' NMMUDDIN, J.-We propose to dispose of this constitution petition and Constitution Petitions Nos. D- 506/1970, D-92/1971, D-93/1971, D-94/1971, D-95/1971, D-129/1971, D-133/1971, D-383/1971, D-390/1971, D-26/1972, D-29/1972, D-220/1972, D-798/1974, D-299/1975, D-147/1976, D-523/1976, D-428/1976, D- 626/1976 and H. C. A. No, 71/1979, by this common judgment for in all the above-mentioned cases common question or questions of law are raised.
2. The Constitution Petition No, D-506/1970, is under Article 98 of the 1962 Constitution, read with Provisional Constitution Order of 1969 filed by Shaikh Habibullah against Pakistan, Central Board of Revenue, and Collector, Central Excise & Land Customs, Hyderabad. The Constitution Petitions filed in 1971 and some in 1972, are under Article 98 of the Constitution, 1962 and some are under Article 201 of the Interim Constitution, 1972. The Constitution Petitions filed in the year 1974 or thereafter, are under Article 199 of the Constitution of 1973 and the High Court Appeal is under section 3 of the Law Reforms Ordinance, 1972.
3. Since the main arguments were advanced in Constitution Petition No, 91 of 1971 by Mr. Iqbal Kazi Advocate, we would therefore, first give facts of this constitution petition.
4. The petitioners Mondi's Refreshment Room & Bar, a registered firm, were at the relevant time running a liquor bar at Dawood Pota Road, Saddar, Karachi, under the licence issued to them by the Collector & Director, Excise & Taxation, Karachi, under the provisions of the Sind Abkari Act, 1878.
5. The petitioners state in the petition that they sold liquor at the aforesaid premises under the licence but did not sell any food nor was any food prepared and sold at their instance at the said premises. According to them they did not render any services of any kind to the customers except the sale of the liquor which is authorised under the licence issued to them by the Provincial Government.
6. However, in the counter-affidavit by Mohiuddin Ahmed, Superintendent, Central Excise & Land Customs, Circle 'B', Karachi on behalf of respondents, he claimed that the petitioner served light refreshment in the premises and thus the services rendered by them in the premises were excisable services within the meaning of section 2(dd) of the Central Excises & Salt Act, 1944 (hereinafter called the Act) and therefore, came within the purview of provisions of section 3(1) of the Act and accordingly were liable to pay prescribed duties. Accordingly, the Superintendent, Central Excise & Land Customs, Circle 'B', claimed from the petitioners a sum of Rs, 17,414.82 as central excise duty on service charges calculated on the total sale of the petitioners from 29-6- 1970 to 31-12-1970. We may here reproduce the contents of the Notice of Demand verbatim.
'C. No, 32/35-CE/71 Messrs Mondi's Refreshment Room, Frere Street, Saddar, Karachi-3.
Sub : Demand of Central Excise Duty On Restaurants & Bar.
' Whereas it has been reported to the undersigned that you are not paying Central Excise Duty on Service Charges levied vide Annual Budget of 1970-71 announced on 29th June 70 and subsequently revised under SRO. 166/70, dated 29th July, 1970.
' You are therefore asked to deposit Rs, 17,414.82 as Central Excise Duty on Service Charges calculated on your total sales from 29-6-1970 to 31-12-1970 within 10 days from the receipt of this notice, failing which action under rules 8, 10 & 11 of Central Excise Rules, 1944 will be taken against you."
7, The petitioners in reply to the notice denied their liability on the following grounds contained in their letter dated 1-3-1971, addressed to the Collector, Central Excise & Land Customs, Knrachi, respondent No, 3.
(a) As aforesaid we do not supply any services or for that matter, services like lodging, catering, cabret and the like which are intended to be taxed therefore the question of applicability of this duty to our liquor Bars does not arise.
(b) That we do not have the mainly affluent section of the Society as our customers. On the contrary the majority of the customers belong to lower and lower middle class.
(c) That as aforesaid we only sell liquor and do not render any service to the customers. There are no cabrets, nor any food is supplied nor any lodging is permitted.
(d) That our business of running a licensed Bar is not the expanding field of services which is rapidly claiming a growingly large share of Gross National Product.
(e) That the licensed Bars of liquor are not the posh first class restaurants visited by the affluent sections of the Society. As a matter of fact the licensed Bars are not restaurants at all by any definition of the term. Nor do we hold any licence from any authority local or otherwise for running a restaurant.
(f) The liquor Bars are governed by the provisions of a licence issued by the Collector & Director, Excise & Taxation, Karachi, under the Sind Abkari Act, 1878.
(g) Entry into a Bar is restricted under the licence conditions to persons of and above 20 years age, whereas in case of a restaurant it is not so.
(h) Entry of an insane and infirm person into a liquor Bar is prohibited under the licence conditions.
(i) Unlike restaurants, the opening and closing hours of liquor Bars are prescribed by the Commissioner and Director of Excise & Taxation, Government of Sind.
(j) Restaurants can be opened by any person in any locality, but number of liquor Bars is fixed by the Provincial Govt. And they can be run in the premises and localities approved by the Collector & Director, Excise & Taxation, Karachi under the Sind Abkari Act.
(k) Liquor Bars remain closed on every Friday, Eid Holidays, Ten days of Moharrum and during the whole month of Holy Ramazan.
(1) Liquor Bars cannot be sublet nor can liquor be sold on barter."
8. In his reply by letter C. No, 6/5-C E/71, dated the 1st of March, 1971 Collector of Central Excise and Land Customs, Karachi, respondent 3 asserted that bar is a restaurant as defined in the Part II of the First Schedule to the Central Excises and Salt Act, 1944 and all services rendered in a restaurant where alcoholic drinks are provided are liable to excise duty.
9. They have therefore sought the following reliefs in the petitions :
(a) A declaration that the Finance Ordinance, 1970, amending the Central Excises and Salt Act, 1944 imposing excise duty on "services provided or rendered" is ultra vires.
(b) Declaration that respondent No, 1 cannot in law levy, impose or collect any excise duty on the liquor sold by the petitioners under licence issued by the Director of Excise and Taxation on behalf of the Provincial Government and that the imposition against the petitioners was illegal, not according to the law and liable to be quashed.
(e) Injunction restraining the respondents and all their subordinates from recovering any excise duty on the sale of liquor by the petitioners.
10. In Constitution Petition No, D-506 of 1970, the petitioner Shaikh Habibullah, states that he is running hotel and restaurant business in Hyderabad City, where he has been supplying food, beverages and refreshments, mostly on a retail basis. He has challenged the vires of the Notification No, S. R.
0. 166 (1/70), dated 29-7-1970, which has fixed the limit of exemptions from payment of excise duty on excisable services of Rs, 4 lacs in the cities of Lahore and Karachi and Rs, 2 lacs for other cities in Pakistan.
11. In Constitution Petition No, D-92 of 1971, the petitioners, a registered firm, state that they are running a Bar and Refreshment Room at their premises on Garden Road, under the licence issued to them by the Collector and Director of Excise and Taxation, Karachi under the provisions of the Sind Abkari Act, 1878. They have challenged the demand for payment of Rs, 14,468.32 as the Central Excise duty on services provided or rendered, calculated on their total sale from 29-6-1970 to 31-12- 1970, almost on same grounds as stated in Constitution Petition No, 91/71.
12. In Constitution Petition No, D-93 of 1971, the petitioners, Paris Refreshment Room & Bar, state that they are running a liquor bar at Preedy Street, Saddar, Karachi under the Licence issued to them by the Collector and Director of Excise & Taxation, Karachi. They are aggrieved by the demand for payment of Rs, 14,468.32 as the Central Excise duty on service charges calculated on their total sale from 29-6-1970 to 31-12-1970 on same grounds as stated in Constitution Petition No, 91 of 1971.
13. In Constitution Petition No, D-94 of 1971, the petitioners Jamshed Refreshment Room & Bar, state that they are running a liquor bar at Napier Street, Saddar, Karachi, under the licence issued to them by the Collector and Director of Excise & Taxation, Karachi. They are also aggrieved by the demand for payment of Rs, 10,025.02 contained in the notice dated 29-1-1971, issued to them by the Superintendent, Central Excise & Land Customs, 'B' Circle, Karachi on the same grounds as stated in Constitution Petition No, 91 of 1971.
14. In Constitution Petition No, D-95 of 1971, the petitioners, Hirjina & Co. (Pak.) Limited, state that they are running the following liquor bars in Karachi, under the licences issued to them by the Collector and Director of Excise & Taxation, Karachi. {{TABLE}}
1. Elphinstone Refreshment Room.
2. Majestic Refreshment Room.
3.Piccadilly Refreshment Room. .
4.New American Refreshment Room.
5.Nelson Refreshment Room.
6.Merry Refreshment Room.
7. Metro Refreshment Room. g. Queens Refreshment Room.
9. CecilRefreshment Room.
10. Taj MahalRefreshment Room.
15. They have challenged the demand for payment of a total sum of Ra. 52,296.45, contained in several notices dated either 21-1-1971 or 12-2-1971 as detailed below:
1. Elphinstone Bar & Refreshment Room Rs. 8,272.12
2. Majestic Bar ...... 7,085.92
3. Piccadilly Bar ...... 398.82
4. New American Bar ...... 4,287.06
5. Nelson Refreshment Room ...... 11,180.24
6. Merry Bar & Refreshment Room ...... 7,185.69
7. Queens Refreshment Room ...... 8,635.58
8. Taj Mahal Bar & Refreshment Room6,251.21 Total Rs. 52,296.45 {{TABLE}}
16. The petitioners have inter alia, claimed that they do not provide or render any services on their aforesaid bars which claim is denied in the Counter Affidavit.
The petitioners have therefore, prayed for declaration that-
(a) the Finance Ordinance, 1970 amending the Central Excises & Salt Act, 1944 imposing excise duty on "services provided or rendered" is ultra vires ;
(b) the respondent No, 1 cannot in law levy, impose or collect any excise duty on the liquor sold by the petitioners in their bars run by them under licences issued by the Director of Excise & Taxation on behalf of the Provincial Government and that the imposition against the petitioners is illegal, not according to the law and liable to be quashed ;
(c) injunction against the respondents and all their subordinates from recovering any excise duty on the sale of liquor by the petitioners at their bars namely (1) Elphinstone Refreshment Room, (2)
Majestic Refreshment Room, (3) Piccadilly Refreshment Room, (4) New American Refreshment Room, (5) Nelson Refreshment Room, (6) Merry Refreshment Room, (7) Metro Refreshment Room,
(8) Queens Refreshment Room, (9) Cecil Refreshment Room and (10) Taj Mahal Refreshment Room.
17. In Constitution Petition No, D-129 of 1971, the petitioner Dhanji Minocher states that he is running a liquor bar at 118, Preedy Street & Mansfield Street, Corner, Saddar, Karachi in the name of Virgo Bar under the licence issued to him by the Collector and Director of Excise & Taxation, Karachi under the provisions of the Act. He has challenged the demand for payment of Rs, 3,792.58, contained in the notice dated 29-1-1971 on the same grounds as stated in the Constitution Petition No, 91 of 1971.
18. In Constitution Petition No, D-133 of 1971, the petitioner Irani Refreshment Room & Bar, a registered firm states that they are running a liquor bar at Nigar Cinema Building, Lawrence Road, Karachi, under the licence issued to them by the Collector and Director of the Excise and Taxation, Karachi, under the provisions of the Sind Akbari Act. They have also challenged the demand for payment of Rs, 7,270.73 as contained in the notice dated 12-2-1971, on the same grounds as stated in Constitution Petition No, D-91/71.
19. In Constitution Petition No, D-383 of 1971, the petitioner Beach Luxury Hotel Limited, states that it is carrying on business of residential Hotel, Refreshment Room, and liquor Bar under the licence issued to it by the Collector/Director, of Excise & Taxation, Karachi under the provisions of the Sind Abkari Act. It has questioned the levy of excise duty of 10 per cent on services provided or rendered by amending the Central Excises & Salt Act, 1944, Act through the Finance Ordinance, 1970 as illegal, ultra vires the Constitution, invalid, and ineffective on the grounds mentioned in the petition.
20. In Constitution Petition No, D-390 of 1971, the petitioners Sultan Ahmed and Muhammad Osman state that they are running restaurant business at Hyderabad, where they supply food and drinks on retail basis. They have questioned the legality and the vires of the amendment made in the Central Excises & Salt Act, 1944 by the Finance Ordinance, 1970, and have sought declaration to the effect that the exemption limit of Rs, 4 lacs for Lahore, Karachi and Dacca and Rs, 2 lacs for other cities in Pakistan is illegal and of no effect being discriminatory.
21. In Constitution Petition No, D-26 of 1972, the petitioners North Western Hotel, have stated that they are running a residential hotel, providing residence, and articles of food and drinks, alcoholic and otherwise, to the lodgers and other guests visiting the hotel for the purpose of lodging and eating etc. The hotel has also a licensed liquor bar and restaurant attached to it for the above purpose. The petitioner has generally challenged the vires of the levy of excise duty on excisable services and have also questioned the levy of excise duty on liquor.
22. In Constitution Petition No, D-29 of 1972 the petitioner, Taj Hotel (Pak.) Limited, states that it is running a residential hotel providing lodging and boarding, and attached to the hotel are a restaurant and Night Club, where articles of food and drinks both alcoholic and non-alcoholic are supplied. The hotel has a licensed bar. It has challenged the vires of amended provisions of the Central Excises & Salt Act, 1944 by the Finance Ordinance, 1970, whereby the excise duty on excisable services has been levied.
23. In Constitution Petition No, D-220 of 1972, the facts, as stated in the petition, are that prior to November, 1967, Palace Hotel Karachi Limited, which was a private limited company registered under the Companies Act, 1913 was carrying on business of residential Hotel under the name and style of Palace Hotel. The Palace Hotel was declared to be an enemy firm by the Government of Pakistan, Ministry of Communication, Islamabad by Notification No, S. R.
0. 200(R)/67, dated 7th November, 1967, issued under the Defence of Pakistan Rules and all its assets and properties were vested in the Custodian of Enemy Property for Pakistan. Subsequent to the vesting of the said property in the Custodian of Enemy Property for Pakistan, the Custodian took over possession of the property and the running business of the Palace Hotel and continued to manage the said property and business through his agent, Pakistan International Airlines Corporation, till 24th March, 1972. Thereafter by an agreement dated 19-11-1972, entered into between the petitioner and the Custodian of Enemy Property for Pakistan, the said Custodian in exercise of its powers under the Enemy Property (Custody and Registration) Order 1965, sold and transferred the entire business of Palace Hotel formerly belonging to Palace Hotel, Karachi Limited together with all rights, licences, assets, claims, moneys and outstandings to the petitioners with effect from 24th March, 1972.
24. The running business of Palace Hotel, which was taken over by the petitioner comprised of a residential hotel for boarding and lodging together with restaurant and Night Club, where food and drinks were supplied to the customers. Certain rooms of the said Palace Hotel were let out at a fixed monthly rent and to which no services or facilities were rendered by the hotel except the telephone bills which were paid by the persons in addition to the monthly rent. The petitioners have stated the names of the persons in occupation, of the rooms in the hotel with rent paid by them.
These are as follows : "1. Baloch Art Centre Water & Electricity Rooms No. C-1. provided. Rs. 500.00 2.New Ceylon Art Jewellers Room C-3 -do- Rs. 800.00
3. Pakistan Art Emporium Room C-4 and C-6. -do- Rs. 1,050.00
4. Wyne Carpets Room C-5. -do- Rs. 450.00
5. Miss Parveen Abbas Hairdresser. -do- Rs.500.00
6. Bonds Travel Bureau Room C-2. -do- Rs. 900.00
7. Trans Mediterranean Airways Rooms C-9 and C-10. -do-Rs.800.00
8. ZEB Publications Room C-13. -do- Rs. 700.00
9. Mabs Consultants Rooms C-11 and C-12 -do- Rs. 935.00
10. United Bank Limited, Room A-9. -do- Rs. 800.00 I1. Habib Bank Ltd.
Room A-10. -do- Rs. 1,000.00
12. Lufthansa German Airlines Room M-20. -do- Rs. 2,100.00
13. Messrs R. C. A. Ltd.,Room C-35" -do- Rs. 660.00"
' In April, 1972 the Superintendent, Central Excise and Land Customs addressed a notice to Palace Hotel, Club Road, Karachi demanding Rs, 7,245 on account of Central Excise duty on excisable services rendered. The services allegedly rendered by Palace Hotel in respect of which the sum of Rs, 7,245 was demanded was the rent realised from the rooms amounting to Rs, 3,450 per month.
The petitioner has therefore, challenged in this petition this demand.
25. These facts are not in controversy as no counter-affidavit has been filed in reply to the petition.
26. In Constitution Petition No, 798 of 1974, the petitioner Shaikh Tufail Muhammad, lessee of Hotel Excelsior, states that the Hotel is a residential hotel having rooms for lodgers and has also a liquor bar and restaurant. According to him the Hotel also sells eatables and liquor and drinks to lodgers as well as to other customers. The petitioner has generally challenged the vires of levy of excise duty on the excisable services on the ground that the levy is ultra vires the constitution and illegal.
27. In Constitution Petition No, 299 of 1975, the petitioners Messrs Jabees Limited are a limited liability company and are carrying on business of a residential hotel and restaurant and has generally challenged the levy of excise duty on excisable services, as being ultra vires the constitution and illegal.
28. In Constitution Petition No, 147 of 1976, the petitioners Salomi Refreshment Room & Bar, a firm, state that they are running a liquor bar under the licence issued to them by the Collector and Director of Excise & Taxation, Karachi under the provisions of the Sind Abkari Act, 1878. They have challenged the demand contained in the notice dated 12-2-1971, for payment of Rs, 3,762.75, as being ultra vires the constitution and illegal on the same ground as taken in Constitution Petition No, 91 of 1971.
29. In Constitution Petition No, 428 of 1976, the petitioners, R. B. Awari & Company Limited, state that they are running a liquor bar known as 'Winner Bar' at Frere Street, Saddar, Karachi under the licence issued to them by the Collector and Director of Excise & Taxation, Karachi, under the provisions of the Sind Abkari Act, 1878. The petitioners claim that they do not sell food or any other refreshment nor is the same prepared at their premises or sold. They further claim that they do not render any service of any kind whatsoever, except the sale of liquor which is authorised under the licence issued to them by the Provincial Government. They have questioned the vires of the Finance Ordinance, 1970, whereby the Central Excises & Salt Act, 1944 has been amended, imposing excise duty on Excisable Services, as being ultra vires the constitution and illegal and have prayed a declaration that the excise duty cannot be levied on liquor sold by them under the licence issued to them by the Director of Excise & Taxation on behalf of the Provincial Government. They have also prayed for an injunction restraining the Federal Government, respondent No, 1 and the Collector, Central Excise & Land Customs, Karachi, respondent No, 2, from recovering the excise duty on the sale of liquor by them.
30. In Constitution Petition No, D-519 of 1976, the petitioners, Hotel Marina, a regist.!Red firm, states that it is carrying on business of a lodging house in Karachi. According to it there are 10 rooms and few cubicles in the Hotel which are let to individuals who are using the same for their residence or as shops or offices. No food is served. It further claims that it does not do any catering in respect of the business in the said premises. According to it even the Kitchen has been let out on a monthly rent and it further claims that it has nothing to do with the service and catering. The petitioner, however, as stated in the petition runs a bar in a separate portion of the room under the licence granted to them under the provisions of the Sind Abkari Act.
31. The petitioner further states that on or about 31-7-1976, the Deputy Superintendent of Excises and Land Customs, Karachi, who is a subordinate to respondent No, 2 came to the office of the petitioner and directed it to charge 15 per cent. As duty of excise on all sales of liquor made in the bar and accordingly, it started charging the duty but according to it, its business had gone down considerably. It has therefore, challenged the vires of the levy of excise duty on services provided or rendered and also the legality of the levy of excise duty on liquor sold by them. It has further prayed to restrain the respondents from levying excise duty on the sale of liquor by the petitioner at its bar.
32. In Constitution Petition No, 523 of 1976, the petitioners, Messrs Cosmopolitan Bar & Refreshment Room, a registered partnership firm, state that they are holding licence to sell liquor and run a bar at a premises on Bunder Road, Karachi and that they are not running any refreshment nor do they any catering in respect of sale and supply of liquor nor render any services or catering.
33. In the counter-affidavit, filed by Sibte Haider Zaidi, Superintendent, Central Excise, Karachi, however, the claim that the petitioners are not running any refreshment room and bar is denied. It is asserted that they are rendering services, providing facilities and utilities to and for their customers, and snacks are provided to their customers. He has so stated on the basis of inspection made by the Superintendent of the Circle concerned. The petitioners have also stated that for some time the Collector, Central Excise and Land Customs, had been pressing the petitioners for payment of excise duty. They have therefore, challenged the vires of the amending provisions of the Finance Ordinance, 1970, whereby the excise duty has been levied on excisable services provided by amending the Sind Salt Act, 1944. They have further claimed that their sale never exceeded Rs, 4 lacs in a year and therefore, they were not liable to pay central excise duty even if it is found otherwise leviable.
34. In Constitution Petition No, D-626 of 1976, the petitioner K. M. Mondi, sole proprietor of Ritz Bar, Shahrah-i-Iraq, Karachi, states that he is running a liquor bar under the licence issued to him by the Collector, Excise and Taxation, Karachi under the provisions of Sind Abkari Act, 1878. He claims that he does not sell any food or refreshment nor is the same prepared at the premises. He also states that Assistant Collector, Central Excise and Land Customs, Karachi vide his notice dated 24- 7-1976, called upon him to produce books of accounts and documents specified in the notice for enquiry under the Excises & Salt Act, 1944 on 30-7-1976. Thereafter, the Superintendent, Central by the notice dated 20-8-1976, called upon the petitioner to apply for issue of L-7, licence. By another notice bearing No, C. No, 16/113-C. E/76, dated 10-9-1976, received by the petitioner on 5-10-1976.
The said respondent calculated that the petitioner allegedly have evaded central excise duty to the extent of Rs, 3,23,438.43 and that the petitioner has contravened rules 174, 96-W and 226 of the Central Excise Rules, 1944.
35. The petitioner has therefore, questioned the demand of the Collector of Central Excise & Land Customs respondent No, 2 for applying L-7 licence as being illegal, and has also challenged the vires of the provisions whereby excise duty on services provided or rendered has been levied.
36. The High Court Appeal No, 71 of 1979, has arisen in the following circumstances.
37. The appellant filed a suit, being Suit No, 157 of 1972, against Pakistan, Assistant Collector, Central Excise & Land Customs, Custodian, ' Enemy Property for Pakistan, respondents Nos. 1 to 3 for the following reliefs :
(1) Declaration that defendants Nos. 1 and 2 (here Respondents Nos. 1 & 2) are not entitled to recover any amount as Central Excise duties for any services, facilities and utilities and on sales of liquors etc. On Palace Hotel, owned by the Custodian of Enemy Property for Pakistan and/or Central Government from 1970 to 31-3-1972, as being illegal and ultra vires.
(2) A decree against Defendants Nos. 1 & 2 (here respondents Nos. 1 & 2) for refund of Rs, 1,39,126.31 with interest at 9% from the date of suit till payment."
38. It is averred in the plaint that prior to November, 1967, Palace Hotel (Karachi) Limited, which was a private company registered under the Companies Act, carried on business at Kutchery Road (now Dr. Ziauddin Ahmed Road) in Civil Lines Quarter, Karachi, of a residential hotel, known as Palace Hotel. It provided lodging and boarding and attached to it was a Restaurant and a Night Club called "Gourmet", where articles of food and drinks, alcoholic and non-alcoholic and other such articles were supplied. Palace Hotel had also a licensed Bar. Palace Hotel (Karachi Ltd., was declared to be an enemy firm by the Government of Pakistan. Ministry of Communications, Islamabad, by Notification No, SRO-200 (R)/67, 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 Enemy Property for Pakistan, as being enemy property. The Custodian of Enemy Property for Pakistan, by letter No, 10 (4)CEP-II/66, dated 4th November, 1967, signed by the Deputy Custodian for and on behalf of the Custodian of Enemy Property, authorhed Pakistan International Airlines Corporation, Karachi, under paragraph 4 of the Enemy Property (Custodian and Registration) Order, 1965 to take over the management of the Palace Hotel on his behalf with all its assets, records, etc. It is also stated that entire management and carrying on of the business of Palace Hotel was thereafter, taken over and conducted by the Government of Pakistan, as enemey property, by removing the old management and its Directors. It was further averred that the Custodian of Enemy Property for Pakistan through his authorised Agent, Pakistan International Airlines Corporation, managed the said Palace 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 (Custody and Registration) Order, 1965, sold and transferred the entire business of Palace Hotel, formerly belonging to Palace Hotel (Karachi) Limited together with all rights and licences and all assets, claims, moneys, outstandings, to the plaintiff effective from 24th March, 1972. The appellant therefore took over the Palace Hotel from Pakistan International Airlines Corporation and assumed charge with all assets, rights, licences, privileges as owners thereof from that date. It was also stated that the Assistant Collector of Central Excise and Land Customs, Division I, Karachi, had required the Palace Hotel to pay Central Excise duties 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 made, in pursuance of the provisions of Central Excises and Salt Act of 1944, as amended by Finance Ordinance IX of 1970 and again by Finance Ordinance XIV of 1971. The total amount so demanded as being due for services etc. Rendered in the said Hotel including sales in the bar. Night Club of the Palace Hotel from Jun; 1970 up to March, 1972 had been worked out and/or as demanded amounted to Rs, 2,94,898.71.
39. The appellant claimed that as a matter of fact no amount could legally be levied or required to be paid by Palace Hotel as payable to the Central Government as Central Excise duties of pursuance of the provisions of Central Excises and Salt Act, 1944 as amended in 1970 and 1971, for the reason that during the aforesaid period Palace Hotel as an enemy property had been vested in the Custodian of Enemy Property for Pakistan on behalf of the Central Government and the business of the said Palace Hotel was thus operated, run and carried on by and/or on behalf of the Central Government. No Excise duties therefore, it was asserted, could be levied or demanded from the Central Government or the Palace Hotel. The appellant further claimed that the demand for payment of Central Excise duty for services etc. Rendered by Palace Hotel as demanded for the period June, 1970 to March, 1972 amounting to Rs, 2,94,898.71, was ab initio illegal and ultra vires and was not at all leviable under the provisions of sections 3, 3-A and 4 of the aforesaid Excises and Salt Act, 1944, as subsequently amended. The stand of the appellant was that the levy of Excise duty by the Central Excise and Land Customs Collectorate at Karachi appeared to have been made by mistake and/or in ignorance of the true legal position. The Custodian of Enemy Property for Pakistan, who was running the Palace Hotel on behalf of the Central Government as enemy property, was immune from payment of any duties under the aforesaid Act.
40. The appellant further claimed that between 22nd July, 1970 and 11th April, 1972 Palace Hotel had paid a total sum of Rs, 1,39,126.31 as the Central Excise duties. At the time when the appellant took over the possession of Palace. Hotel on 24-3-1972, further sum of Rs, 1,55,772.40 was being demanded as arrears of Central Excise duties and the appellant as being the purchaser of Palace Hotel was required to pay this amount. The appellant further asserted that immediately after the appellant took possession of the Palace Hotel, the Assistant Collector, Central Excise and Land Customs, Karachi, coming to know of the purchase of Palace Hotel by the appellant, issued on 3-4- 1972 an order for attachment or seizure of the movable assets lying in the Palace Hotel for recovery of Rs, 1,55,772.40. The appellant claimed that the appellant bona fide believing that the said amount demanded for Central Excise duties was legally due and payable, requested the Assistant Collector, Central Excise and Land Customs, Karachi to give time to look into the matters and offered to give Bank Guarantee and to pay the amount by 30th April, 1972. According to the appellant it was done to avoid attachment and seizure of assets of Palace Hotel and accordingly furnished Bank Guarantee of First National city Bank, Karachi by letter of Guarantee dated 3rd April, 1972 and also furnished Guarantee Bond dated 4th April, 1972 of the same Bank for payment of the amount of Rs, 1,55,772.40 by 30th April, 1972. The appellant further claimed that being the transferee of the Palace Hotel with all rights, privileges. Assets, claims, etc. It was entitled to claim refund of Rs, 1,39,126.31 as having been illegally recovered from or paid by Palace Hotel to respondents Nos. 1 and 2 and further that the appellant could not be required to pay as arrears of Central Excise duties the above-mentioned sum of Rs, 1,55,772.40 which was claimed to be due and payable to Central Excise and Land Customs, Karachi from September, 1970 to June, 1971.
41. Respondents in their joint written statement denied that the business of Palace Hotel was taken over and conducted by the Government of Pakistan, It was averred that the excise duty could be legally levied and was lawfully demanded from the Palace Hotel for the services provided or rendered and that on 24-3-1972, a sum orRs, 1,55,772.40 was due from the Palace Hotel Karachi Limited, after deducting the amount of excise duty on the services already paid by the appellant, and that this liability was taken over by the appellant. It was further averred that on 18-4-1972, the appellant wrote a letter to the Collector, Central Excise & Land Customs, Karachi, in respect of the excise duty recoverable from the Palace Hotel for the period beginning from 1-9-1970 to 30-6-1972, and that the appellant offered to furnish Bank guarantee in the said amount and pay the said amount in three instalments, which offer, it was claimed by the respondents, was accepted by the respondents and accordingly the appellant had paid the first instalment in the sum of Rs, 59,658.76, but did not pay the remaining two instalments.
' On the pleadings of the parties the following issues and an additional issue were framed : "(1) Is the Palace Hotel immune from payment of Excise Duty as alleged in para. 8 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. I and 2?
(5) To what relief, if any, the plaintiffs are entitled? Additional Issue : "Whether the suit is barred under section 10 of the Central Excises & Salt Act, 1944 ?"
42. Before the learned Single Judge issue No, 1 and the additional issue were not pressed and therefore, they were decided against the appellant. The learned Single Judge, however, decided the remaining issues also against the appellant and in consequence dismissed the suit but without costs. The appellant has therefore, filed the present appeal.
43. We heard M/s. Iqbal Kazi. Mr. Qamar Mohammad Khan, Mr. Mamoon Kazi, Mr. Arif Hussain, Mr. Mansoorul Arfin and Mr. Mohsin Tayab Ali Advocates for the petitioners, the last-named Advocate also in support of the High Court Appeal, and Mr. Abdul Sattar Shaikh Addl. A. G., Sind, and Mr. Hamid Hussain and Mr. Muzaffar Hassan Advocates, for the respondents.
44. Mr. Iqbal Kazi, the learned counsel raised the following points in support of his petitions :
(i) The imposition of excise duty on excisable services is ultra vires the Constitution of 1962.
(ii) In any case, there is express bar in the Constitution in levying excise duty on liquor by the Federal Legislature.
(iii) Excise duty was not payable by the petitioners as they were not rendering any excisable services within the meaning of section 2 (dd) of the Act.
(iv) The services made liable to duty in the Second Schedule to the Act are beyond the definition of Excisable Services provided in section 2 (dd) of the Act.
(v) The Central Government had, no power to recover this duty after the promulgation of 1973 Constitution.
45. Mr. Qamar Muhammad Khan Advocate in addition submitted that the excise duty in the present case is partly in the nature of sales tax and partly professional tax so far as excise duty levied on goods and merchandise supplied was concerned.
46. M/s. Mamoon Kazi, Mr. Mansoorul Arfin and Mr. Arif Hussain Advocates adopted the points raised by Mr. Iqbal Kazi Advocate.
47. Mr. Mohsin Tayabally Advocate appearing for petitioners in C. P. Nos. 220 of 1972, 428 of 1972 and for the appellant in H. C. A. No, 72 of 1971, adopted the points of Mr. Iqbal Kazi. He however, additionally raised the point that the expression excisable services in view of the provisions of section 2 (dd) of the Act, as amended, would not include the rent of room in a hotel.
' No counsel raised any other points.
48. We have, however, noticed that in Constitution Petition No, D-39 of 1970 and another petition, the petitioners have raised the point that the levy of excise duty on the amount of Rs, 4 lacs and above on excisable services in the cities of Lahore and Karachi and Rs, 2 lacs and above in other cities is discriminatory and is therefore, unconstitutional.
49. It seems that the fate of the first point raised by Mr. Kazi depends upon the meaning of the expression 'duties of excise', or the meaning of the word or term 'excise'.
50. We would therefore, first consider the meaning of this word as stated in the dictionaries, as discussed by Jurists and in various cases.
' According to the Oxford Dictionary Vol. III, p. 379 "excise" means : "any toll or tax, a duty charged on home goods either in the process of their manufacture or before their sale to the home consumers".
' Webster's New International Dictionary, page 890, defines the word 'excise' as : "any duty, toll or tax, and inland duty or impose levied upon the manufacture, sale or consumption of commodities within the country. Also a tax upon the pursuit or following of certain sports, trades or occupations Jowitt's Dictionary of the English Law, defines it as : "A duty on certain commodities as charged on the manufacturer ; 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 not 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."
' Wharton's Law Lexicon, page 364, states the meaning as : "the name given to the duties or taxes laid on certain articles produced and consumed at home".
' Black's Law Dictionary (Revised Fourth edition), page 672, states : "An inland imposition, paid sometimes upon the consumption of the commodity, and frequently upon the retail sale."
' We may now refer to the opinion of a jurist namely, Stephen on the meaning of the word 'excise' and also some judicial pronouncements wherein this word has been considered.
' Stephen in his commentary (Vol. II, Chap. 7) following Blackstone's old definition (Commentary, Vol. I, Chap. 8) has stated : "Excise duties are those duties which are imposed by parliament upon commodities produced and consumed in this country. They are directly opposite in their nature to the Customs duties, for they are an inland imposition, paid sometimes on the consumption of the commodities, frequently upon the retail sale."
' It may also be pertinent to refer to the meaning of this word stated by Findlay Shirras, an economist in his book entitled 'Science of Public Finance', Vol. II (Edn. 3), p. 652 which is as follows : "A tax or duty on home-produced goods, either in the process of their manufacture or before their sale to consumers, especially on spirits, beverages, gasoline, sugar, and tobacco. It includes also certain licences, commodities, and licences to conduct certain trades. It is usual to exclude from excise or excises sales or turnover taxes.".
' This word also came for consideration before the Federal Court of India in Reference No, 1 of 1938 (A 1 R 1939 F. C. 14) made by His Excellency the Governor-General under section 213 of the Government of India Act, 1935. Gwyer, C. J. While considering the scope of the Federal Legislature to legislate and the meaning of excise duty observed as follows : "The federal legislative power extends to making laws with respect to duties of excise on goods manufactured or produced in India. "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 the Latin exciders, to cut out. It was at first a general word for a toll or tax, but since the 17th century it has been acquired in the United Kingdom a particular, though not always precise, signification. The primary meaning of 'excise duty' or 'duty of excise' has come to be that of tax on certain articles of luxury (such as spirits, beer or tobacco) produced or manufactured in the United Kingdom, and it is used in contradistinction to customs duties on articles imported into the country from elsewhere. At a later date the licence fees payable by persons who produced or sold excisable articles also became known as duties of excise ; and the expression was still later extended to licence fees imposed for revenue, administrative, or regulative purposes on persons engaged in a number of other trades or callings. Even the duty payable on payments 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 customs duties, are collected and administered by the Commissioners 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 home consumption. I am satisfied that is also its primary and fundamental meaning in India ; and no one has suggested that it has any other meaning in Entry (45)."
' Sulaiman, J. Who wrote separate opinion in Reference No, 1 of 1938 has succinctly stated meaning of the term 'excise duties, as understood in England in these words : "Thus, in England they have a fairly wide range. Even a dog tax, a vehicle tax, a hawker's licence tax, tax for wine licences and pawn broker's licences have been recognized in England to come within the range of excise duties, although in their nature they are licences. Again, in England excise duty is levied on the amount of purchases of intoxicating liquor supplied in or to a club or on behalf of a club to its members (Ibid. Vol. 28, para. 639). A duty of excise is payable on all payments for admission to any place of entertainment (ibid. Para, 681). Indeed, all dues realized through the Commissioners of Customs and Excise are treated either as customs or excise duties."
51. It was argued by Mr. Iqbal Kazi that the term 'excise' should be construed in its primary and fundamental meaning and the same meaning should be given to this term so far as item No, 43-b of the III Schedule to the 1962 Constitution is concerned. He laid much emphasis on the following observation of Gwyer, C. J. In Reference No, 1 of 1938, which we have already quoted hereinbefore : "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 home consumption. I am satisfied that that is also its primary and fundamental meaning in India ; and no one has suggested that it has any other meaning in Entry (45)."
' Mr. Kazi also referred to the following opinion of Lord Thankerton in (1934) Appeal Cases Attorney- General for British Columbia v. Kingdome Navigation Company Limit2d, besides citing The Province of Madras v. Messrs Boddu Paidanna and sons (1) and Governor-General-in-Council v. Prvince of Madras (2): "The meaning of "excise" as given in English Dictionaries is, of course, very comprehensive, as the writer of dictionary has to include all possible uses to which the word is put. But in Common parlance the duty of excise is more or less connected with home manufacture or production, even though its collection may be delayed till a later stage."
' Firstly in Reference No, 1 of 1938 (AIR 1939 FC 14) Entry No, 45 of list I, Schedule 7th to the Government of India Act, 1935, came up for consideration which was as follows : "Duties of excise on tobacco and other goods manufactured or produced in India (Pakistan, substitute after independence of sub-continent in Pakistan) except-
(a) alcoholic liquors for human consumption ;
(b) opium, Indian hemp and other narcotic drugs and narcotics ; non-narcotic drugs.
(1) Al R 1942 PC 33 (2) Al R 1945 P C 98
(c) medicinal and toilet preparations containing alcohol or any substance included in sub- paragraph (b) of this Entry."
' But here the relevant Entry is Entry No, 43(b) in the III Schedule to 1962 Constitution which is as follows : "43(b) duties of excise (including duties on salt, but not including duties on alcoholic liquor, opium or other narcotics) ;".
52. It will be seen from the above two quoted Entries that the power given to the parliament under the Government of India Act, 1935, to levy duties of excise was limited to tobacco and other goods manufactured or produced except alcoholic liquors for human consumption, opium and Indian hemp and other narcotic drugs and narcotics etc. While under the 1962 Constitution the duties of excise was not subjected to any such limitation. Same remains the position under 1973 Constitution. (See Entry 44 of the 4th Schedule).
' Therefore, the observations of Gwyer, C. J. In AIR 1939 FC 1, should be understood in the context of the scope of Entry No, 45, as there was reason then to adopt narrower meaning of the term or word 'excise' in view of the fact that such duties were limited to manufacture or production of tobacco and other goods.
' Secondly, Supreme Court of Pakistan seems to have accepted and approved the wider meaning of the expression 'duties of excise' in Muhammad Younus V. Central Board of Revenue, Government of Pakistan and others (1) while considering the various provisions of Central Excises and Salt Act, 1944 and in Colony Sarhad Textile Mills Ltd. v. Superintendent, Central Excise and Land Customs (2).
' In the first named case while considering in the case AIR 1939 FC 1, on which reliance was placed heavily by Mr. Iqbal Kazi, 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 Legislatures had no power to legislate, their competence being limited to levying 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
(1) PLD 1964 SC 113 (2) 1979 SCM R 640 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 realised."
' In the second named case Dorab F. l'atel, J. After reviewing Indian, Canadian, and Australian cases was pleased to observe that 'excise' is a word of wider import. We are bound by the observations.
' Therefore, the argument of Mr. Iqbal Kazi that the Central Legislature under 1962 Constitution had no power to levy excise duty in respect of excisable services as the same are not covered by the term of 'duties of excise' has no merit and accordingly, we cannot accept the same.
' In view of the above opinion we need not discuss the cases AIR 1942 PC 33 and AIR 1945 PC 98.
Consequently, the opinion of the Learned Single Judge in the judgment impugned in H. C. A. No, 71/79 reported as PLD 1980 Kar. 275 on this point is correct and must therefore prevail.
53. We may, however, record that Mr. Hamid Hussain, learned counsel for the respondent besides submitting that the leavy of duty on excisable services is covered by the expression 'duties of excise', submitted that under Article 131 (2) of the 1962 Constitution, the Central Legislature had power to make laws for the whole or any part of Pakistan with respect to any matters not enumerated in the Third Schedule to the 1962 Constitution but we need not examine this submission for we have already clearly held that the expression 'duties of excise' covers impugned duty.
54. Taking up the second point of Mr. Iqbal Kazi that in view of the provisions of Entry'43(b) of the Third Schedule of 1962 Constitution, the Federal Legislature had no power to levy excise duty on liquor, the argument of Mr. Iqbal Kazi was that by levying excise duty on liquor, the Central Legislature has legislated in respect of a matter which was specifically excluded from its purview.
He submitted that the levy of duty on services rendered or provided in a place where liquor is sold was in fact, levy of duty on liquor. He further submitted that it is settled principle that what cannot be done directly cannot be done indirectly. He relied on the Attorney-General of Saskatchewam v.
The Attorney-General of Canada (1). In per view the point raised is misconceived for duty has not been levied on liquor but on 'excisable services' which expression has been defined as services, facilities and utilities as specified in Part II of the First Schedule to the Act, wherein the meaning of 'restaurant' is explained as an establishment, organization, place where food or drinks are sold, whether or not it provides any other services, facilities or utilities and includes a night club and cabaret. From the explanation it is clear, that the duty is levied on services, facilities and utilities, provided or rendered in a restaurant which is a place where a person is provided with drinks and food and where he takes rest, sometime for hours, and where he may be provided with other services, facilities and utilities. It is therefore, these services, facilities and utilities which have been taxed. However, the basis of levy of the duty is the charges recovered for the drinks, food and other services, facilities and utilities. The Legislature instead of levying duty in that manner could have very well taxed the entrance in a hotel or restaurant or occupation of a chair or table therein
(1) AIR 1949 P C 190 but it has chosen a different basis, it being sovereign it could do so subject however, to any limitation provided in the Constitution. Really therefore, the duty is on services, facilities and utilities in hotel or restaurant. So far as AIR 1949 P C 190 is concerned the principle in support whereof it has been cited and which has already been quoted, is not in dispute but what can be questioned is the application of the principle to the provisions of law under consideration.
55. Taking up the next point it was submitted by M. Kazi that the petitioners who own liquor bars do not provide or render any service in their bars. The respondents have disputed in their counter- affidavit this claim. Therefore, this being a disputed question of fact, could not be decided in this Constitution petition. Moreover, according to explanation, as already pointed out, "Restaurant" means an establishment, organization 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. Thus a place where food or drinks are sold attract the provisions of section 3 of the Act. Accordingly we find no substance in this point too.
56. Taking up the fourth point, it was urged by Mr. Kazi that the Schedule has enlarged the definition of 'excisable services' given in section 2(dd) of the Central Excises & Salt Act, 1944 and therefore, it should not be given effect to.
' Reliance was placed on Maha Ram and others v. Emperor (1), Muneshwara Nand V. State (2), Pir Ghulam Rasul Shah and another v. Chief Land Commissioner, Lahore and others (3).
' In order to appreciate the submission we may first hereinbelow quote the definition of 'excisable services' as given in section 2(dd) of the Act : " 'excisable services' means services, facilities, and utilities specified in Part 11 of the First Schedule as being subject to a duty of excise."
' We may also quote the relevant provisions of Part II of the First Schedule to readily and conveniently appreciate the submission :- FIRST SCHEDULE PART II Item No, Description of Services Rate of duty 3 1 2 I Services rendered by Hotels and Restaurants- " (1) All services, facilities and utilities, includ- 10 per cent ing catering, supplies and merchandise of the charges. provided or 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.
(1) AIR 1918 All. 168 (2) AIR 1961 All. 24
(3) PLD 1967 Kar. 618 2 3
(2) All services, facilities, and utilities, 10 per cent including supplies and merchandise, provided of the or rendered by a restaurant. Charges. 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."
' It will be seen from the above-quoted definition that section 2 (dd) itself refers to excisable services as specified in Part II of the First Schedule.The services specified in Part II of the First Schedule have, therefore, by reference become part of the definition of excisable services and must therefore, be given effect.
' Further, a schedule in an Act is a mere question of drafting, a mere question of words. The schedule is as much a part of the statute and is as much an enactment as any other part, and if an enactment in a schedule contradicts an earlier clause it prevails. (See Craies on Statute Law, 5th Edn., page 208, wherein reliance is placed on the observations of Brett, L. J. In Attorney-General v. Lamplough (1).
' So far as the cases cited in support of this point are concerned. We would first take up Maha Ram and others v. Emperor (2).
' In this case it was laid down that it is not competent to a Court to extend the words of an enactment by construction.
' But in the present case there is no question of extending the words of an enactment by construction. The next case cited was Muneshwara Nand v. State (3) which lays down the following principle :- "Schedules form a part of the statute and must be read together with it for all purposes of construction. But expressions in the Schedule cannot control, or prevail against the express enactment. If there is any appearance of inconsistency between the Schedule and the enactment the enactment shall prevail, and if the enacting part and the Schedule cannot be made to correspond, the latter must yield to the former."
' However, we do not find any conflict between the provisions of the Act and its Schedule. In fact the provisions of the Act and its Schedule read together are quite in harmony with each other. This case is therefore, also of no help to the petitioners.
' In Pir Ghulam Rasul Shah and another v. Chief Land Commissioner, Lahore and others the principle of interpretation of statute is stated as follows :- "If there is inconsistency between the Regulation, which is the main enactment and the rules thereunder which rules are to be deemed to be part of the main enactment itself, then the two provisions of the enactment and the rules should be reconciled as best as they can. But if the conflict is incapable of resolution, the rule which should apply
(1) (1878) 3 Ex. D 214 (2) AIR 1918 All, 168
(3) AIR 1961 All. 24 is that the principal enactment should be treated as the main provision and the Orders or Rules made under the enactment, as subordinate provisions."
' This ease is also distinguishable for the aforesaid reason. This point also has therefore, no substance.
57. Taking up the fifth point, raised by Mr. Iqbal Kazi, namely, that the Government has no power to recover excise duty after coming into force of 1973 Constitution, the arguments of Mr. Kazi was that, the Finance Ordinance, 1970, through which the excise duty on excisable services was levied, was not a valid piece of legislation having been promullgated by General Yahya Khan who was declared to be a usurper by the Supreme Court of Pakistan in Asma jilani's case (1) Mr. Iqbal Kazi relied on a Division Bench's decision of this Court in Shamimur Rehman v. Government of Pakistan and others (2). On the other hand, it was submitted by Mr. Hamid Hussain, and Mr. Muzaffar Hasan that the Ordinance has been successively saved by the Interim Constitution by its Article 280, clauses (1), (2) and (8) and by Article 268, clauses (1) and (7) of the 1973 Constitution. The relevant clauses of these articles read as follows:-- ' Article 280 of the Interim Constitution of 1972 : "280.-(1) Except as provided by this Article, all existing laws shall, subject to this Constitution, continue in force, so far as applicable and with the necessary adaptations, until altered, repealed or amended by the appropriate Legislature.
(2) The Proclamation made on the twenty-fifth day of March, 1969, is revoked With effect as from the commencing day, and the Orders specified in the Sixth Schedule and any Orders amending those Orders are repealed with effect as from that day, but this clause shall not affect any existing laws made under those Orders.
(3)
(,4) .
(5) 4
(6) .
(7). .
(8) In this Article, "existing laws" means all laws (including Ordinances, Orders-in-Councils, orders, rules, bye-laws, regulations and Letters Patent constituting a High Court, and any Notifications and other legal instruments having the force of law) in force in Pakistan or any part of Pakistan, or having extra-territorial validity, immediately before the commending day."
' Article 268 of the 1973 Constitution : "268.--(1) .Except s proviced by this Ankle, all existing laws shall, subject to the Constitution; continue in force, so far as applicable and with the necessary adaptations, until altered, repealed or amended by the appropriate Legislature.
(3) .
(4) .
(1) PLD 1972 SC 139 (2) PLD 1980 Kar. 345
(5) .
(6) .
(7) In this Article, "existing laws" means all laws (including Ordinances. Orders-in-Council, Orders, rules, bye-laws, regulations and Letters Patent constituting a High Court, and any notifications and other legal instruments having the force of law) in force in Pakistan or any part thereof, or having extra-territorial validity, immediately before the commencing day."
Explanation.-In this Article, "in force", in relation to any law, means having effect as law whether or not the law has been brought into operation."
A perusal of clauses (1) and (8) of the Interim Constitution and clauses (1) and (7) of Article 268 of the 1973 Constitution clearly shows that 6 all the existing laws have been saved by the said provisions. Moreover, in the case of Asma Hamoodur Rehman, C. J. Following the prineie of condonation, condoned all acts and legislative measures which were in accordance with, or could have been made under the abrogated Constitution in these words, which appear at page 207 of the report :- "Applying this test I would condone (1) all transactions which are past and closed, for, no useful purpose can be served by re-opening them, (2) all acts and legislative measures which are in accordance with, or could have been made under, the abrogated Constitution or the previous legal order, (3) all acts which tend to advance or promote the good of the people, (4) all acts required to be done for the ordinary orderly running of the State and all such measures as would establish or lead to the establishment of, in our case, the objectives mentioned in the Objectives Resolution of 1954."
' As regards PLD 1980 Kar. 345, cited by Mr. Iqbal Kazi, it may be stated in that case inter alia the validity of Martial Law Regulation No, 103 came up for consideration, besides the question whether Central Government could legislate in respect of acquisition or requisition of the property. We have already held that the averments in the Central Excises & Salt Act, 1944, by the Finance Ordinance, 1970, was within the competence of the Central Legislature. This case therefore, does not advance the case of the petitioner to any successful conclusion.
58. Taking up the point raised by Mr. Qamar Abbas that the excise duty in the present case is partly in the nature of sales tax so far as excise duty levied on goods and merchandise supplied in a hotel are concerned and partly professional tax so far services are concerned.
' He submitted that the Government should have levied this duty by amending the Sales Tax Act so far as the goods provided or supplied to the customers are concerned. In this connection he referred to preamble of the Sales Tax Act, 1951, which reads as follows : "Whereas it is expedient to consolidate and amend the law relating to the levy of a tax on the sale, importation, exportation, production, manufacture or consumption of goods."
' So far services are concerned, he submitted, that some independent enactment should have been passed or promulgated.
' He further submitted that the word 'charges' used, under the heading 'rate of duty', in the sentence '10 per cent. Of the charge' is vague.
As regards the main point, it may be stated that if Legislature is competent to levy a tax or duty it could do so by providing for the same either in an existing Act or by passing an independent Act.
Examples are not lacking where a number of taxes and duties have been levied by the Provincial Legislature through the Finance Act or Ordinance. One such example, can be cited that of tax on hotels which was levied in Sind by the Finance Act, 1977.
' It is for the Legislature to consider which manner may be convenient to levy a tax or duty. No valid objection can therefore, be taken on that score alone.
' We may have referred to the observations of Gwyer, C. J. In Reference No, 1 of 1938 which, though are in relation to the stage at which the excise duty could be imposed, are somewhat pertinent to the point under consideration. These observations are :--- "Subject always to the legislative competence of the taxing authority, a duty on home-produced goods will obviously be imposed at the stage which the authority find to be the most convenient and the most lucrative, wherever it may be, but that is a matter of the machinery of collection, and does not affect the essential nature of the tax. The ultimate incidence of an excise duty, a typical indirect tax, must always be on the consumer, who pays as he consumes or expends and it continues to be an excise duty, that is a duty on home-produced or home manufactured goods, no matter at what stage it is collected."
' So far as the second submission is concerned that the word 'charges' used in the provision mentioned hereinbefore is vague. We think that the submission is not wells founded. According to the Concise Oxford Dictionary 'charge', as a noun, means 'expense' price demanded for 'service or goods'. Accordingly the duty has to be charged on the price of the services rendered and drinks and food provided. Therefore, there is no substance in this submission too of Mr. Qamar Abbas.
59. Now, we would take up the Point raised by Mr. Mohsin Tayab Ali that the excisable services would not include rent of a room in a hotel. In this regard he submitted that the words all services, facilities and utilities would not include rent in a hotel. He further submitted that these words should be read as ejusdem jeneris He also submitted that no services are rendered in the rooms. He alternatively, submitted that the rooms which have been let out are not part of the Palace Hotel.
Taking up the alternate submission first that the rooms let out are not of the hotel, it may be stated that in paragraph 7 of the petition the petitioner has stated that certain rooms of the said Palace Hotel are let out at a fixed monthly rent and to which persons no services or facilities are rendered by the Hotel except the use of electricity and water. But the respondents in paragraph 7 of the counter-affidavit have denied that no services, facilities or utilities are being provided to persons occupying rooms on monthly rent. It is stated therein that services, facilities and utilities are being provided to such persons in different forms such as supply of water, drinks, tea etc., when demanded by the occupiers of such rooms. It is further stated that these are some of the services, facilities or utilities 'provided to such occupiers of the rooms, and that all persons named in the paragraph under reply are being provided with the services, facilities and utilities. It is also stated that the rooms occupied by the persons are small part of the entire building and organisation which is a Hotel within its definition as given in the Part II of the First Schedule to the Act.
' Therefore, the claim that the rooms are not part of the hotel stands belied by the averments made in the petition itself.
60. Now, taking up the first submission, that room rent cannot be included in excisable services, it may first, be pointed out that according to the definition of the expression 'excisable services', all services, facilities and utilities, specified in Part II of the First Schedule to the Act have been subjected to duty under section 3 of the Act. And Part II of the First Schedule which provides that all services, facilities and utilities include catering, supplies and merchandise provided or rendered by a hotel. In the explanation, 'hotel has been defined as an establishment, organisation or place where rooms or suites of rooms, are let out on rent. Whether or not there is any arrangement for catering or restaurant and whether or not it provides any other (emphasis supplied) services, facilities or utilities by whatever, name called. From the explanation it is clear that even if a room or a suite of rooms in a hotel is let out on rent the same is to be treated as a service or utility or facility as the provision in the explanation 'whether or not there is any arrangement for catering or a restaurant or provides any other service, facility or utility indicates that occupation of rent of a room or suite of a room in a hotel on rent is included in the term services, facilities. The words 'any other' are clear pointers in this direction. Therefore, the intention of the Legislature is clear that it intended to subject to duty the rent charged by a hotel for a room or suite of rooms rented out therein.
61. As regards the submission that the rule of ejusdem generis should be applied, it may be stated that there are no general words before the words, all services, facilities and utilities so that it could be argued that the general words are controlled by the following particular words or that general words are presumed to be restricted to the same genus as the particular words or that the general words must be confined to the things of the same kind as those specified.
' However, the question whether, when the Legislature has used general words in a statute, not following particular or specific words, those words are to receive any (and, if so, what) limitation, is one which may sometimes be answered by considering whether the intention of the Legislature on this point can be gathered from other parts of the statute. (Craies Statute Law, 5th Edn., p. 171).
' In our opinion the intention of the Legislature that it intended subject to duty inter alia the room charges is clear if the charging section is read in the light of the definition of the expression 'excisable services' alongwith the relevant provisions of the First Schedule, Part II.
62. Taking up the last ground taken in C. P. No, D-390 of 1971, that the exemption limit from payment of excise duty on turn over of Rs, 4 lacs granted to hotels and restaurants in Karachi and Lahore as against of Rs, 2 lacs to hotels and restaurants situated in other cities is illegal being discriminatory, the point seems to be based on the provisions of equal protection of law and equality before law enshrined in Articles 4 and 25 of 1973 Constitution. However, mere differentiation or inequality in treatment does not amount to discrimination in contravention of the above provision as pointed out by Shahabuddin, J. In Zain Noorani v. Secretary of National Assembly (1) for the provisions prohibit only unreasonable or arbitrary differentiation having no rational basis with reference to the legislation. The principle of equality does not amount to equality of operation of legislation
(1) PLD 1957 SC (Pak.) 46 upon all citizens of State as laid down by the Supreme Court of Pakistan in Jibendra Kishore v.
Province of East Pakistan (1). It also does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position and the varying needs of different classes of persons often require separate treatment. State of Bombay v.
F. L. Balsara (2). Syed Sharifuddin Pirzada in his book entitled "Fundamental Rights and Constitutional Remedies in Pakistan", 1977 Edition, pages 371/372, while stating the above principles has stated the further principle that the equality clause forbids class legislation but does not forbid reasonable classification for the purposes of legislation (Sakhawant Ali v. State of Orissa (3)). He has however, pointed out the conditions for application of the abovesaid principle and other principles as follows :
(a) the classification is natural and reasonable and bears a fair and substantial relation to the object of legislation ;
(b) the classification is not arbitrary or capricious ;
(c) a classification that proceeds on irrelevant consideration, such as differences in race, colour or religion will certainly be rejected by the Courts ;
(d) the classification may be founded on different bases, namely, geographical or according to objects or occupation or the like. What is necessary is that there must be a nexus between the basis of classification and the object of enactment under consideration ;
(e) it is not required that the legislative classification should be scientifically or logically perfect ;
(f) if the classification is relevant to the object of the Act, it must be upheld unless the relevancy is too remote or fanciful ;
(g) a classification is not unreasonable merely because one individual or company is treated differently from others by legislation ;
(h) the power to make a classification can be exercised not only by the Legislature but also by administrative bodies acting under the Act.
' In the present case the petitioner has nowhere alleged in the petition that the exemption from payment of excise duty provided to classes of hotels and restaurants on the basis of turn over is arbitrary or capricious or is based on irrelevant consideration or is in violation of any other conditions mentioned above.
' We therefore, find that this point also has no substance.
' Accordingly, we dismiss all the petitions and the High Court Appeal leaving the parties to bear their own costs in the circumstances of the cases.
(1) PLD 1957 SC (Pak.) 9 (2) AIR 1951 SC 318 (3) AIR 1955 SC 166