MR. MIR FUAD, MEMBER (TECHNICAL).-(1). Being aggrieved and dissatisfied with the impugned Order-in- Original No. 1/2002, dated 28.09.2002 passed by the learned Additional Collector of Customs, Excise and Sales Tax (West), Karachi, the appellant has preferred this appeal before this forum which came up for hearing on 12.12.2002.
2. The facts leading to this appeal according to the Order-in- Original are that M/s. National Beverages (Pvt.) Limited situated at Ex-place Cinema Building, near Metropole Hotel, Civil Line, Karachi stated before the Hon'ble Federal Tax Ombudsman, Karachi that they had paid excess amount of Rs. 2,12,03,118/- during the years 1990-91, 1991-92, 1992-93 and 1993-94, on account of excise duty under "Excise Duty" on Production Capacity (Aerated Water) Rules, 1990, issued vide SRO. 507(I)/90, dated 07.06.1990. Therefore, they claimed refund of the aforesaid amount from the Central Excise Department. The initiative on their part was upon the consequences of the decision made by the Honourable Lahore High Court at Lahore in the matter of M/s. Seven Up Bottling Company (Pvt.) Limited Vs. Government of Pakistan (PTCL 1996 CL. 325) in WP No. 245/1992 which was decided on 07.07.1993. They filed the refund claim on 20.10.1994. That did not fulfil the requirement in accordance with rule 11 of Central Excise Rules, 1944, read with General Order No. 6 of 1987 whereby they were required to lodge such refund claims to the proper officer within one year of the payment of excise duty.
They were accorded another opportunity to lodge afresh refund claim to the concern section of this Collectorate vide letter No. 18/53-Law FTO COMP W/2001/0514 dated 11.09.2001. But the offer was not taken into consideration and consequently ignored by them which showed their lack of interest in settlement of the matter at that stage.
And whereas, the incident of duty had been passed on to the consumers in accordance with the principal set out by the Honourable Supreme Court of Pakistan in CPSLA No. 870/76 read with section 3D of Central Excises Act, 1944.
They were, therefore, called upon to explain within ten days of the receipt of this notice as to why their refund claim filed may not be rejected under the rule 11 of the Central Excises Rules, 1944 read with General Order No. 6 of 1987 and GO No. 5 of 1996.
3. The case was decided against them and hence this appeal.
4. We heard the learned counsel for the appellant as well as the representative of the department.
5. The learned counsel for the appellant has stressed upon the following points:-
(a) That the claim was not barred by limitation under Rule 11 of the Central Excise Rules, 1944.
According to the Judgment of the Supreme Court in the case of Pfizer Laboratories Limited reported in PTCL 1998 CL. 354, when excise duty is recovered which is not leviable, limitation of one year provided in Rule 11 of Central Excise Rules, 1944 is not applicable.
(b) That when excise duty was recovered by mistake refund was claimable under Article 96 of the First Schedule to the Limitation Act within three years.
(c) That the Revenue Division was expected to report compliance or else to file an objection. The Revenue Division has been seeking extension in the date of compliance to implement the findings.
(d) That the question whether National Beverages (Pvt.) Limited was still alive in the records of the Corporate Law Authority, as well as books of Stock Exchange was irrelevant and has no bearing on the law. The appellant company is still on the record of the Security & Exchange Commission of Pakistan vide acknowledgement No. K-1110/Comp/2002/ 6707.
(e) That the refund claim is not hit by section 3-D of the Central Excises Act, 1944. Passing of the incidence in the case of consumers is only with reference to that duty which has been collected due to misapprehension of any provision of Central Excises Act or otherwise. When the appellant collected and paid Central Excise Duty in the light of the proviso to Rule 7 of the Production Capacity Rules, 1990, that was the legal position operating at that point of time. There was no misapprehension of any provision of Central Excises Act or any other reason and it would be incorrect to presume that duty was actually not payable at that point of time.
7. The representative of the department supports the Order-in- Original for the reasons stated therein.
8. Rival submissions examined. Case record seen.
9. This case relates to the refund of Central Excise Duty being claimed by M/s. National Beverages on account of the levy of duty under Production and Capacity Rules, 1990 being held as ultra virus by the Honourable Lahore High Court in case of M/s. 7-Up Bottling (Pvt.) Limited Vs. Government of Pakistan (PTCL 1996 CL. 325) in W.P. No. 245/92 decided on 01.07.1993. The appellant filed the refund claim. Since the Central Excise Department did not decide their claim they approached the Federal Tax Ombudsman. The Federal Tax Ombudsman has given the following findings:- "The Department's argument that the refund claim is barred by time under Rule 11 of Central Excise Rules cannot be upheld. As the duty was not leviable under law the question of bar of limitation does not arise. This finds support from the judgments of the Supreme Court of Pakistan and High Court referred to above.
So far the objection regarding passing of incidence of duty to the consumers is concerned it is pertinent to note that section 3-D of Central Excises Act contemplates that every person who has collected or collects any duty under misapprehension of any provision of the Act or which is not payable as duty or which is in the excess of duty actually payable is bound to pay the amount so collected to the Federal Government provided the incidence of which has been passed on to the consumer. It therefore, follows that any person collecting any duty as stated above incidence of which has been passed on to the consumer cannot retain the duty so collected and he is duty bound to deposit the same in the Government Treasury. The burden of proof of passing of the incidence of such duty or that it has not been passed on to the consumer shall be on the person collecting the duty. In this case the complainant is not the collecting agent or the person who has collected any duty. In fact it has paid duty in excess to the Federal Government which is being claimed as refund. In these circumstances if the department chooses to process in to the objection that the incidence of duty has been passed on to the consumer, the burden of proof shall be on the department to establish it.
The stand that similar matter in the cases of two other beverage companies is sub judice is no ground to reject the complaint to stay the proceeding for recovery of refunds already paid.
It is recommended that CBR direct the Collector of Sales Tax & Central Excise (West):-
(i) to decide the refund claim within thirty days; and (ii) report compliance within seven days thereafter."
10. The department accordingly processed the case and decided against the appellant as according to the learned Adjudicating Officer the burden of duty had been passed on to the consumer and as such the appellant was not entitled to the refund. The learned counsel for the appellant before us has emphasized the point that provisions of section 3-D are not applicable in his case. The learned counsel for the appellant has urged that he paid the duty according to law prevalent at that point of time and since section 3- D according to him relates to a situation where duty is paid under misapprehension, he is not attracted by the provision of this section. He has further stated that he accepts that incidence of duty has been passed on but states that this arguments is irrelevant as far as his case is concerned. Thus the main point to be decided in this case is the applicability of section 3-D of the Central Excises Act, 1944.1 reproduce section 3-D with advantage:- "3-D Collection excess duty etc.-(1) Every person who has collected or collects any duty, whether which is not payable as duty or which is in excess of the duty actually payable and the incidence of which has been passed on to the consumer, shall pay the amount so collected to the Federal Government.
(2) Any amount payable to the Federal Government under subsection (i) shall be deemed to be an arrear of duty payable under this Act and shall be recoverable Accordingly and no claim for refund in respect of such amount shall be admissible.
(3) The burden of proof that the incidence of such duty has not been, or not, passed on to the consumer shall be on the person collecting the duty."
11. The reading of the above sub-section (1) clearly shows that it relates to the collection of duty whether under misapprehension OR OTHERWISE. To my mind the present situation is clearly covered under OR OTHERWISE as in this case the duty was paid by the appellant under SRO.
507(I)/90, dated 07.06.1990 and the incidence of which was passed on to the consumer. In defec to terms I would observe that duty was ultimately paid by the consumers which had earlier been deposited in the Government Treasury by the appellant. The appellant'^ plea is that their case is not attracted by section 3-D as they collected the duty under relevant provision of law prevalent at that point of time and that since the collection of duty at that point of time had the statutory backing there case would not be hit by the provisions of section 3- D which states that it relates to that duty "which is not payable as duty or which is in excess of duty actually payable". This argument of the learned counsel for the appellant needs examination. According to the facts of the case the appellant collected the duty in the years 1991-92, 1992-93 and 1993-94 under SRO.
507(I)/90, dated 07.06.1990. However, I observe that subsequently the Honourable Lahore High Court held that this levy is ultra virus. The appellant is saying that collection of duty at that point of time was according to law and hence he is not attracted by provisions of section 3-D. I observe that the situation according to law is not what the appellant has presented. Since the Lahore High Court has held and the decision up held by the Honourable Supreme Court also, that the levy of duty under SRO. 507(I)/90 is ultra virus, it would deemed to be ultra virus and without any lawful effect even at the time of its levy and collection. Thus according to law, as a result of the judgment of the Supreme Court, this duty was not payable as duty even in the year$> 1991-92,1992-93 and 1993-94 and since duty was not payable at that point of time section 3- D would squarely be attracted in this case. Even otherwise the argument of the appellant is mutually contradictory. On the one hand they are claiming that duty was leviable according to law at the time of collection and section 3-D is not applicable in this case and on the other hand are claiming refund of it as it was not leviable at the time of collection. This position is apparently mutually contradictory and cannot be accepted.
12. The perusal of the orders of the Federal Tax Ombudsman, in consequence of which these proceedings are taking plea, shows that appellant's position has not been accepted at that forum also. In fact it has been left to the department to process it according to provisions of section 3-D regarding passing of incidence of duty. As for the burden of proof, I observe, that the learned counsel for the appellant himself admits that duty has been passed on, so it stands admitted as well as established that incidence of duty has been passed on. Considering this I am of the view that the appeal lacks merit.
13. In this I am strengthened by the judgment of the Honourable Supreme Court of Pakistan vide PLD 1977 Lahore 75 (The Commissioner of Sales Tax, Rawalpindi. Vs. M/s. Sajjad Nabi Dar) decided on 07.06.1976. In this case their Lordships have held:- "The respondent who normally collects such amounts for the Government received that the amount not on his own account but as sales tax to be paid to the Government. The act of the respondent thus lay under sections 187 and 195 of the Contract Act. The respondent shall be deemed to have the implied authority of the collection of the sales tax and the petitioner ratified that act by accepting the amount.
It is thus quite clear that the respondent who collected the amount in question, did so from the very beginning, as an agent for the Government and became functus officio; as soon as he paid the same to the exchequer. He, therefore, was not entitled to its refund under section 27 of the Sales Tax Act.
Our reply to the question referred to us is, therefore, in the negative. Respondent shall pay the costs of the case."
14. While respectfully following the above judgment and also the provisions of the statute i.e. Section 3-D of the Central Excises Act, 1944 which does not allow refund if incidence of duty has been passed on to consumers. I dismiss the appeal.
MR. SULTAN AHMED SIDDIQUI, MEMBER (JUDICIAL).-(l). My learned brother Member (Technical-I) has already given in the detail the facts of the case as well as his findings on the points framed by him in para 5(a) to (e) of the Judgment. I after agreeing with his above observations except on the point discussed in para 5(e) that as the refund claim of the appellant is hit by section 3-D of the Central Excises Act, 1944 as such their appeal is liable to be dismissed, have decided to allow the appeal of the appellant for the following reasons:-
(i) The appellant who were manufacturing aerated beverage opted to pay Central Excise and Sales Tax on the basis of production capacity (Aerated Waters Rules, 1990) issued vide SRO.
507(I)/90 dated 07.06.1990. The said rules were issued under section 3(4) of the Central Excises Act, 1944 for collection of central excise duty on the basis of filling valves or spouts installed by the manufacturers of aerated water and the same were in lieu of collecting central excise duty under subsection (1) of Section 3 (on the basis of actual production/clearance). Rule 6 of the Capacity Rules prescribe the rate of duty per filling valve/spout per financial year. Rule 7 of the Capacity Rules, as amended vide SRO. 701(I)/90, dated 02.07.1990 and SRO. 559(I)/91, dated 16.06.91, prescribed that all the filling machines/valves/spout installed in the factory would be taken into account for the purposes of collecting the liability of central excise duty regardless of the fact whether any valve/spout was in working condition or not. The Proviso was added to Rule 7 which laid down that in the case of manufacturers who have paid higher amount of excise duty and sales tax on the aerated waters during the financial year 1989-1990 than that worked out under Rule 6, such higher amount shall be levied. The appellants fell in the said category and as such they were required to pay CE duty on the basis of the said proviso to Rule 7 which they kept on paying till the Hon'ble High Court of Lahore in a case of 7 Up Bottling Company reported in PTCL 1996 CL 325 declared the said proviso to Rule 7 of the Capacity Rules as ultra virus. (Departmental appeal against this judgment was rejected vide case reported in PTCL 1996 CL 341). Thereafter the appellants filed their refund claim on 28th October, 1994 for duty paid by them in excess, which remained un-decided for four years despite reminder. They thereafter filed the complaint before the Federal Ombudsman which was disposed of by way of certain recommendation on 12th April, 2002.
(ii) The appellants after receipt of the copy of the decision of the Hon'ble Ombudsman along with request of the appellant for refund of the excess amount paid by them under Rules 6 & 1 of the Central Excise Rules instead of deciding the refund claim of the appellants issued show cause notice dated 27.07.2002 which culminated in passing of the Order-in-Original referred above. The refund claim of the appellants was found not permissible due to the mischief of section 3-D of the Central Excises Act, 1944 since the incidence of duty had been passed on the consumer (according to the department).
2. Now in view of the decision of the Adjudicating Authority and that of my learned brother the core issue in the case is interpretation of Section 3-D of the Excises Act, 1944 and its applicability on the appellants case.
3. After carefully applying my mind on the legal aspect of the case, my humble opinion will be as under.
4. Passing of incidence to the consumer in the instant case is only with reference to that duty which has been collected from the consumers due to misapprehension of any provision of the Central Excises Act or otherwise (due to any other reason) but that duty was otherwise not actually payable or was paid in excess than actually payable. The scenario in the present case is that the appellants paid the Central Excise Duty to the Government in the light of the Proviso to Rule 7 of the Excise Duty on Production Capacity (Aerated Waters) Rules, 1990. By virtue of this proviso, the manufacturer who had paid higher amount of excise duty and sales tax on the aerated water during the financial year 1989-90, than that worked out under Rule 6, such higher amount shall be levied. The appellant fall in the said category and paid excise duty on the basis of said proviso to Rule 7 and kept on paying till the High Court of Lahore decided the said proviso as ultra virus. The duty paid by the appellant was never collected due to misapprehension of any provision of Central Excises Act or otherwise due to any other reason. Passing of duty to the consumers is only with reference to duty which has been collected due to misappropriation of any provision of Central Excises Act or otherwise.
5. In the instant case apparently the appellant collected and paid the central excise duty to Government due to mischief of Rule (7) of Production Capacity Rules, as such it was the legal position operative at that point of time. Apparently there was no misapprehension of any of the provision of Central Excises Act or any other reason and it would be incorrect to presume that duty was actually not payable at that point of time.
6. The collection of CE duty was neither passed on actual production or clearance basis of production, in terms of sub-section 1 of section 3 or on the basis of production capacity of the plant/machinery installed by the appellants in terms of sub-section 4 of section 3 which is with reference to alternate modes of collection of payment of central excise duty without changing its nature as a levy of central excise duty which being an indirect tax always gets passed on to the final consumer, whereas in the instant case the refund claim of the appellant is in respect of the excise duty which was paid and collected against ultra virus proviso to rules 6 & 7 of the Aerated Water Rules. Due to this legal and factual position. The learned Ombudsman in his decision referred above has observed as under:- "In the instant case complainant/present appellant is not collecting agent nor person who has collected any duty. In fact he has paid duty in excess to the Federal Government which is being claimed as refund. In these circumstances if the department chooses to process in to the objection that the incidence of duty has been passed on to the consumer, the burden of proof shall be on the department to establish it."
7. At that point of time the collection and payment of CE duty was requirement of the said legal proviso of Rule 7 of the Capacity Rules which tax was invariably paid by the appellants on the basis of installed filling machinery/valve/spout and there was no occasion of passing the duty to the consumers. The criteria of incidence of duty having been passed on to the consumers would apply only to that duty which was collected due to misapprehension of any provision of Central Excises Act, 1944 and or otherwise (due to any other reason) but that duty was not payable or it was paid in excess than actually payable.
8. At that point of time such duty paid in excess was not collected from the consumers but was deposited in the Government Treasury by the appellant under Production Capacity Rules, 1990. This point has been elaborately discussed by the Appellate Tribunal, Lahore Bench (PTCL 2002 CL. 178) while interpreting section 3-D of the Act I by following the decision, observe that the refund claim of the appellant is not hit by section 3-D of the Central Excises Act, 1944 consequently the appeal of the appellant is allowed as prayed by them by setting-aside the impugned Order- in-Original.
9. These are the reasons on which I respectfully disagree with the observation of my learned brother Member (Technical-I).
MR. ZAFAR IQBAL, MEMBER (TECHNICAL).-(1).
This matter is before me on account of a difference of opinion that has arisen between Mr. Mir Fuad, the learned Member Technical and Mr. Sultan Ahmed Siddiqui, the learned Member Judicial.
The learned Member Technical has been pleased to dismiss the appeal, whereas the learned Member Judicial has been pleased to allow the same. The precise question referred to me is as follows:- "Whether refund claim by the appellant is hit by section 3-D of the Central Excises Act, 1944 and that the incidence of duty so collected has been passed on to the consumers?"
2. The brief facts of the case are that the appellant opted to pay central excise duty on the basis of Excise Duty on Production Capacity (Aerated Waters) Rules, 1990 contained in SRO. 507(I)/90, dated 07.06.1990 (hereafter: "1990 Rules") in lieu of duty on consumption under section 3 of the Central Excises Act, 1944 (hereafter: "1944 Act"). Rule 7 of the 1990 Rules prescribed a methodology in determining the excise duty on production capacity basis. The said Rule 7 was subsequently amended and a proviso thereto was added which in addition to the existing methodology provided for some additional standard to work out the capacity duty. The said proviso to Rule 7 was declared ultra vires by the Lahore High Court in 7-Up Manufacturers v. Federation of Pakistan NLR 1994 Tax 84 = PTCL 1996 CL. 325. The judgment of the Lahore High Court was confirmed in CBR v.
7-Up Bottling Co. (Pvt.) Ltd. 1996 SCMR 700 = PTCL 1996 CL. 341.
3. In the aftermath of the decisions of the Lahore High Court and the Hon'ble Supreme Court, cited supra, the appellant preferred a refund claim before the department. In the event of failure of the department to process and then grant the refund claim the appellant preferred a complaint before the learned Federal Tax Ombudsman (hereafter: "FTO"). Before the FTO the main objection raised by the department was that since the appellant had passed on the burden of the central excise duty to its customers, therefore, the claim of refund was hit by section 3-D of 1994 Act. The learned FTO was pleased to reject the said contention on the ground that the appellant was not a collecting agent nor it was a person obligated to collect any duty. As such the burden was not cast upon the appellant to show that it had not passed on the burden of the duty onto the end consumers but rather the burden was on the department to establish that the incidence of the duty was so passed on to the consumers. The learned FTO upon such recommendations directed the department to decide the refund claim which was filed by the appellant. The said decision of the learned FTO is reported as National Beverages (Pvt.) Ltd. v. Secretary Revenue Division, Islamabad 2002 PTD 3043.
4. Thereafter the department processed the refund claim and rejected the same vide the impugned Order-in-Original No. 1 of 2002, dated 28.09.2002, against which the instant appeal has been preferred before this Tribunal.
5. The learned Member Technical in rejecting the appeal was pleased to hold that in the present case the appellant has failed to show that it had not passed on the burden of the excise duty to the end consumers in terms of section 3-D of the 1944 Act. On the contrary, the learned Member Judicial was of the view, that in this case section 3-D of the 1944 Act was legally inapplicable. On facts he had also observed that this was not a case where the burden of the excise duty was actually passed on to the end consumers. As such the learned Member Judicial has been pleased to allow the appeal.
6. At the hearing before me the rival contentions of the parties have been examined in detail. The learned counsel for the appellant as also the departmental representative were pleased to raise similar contentions before me as they had raised before the learned Member Technical and the Member Judicial. The learned counsel for the appellant in particular stressed, apart from the inapplicability of section 3-D of the 1944 Act, that the burden of the duty in this case was not actually passed on to the end consumers and that he had riot given any concession in this regard.
The findings of fact recorded by the Member Technical were vehemently attacked.
7. Before proceeding further, it will be first pertinent not only to peruse section 3-D of the 1944 Act but also comparable provisions which are contained in section 30-A of the erstwhile Sales Tax Act, 1951 (hereafter: "1951 Act") and section 3-B of the Sales Tax Act, 1990 (hereafter: "1990 Act"). The same are hereby produced for ready reference as under:-
(a) Section 3-D of the 1944 Act reads as follows:- "S. 3-D:-Collection of excess duty, etc.-( 1) Every person who has collected or collects any duty, whether under misapprehension of any provision of this Act or otherwise, which is not payable as duty or which is in excess of the duty actually payable and the incidence of which has been passed onto the consumer, shall pay the amount so collected to the Federal Government.
(2) Any amount payable to the Federal Government under sub-section (1) shall be deemed to be an arrear of duty payable under this Act and shall be recoverable accordingly and no claim for refund in respect of such amount shall be admissible.
(3) The burden of proof that the incidence of such duty has not been, or is not, passed on to the consumer shall be on the person collecting the duty."
(b) Section 30A of the 1951 Act reads as follows:- "S. 30-A: Collection of excess tax, etc.-{\) Every person who has collected [at any time before the commencement of this section or collected at time thereafter] any amount by way of tax, whether by misapprehension of the provisions of this Act or otherwise, which is not payable as tax or which is in excess of the tax shall pay the amount so collected to the Federal Government within such time and in such manner as may be prescribed, and in default of such payment shall also pay any additional amount calculated at the rate of fifty rupees for every day after the date before which he is required to pay the amount so calculated.
(2) Any amount payable to the Federal Government under sub-section (1) shall be deemed to be an arrear of sales- tax payable under this Act and be recoverable accordingly."
(c) Section 3-B of the 1990 Act reads as follows:- "S. 3-B: Collection of excess tax, etc.-( 1) Any person who has collected or collects any tax or charge, whether under misapprehension of any provision of this Act or otherwise, which was not payable as tax or charge or which is in excess of the tax or charge actually payable and the incidence of which has been passed on to the consumer, shall pay the amount of tax or charge so collected to the Federal Government.
(2) Any amount payable to the Federal Government under sub-section (1) shall be deemed to be an arrear of tax or charge payable under this act and shall be recoverable accordingly and no claim for refund in respect of such amount shall be admissible.
(3) The burden of proof that the incidence of tax or charge referred to in sub-section (1) has been or has not been passed to the consumer shall be on the person collecting the tax or charge."
8. A bare reading of the three provisions reproduced above would confirm that the same are analogous in nature. The rationale behind introduction of section 3-D of 1944 Act or the other comparable provisions cited above seems to be based upon the economic principle that in matters pertaining to indirect taxation the ultimate burden is borne by the ultimate consumers. In such cases, the law makers in their wisdom have desired that refund, if any, of any amount paid in excess could only be claimed by a person unless and until he is able to show that he did not actually pass the burden onto the ultimate consumer. For such principle if any authority is needed it is the case of the apex Court reported as Sajjad Nabi Dar v. CTT PLD 1977 SC 437 which is a case concerning the applicability of section 30-A of 1951 Act. Very recently, a Division Bench of the Sindh High Court in Federation of Pakistan v. Metropolitan Steel Corporation SBLR 2001 Karachi 544 = 2002 PTD 87 has followed the Sajjad Nabi Dar case. There is no cavil with the proposition laid down in the Sajjad Nabi Dar case. However, this case only states the general principle. The Courts of our country have subsequently laid down exceptions to this general rule, some of which are stated as follows:-
(a) in Rupali Polyester v. Federation of Pakistan PLJ 1986 Lah. 848 = 1997 PTD 54 a learned Single Judge of the Lahore High Court was pleased to hold that in matters of central excise duty, section 3-D of the 1944 Act can only be made applicable from the date from which such provision was introduced. It was observed that the said section 3-D of 1944 Act was introduced through the Finance Act, 1993, hence it was operational with effect from 01.07.1993 and not earlier. The Court maintained that for periods prior to 01.07.1993 refund could not be declined to the assessee on his failure to establish that the burden of excise duty had not been passed on to the consumer. The Court held that for the purposes of central excise duty refund the department cannot for the period prior to 01.07.1993 employ the provision of section 30-A of 1951 Act, since both the 1944 Act and the 1951 Act occupied fields which were separate and distinct; in Collector of Central Excise v. Bawani Sugar Mills 2000 SCMR 1266 the Hon'ble Supreme Court was pleased to hold that where after the withdrawal of exemption/concession the assessee had not enhanced the selling price/rate of sugar and the price had remained uniform, it sufficiently established that the assessee had not passed on the burden of the central excise duty to the consumer; in National Beverages v. Secretary Revenue Division 2002 PTD 3043 (i.e. The order passed by the learned FTO is in this very case) the learned FTO was pleased to hold that section 3-D of 1944 Act will only apply if the assessee was a collecting agent or was under any obligation to collect duties.
It was held that as the assessee was not the collecting agent and had only paid excess duty it was entitled to refund. It was further observed that the refund could only have been declined where the department could have shown that the incidence of the duty had been passed on to the consumer. This case seems to hold that where the assessee is not the colleting agent and pays excess tax, it is not the assessee but rather the department on which the duty is cast to establish that the incidence of duty had been passed by the assessee to the consumer and in the absence of discharging such burden refund could not be declined; in Al-Faiz Furniture v. Secretary Revenue Division 2003 PTD 2542 the learned FTO has held a principle similar to the one held in the National Beverage case (supra). In this case the Elementary Government Training College was the collecting agent hence the assessee i.e. Al-Faiz Furniture could not be saddled with the burden to prove that the tax had not been passed son to the end consumer; the case of Pakistan Mineral Water Bottling Plant v. Secretary Revenue Division 2003 PTD 2867 creates another strong exception. This was a case where certain chilling charges were declared to be illegal by the High Court and the decision of the High Court was confirmed by the Hon'ble Supreme Court. The department declined to grant the refund on the ground that the assessee had failed to discharge the burden cast upon it under section 3-D of the 1944 Act i.e. The assessee had failed to show that the burden of the excess charges had not been passed on to the end consumer. The learned FTO rejected the contention of the department and was pleased to hold that section 3-D of 1944 Act would be inapplicable to a situation where the tax or duty was illegal. It was also observed that charges other than tax or duty (i.e. Chilling charges in this case) if illegally recovered cannot be declined to be refunded on the ground of section 3-D of 1944 Act for the simple reason that the latter provision was not applicable to charges other than tax/duty; and
(f) in 7-Up Bottling Company (Pvt.) Ltd. v. Additional Collector 2002 YLR 3498 = PTCL 2002 CL. 178 (Trib.) a Division Bench of this Tribunal has been pleased to hold that for section 3-D of 1944 Act to apply it must be shown that the duty at the time of collection/payment was not payable or was in excess of the duty actually payable; and where any duty was declared to be ultra vires by the Court subsequent to its payment, it cannot be said that at the time of payment of the duty the same was payable. In such event section 3-D of 1944 Act was not applicable.
9. It seems that the case of the appellant falls within the exceptions to section 3-D of 1944 Act underscored above. The facts of the 7-Up cases (i.e. NLR 1994 Tax 84 = PTCL 1996 CL. 325, decided by the Lahore High Court, 1996 SCMR 700 = PTCL 1996 CL. 341 decided by the Supreme Court and 2002 YLR 3498 decided by the Tribunal) and the present case are identical. In fact the present appellant seeks support of the 7-Up cases decided by the Lahore High Court and the Supreme Court i.e. NLR 1994 Tax 84 = PTCL 1996 CL. 325 and 1996J8CMR 700 = PTCL 1996 CL. 341 to contend that the proviso to Rule 7 of the 1990 Rules is ultra vires and that the payment of excess duty made by the appellant during the existence of such proviso is liable to be refunded. The benefit drawn by the petitioner in these 7-Up cases is fully extendable to the case of the present appeal under the doctrine/rule of good governance laid down by our apex Court in the case of Hameed Akhter Niazi v. Secretary Establishment 1996 SCMR 1185. This doctrine of good governance is based upon the salutary principle of equality entrenched in Article 25 of the Constitution. Succinctly stated, the principle of good governance is that where a Tribunal/Court decides a particular question, another person who is similarly placed has to be accorded the benefit of that order/judgment and should not be made to approach the Court/Tribunal to get similar relief.
10. Section 3-D of the 1944 Act has been reproduced in para 5 above. Section 3-D(l) of the 1944 Act can be broke down in the following parts:-
(a) "every person who has collected or collects any duty;" (hereafter: "the first ingredient");
(b) "whether under misapprehension of any provision of this Act or otherwise;" (hereafter: "the second ingredient");
(c) "which is not payable as duty or which is in excess of the duty actually payable;" (hereafter: "the third ingredient");
(d) "the incidence of which has been passed onto the consumer;" (hereafter: "the fourth ingredient").
11. The above four ingredients of section 3-D(l) of the 1944 Act could, respectively, be paraphrased as follows:--
(a) a person to which section 3-D of the 1944 Act applies must be a collecting agent or must be under an obligation to collect duty;
(b) that person must have acted under misapprehension of any provision of the 1944 Act or otherwise;
(c) the duty in respect of which the refund is being claimed must not have been payable;
(d) the incidence of the duty must have been passed onto the end consumer.
12. If any of the four ingredients are missing then section 3-D of 1944 Act cannot apply. In this case the learned FTO has held (see 2002 PTD 3043) that the appellant is not a collecting agent. The first ingredient is conspicuously missing. More pertinently the third ingredient is also missing as the duty at the time of its payment was payable. This is because the duty in question was paid under the proviso to Rule 7 of the 1990 Rules before it was declared ultra vires by the Lahore High Court and the Supreme Court in NLR 1994 Tax 84 = PTCL 1996 CL. 325 and 1996 SCMR 700 = PTCL 1996 CL. 341.
As such before the latter two judgments the said proviso to Rule 7 of the 1990 Rules had occupied the field and it could not be said that during the existence of such proviso the duty thereunder was not payable. Thus at the time of payment the duty was payable in law under the proviso to Rule 7 of die 1990 Rules. To such effect is the 7-Up case (i.e. 2002 YLR 3498). A learned Division Bench of this Tribunal in the 7-Up Bottling case 2002 YLR 3498 has directly decided this issue on identical facts. The Tribunal's order in the 7-Up Bottling case was not only applicable to the appellant in terms of the rule of good governance enunciated in the Hameed Akhter Niazi case (cited supra) but the same was also binding upon the Division Bench of this Tribunal under the law of precedent.
As such, with highest respect at my command I cannot see how the learned Member Technical could have departed from such binding precedent. Even otherwise, in terms of the Rupali Polyester case (cited supra) the operation of section 3-D of 1944 act is not extendable to the period prior to 01.07.1993 i.e. The time of its introduction. A substantial amount of refund pertains to such prior period. For the period prior to 01.07.1993 refund could not be declined on any common law or economic principle in the absence of availability of a statutory provision like section 3-D of the 1944 Act. Attention is invited to the case of Hotel Midway House Ltd. v. Director General 1993 SCMR 1712. In this case the appellant had sought refund of excess hotel tax paid by it. The department had raised an objection that as the appellant had passed on the burden of tax to the end consumer no refund could be granted. The department's contention was repelled and the Hon'ble Supreme Court was pleased to hold that the department could not justify retention of the amount in excess of the amount of tax legally payable by the assessee.
13. In the light of the above discussion I fully concur with the opinion delivered by the learned Member Judicial and would allow the present appeal, set aside the impugned order and direct the department to issue the refund without any further delay.