' AJMAL MIAN, J.--The petition is directed against the orders, dated 20-7-1983 and dated 26-9-1983 passed by respondent No. 4 and respondent No. 1 respectively.
2. The brief facts leading to the filing of the above petition are that the petitioner is the owner of a Hotel at Karachi, namely, Hotel Intercontinental. By Finance Ordinance, 1970 (Ordinance No. XI of 1970) a number of amendments were made inter alia is the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), which inter alia included the incorporation of clause (dd) in section 2 and Item 13.01 in Part II of the First Schedule to the Act. It may be advantageous to reproduce hereinbelow the above clause and paras. A and B of above Item 13.01 of Part II of the First Schedule to the Act, which read as follows:-- "(dd) 'excisable services' means services, facilities and utilities specified in Part II of the First Schedule as being subject to a duty of excise."
Item No. Name of Service Rate of duty.
13.01 Services rendered by Hotels and Restaurants-- A. All services, facilities and utilities, including catering, 15% of the supplies and merchandise charges provided or rendered by an hotel Explanation.--"Hotel" means an establishment, organisation or place where rooms or suits of rooms, are let out on rent, whether or not it has any arrangement for catering or provides any other services, facilities or utilities, by whatever name called.
B. All services, facilities and utilities, including supplies 15% of the and merchandise, provided charges or rendered by a restaurant Explanation,--"Restaurant" means an establishment, organisation or place where food or drinks are sold, whether or not it provides any other services, facilities or utilities, by whatever name called, and includes a night club and cabaret."
' The petitioner by virtue of the above enactment had become liable to pay excise duty for the services facilities and utilities including catering, supplies and merchandise provided or rendered by them. The petitioner had obtained a telephone exchange and telex service from the Telegraph Department of Government of Pakistan for providing the same to their customers. It is the case of the petitioner that they charge 15% as handling charges in addition to the actual charges payable by them to the Telegraph Department from their customers for the above services. It seems that respondent No. 2, that is Central Board of Revenue, (hereinafter referred to as the Board) issued a Circular C. No. 4/8-UX (B&L)/70, dated 27-7-1971 addressed to the Collector, Central Excise and Land Customs Lahore/Hyderabad/Karachi, North Zone Dacca/South Zone, Chittagong under the caption "levy of excise duty on service rendered by Hotels and Restaurants". It may be pertinent to reproduce hereinbelow the relevant portion of the above circular, which reads as follows:-- "The question of reserving uniform record to be maintained by hotels and restaurants and the category of service which should be treated as excisable has been under the consideration of the Board and after careful examination of the relevant issues the following decision has been made:
(1) The hotel and restaurants shall maintain the following record:--
(a) Bill of charges,
(b) Daily register, and
(c) Submission of a monthly return to the department.
The form of the bill, daily register and the monthly return will be prescribed by the Collector. The hotels may be required to maintain the bares necessary information for the department and the Collector should look into the forms maintained by various hotels and with modifications, if any, approve them.
(2) The following items may be included in the bills for charge of Central Excise Duty:--
(a) Telephone charges.--This has to be determined from two angles (i) whether the charges are included in all charges to the customers or (ii) whether a separate bill is issued for telephone charges to duty and in the automatically charged to duty and in the second case it is to be seen whether the hotel is recovering from the customers any extra amount for this services, if so, that extra amount should be subjected to levy.
(b) Telegram and postal charges.--If any amount in excess of the amount payable to the postal department is realised by the hotels from customer, that has to be charged to duty."
' On the oasis of the above circular the petitioner was charged excise duty on the above 15% handling charges and not on the total amount charged by them from their customers in respect of the above telephone and telex service. However, it seems that Deputy Superintendent Central Excise and Land Customs, Karachi by a letter, dated 18-2-1981 informed the petitioner that with effect from 15-2-1981 excise duty on the charges on account of telephone, telegram and postal service provided by hotels and restaurants would be levied on the amount actually paid by the guests/visitors. The above letter was issued in confirmation of the telephonic message conveyed by the said officer to the petitioner. In response to the above letter, the petitioner through their letter, dated 24-2-1981 resisted the above new method of charging the excise duty and pointed out that in view of the above circular they were liable to pay only on the handling charges. As a result of the above stand taken by the petitioner, the Superintendent Central Excise and Land Customs by his letter, dated 14-4-1981 had withdrawn the aforesaid instructions contained in the above letter of Deputy Central Excise and Land Customs, dated 18-2-1981. It seems that after the expiry of nearly one year the Superintendent Central Excise and Land Customs by his letter, dated 18-2-1982 addressed to the petitioner informed them that as per order of the Collector, Central Excise and Land Customs, Karachi, excise duty on the charges on account of telephone, telegram, telex and all services rendered by them to the guests/visitors were to be charged on amount actually paid by them with effect from 15-2-1981. The petitioners were asked to supply the figures separately on each item on the pro forma given below in the above letter for the period from 15-2-1982 to 31-3- 1982. The petitioners were also directed that in future they should maintain the record for service charges in R.T. 3(B). The above demand was again resisted by the petitioner through their letter, dated 15-5-1982 but on 11-8-1982 the Assistant Collector issued a show-cause notice for the differential amount of the central excise duty on telephone and telex charges amounting to Rs.5,97,435.93. The above show-cause notice was resisted by the petitioner but the Assistant Collector by his order, dated 17-11-1982 maintained the above show-cause notice and ordered the issuance of demand of the above sum of Rs.5,97,435.93. The appeal filed by the petitioner against the above order was dismissed by respondent No. 3 i.e. the Collector Central Excise and Land Customs by his order, dated 15-2-1983. After that the respondent No. 4 i.e. Deputy Collector, Central Excise and Land Customs passed an order, dated 20-7-1983 ordering of the recovery of Rs.3,42,960.41 as central excise duty and Rs.1,71,480.20 as additional duty. The petitioner filed a revision before respondent No.1, which was partly allowed by the impugned order, dated 26-9-1983, the operative portion of which reads as follows:-- "4. Having heard the defence and going through the facts of the case on record, I find that the applicants are justified in claiming the non-recovery of the central excise duty on the total amount of telephone, telegram and postal services rendered by them from April 14, 1981 (the date the Superintendent with drew the instructions of the Deputy Superintendent) should not be treated a default on the part of the applicants.
5. However, the applicants should have started recovering from the clients excise duty on the total amount of Telephone, Telegram, Telex and Postal Services from April 18, 1982 (the date the Superintendent informed the applicants about the change in law) and should not have waited for the decision of the Assistant Collector, Central Excise and Land Customs, Karachi.
6. The applicants cannot be given the benefit of any misinformation as to the correct position of law from April 18, 1982 onwards. The duty short paid by the applicants from April 14, 1981 to ' April 18, 1982 is waived. The orders of the Collector Appeals, Karachi are amended to this extent only."
' The petitioner being aggrieved by the above order has filed the present petition.
3.(a) In support of the above petition Mr. Kazim Hassan, learned counsel for the petitioner has urged as follows:--
(i) That the Board's instructions contained in the aforesaid circular, dated 27-7-1971 had the force of law, and, therefore, the same could not have been deviated by the respondents.
(ii) That respondents could not have withdrawn the above instructions after the same were acted upon by the petitioner inasmuch as the petitioner had not recovered any excise duty from their customers on the amount payable by the petitioner in respect of telephone and telex services of the Telegraph Department.
(b) On the other hand Mr. Liaquat Merchant, learned Deputy Attorney-General has contended as follows:--
(i) That under clause (dd) read with Item No. 13.01 of Part II of the First Schedule to the Act, the respondents were entitled to charge on all services, facilities and utilities for which the customers had paid to the petitioner.
(ii) that the Circular, dated 27-7-1971 was withdrawn by the Board by letter C.No. 39/2-CET/76, dated 2-2-1981 addressed to the Collector, Central Excise and Land Customs Karachi, by the Second Secretary to the Board, and therefore no reliance can be placed after the above date.
(iii) That the respondent No. 1 has taken very equitable view in the above impugned order by waiving the excise duty on the differential for the period commencing from 14-4-1981 to 18-4-1982 and, therefore, the above order cannot be struck down in exercise of constitutional jurisdiction.
4. The basic question in the instant case is, what is the liability of the petitioner under clause (dd) read with Item 13.01 of Part II of the First Schedule to the Act quoted hereinabove. A plain reading of the above-quoted clause read with Item 13.01 indicates that the excise duty is leviable on excisable services which mean services, facilities and utilities including catering, supplies and merchandise provided or rendered by a hotel.
' Mr. Liaquat Merchant has referred to the meaning of the word 'facilities' given in Ballentine's Law Dictionary, Third Edition, page 448 and Black's Law Dictionary, page 705, the relevant portions of which read as follows:-- "facilities" Appliances and services necessary or convenient in keeping house or operating a business or industry. Utilities; conveniences; rest rooms. Equipment of a carrier"....................................
"FACILITIES." That which promotes the ease of any action, operation, transaction, or course of conduct. Webster. The term denotes inanimate means rather than human agencies. Sloss-Shef - field Steel & Iron Co. v. Smith, 185 Ala. 607, 64 So. 337, 338."..................
' On the basis of the above definitions, it was vehemently urged by Mr. Liaquat Merchant that the word "facilities" is of wide import and covers services which are rendered by the petitioner with the aid of equipments.
5. We are inclined to hold that the facilities in the form of telex and telephone services provided for by the petitioner to their customers are covered by the above item of Part II of the First Schedule to the Act read with clause (dd) of section 2. It may further be pointed out that as per quoted item 13.01 the excise duty is leviable at the rate of 15% of the charges recovered by the petitioner from their customers and, therefore, it can safely be concluded that petitioner's liability was to pay 15% of the total amount recovered by them from their customers. In this regard reference may be made to the following cases:--
(i) Pakistan Investment Ltd. v. Pakistan and 2 others PLD 1980 Kar. 275 in which one of us (Ajmal Mian, J.) while dealing with the above clause (dd) read with the above items observed that levy of excise duty on intangible items in contrast to tangible items is not a new or unknown concept introduced by Finance Ordinance, 1970. It was further observed that the term 'excise duty' being susceptible to intangible items and therefore it can also cover a levy on services rendered or provided.
(ii) Mondi's Refreshment Room and Bar Karachi v. Islamic Republic of Pakistan and another PLD 1983 Kar.
214. Through the above-reported judgment, a Division Bench of the Court disposed of a High Court Appeal filed against the above judgment and also a number of connected petitions. While maintaining the above judgment inter alia it was held that excisable services specified in the schedule by reference had become part of the definition of excisable services given in section 2(dd) of the Act.
6. Having dealt with the question of liability as imposed by the above clause (dd) read with the above item 13.01, it may be pertinent to dilate on the other arguments submitted by the learned counsel for the petitioner, Mr. Kazim Hassan, in furtherance of his above submission that the above circular of the Board has binding effect, has referred to section 41 of the Act, which provides that all officers and persons employed in the execution of the Act and the rules made thereunder shall observe and follow the orders, directions and instructions of the Central Board of Revenue. It further provides that no such instructions shall be given by Central Board of Revenue so as to interfere with the discretion of an officer in the performance of his duties under sections 33 and 35. He has also referred to the following cases:--
(i) Nazir Ahmad v. Pakistan and 11 others PLD 1970 SC 453, in which the Hon'ble Supreme Court observed as follows as to the binding effect of the construction placed on words "appointed at one time" by the department.
"The departmental practice has followed the right course in the implementation of the relevant rule but whether right or wrong, it will be extremely unfair to make a departure from it now after a lapse of so many years and to disturb rights that have been settled by a long and consistent course by this practice. In the case of the appellant, the seniority initially accorded to him has held the ground continuously for ten long years until it was disturbed by the impugned order. This, to say the least, is bound to weaken the faith of the employees in the attitude and behaviour of the department. A passage from Crawford's Statutory Construction (1940 Edition at page 399) may be usefully reproduced to point out the effect of the 'departmental constructions', that is to say, the construction which is placed in practice on the provisions of a statute or rules by the administrative authorities who are charged with the execution of the statute or the rules. The learned author observes: Where the executive construction has been followed for a long time an element of estoppel seems to be involved. Naturally many rights will grow up in reliance upon the interpretation placed upon a statute by those, whose duty it is to execute it. Often grave injustices would result should the Courts reject the construction adopted by the executive authorities."
(ii) The Commissioner of Sales Tax Karachi (East) Karachi v. M/s. Chaudhry Farzand Ali PLJ 1983 Kar.
428. In the above case a Division Bench while relying upon the above Supreme Court Judgment held that Government functionary adopting and following for considerable time particular construction with regard to departmental instructions issued in that behalf normally not to be permitted to depart from such practice or interpretation.
7. There cannot be any cavil to the proposition that if a department places a particular construction on a provision of an enactment for a considerable long period and acts upon it or that it follows a practice consistently without any interruption for a considerable period, it cannot depart from such construction or practice in the absence of new development in the form of clarification by the legislature or by framing of new rules or issuance of binding instructions by the competent authorities. In the instant case the Board by its above-quoted Circular, dated 27-7-1971 had provided the manner of charging the excise duty in respect of the services, facilities of telephone and telex provided for by the petitioner to their customers.
There cannot be any doubt if the above circular would not have been modified, the same would have been binding on the subordinate officials to the Board in terms of section 41 of the Act.
However, this circular was modified by the aforesaid letter on 2-2-1981 addressed by the Second Secretary of the Board to the Collector Central Excise and Land Customs, Karachi which reads as follows:-- C.No.39/2-CET/76 Islamabad, the 2nd February, 1981.
From:- Mr. Shahid Bashir Second Secretary, To:- The Collector, Central Excise & Land Customs, Karachi.
Subject:-LEVY OF EXCISE DUTY ON SERVICES RENDERED BY HOTELS AND RESTAURANTS.
In partial modification of the instructions contained in Board's letter C. No-4/8-CX (B&L)/70, dated 27-7-1971 on the subject noted above, it has been decided that with effect from 15-2-1981 Central Excise duty on the charges on account of telephone, telegram and postal services provided by hotels and restaurants will be leviable on the amount actually paid by the guests/visitors. You may like to communicate the decision to all concerned for strict compliance from the due date.
(2) The above instructions are based on the advice rendered to the Board by the Law Division. This is for the information of the Departmental officers and need not be quoted while communicating the above instructions to other agencies.
Sd/.
(SHAHID BASHIR) Second Secretary-"
' In view of the above withdrawal no reliance can be placed on the aforesaid circular, dated 27-7- 1971. However, it was urged by Mr. Kazim Hassan that the factum that the above circular, dated 27- 7-1971 was withdrawn or modified was not brought to the notice of the petitioner and, therefore, the above withdrawal was of no effect. It seems that the respondents initially in their letters have not referred to the withdrawal of the above circular, dated 27-7-1971 but apparently had verbally informed the petitioner, which is evident from para 8 of the petitioner's arguments submitted before the respondent No. 1, which reads as follows:-- "On the hearing of the reply to the show-cause notice on 18-9-1981 for the first time it was stated that the instructions of the Central Board of Revenue, dated April 27, 1971 have been withdrawn. A request was made that a copy of the revised instructions be shown to the Hotel Intercontinental but the same was refused whereas the original instructions had been duly conveyed to the Hotel."
8. The question therefore in issue is, whether non-communication of the withdrawal of the aforesaid instructions, dated 27-7-1971 through writing would absolve the petitioner from their statutory liability to pay excise duty at the rate of 15% on the charges recovered by them from their customers. We are inclined to hold that since the factum that the above circular, dated 27-7-1971 was withdrawn was brought to the notice of the petitioner and as the Superintendent Central Excise and Land Customs in his above letter, dated 18-4-1982 made it clear that as per order of the Collector Central Excise and Land Customs Karachi the excise duty would be payable by them on the charges actually recovered by them with effect from 15-2-1981, the petitioner as a prudent businessm an was expected to charge the excise duty from the customers on the basis of the actual charges paid by them from the telephone and telex services. The Federal Government has taken a reasonable view in the matter by waiving the excise duty on the differential amount for the period commencing from 14-4-1981 upto 18-4-1982 though the above circular letter, dated 27-7- 1971 was withdrawn on 2-2-1981.
9. Mr. Kazim Hassan then referred to the following cases in support of his above last submission namely, that respondent could not have withdrawn the above instructions after the same were acted upon by the petitioner inasmuch as the petitioner had not recovered any excise duty from their customers on the amount payable by the petitioner in respect of telephone and telex services of the Telegraph Department:-- Muhammad Himayatullah Farukhi, PLD 1969 SC 407, in which the Hon'ble Supreme Court was considering the question whether the President of Pakistan was justified in revising his decision of 7-10-1959 fixing the salary of the respondent after the expiry of nearly three years by his order, dated 26-8-1962 and while holding that he was not competent observed as follows:-- " There can hardly be any dispute with the rule as laid down in these cases that apart from the provisions of section 21 of the General Clauses Act, locus poenitentiae, the power of receding till a decisive step is taken, is available to the Government or the relevant authorities. In fact, the existence of such a power is necessary in the case of all authorities empowered to pass orders to retrace the wrong steps taken by them. The authority that has the power to make an order has also the power to undo it. But this is subject to the exception that where the order has taken legal effect, and in pursuance thereof certain rights have been created in favour of any individual, such an order cannot be withdrawn or rescinded to the detriment of those rights."
(ii) Motilal Padampat Sugar Mills Co.Ltd. v. State of Uttar Pradesh and others 1981 PTD 277 (SC of India), in which the Indian Supreme Court was dealing with the question whether promissory estoppel can be pleaded against the State Government of Uttar Pradesh. In the above case the appellant had set up a Banaspati factory on the clear representation of the State Government that they would be entitled to exemption of sales tax in respect of Banaspati effected in Uttar Pradesh for a period of three years from the date of commencement of production and after reviewing the case law on the subject the Indian Supreme Court held that plea of promissory estoppel can be raised against the State Government."
' It will suffice to observe that the above first case has no applica tion for the reason that after 18-4- 1982 the petitioner had no justifiable reason not to charge from their customers excise duty on the actual amount paid by them in respect of telephone and telex charges etc. and, therefore, the question that the petitioner had altered their position does not arise.
' The above-cited second case has also no application for the reason that the petitioner has not brought anything on record to indicate that they had installed telephone and telex services on the representation of the respondents that they would charge the excise duty on the amount of handling charges and not on the amount actually received by the petitioner from their customers in terms of clause (dd) of section 2 read with Item 13.01 of Part II of the First Schedule to the Act.
10. For the aforesaid reasons the petition is dismissed. However, there will be no order as to costs.
' Before parting with the above discussion, we may put on record that Mr. Kazim Hassan has very ably argued the case.