was clarified that the judgment would be operated from the date of its pronouncement and would have no retroactive legal implications. In case of Commissioner of Income Tax v. Shahnawaz Ltd. and others (1993 SCMR 73), it was further clarified that the judgment and the law would be retrospectively effective only if those cases had not been finally disposed of by the authority and were pending before it or Court at the time of announcement of the judgment and the cases in which it has finally been determined and attained finality, being past and closed transactions, could not be re-opened under an amending legislation as well as under the judgment of the Court. By depositing the Regulatory duty and not claiming the refund within one year, the petitioner was estopped to agitate the claim after six years, and the principle of laches and waiver would also come into play against the petitioner.
9. Even otherwise, the facts of the case of Colony Textile Mills are quite different and are not attracted to the present case because in that case the Ist Notification No. S.R.O. 492(I)/77, dated 11-6-1977 was amended by subsequent notification S.R.O. No.810(I)/78, dated 29-6-1978, ordering that no excise duty would be charged on cotton yarn, twist, threat or yarn of man-made fibre. A year thereafter, a third notification was issued on 28-6-1979 vide S.R.O. No.555, superseding the earlier notification, dated 29-6-1978, wherein a provision was made for charging excise duty on the cotton yarn, twist, thread or man-made fibre. The learned High Court declared the action of the authorities seeking recovery of duty on stock of yarn produced or manufactured earlier as illegal and without lawful authority. In the instant case, it is not so as the petitioner had not produced any evidence of grant of exemption granted earlier by the Revenue Department. The petitioner did not challenge the levy of the regulatory duty and kept mum/remained in state of dormancy during five/six years and woke up, when the other affectees in case of Pfizer Laboratories, supra, had gained the relief from the Court. The High Court after examining the facts of the case in hand and perusal of the judgments of the superior Courts in following .the dictum laid down in the, same, passed the impugned judgment. Learned counsel for the petitioner has failed to point out any infirmity, illegality in the impugned judgment, warranting interference by this Court.
10. For the foregoing reasons, this petition being devoid of any substance is dismissed and leave to appeal refused.
M.B.A./S-28/SCPetition dismissed.