IRFAN SAADAT KHAN, J. - This Constitutional Petition has been filed by challenging the demand letter No. DG-2(287)/91-Excise/2037, dated 29th June, 2010 issued by Deputy Director (HQ)
Directorate General Excise & Taxation Sind, Karachi, the respondent No, 1, whereby the petitioner was directed to pay license renewal fee for the financial years 2001-2002 to 2009- 2010, which was earlier communicated to the petitioner vide his letter dated 26th June, 2010.
2. Briefly stated the facts of the case are that petitioner is engaged in the business of selling intoxicating liquors. In 1991, the respondent No. 1 granted license of trade and import of liquor and retail of the same under Article 18 of the Prohibition (Enforcement of Hald) Order, 1979 and the Rules framed thereunder to the petitioner, which he was conducting through his shop situated at Kot Ghulam Muhammad Road, Digri. From 1991 till 2000 the petitioner got renewed his license every year. In the year 2000, respondent No. 1 vide his order dated 24.6.2000 informed the petitioner that he was to pay a sum of Rs. 17,92,200/- as the petitioner was found violating certain conditions mentioned in the license. The petitioner was informed that if such amount was not paid by him before 31st December, 2000 his license will be cancelled. As the petitioner was not having enough funds to pay the huge demand his license was cancelled on 31st December, 2000, with the result that the petitioner had to close down his shop. Thereafter the petitioner continued to challenge the action of respondent No. 1 and the respondent No. 1 vide letter dated 24.6.2010, which is annexure "C" of the file, informed him that the competent authority was pleased to allow the restoration of retail of liquor license subject to the payment of license renewal fee for the financial years 2001- 2002 to 2010-2011, amounting to Rs. 31,50,000/-.
3. The petitioner thereafter approached the respondent No. 1 with the request that as his license was not in operation since the last ten years and he was suffering from financial crisis therefore he was ready to pay the license fee for the financial year 2010-2011 only and requested that the payment of fee for the period 2001-2002 to 2009-2010 may be exempted. The respondent No. 1 thereafter vide letter dated 29.6.2010, which is impugned in the present petition, regretted and informed the petitioner that no exemption in respect of payment of license renewal fee could be granted to the petitioner for the years 2001-2002 to 2009-2010 and if he wants to get renewal of his license, he had to pay the said renewal fee for the financial years 2001-2002 to 2010-2011. It is against this letter that the present petition has been filed.
4. Mr. Khawaja Azizullah, learned counsel appeared on behalf of petitioner and at the very outset submitted that the shop of the petitioner was closed since 01.01.2001 and when the shop was closed since the last ten years how can the respondent No. 1 demand from the petitioner to pay the amount of renewal fee for these years when the petitioner was not in the business. He submitted that had the shop of petitioner remained open and had the petitioner continued to be in the business, the department would have been justified in demanding this fee from him but when admittedly the shop of the petitioner was closed down, due to any reason whatsoever, there was no legal justification for asking the payment of renewal fee for this interregnum period. He further submitted that license is only necessary when any business is carried out but when the business of petitioner was not in operation, there was no justification for the department to ask for the said license fee for that period, which as per him is not only illegal but also, uncalled for. He submitted that it was the department which had cancelled his license so how can the department now ask for payment of the license fee in respect of the periods during which his license had admittedly remained cancelled.
5. The learned counsel submitted that respondent No. 1 has totally failed to appreciate the facts of case and had treated the case of the petitioner to be akin to the case of a person who had remained in the business but had not renewed his license; whereas the case, of petitioner was that where his license remained suspended during a period then the department could not legally ask for payment of any amount as license fee for this period. Learned counsel went on to argue that petitioner is ready to pay the license fee pertaining to the year 2010-2011 but demanding of arrears from him for the years 2001- 2002 to 2009-2010 was not only illegal but also unjust. He further submitted that the demand letter issued by the respondent No. 1 is in violation of law and his letter may be treated as illegal, unlawful, ab initio void and may accordingly be set at naught. In the end, he submitted that under identical circumstances in C.P. No. D-793 of 2005 a Division Bench of this Court had allowed the petition and restrained the department from demanding the license fee from the petitioner in respect of the period during which his business was not in operation. He submitted that similar treatment may also be accorded to him, as already been decided in the above-referred petition.
6. Mr. Saifullah, learned A.A.G. Sind appeared on behalf of the State and submitted that no illegality has been committed by the respondent No. 1 and whatever demand has been asked was in accordance with Rule 23 of the Sind Prohibition Rules, 1979 (The Rules). He submitted that no doubt the license of the petitioner was cancelled due to non-payment of fee by the petitioner but as the petitioner wants to renew his license he was under the legal obligation to pay arrears of the interregnum period also. He quoted an example of renewal of car license and submitted that if some one pays motor vehicle fees in the year 2000 then keeps mum for ten years and then applies for payment of the same in the year 2010 would the department accept the said fees for the year 2011 only or would the department ask him to pay arrears also from 2001 to 2011 for renewal of the same. He submitted that answer to this question would be an Emphatic Yes. The department would definitely ask him to pay the said fee for the entire period i.e. 2001 to 2011. He submitted that similar is the position of the petitioner though his license was cancelled on 31st December, 2000 but since he has now approached the department for granting him renewal of his license for the year 2010- 2011 he has to pay the entire license fee for all the interregnum period. He also read out in this regard provision of Section 23 of the Rules and submitted that the amount demanded is a fee and not a levy, hence petitioner was under obligation to pay the same if he wants to get a fresh license.
Lastly he submitted that the decision relied upon by the counsel for the petitioner is distinguishable and contended that petition has been filed with mala fide intention and the petitioner has approached the Court with unclean hands. The learned A. A.G. Also submitted that the petitioner had applied for renewal of license and not for issuance of a new license as the fee for issuance of a new license is now Rs. 5 million. He therefore submitted that the license cannot be renewed from 2001 directly for the year 2010 without renewing it from year to year for which the renewal fee is being charged which is still much beneficial to the petitioner then getting a new license issued.
Hence according to the learned AAG, the petition is liable to be dismissed with cost, in support of his above submissions he relied upon the cases of GOVERNMENT OF PAKISTAN v. ZAMIR AHMED KHAN (PLD 1975 SC 667) MUHAMMAD AKBAR KHAN v. PROVINCE OF WEST PAKISTAN (PLD 1961 SC 17)
MUHAMMAD ISMAIL & CO. LTD. v. CHIEF COTTON INSPECTOR MULTAN (PLD 1966 SC 388) and PAKCOM LTD. & OTHERS v. FEDERATION OF PAKISTAN & OTHERS (PLD 2011 SC 44).
7. We have heard both the learned counsel at length and have perused the decisions relied upon by them.
8. It is seen from the record that Director General, Excise & Taxation Sindh vide his Show-Cause Notice dated 12.8.2000 observed that as the petitioner has violated clause 19 of the license issued to him hence there was a shortage in payment of government dues to the extent of 17,92,200/- in the shape of assessm ent fee and permit fee. The Director General thereafter mentioned that if the said amount was not paid within a period of 14 days, his license would be cancelled and the said amount would be recovered as land revenue. It is further to be noted that the petitioner did not pay the said amount due to which his license was cancelled.
9. It is also noted that a Division Bench of this Court vide order dated 09.12.2005 allowed the petition and declared levy and recovery of vend fee, assessment fee and surcharge on assessment fee as without lawful authority. This judgment of the High Court was challenged before the Hon'ble Supreme Court which vide its order dated 14.4.2006 held that the order passed by the High Court suffers from no infirmity or illegality and refused leave to appeal. In the present case where admittedly petitioner failed to pay the government dues his license was cancelled with the result that his shop was closed down. The petitioner thereafter kept on pursuing the matter before different authorities and the learned Chief Minister thereafter restored his license subject to the payment of renewal fee for the period 2001-2002 to 2010-2011. In our opinion nothing much is left in this petition to decide as this Court in C.P.No. D-793 of 2005 has held that demand for payment of license fee for the years when the shop remained closed on account of cancellation of license was held to be without legal justification, In the present case also though learned AAG has relied upon Section 23 of the Rules and has relied upon certain decisions but in our considered view same are not applicable to the present case as the decisions relied upon by him are mostly on the point that what is the difference between a fee and a tax and between a fee and a levy. We are afraid this is not the case of petitioner where a fee or a levy or a tax has been challenged or varies of any law is under question but his only grievance is that no license fee was payable by him in respect of the years when admittedly his shop had remained closed on account of cancellation of his license.
Learned AAG has not cited any law which authorizes the department to demand any license fee in respect of the period during which the shop had remained closed or shop was not in operation. We specifically asked a question from AAG for giving us relevant law which authorizes the department for demanding any license fee in respect of the period during which the shop of a person remained closed or was not functioning but no such law was cited by the AAG in this regard. Though the Chief Minister has allowed restoration subject to payment of license fee for the financial Year 2001- 2002 to 2010-2011 but has not given any legal justification for demanding this amount from the petitioner for the years during which admittedly his shop had remained closed on account of cancellation of the license.
10. In the para-wise comments filed by the respondent No. 1 also no specific law has been mentioned which authorizes the department to demand the said license fee. The only emphasis given in the para wise comments was that from years 1991 to 2000 petitioner had regularly paid the license fee and therefore he was under legal obligation to pay the license fee thereafter also. In our view this comment negates their own contention though during the years 1991 to 2000 regular license fee was paid by the petitioner but during this period his shop was properly functioning, no plausible reply or explanation has been submitted by the Department that whether after 2001 to 2010 shop of the petitioner had remained opened or closed or whether under any provision of law department was legally justified to demand this amount from the petitioner. We are also of the view that since the license was cancelled allegedly for nonpayment of vend fee which had later on been declared to be ultra vires the Act, therefore, it was illegally cancelled and the petitioner cannot be made to suffer for the illegality committed by the department. We, therefore, in view of observations made above and in view of the explicit decision given by the Division Bench of this Court in C.P.No. D-793 of 2005 have come to the conclusion that the department was not justified in demanding license fee from the petitioner for the years when his shop had remained closed on account of cancellation of license fee. Learned AAG has no produced before us any decision of the Hon'ble Supreme Court whereby this decision of the Division Bench has either been overruled or disapproved.
11. We, therefore, as a rule of proprietary, allow the petition keeping in view, the decision given by the Division Bench of this Court and direct the respondent No. 1 to accept license fee from the petitioner for the year 2010-2011 only. The demand thus raised for the years 2001- 2002 to 2009-2010 is hereby declared to be without any legal and lawful justification and is hereby quashed. The petition is therefore allowed in the above terms.