(1) (a) This is a su;t for the recovery of Rs, 1,39,126.31 and also for declaration and injunction. The facts leading to the filing of the above suit are shortly that prior to November 1967 Palace Hotel (Karachi) Ltd. Which was a private company registered under the Companies Act carried on business at Dr. Ziauddin Road of a residential hotel known as 'Palace Hotel? And provided lodging and boarding and attached to it was a restaurant and a night club called `Gourmene where Articles of food and drinks, alcoholic and non-alcoholic and other Articles were supplied. The hotel had also a licensed bar. It has been averred that Palace Hotel (Karachi) Ltd. Was declared to be an enemy firm by the Government of Pakistan, Ministry of Communication, Islamabad by a notification dated 7th November 1967 issued under clause (b) of rule 182 of the Defence of Pakistan Rules and vested all its properties and assets of all kinds in, the Custodian of the Enemy Property and that the Custodian of Enemy Property for Pakistan by letter No, 10(4) CEP-11/66 dated 4th November 1967 signed by the Deputy. Custodian authorised Pakistan International Airlines Corporation (hereinafter referred to as P. I. A.) under para. 4 of the Enemy Property (Custodian and Registration) Order, 1965 to take over the Management of the said Palace Hotel on his behalf with all its assets, records etc. It has been further averred that P. I. A. Managed the said hotel and remained in sole charge thereof from 4th November 1967 till 24th March 1972, . When the Custodian of Enemy Property in exercise of his powers under the Enemy Property (Custodian and Registration) Order, 1965 sold and transferred the entire business of Palace Hotel formerly belonging to Palace Hotel (Karachi) Ltd., together with all rights, licences, all assets, claim, money outstanding to the plaintiff operatively from 24th March 1972 under the agreement of sale dated 19th April 1972. It has also been averred that the Assistant Collector of Central Excise and Land Customs Division I, Karachi had required the Palace Hotel to pay Central Excise duty on services provided or other facilities and utilities rendered including sales of liquors, food etc.' at 10% from June 1970 onwards and had ,further required monthly returns to be filed, in pursuance of the provisions of the Central Excises and Salt Act of 1944, as amended by the Finance Ordinance IX of 1970 and again by the Finance Ordinance XIV of 1971 and that the total amount was so demanded as being due for the services rendered , in the hotel including sales in the bar, night club of the hotel from June 1970 up to March 1972 had been worked out . And/or as demanded amounted to Rs, 2,94,898.71. It has been further averred that as a matter of fact . No amount could legally be levied or required to be paid by Palace Hotel as the said hotel was operated, run and carried by and/or on behalf of the Central Government and that the demand for the aforesaid period was ab initio illegal and ultra wires and was not at all leviable under the provisions of sections 3-A- and 4 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) as subsequently amended and that the demand appears to have been made by mistake and/ or in ignorance'of the true legal position.
(b) It has also been averred that between 22nd July 1970 and 11th April 1972 Palace Hotel had paid a total sum of Rs, 1,39,126.31 and that at the time when the plaintiff took over the possession of Palace Hotel on 24-3-1972 a further sum of Rs, 1,55,772 40 was being demanded as the arrears of Central Excise duty and the plaintiff, the purchaser of Palace Hotel was required to pay the aforesaid amount. It has further been averred that immediately after the plaintiff took possession of the Palace Hotel the Assistant Collector, Central Excise and Land Customs,' Karachi, coming to know of the purchase by the plaintiff issued on 3-4-1972 an. Order for attachment for the seizure of the movable assets lying in Palace Hotel for recovery of Rs, 1,55.772.40 and that the plaintiff bona fidely and in good faith believing that the said amount demanded for Central Excise duty was legally due and payable requested the Assistant Collector to give time to look into the matter and offered to give a bank guarantee and to pay the amount by 30th April 1972. It has also been averrd that the plaintiff to avoid attachment and seizure of the assets of the Hotel furnished a bank guarantee of the First National City Bank, Karachi by a letter of guarantee dated 3rd April 1972 and also furnished 'a guarantee bond dated 4th April 1972 for the aforesaid amount. It has been further averred that the plaintiff being the transferee of the Palace Hotel with all rights, privileges, assets, claims etc. Is entitled to claim refund of Rs, 1,39,126.31 as having been illegally recovered from or paid by Palace Hotel to defendants 1 and 2 and that the plaintiff cannot be required to pay the aforesaid alleged arrears amounting to Rs, 1,55,772.40. It has also been averred that the Assistant Collector was aware of the fact that other hotels mentioned in para. 14 of the plaint had challenged the validity of the levy through writ petitions and obtained stay order and that no information was given to the plaintiff by defendant No, 2 nor they were aware of the same and that they came to be informed on 22-44972. It has also been averred. That prior to Finance Ordinance XI of 1970 no excise duty was payable on the services, facilities or utilities provided or rendered in any hotel or restaurants_ and that the amendment in the Act is ultra Tires of the Constitution. It has also been averred that the- excise duty, on services, facilities and utilities in a case of any hotel and restaurant is illegal, unjust and ultra vices and that in hotel and restaurant Articles of food and drinks, alcoholic and non- alcoholic cannot in law be subjected to any excise duty of all such Articles like tobacco, sugar, vegetable products, tea; coffee as these have already been separately subjected to levy of excise duty. On the, basis of the above averment the plaintiff has prayed for the reliefs mentioned hereinabove.
2. Defendants Nos, 1 and 2 have filed a joint written statement, wherein it has been denied that the business of Palace Hotel was taken over and conducted by the Government of Pakistan. It has been averred that excise duty can be legally levied and demanded from Palace Hotel for the service rendered and sales on other account. It has further been averred that on 24-3-1972 a sum of Rs, 1,55,772.40 was due from the Palace Hotel (Karachi) Ltd., after deducting the amount of the excise duty on services rendered already paid by the aforesaid company and that this liability was taken over by the plaintiff. - It has further been averred that on 184-1972 the plaintiff wrote a letter to the Collector of Central Excise and Land Customs, Karachi in respect of the excise duty recoverable from the Palace Hotel Ltd. For the period beginning from 1-9-1970 to 30-6-1972 and that the plaintiff offered to furnish a bank guarantee in the sum of Rs, 1,55;972.40 and offered to pay the aforesaid amount in 3 instalments' and that the final payment was to be made on/or before 30th June 1972. It has been further averred that the plaintiff's aforesaid offer was accepted by the answering defendants and that the plaintiff paid the first instalment of the sum 'of Rs, 59,658.76, but did not pay the remaining two instalments. It has further been averred that the excise duty was recoverable from the Customers prior to 25th March 1972 and from 25th March 1972 the plaintiff has been recovering the excise duty on services rendered from the customers and paid the same upto 31st March 1972 and that from 1-4-1972 though the plaintiff has been recovering excise duty on services rendered from their customers but they have not been paid to the defendant No,
2. If that been denied that the plaintiff gave the bank guarantee under any mistake. It has been averred that the bank guarantee was given with full knowledge and that there was no pressure brought upon the plaintiff and that at no time the plaintiff had contested the liability. It has further been averred that the Central Legislature had power to make laws to levy duty on services and that it is not ultra vires. Defendants Nos, 1 and 2 have accordingly denied their liability.
3. Defendant No, 3 has filed a separate written statement, wherein it has not been denied that the.
Business of Palace Hotel was taken over and vested as an enemy property in the answering defendant. However, it has been denied that the entire management of carrying. On business was done by the Government of Pakistan. It has been averred that after the vesting of the above property the business was carried on by P. I. A. On behalf of the answering defendant. It has been averred that the answering defendant is neither necessary nor proper party.
4. On the basis of the above pleadings the following issues were framed :- "(1) Is the Palace Hotel immune from payment of Excise Duty as alleged in para 3 of the plaint?
(2) Are the plaintiffs liable to pay Excise duty on services rendered prior to 25th March 1972 and thereafter?
(3) Are the plaintiffs bound by the Bank Guarantee given by them to Defendants Nos, 1 and 2?
(4) Have the plaintiffs any cause of action against defendants Nos, 1 and 2?
(5) To what relief, if any, the plaintiffs are entitled?
5. When the case came up for hearing on 11-4-1979 the learned counsel for the parties stated that they did not wish to lead any oral evidence, and, therefore, the case was posted for arguments. On 16-7-1979 upon the application filed by the defendants, the following additional issue was framed : "Whether the suit is barred under section 10 of the Central Excises and Salt Act, 1944"?
' My findings on the above issues are as follows :
6. Issue No, 1.-Mr. Mohsin Tayabally, learned counsel for the plaintiff, did not press the above issue and, therefore, no discussion is required upon the aforesaid issue.
7. Additional Issue.-The learned counsel for the defendants did not address any argument on the above issue nor he pressed the same. Accordingly the above issue has not been discussed.
8. (a) Issue No, 2.-The learned counsel for the plaintiff has urged two points on the above issue, namely :-
(1) that the levy of excise duty on the service provided/rendered is ultra vires of the Constitution and (ii) that the arrears of excise duty could have been recovered from the owner or manager of the hotel, in whose control or management the hotel in question was during the period for which the as rears were demanded and not from the purchaser.
(b) Referring to the first contention that the levy of the excise duty on services rendered is ultra vires of the Constitution, it may be observed that the Central Excises and Salt Act was amended by the Finance Ordinance, 1970 for providing levy on services provided or rendered in Pakistan as and at the rate set forth in the First Schedule. By the aforesaid Ordinance inter alia sections 2, 3, 4 and Schedule 1 of the Act were amended. In section 2 inter alia clause (dd) was added. It may be observed that clause (dd) of section 2 of the Act defines "excisable services" as means services, facilities and utilities specified in Part 2 of the First Schedule as being subject to a duty of excise whereas subsection (1) of section 3 of the Act provides that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods, produced or manufactured and on all excisable services provided or rendered in Pakistan as and at the sates set forth in the First Schedule. On the other hand, newly- added subsection (3) to section 4 provides that under the Act any services, facilities and utilities are subject to duty at a rate dependent on the charges therefor, and any such services, facilities or utilities or, in any case. Rendered or provided free of charge or at a concessional rate, the duty shall be levied and collected on the amount which would have been charged for such services, facilities and utilities had they not been rendered or provided free of charge or at a concessional rate and that the amount with reference to which the duty shall be levied shall be the total amount charged for all services, facilities and utilities provided or rendered including charges for supplies or merchandise therewith. Whereas item 1 of Part 2 of the First Schedule to the Act defines "Services" as follows :- "1. Services rendered by Hotels and Restaurants.- All services, facilities, and utilities, including 10 per cent. Of the catering, supplies and merchandise provided or charges rendered by an hotel.
'Explanation.-`Hotel' means an establishment, organisation or place where rooms. Or suites of rooms are let out on rent, whether or not it has any arrangement for catering or a restaurant or provides any other services, facilities or utilities, by whatever name called:.
' All services, facilities and the utilities, including 10 per cent. Of the supplies and merchandise, provided or rendered charges by a restaurant.
'Explanation.-"Restaurant" means an establishment, organisation or place where food or drinks are sold, whether or not it provides any other services, facilities or utilities by whatever name called, and includes a night club and cabaret."
(c) It was not urged by Mr. Mohsin Tayabally that the Act read with First Schedule thereto does not provide a complete machinery for the levy and recovery of excise duty on the services rendered/provided but his argument was confined to the vires of the amendments made by the Finance Ordinance, 1970 to the Act. In support of the above contention he has referred to item 43(b) of the III Schedule to the late 1962 Constitution, which reads .As follows :- "43. Duties and taxes, as follows :.
' It was urged by the learned counsel for the plaintiff that clause (b) of the aforesaid item 43 contemplates excise duty on the goods produced and manufactured locally and does not postulate excise duty on services. His further argument was that the framers of the Constitution used the terms "duties of excise" in the sense and meaning well-established and judicially interpreted namely, that it is a levy on the goods manufactured or produced and, therefore, the Finance Ordinance, 1970 providing levy of excise on the services rendered/provided, is ultra vires of the above provision of the Constitution and beyond the competency of the Legislature. In support of the above contention he has referred to the case, In re: Central Provinces & Berar Sales of Motor Spirit and Lubricant Taxation Act, 1938 (1), the Province of Madras v. Boddu Paidanna & Sons (2), GovernorGeneral-in-Council v. Province of Madras" (3), Muhammad Younus v. Central Board of Revenue, Government of Pakistan (4) and Colony Sarhad Textile Mills Ltd. v. Superintendent of Central Excise and Land Customs (5). On the other hand, it was urged by Mr. Shah Jamil Alam, learned Deputy Attorney-General, that in the aforesaid Indian Federal Court cases and the Privy Council case, the subject-matter of the cases was item No, 45 of List 1 of Schedule 7 to the Government of India Act, 1935, the language of which was different from the language employed in item 43 of III Schedule of the late 1962 Constitution, and that the legislative history is relevant in order to appreciate the meaning of a constitutional provision or a provision of an enactment. His further contention was that the term 'duties of excise' is of very wide import and is flexible in nature and, therefore, it cannot be urged that the levy of excise on the services is ultra vires of the aforesaid item 43 of the III Schedule to the Late 1962 Constitution. Mr. Shah Jamil Alam has also relied upon the two Pakistani rulings cited by Mr. Mohsin Tayabally and has also referred to the sase of Atlantic Smoke Shops Ltd. v. Conolon and others, Attorney-General of Canada and others (6). In support of his contention that the term 'excise duty' will cover a levy on the services rendered/provided. He has also referred to the cases of Bengal Immunity Co. Ltd. v. State of Bihar and others (7) and Rabnawaz v. Jahana (8), in support of his contention that legislative history is relevant in order to understand the intent and purpose of constitutional provision or any other enactment.
(i) Referring to the case of 1939 FC, it may be observed that the Federal Court of India was called upon through a special reference made by the Governor-General under section 213 of the Constitution Act to give its opinion on the vires of the C. P. And Berar Sales of Motor Spirits and Lubricant Taxation Act (XIV of 1938). It was urged on behalf of the Government of India that the above sales tax imposed by the provincial enactment was in the nature of excise duty and, therefore, beyond the competency of the provincial Legislature. Reliance was placed upon entry 45 of List 1 in Schedule 7 to the Government of India Act, 1935. While expressing the opinion on the above controversy Mr. Justice Gwyer, C. J. Has been pleased to observe that the federal
(1) AIR 1939 FC 1 (2) AIR 1942 FC 33
(3) AIR 1945 P C 98 (4) PLD 1964 SC 113
(5) 1979 SCM R 640 (6) (1943) 2 All E R 393
(7) AIR 1955 SC 661 (8) PLD 1974 SC 210 legislative power extends to making laws with respect to duties of excise on goods manufactured or produced in India and that 'excise' is stated in the Oxford Dictionary to have been originally 'accise', a word derived through the Dutch from the late Latin `accensare' to tax, the modern form, which ousted 'accise' at an early date being apparently due to a mistaken derivation from Latin 'excidere', to cut out. It has been further observed by his Lordship that it was at first a general word for a toll or tax but since Seventeenth Century, it has acquired in the United Kingdom a particular, though not always precise, signification and that the primary meaning of 'excise duty' or 'duty of excise' has come to be that of a tax on certain Articles of luxury (such as spirit, beer or tobacco) produce or manufactured in the United Kingdom and its use in contradistinction to customs duty on Articles imported into the country from elsewhere and that at a later date, the licence fee payable by persons who produced or sold excisable Articles also became known as duty of excise; and the expression was still later extended to licence fee imposed for revenue, administrative or regulative purposes on persons engaged in a number of other trades or callings and that even the duty payable on payment for admission to places of entertainment in the United Kingdom is called a duty of excise: and, generally speaking, the expression is used to cover all duties and taxes which together with custom duties are collected, administered by the Commissioner of Customs and Excise but its primary and Fundamental meaning in English is still that of a tax on Articles produced or manufactured in the taxing country and intended for human consumption.
(ii) Reverting to the case of 1942 FC, it may be observed that in the aforesaid case the vires of the Madras General Sales tax Act, 1939 was considered with reference to entry 45 of List 1 and entry 48 of List 2 of the 7th Schedule to the Government of India Act, 1935. In that context, it was held that the tax on the sale of goods is exclusively assigned under the Government of India Act to the provincial Legislature and is a tax levied on the occasion of the sale of goods and that a tax levied on the first sale must be in the nature of things be a tax on the sale by the manufacturer or producer, it is levied upon him qua seller and not qua manufacturer or producer and that it may well be that a manufacturer or producer is sometime doubly hit. It may be observed that in the aforesaid case it was held that the aforesaid Madras Act was intra vires.
(iii) With reference to AIR 1945 - P C case, it may be observed that it was an appeal filed by the Governor-General-in-Council against the judgment of the Federal Court of India, holding that the Madras General Sales Tax Act (IX of 1939) was intra vires, the judgment of the P. C. Was delivered by Lord Simonds. While considering the contention of the Governor-General-in-Council that by virtue of entry No, 45 of the Federal List, the Central Legislature is exclusively competent to levy duty of excise, it was observed that the term "duty of excise" is a somewhat flexible one, it may, no doubt, cover a tax on first and perhaps on other sales; it may in a proper context have an even wider meaning. 'Their Lordships approved the discussion on the above term, 'excise duty' given in the aforesaid 1939 FC case.
9. (a) Before taking up the Pakistani cases, it will be advantageous to note the changes brought about by late 1956 Constitution of Pakistan in the entry 45 of List 1 of the 7th Schedule to the Government of India Act, 1935. It may be pertinent to reproduce hereinbelow the aforesaid Entry 45 of the Government of India Act, 1935 and corresponding entry, namely Item 26 of the 5th Schedule to the late 1956 Constitution: ' Entry 45 of List I Schedule 7th to the Government of India Act, 1935: "Duties of excise on tobacco and other goods manufactured or produced in (Pakistan) except-
(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs and narcotics; non-narcotic drugs.
(c)medicinal and toilet preparations containing alcohol or any substance included in sub- paragraph (b) of this Entry."
Item 26: "Duties of custom (including export duty): duties of excise (including duty on salt but excluding alcoholic liquors, opium and other narcotics); Corporation taxes.
' It may be noticed that in item 26 of the 5th Schedule to the late 1956 Constitution, the framers of the Constitution had deliberately, omitted the words "on tobacco and other goods manufactured or produced in Pakistan except (a) alcoholic liquors for human consumption; opium, Indian hemp and other narcotic drugs and narcotics, non-narcotic drugs; (c) medicinal and toilet preparations containing alcohol or any other substance included in sub-para (b) of this Entry", instead of that the words "duties of excise" (including duties on salt, but excluding alcoholic liquors opium and other narcotics) had been substituted. The language employed in item 43(b) of the III. Schedule of the late 1962 Constitution is identical with the language used in item 16 of the 5th Schedule to the late 1956 Constitution. In my view the contention of Mr. Shah Jamil Alam that the effect of the above change on the language is tc enlarge the scope of the excise duty, seems to be correct. Under item 26 of the 5th Schedule of 1956 Constitution and also under Item 43(b) of the late 1962 Constitution, it was not contemplated that the excise duty could only be imposed on the goods manufactured or produced in Pakistan as the words "tobacco and other goods manufactpred or produced" were deliberately omitted from item 26 of late 1956 Constitution and so from Item 43(b) of late 1962 Constitution. Therefore, while considering the cases containing interpretation on. Item 45 of List of the 7th Schedule to the Government of India Act, one cannot overlook the above significant change in the language.
(b) Reverting to the case of PLD 1964 SC it may be stated that the question for consideration before their Lordships of the Supreme Court was, as to whether mere possession of the betelnuts which was excisable by virtue of Central Excises and Salt Act, sections 6, 3, 2(k) of 2nd Schedule, rendered the person in possession liable to pay excise duty, though he was neither a curer nor a wholesale dealer. While considering the aforesaid 1939 FC case Hamoodur Rehman, J. (as his Lordship then was), observed as follows :- "This argument is based mainly upon certain observations of the learned Judges of the Federal Court of India in a reference made by the then Governor-General of India. In the matter of the Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (1). In this reference the validity of the above-mentioned Provincial Act came to be questioned on the ground that the tax purported to be imposed was really in the nature of an excise duty in respect "of which the Provincial Legislature had no power to legislate, their competence being limited to buying taxes on the sale of goods and on advertisements. It was in this connection that the nature of a duty of excise came to be investigated into by the Federal Court of India and it was observed that the expression "duty of excise", in its primary and fundamental sense, signifies a tax on goods produced or manufactured in the taxing country and intended, for home consumption, as distinct from customs duties on articles imported into the country from outside, though it has now been extended to cover a large variety of other duties and taxes which would not strictly come within the dictionary 'meaning of that term, such as a dog tax, a vehicle tax, a hawker's licence tax, for wine licences and pawn broker's licences. We, nevertheless, find it difficult to accept the further corollary that was sought to be drawn by the learned counsel from the primary connotation of the expression "duty of excise", namely, that the duty of excise must be a duty which has from its very nature to be imposed on home-produced goods at some stage which has some connection with production and manufacture. In theory, we are unable to see why there should be any such limitation as to the stage at which a duty of excise is to be realized."
' From the above-quoted extract it is clear that their Lordships of the Supreme Court were mindful of the fact that the term "duty of excise" is a term of wide import and has been extended to cover a large variety of other duties and taxes which will not strictly come within the dictionary meaning of that term, such as dog tax, a vehicle tax, a hawker's licence tax, tax for wine licences and pawn broker's licences.
(c) Referring to 1979 SCMR, it may be observed that the question before their Lordships of the Supreme Court in the aforesaid case was as to whether - excise duty could be levied on the goods exported by the manufacturer. It was urged in the aforesaid case by the appellant that the excise duty can only be levied on the goods which are manufactured and consumed in the country.
Dorab Patel, J. After reviewing Indian, Canadian and Australian cases has been pleased to observe that the "excise" is a word of wide import and because the meaning of the word is so flexible, excise duty can be levied upon local manufactures in respect of the goods, which are exported and this means that the appellant's challenge to vires of the Act is totally misconceived and that as the Legislature was competent to levy excise duty on export, it was also competent to waive that duty on terms to be fixed by it. His Lordship was also pleased to quote para. 775 from the Halsbury's Laws of England, 4th Edn., Vol. 12 defining the nature of excise duty as well as the definition of the word "excise" given in Jowitt's Dictionary of the English Law. It will be advantageous to reproduce hereinbelow the aforesaid para. 775 of the Halsbury's Laws of England and the definition of the term 'excise' given in the aforesaid dictionary :- "Halsbury Laws of England, Fourth Edition, Vol. 12, p. 775-Nature of excise duties-Excise duties "fall under three main headings-(1) those charged on articles or commodities produced or manufactured in the United Kingdom; (2) those charged on certain betting and gaming activities; and (3) those charged on excise licences, which are called excise licence duties.
' KARACHI 285 Jowitt's Dictionary of the England Law: "A duty on certain commodities is charged on most cases on the manufacture; such are duties on spirits, salt, tobacco. Etc. There are also duties which, though not properly in the nature of excise, are classed under this head; such. As the licences which are required to be taken out annually by those who manufacture or deal in certain goods, or carry on certain employments, and also what are sometimes known as assessed taxes, e.g., those payable on motor vehicles, and formerly on male servants and armorial bearings."
' Mr. Justice Karam Elahee Chauhan, while agreeing with the judgment of Patel, J. Added a separate note, wherein his Lordship was pleased to observe that the "term 'excise duty' (so far as I know) has not been precisely or authoritatively defined in any statute of Pakistan and so far as dictionaries and attempts made in different case-law are concerned, they show as observed in Governor- General-in-Council v. Province of Madras that this term is flexible one,"
(d) With reference to (1943) 2 All E R, it may be observed that this was a case of the Privy Council arising from an appeal from a judgment of the Supreme Court of Canada involving interpretation of Tobacco Tax Act of New Burnswick 1940 and the regulations made thereunder. Viscount Simon L.
C. While delivering judgment of the Board observed that "'excise' is a word of vague and somewhat ambiguous meaning and that Dr. Johnson's famous definition in his dictionary is distinguished by accerbity rather than precision and that the word is usually (though by no means always) employed to indicate a duty imposed on home-manufactured articles in the course of manufacture before they reach consumer.
10. (a) From 1939 FC case it is clear that the word 'excise' has been derived through Dutch from the Latin word `accensare' and that modern form of the word is apparently due to a mistaken derivation from the Latin word `excidere'. It was first a general word for a toll or tax, but since 17th Century it has acquired in the United Kingdom a particular though not always precise signification being the primary meaning a tax on certain Articles of luxury produced or manufactured in the United Kingdom. It has also been pointed in the aforesaid F. C. Case, that the expression "excise" has been extended to licence fee imposed for revenue, administrative or regulative purposes on persons engaged in a number of other trades or callings and that even duty payable on payment for admission to places of entertainment in the United Kingdom, is called a duty of excise. Similarly in 1964 SC Hamoodus Rahman, J. (as his Lordship then was) has pointed out that (as observed in the Federal Court of India case of 1939 referred to hereinabove) though duty of excise in its primary and fundamental sense signifies a tax on goods produced or manufactured in the taxing country and intended for human consumption as distinct from customs duty on articles imported into the country from outside, but it has now been extended to cover a large variety of other duties and taxes which would not strictly come within the ordinary dictionary meaning of the term, such as dog tax, vehicle tax, a hawker tax, tax for wine lincences and pawn-broker licences. Whereas in 1945 P C, Lord Simonds has observed that the term "duty of excise" is a somewhat flexible one, and that it may no doubt cover a tax on first and perhaps on other sales; it may in a proper context has even wider meaning. Similarly in the aforesaid 1979 S CM R Patel, J. Has observed that the word "excise" is the word of wide import and that because the meaning of the said word is so flexible, excise duty can be levied upon the goods manufactured locally, irrespective of the question whether they were exported or not.
(b) From the above-cited and discussed cases it is also evident that before 17th Century the Latin word `excidere' meant a toll or tax. However, since 19th Century in United Kingdom, the word "excise" has acquired primary meaning as a tax on certain Articles of luxury produced or manufactured in United Kingdom. However, the scope of the term 'excise' has been extended as pointed out in the aforesaid case of 1939 of Indian F. C. And of 1964 Supreme Court of Pakistan to the items mentioned hereinabove in para (9)(a). Which do not involve manufacturing or producing of goods. In other words, the levy of excise duty on intangible items in contrast to tangible items, is not a new or unknown concept introduced by the Finance Ordinance, WO referred to hereinabove. In my view, as in item 43(b) of the III Schedule to the late 1962 Constitution, the framers of the Constitution had deliberately omitted inter alia the words "on tobacco and other goods manufactured or produced in Pakistan" and as no definition of the term "excise duty" has been given in the said Constitution, no restriction can be placed on the legislative power of the Federal Legislature. If the term "excise duty" is susceptible to intangible items as pointed out hereinabove, in my view, the above term can also cover a levy on the services rendered/provided. In view of the above discussion I do not find any force in the contention of the learned counsel for the plaintiff. The amendments introduced in the Act and the First Schedule to it inter alia by the Finance Ordinance, 1970 are intra vires of the power of the Central Legislature.
(c) It may be pertinent to observe that Mr. Mohsin Tayabally the learned counsel for the plaintiff had also urged that the excise duty in question on services includes duty on items like liquor on which excise cannot be imposed under item 43(b) also excise duty on the local manufactured items, on which the maufacturer/producer must have already paid the excise duty, in this regard, it will suffice to observe that no particulars were provided for in the plaint to indicate what was the ratio between the recovery of the excise duty an alcohol and other items on which excise duty had already been paid and the excise duty recovered in respect of other items. I am, therefore, of the view that in the absence of the material particulars, the above argument cannot be appreciated.
' In view of the above discussion my finding on issue No, 2 is in the affirmative.
11. (a) Reverting to the second contention that the plaintiff being the purchaser of Palace Hotel cannot be made liable to pay the balance of the arrears, which was payable by the previous management, it my be observed that the learned counsel for the plaintiff has particularly relied upon rule 96-W of the Central Excise Rules, 1944, sub-clause (3) of which provides that the owner or manager of the hotel or restaurant shall pay the duty due from him at the end of each week. It was urged by the learned counsel for the plaintiff that because of the above sub-clause of rule 96-W, the liability was of the owner and/or the manager of Palace Hotel, who were running the hotel at the relevant period. Whereas Mr. Shah Jamil Alam has urged that the plaintiff had taken the running concern of Palace Hotel with all rights and obligations and, therefore, they are liable to pay the above outstanding excise duty. In my view, the contention of the learned counsel for the plaintiff is devoid of any force inasmuch as the liability to pay the excise duty is of the owner or the manager of the hotel, but the rule does not provide that the liability shall cease if the management is changed. It is an admitted position that the plaintiff had purchased the aforesaid running concern with all the rights and liabilities inasmuch as they have claimed the refund of Rs, 1,39,126.39 which amount was paid by the previous management and not by the plaintiff. If the plaintiff under the transfer agreement is entitled to claim the refund of an amount paid by the previous management, it must follow that they are also liable to meet the outstanding liability. Moreso, when it is provided in the agreement entered into between the plaintiff and defendant No, 3.
Furthermore, the fact that soon after taking over the management, the plaintiff executed a bank guarantee in favour of defendant No, 2 and agreed to pay the balance amount in 3 instalments and in fact paid a sum of Rs, 59,658.76 clearly indicates that the plaintiff purchased the running concern knowing fully well that they were to discharge the liability in respect of the excise duty.
Defendant No, 2 is entitled to enforce the bank guarantee for the balance amount. The plaintiff is liable under the above bank guarantee independent from their liability under the Act and the rules framed thereunder.
(b) It will be pertinent to point out that excise duty on the services was payable by the customers and in fact as averred in the written statement of defendants Nos, 1 and 2 that the Palace Hotel had recovered the excise duty from the customers and, therefore, they had no justification to withhold the passing of the amount of excise duty to defendant No,
2. As a matter of fact neither the previous management nor the plaintiff can have any cause of action if the recovery of the amount already received by the, predecessor is enforced. I, therefore, do not find any substance in the above argument of the learned counsel for the plaintiff.
12. Issue No, 3.-It was conceded by Mr. Mohsin Tayabally that in case it is to be held that the amendments introduced in the Central Excises and Salt Act and to its schedule were intra vires, the bank guarantee is enforceable. Since I have held that the levy of the excise on services was legal, my finding on this issue is in the affirmative.
13. Issues Nos, 4 and 5.-In view of the discussion under issue No, 2 my findings on the above issues are in the negative. I, therefore, dismiss the suit, but there will be no order as to costs.