This Constitutional petition has been made by Hashwani Hotels Limited, which is a public limited company. It owns a Four Star Hotel, namely, Holiday Inn, in Islamabad. There are 150 single and double bedrooms in the hotel with usual facilities and services. The customers are classified into different categories and the following rates have been prescribed therefor :- Presidential SingleTwinSuiteSuite Airlines Personnel & bona fideRs. 255Rs. 300Rs. 500Rs. 900 Travel Agents Quarterly and Monthly ratesRs. 300Rs. 350Rs. 500 Seminars & convention for 15Rs. 250Rs. 300 rooms or more.
International Tourist GroupRs. 300Rs. 350 for 10 persons or more.
Commercial Accounts Diplomatic/U. N. And OfficialsRs. 400Rs. 480Rs. 800Rs. 1500 British Airways CrewRs. 320 F.1. T.SingleTwin StandardRs.480Rs.570 DeluxeRs.510Rs.600 Deluxe SuiteRs. 1000 Presidential Suite.Rs.1800 These rates have been mentioned in Annexure "A" to the present petition.
2. The services, facilities and utilities rendered or provided by the petitioner by letting out rooms of the hotel are subject to duty under the Central Excises and Salt Act, 1944, hereinafter referred to as the said Act. The rate of the duty is set forth in paragraph 1 of part II of the First Schedule to the said Act. It is 15 per cent of the charges for the services, facilities and utilities.
3. The dispute involved in the instant petition is not with regard to the rate of duty but in respect of the charges for the services, facilities and utilities. The petitioner has been paying duty on the income actually derived by it from the different categories of the customers in accordance with the rates given above. Respondent No. 2, Deputy Collecter, Central Excise and Land Customs, Rawalpindi, however, demanded duty at the highest of these rates, namely, Rs. 510 for a single room and Rs. 600 for a double room fixed for deluxe accommodation for F. I. T. (Frequent International Traveller). This demand has been placed on the petitioner by means of show-cause notices, Annexures "C", "D" and `13". According to the said respondent, if the petitioner is charging less from other categories of customers even then it is bound to pay duty at the said rate. In this connection, he relies on clause (a) of subsection (3) of section 4 of the said Act, which reads as follows:- "(3) Where under this Act any services, facilities and utilities are subject to duty at a rate dependent on the charges therefor and-
(a) any such services, facilities or utilities are, 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 thay not been rendered or provided free of charge on at a concessional rate; and
(b) 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."
According to the petitioner, the said notices were taken exception to by it by making a representation to respondent No. 3, namely, the Central Board of Revenue, but the representation was rejected by that respondent, vide its order, dated the 29th January, 1981 (copy Annexure `F').
Respondent No. 1, in this petition, is the Government of Pakistan.
4. The plea raised by the petitioner is that it is charging the customers of various categories in accordance with the rates set out in Annexure "A" without showing any concession in the matter and, therefore, the provisions of paragraph (a) of subsection (3) of section 4 of the said Act cannot be made use of for demanding duty with reference to the charges prescribed for a particular category of customers which happens to be the highest. The petitioner has, therefore, prayed for declaration that the show-cause notices issued by respondent No. 2 and order dated the 29th January 1981, passed by respondent No. 3, be declared to be illegal, arbitrary, ultra vires, without lawful authority and of no legal effect.
5. It was contended by learned counsel for the petitioner that the petitioner bad been charging its customers strictly in accordance with the rates specified in Annexure "A" without showing concession to any individual in the matter of payment of rent prescribed for the category to which he belonged and, therefore, the provisions of clause (a) of subsection (3) of sec--tion 4 of the said Act could not be pressed into service by the respondent for justifying the demand in question. In this connection. Reliance was placed by him on an unreported judgment delivered by a Division Bench of the Sind High Court on 29th September 1981 in Sky Room Limited v. Assistant Collector.
Excise & Land Customs, in Constitutional Petition No. D-5 of 1977 (copy Annexure "Z"). According to learned counsel for the petitioner, "concession" means a grant or favour extended to a particular individual but since all customers of the petitioner falling in a particular category are charged in accordance with the rate prescribed for that category, without show--ing concession to any of them, it was not a case of concession. Interpreting the word "in any case" occurring in clause (a) of subsection (3) of section 4 of the said Act, it was submitted by learned counsel for the petitioner that these words were intended to apply to the case of a particular individual and not to the classes of individuals. He also invited my attention to Annexure "G" showing that only 15.45 per centum of the business of the petitioner depended on customers falling in the category of Frequent International Travellers (Rack Rates).
6. In reply, it was urged by learned counsel for the respondents that for the purpose of subsection
(3) of section 4 of the said Act, charge for services, facility and utilities in dispute was the maximum charge specified in Annexure "A" and that all other charges were concessional rates and, there fore, the respondents were justified in demanding duty with reference to the maximum charge. While dealing with the expression "in any case" used in clause (a) of sub-section (3) of section 4 of the said Act, it was maintained by learned counsel for the respondents that this expression not only covered the case of a particular individual but was also applicable to the case of a number of individuals and the classes of individuals. In this connection he placed reliance on section 13 of the General Clauses Act, 1897 which provides that unless the subject or context otherwise requires the words in singular include the plural and vice versa. In regard to the case of Sky Room Limited, his submission was that the judgment in that case having been delivered by a Court other than this Court was not binding on this Court and, therefore, there was no bar to my, taking a contrary view.
According to learned counsel for the respondents, the demand of the respondents was in consonance with the provisions of subsection (3) of section 4 of the said Act and was, therefore, unexceptionable.
7. The case of Sky Room Limited was also in respect of hotel accommodation. In that case, the room charges for P. L.A. Crew on duty and transit passengers staying on P. I. A: account were less than the charges recovered from other customers. In the Schedule of rates, the charges prescribed for other customers were termed as normal rates. The excise authorities demanded duty according to the normal rates even in regard to the accommodation utilised by P. I. A. Crew on duty and transit passengers staying on P. I. A. Account, on the plea that they were accommodated on concessional rates. This plea was, however, repelled by Sind High Court as follows:- "Now, it is well-known practice .In .The ,field of trade and commerce that various merchandise of commodities are sold to different classes of customers at different rates, for example a mill sells, cloth produced by it in wholesale at a rate different from the one charged by it at its retail shop and in each a case the rate charged from a whole seller cannot be termed. As a concessional rate, for the term `concession' in our view imports reduction of prices already fixed for a class of customers or for a quantity, and if different rates are fixed for different classes of customers or for different quantities, then the difference in rate cannot be said to be a `concession'.
Further, according to dictionary meaning the term, in the present context, means, rebate or reduction in fixed rate or price as a favour but when the rates or prices are already fixed and known and the services, facilities and utilities could be obtained by any person of that class then the question of favour would not arise. Here we may refer to an American case, namely "De Haro v.
United States" (18 L. Ed. 681, 687) cited in Ballentine's Law Dictionary, where in the term as used in Spanish American grant came up for consideration and it was held to mean ' whatsoever, is granted as favour or reward ac the privileges granted by the prince'. Furthermore, the provisions contemplate an individual case as the words used are "in any case" which in our view will not cover rates fixed for different classes of customers. We, may here give another example. It is common knowledge that sugar is sold to different classes of consumers at different rates, as industrial and commercial consumers are charged higher rate than that charged from the domestic consumers.
Could it in such a case, be said that the rate or price charged from the domestic consumers, is a concessional rate or price, if it could, then, it could be argued with equal force that the rate charged from the industrial or commercial consumers is exorbitant. But in our view the argument would not be sound for different prices could be charged from different classes of customers for a variety of reasons which we need not detail here. The experience shows that in commerce and trade there are generally different rates for different classes of customers or different quantities or for services used for different periods. It is, therefore, apparent that the rates charged from different Airlines or from P. I. A. On account of their crew members and transits passengers are not in the nature of concession and they could conveniently be termed as, or compared with the rates for bulk sale, quantity-wise or number---wise. In our view the convenient and safe criteria for judging whether a concession has been allowed or not would be that if two customers of the same class are sold the same goods in one same or similar quantity at different rates, then in the absence of some other good reason, the one who purchases the same at lower rate can be said to have been granted a concession."
8. I respectfully agree with the learned Judges of the Sind High Court that the management of a hotel can prescribe different rate for the different categories of customers and that if the rates fixed for any category is less than that of the other the former cannot be treated as concessional rate within the meaning of clause (a) of subsection (3) of section 4 of the said Act.
9. While subscribing to the conclusion reached by the Sind High Court, I will like to add that according to subsection (3) of section 4 of the said Act, undoubtedly, the charged for services, facilities and utilities are to be fixed by the management of the hotel and not by the law or the excise authorities. It is only the rate of the duty which is to be prescribed by law. Fixation of different charges for different categories of customers is not forbidden by law. Perhaps, such fixation has got to be done by the management for operational considerations. The law also does not insist that a single uniform charge shall be fixed for all categories of customers. Further, there I nothing in the law to suggest that if different charges are prescribed for different categories of customers, the duty shall be paid according to the charge which happens to be the highest. I, therefore, find nothing wrong with different charges prescribed by the petitioners for different categories of its customers.
10. In the instant case, the charges prescribed by the petitioner are pre--determined and notified ones. They are not negotiated by the management and the customers. According to learned counsel for the petitioner, any person coming to the hotel is charged in accordance with the rate applicable to the customers of his category. It is not alleged by the respondents that any customer was shown concession in the matter of payment of charges applicable to the category of customers to which he belonged. The mere fact that the charges payable by a particular category of customers is the highest does not mean that others who have paid in accordance with the charges prescribed for their respective categories have been shown any concession or favour.
Therefore, without going into the question whether the words "in any case" refer to the case of a particular individual only or also embrace the case of number of individuals or classes of individuals, I hold that since the present case does not involve any concession it does not attract the provisions of clause (a) of subsection (3) of section 4 of the said Act.
11. The upshot of the above discussion is that the petitioner was liable to pay duty on the basis of different charges prescribed for different categories of customers. It is not the case of the respondents that the duty has not been paid accordingly. The respondents are, therefore, not entitled to recover anything more from the petitioner. In this view of the matter, I accept the petition in hand and declare that show-cause notices (copies Annexures "C", "D" and "E"), issued by respondent No. 2 as well as the order (copy Annexure "F"), passed by respondent No. 3, are without lawful authority and of no legal effect. There shall be no order as to costs.