NATIONAL GASES LTD. VS MINISTRY OF RAILWAY through Federal Secretary Railways, 2015 PTD-KARACHI-HIGH-COURT-SINDH 2552 (2014)

Sales Tax Act (VII of 1990)---

----S. 5---Sale of Goods Act (III of 1930), S. 64-A(a)---Constitution of Pakistan, Art. 199---Constitutional petition---Rate of tax and duties, determination of---Factual controversy---Petitioner company contended that it was entitled for payment of any increase in the amount of taxes subsequent to an award of contract---Plea raised by authorities was that claim of petitioner was a disputed fact---Validity---Facts as averred by petitioner were seriously disputed by authorities---Relief sought by petitioner was primarily with regard to enforcement of contractual obligation between the parties which could not be enforced or granted while exercising discretionary jurisdiction of High Court under Art. 199 of the Constitution---Appropriate remedies in such matter was through a suit before Civil Court of competent jurisdiction---Petition was dismissed in circumstances.

Chaudhry Brothers v. Province of Punjab through Secretary/Chief Purchase Officer, Industries and Mineral Development Department, Lahore and 2 others 1993 MLD 2437 ref.

Pakcom Limited and others v. Federation of Pakistan and others PLD 2011 SC 44 and Nizamuddin and another v. Civil Aviation Authority and 2 others 1999 SCMR 467 rel.

Khalid Ishtiaq for Petitioner.

Hussain Baksh Saryo and Dilawar Hussain, Standing Counsel for Respondents.

Date of hearing: 12th December, 2014.

ORDER

MUHAMMAD JUNAID GHAFFAR, J.---Through instant petition, the petitioner has sought the following relief(s):-

(a) Declare that the petitioner is entitled to receive the increased rate of Sales Tax and additional Special Excise Duty on the goods supplied, from the respondents, in terms of section 64-A(a) of the Sale of Goods Act, 1930 read with Section 5 of the Sales Tax Act, 1990.

(b) Pass a mandatory order against the respondents Nos.1, 2 and 3, directing them to act in accordance Section 64A(a) of the Sale of Goods Act, 1930 read with Section 5 of the Sales Tax Act, 1990, and pay/reimbursed a sum of Rs.16,94,182 to the petitioner on account of increased rate of Sales Tax and additional Special Excise Duty paid by the petitioner on the goods supplied.

(c) Pass other orders, reliefs and directions as deemed appropriate with the facts and circumstances of this petition.

(d) Cost of the petition.

2. Precisely the facts as stated in the Memo of petition are that pursuant to a Tender dated 29-3-2007 for supply of 1200 Metric Tons of Pig Iron, issued by respondent No.3, the petitioner had participated in such tender and was accordingly issued a purchase order dated 11-5-2007 and had supplied 1200 Metric Tons Pig Iron to the respondents. However, before a proper payment bill could be issued by the petitioner, the rate of Sales Tax leviable on the supply of such goods was increased from 15% to 20%, with an additional levy of Special Excise Duty at the rate of 1% by the Government of Pakistan through S.R.O. 644(I)/2007 dated 27-6-2007 and S.R.O. 655(I)/2007 dated 29-6-2007. Thereafter, the petitioner approached respondent No.3 to amend the purchase order so that the same may include enhanced amount of Sales Tax, but no response was received by the petitioner, and to avoid any dispute, the petitioner submitted bill for supply of goods in accordance with purchase order dated 11-3-2007. Subsequently, the petitioner was issued a demand notice dated 6-9-2008 by the Assistant Collector, Sales Tax Audit for short payment of Rs.16,94,182 on account of increased Sales Tax which was paid by the petitioner somewhere in 2010. Thereafter, respondent No.3 informed the petitioner through letter dated 25-3-2010 that the purchase order already issued stands fully complied with and again vide letter dated 16-6-2010 informed the petitioner, that the request of the petitioner for reimbursement of additional amount of Sales Tax and Special Excise Duty was considered by the competent Authority, but the same was declined. Being aggrieved with such refusal, the petitioner has filed instant petition for recovery of Rs.16,94,182 being the additional amount of Sales Tax and Special Excise Duty paid on behalf of respondents.

3. Learned counsel for the petitioner has contended that through instant petition, the petitioner is seeking enforcement and or observance of Section 64-A of the Sale of Goods Act, 1930, and further obligations accrued thereof on the part of the respondents, as according to the learned Counsel, in view of the provision of Section 64-A of The Sale of Goods Act, 1930, the petitioner is prima facie entitled for payment of any increase in the amount of taxes subsequent to an award of contract. At the very outset, learned counsel for the petitioner was confronted by this Court that as to how instant petition, through which enforcement of Contractual Obligations is being sought, is maintainable under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, to which, the learned Counsel responded that since the official respondents are a Government Organization, hence, instant petition is maintainable. In support of his contention learned Counsel relied upon the case of Chaudhry Brothers v. Province of Punjab through Secretary/Chief Purchase Officer, Industries and Mineral Development Department, Lahore and 2 others (1993 MLD 2437).

4. Conversely the learned counsel for respondents has contended that the claim of the petitioner is disputed and does not fall within the ambit of Section 64-A ibid, whereas, such disputed questions of fact regarding contractual obligations cannot be resolved in writ jurisdiction, hence; instant petition is liable to be dismissed.

5. We have heard both the learned Counsel and have perused the record. It appears that the petitioner had participated in a tender issued by the respondents for purchase of 1200 Metric Tons of Pig Iron and supplied the same on the basis of a purchase order dated 11-5-2007. Such factual position has been averred and admitted by the petitioner in its pleadings. Whereas, on the other hand, the petitioner, through instant petition is seeking refund of the increased amount of Sales Tax and Special Excise Duty purportedly paid by the petitioner, pursuant to change/increase in rate of Sales Tax and levy of Special Excise Duty by the Government of Pakistan through S.R.O. 644(I)/2007 dated 27-6-2007 and S.R.O. 655(I)/2007 dated 29-6-2007. We are of the candid view that such factual determination, as to whether what was the applicable rate of Sales Tax at the time of issuance of purchase order and thereafter, pursuant to subsequent increase in the rate of Sale tax, cannot be adjudicated upon by this Court under its Writ jurisdiction as it requires factual ascertainment of rights of the parties. Insofar as the contention of the learned Counsel for the petitioner with regard to the provisions of Section 64-A of Sale of Goods Act, 1930, is concerned, it would suffice to observe that such provision of law does not entitles a party to seek its enforcement through a Writ petition under Article 199 of the Constitution of Pakistan, 1973, as primarily the claim of the petitioner is being disputed by the respondents. Therefore, until and unless it has come on record through proper evidence that the petitioner was and is entitled for reimbursement of any increased amount of Sales Tax and Special Excise Duty in view of the provision 64-A of Sale of Goods Act, 1930, no enforcement of such provision can be sought through a writ petition. In the instant matter, the facts as averred by the petitioner have been seriously disputed by the respondents, whereas, the relief being sought by the petitioner in the instant matter is primarily with regard to enforcement of Contractual Obligation between the parties, which cannot be enforced or granted while exercising discretionary jurisdiction of this Court under Article 199 of the Constitution of Pakistan, for which the appropriate remedy lies through a Suit before a Civil Court of competent jurisdiction. The Hon'ble Supreme Court in the case of Pakcom Limited and others v. Federation of Pakistan and others (PLD 2011 SC 44), while examining the issue of enforcement of contractual obligations has been pleased to hold that:--

47. It seems proper here at this juncture to mention that the contractual rights, commitments, undertakings and obligations have to be enforced through courts of ordinary jurisdiction which should not be interfered with by the High Court while exercising its Constitutional jurisdiction especially in those matters arising out of contractual obligations. (Millat Tractors E.T. v. Govt. of Pak (PLD 1992 Lah.68) Ahmad Hassan v. Pakistan Machine Tools Factory (1990 CLC 2007), Sufi Muhammad Ramzan v. Secretary, Local Government and Rural Development Department, Punjab, Lahore (PLD 1987 Lah. 262), Pakistan Mineral Development Corporation Ltd v. Pak. WAPDA (PLD 1986 Quetta 181). In such like eventualities the normal remedy to law being a suit for enforcement of contractual rights and obligations would be availed instead of invocation of Article 199 of the Constitution merely for the purpose of enforcing contractual obligations. The said view finds support from the dictum laid down in the following authorities:--

Ahmad Hassan v. Pakistan Machine Tools Factory (1990 CLC 2007), Lutfonnessa Ibrahim v. Province of East Pak. (PLD 1969 Dacca 779), Mohd. Din and Sons v. Province of West Pak. (PLD 1969 Lahore 823), Muzaffar-ud-Din v. Chief Settlement Commissioner (1968 SCMR 1136), Miajan All v. Province of E.Pak (22 DLR 235), Momin Motor Co v. R.T.A.Dacca (PLD 1962 SC 108), Chandpur Mills Ltd. v. District Magistrate Tippera (PLD 1958 SC 267), The State of Pakistan v. Mehrajuddin (PLD 1959 SC 147), Raghavendra Singh v. State of Vindhya Pradesh (AIR 1952 Vindh Pra.13).

48. It hardly needs any elaboration that violation of a contract or failure to abide by the terms and conditions mentioned therein or to honor obligations arising out of an agreement cannot be decided in exercise of Constitutional jurisdiction and such controversies should be resolved by approaching the appropriate forums provided by law. Abdul Rahim v. Town Committee (1985 CLC 2805), Haji Noor Din v. C.C.I and E (NLR 1978 Civ. Lah. 1114), Ashraf Ali v. Abdul Awal (PLD 1968 Dacca 962), A.F.M. Abdul Fateh v. Province of East Pak (PLD 1966 Dacca 178). "The Superior Courts should not involve themselves into investigations of disputed question of fact which necessitate taking of evidence. This can more appropriately be done in the ordinary civil procedure for litigation by a suit. This extraordinary jurisdiction is intended primarily, for providing an expeditious remedy in a case where the illegality of the impugned action of an executive or other authority can be established without any elaborate enquiry into complicated or disputed facts. Controverted questions of fact, adjudication on which is possible only after obtaining all types of evidence in power and possession of parties can be determined only by courts having plenary jurisdiction in matter and on such ground constitutional petition was incompetent."

6. Similarly in the case of Nizamuddin and another v. Civil Aviation Authority and 2 others (1999 SCMR 467), the Hon'ble Supreme Court has deprecated the enforcement of contractual obligations by filing Constitutional petitions and has been pleased to observe as follows:--

The argument advanced by the learned counsel for the appellants that as the latest trend of superior Courts in our country and also elsewhere is to enlarge the scope of judicial review, therefore, availability of alternate remedy or matter involving contractual obligation should not pose hurdle in exercise of power of judicial review under Article 199, is too wide and sweeping to be adopted in every case. It is axiomatic principle of law that every case is to be adjudged on its own facts, circumstances and merits. If in a particular case both the parties admit the factual aspect which give rise to the dispute and the Court feels that the matter is of such an urgent nature that the very remedy would get frustrated, if the aggrieved party is directed to seek redress through alternative remedy available under the law, then in that case it would be proper for the Court to entertain the writ petition. Similarly if through alternative remedy an action /order of a lower authority is to be impugned before a higher authority at whose behest the action is taken or order is passed then that cannot be termed as an adequate and efficacious remedy so as to justify refusal of exercise of judicial review. If in every contractual matter giving rise to enforcement of contractual obligation or a dispute which can be redressed through other remedy available under the law, Writ petitions are entertained, then this would defeat that very purposes of law and which competent Courts are established and vested with jurisdiction under the law.

7. Moreover, even otherwise on merits also, apparently, the purchase order dated 11-5-2007, very clearly states that the same is inclusive of all Government Taxes and Duties and is firm and final and is not subject to variation whatsoever and even if there is any increase/decrease in Government Taxes,/duties, no corresponding increase or decrease would be permissible. This condition in the purchase order is completely in accordance with the exception as provided under Section 64-A of the Sale of Goods Act, 1930, hence; apparently, the petitioner is not entitled to seek any additional amount of taxes from the respondents, in view of such specific stipulation in the purchase order itself. However, such observations are tentative in nature and shall not influence the decision of any forum, if so availed by the petitioner, on merits of the claim of the petitioner.

8. In view of hereinabove facts and circumstances of the instant case and after having come to the conclusion that instant petition being misconceived in facts and law, is not maintainable under Article 199 of the Constitution of Pakistan, 1973, we had dismissed the same vide short order dated 12-12-2014 and above are the reasons for such short order.

MH/N-25/SindhPetition dismissed.