JUDGMENT'
AJMAL MIAN, J .- (a) The petitioner;- which is a private Limited Company has challenged the orders dated 26-8-1972, 25-2-1973 and 3-8-1973 passed by the Assistant Collector Land Excise, Karachi, the Collector Excise, Karachi and the Central Board of Revenue respectively.
The brief facts leading to the filing of the above petition are that it had come to the knowledge of the Central Excise and Customs department that the petitioner, namely M/S Hotel Metropole Ltd., had rented out shops and rooms within the premises of their hotel to the different business organisations and had realised rent from them, but they had not paid central excise duty.
Accordingly, a demand notice of Rs. 1,84,413.67 on account of the Central excise duty was raised by the Superintendent C. E. And L. C. Circle A" for the period commencing from 30th June, 1970 to April, 1972, the detail of which is as follows "S. No. Period Amount received C. E. Duty payable realized as rent -- 10% 1.30th JuneRs. 2,926.10Rs. 292.61 1970 2.July, 70 to June, 71.Rs. 10,53,387.60Rs. 1,05,338.76 June, 71 to7,87,823 0078,782.30 April, 1972 TotalRs.1,84,413.67
(b) In response to the above notice, the petitioner filed their objections, which were heard by the Assistant Collector C. E. And L. C., but the same were dismissed by the aforesaid order dated 26-8-
72. The petitioner being aggrieved by the aforesaid order filed an appeal, which was dismissed by the Collector C. E. And L. C. By the aforementioned order dated 25-2-73. The revision filed by the petitioner also met with the same fate and that too was dismissed by the aforesaid order dated 3- 8-73. The petitioner being aggrieved by the above orders has filed the present petition.
2. (a) In support of the above petition Mr. Khalid Anwar, learned counsel for the petitioner has urged that the impugned orders are without lawful authority inasmuch as the shops and the rooms which have been let out by the petitioner for commercial purpose are not part of the hotel, and, therefore, no excise duty is payable in respect of rent realised. He has referred to sections 2 (dd), 3 (i) and part 11 of the first schedule of the Central Excises and Salt Act, 1944. It may be advanta--geous to refer to the above provisions, which read as follows :- "(dd) "excisable services" means services, facilities and utilities specified in Part 11 of the First Schedule as being subject to a duty of excise."
3. Duties specified in the First Schedule to be levied.--(I) 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 rates, set forth in the First Schedule.
Part II.-Services rendered by Hotels and Restaurants,
(1) All services, facilities and utilities,15 per Cent. including catering, supplies and mer. Of the chandise provided or rendered by ancharges 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 pro-- vides any other services, facilities or utilities, by whatever name called.
(2) All services, facilities and utilities,15 per cent. including supplies and , merchandise, of the provided or rendered by a restaurantcharges 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 inclu4cs a night club and cabaret."
(b) It may be noticed that the term "excisable services" has been defined in section 2 (dd) as to include services, facilities and utilities specified in Part II of the first schedule as being subject to a duty of excise, whereas subsection (1) of section 3, which is the charging section provides that the excise duty shall be levied and collected in such manner as may be prescribed on excisable goods, produced, or manufactured and on all the excisable services provided or rendered, in Pakistan at the rates mentioned in the schedule. Furthermore, part 11 of the first schedule describes the services rendered, by hotels and restaurants, which are excisable.
(c) 1t has been vehemently contended by Mr. Khalid Anwar that in order to press into service the above provisions of the Act, the pre--requisite condition is that the facilities/services mentioned in part Il of first schedule should be rendered by a hotel and a hotel means organisa--tion or place where rooms and suites on rent are let out, whether or not it has any arrangement for catering or providing any other services, facilities or utilities. He has also referred to the schedule of the application form A. 1. 7 for obtaining a license for running the hotel in question (annexure to the re- joinder), to show that the entire building known as `Hotel Metropole Building' has not been used for hotel purpose as only those portions of the building were mentioned in the schedule to the above application, which were intended to be used for running a hotel and in fact they have been so used. It may be pertinent to reproduce hereinbelow the aforesaid schedule to form A. 1. 7, which reads as follows Distinguishingdetailedpurpose of letter or num-descriptioneach berof each or letter and number of each
1. Residential rooms on 3rd and 4th floors.
2. Samar.
3. Discotheque.
4. Coffee shop.
5. Lounge Bar. 6.
Banquet Hall.
7. Garden Party Area".
(d) From the perusal of the above-quoted schedule, it is evident that in the application form for obtaining a license to run Hotel Metropole, the petitioner had mentioned. Certain portions of the building and not the entire building. The Assistant Collector in his impugned order has not given any reason whatsoever, as to why he was of the view that the demand of Rs. 1, 4,413.67 was correct.
Whereas the Collector C. E. And L. C in his order has held that upon carefully considering the copies of the leased agreements etc. Of the three parties supplied by the party, he was of the view that the apartments and shops are a part of M/S Hotel Metropole and that Hotel Metropole are extending excisable services to their occupants. It tray also be pertinent to observe that the Board of Revenue upon relying on the definition given in item 1 (I) of Part II of the First Schedule also came to the conclusion that the petitioner was providing/rendering services, which are excisable. It may be noticed that in none of the above orders, the effect of granting of the license for running a hotel in a portion of a building has been considered by the authorities. It is not clear as to whether this aspect was canvassed before the authorities, who have passed the impugned orders. Furthermore, the demand in question relates to the period commencing from 30-6-1970 to April 1972, whereas the above Form A. I. 7 is dated 28-6-1972, which is a date subsequent to the impugned period of demand. Nothing has been brought on the record to indicate that license for the impugned period was also for a portion of the building. It may again be observed that the petitioner had filed a photostat copy of the above Form A. I. 7 along with their affidavit-in--re-joinder and, therefore, it has not been commented upon by the respondents in their counter-affidavit. In our view the above aspect is very pertinent to the point in issue.