NASIR ASLAM ZAHID, J.--1. The petitioners had imported a consignment of powdered milk known as "Klim" from Denmark. According to the petitioners, the said powdered milk was mainly for the use of food for infants and invalids and table of specifications of the mode of its use is printed on every tin in which the milk was imported. Before the arrival of the ship in which the said consignment of the petitioners was coming to Karachi, the Assistant Collector of Customs (respondent No. 2 herein) sent a notice, dated 14-5-1975 stating that the question of correct classification of the milk in question has been referred to Central Board of Revenue and in case the Central Board of Revenue decided that the goods should be classified Under heading 04.02 of the Pakistan Customs Tariff, the petitioners would have to pay the short-levy of ,sales-tax amounting to -Rs. 40,697. It was further stated that the notice may be taken as a provisional demand issued under section 32 of Customs Act, 1969. A bill-of-entry was filed for the consignment in question and according to the petitioners, the same was accepted by the Custom House on 23-4-1975 and at that time no sales tax was charged and the consignment was released under .Item 21.07 of the Pakistan Customs Tariff. After more than two years, a notice, dated 30-8-1977 was received from the respondent No. 2 by the petitioners to the effect that on 2-6-1975 the Central Board of Revenue had given a decision that "Kiln" brand milk powder was chargeable to sales tax at the rate of 20 per cent under heading 04.02 of P.C.T. And that the petitioners had cleared the said goods under heading 21.07, which resulted in short-levy of the sales-tax of Rs. 40,697. The case of the petitioners was that "Klim" milk powder being food of infants fell under item 21.07 and not under item 04.02. The said notice, dated 30-8-1977 of the Assistant Collector of Customs stated that if the petitioners had any representation to make in this regard they should do so within a period of 15 days and if they wanted to be heard in person or through their representative or Advocate, they may appear on 27- 9-1 977 before the Assistant Collector of Customs. The petitioners sent a reply, dated 22-9-1977, which may be reproduced here:-- "Sub: Importation of 1187 Cartons, "Klim Brand Milk" valued at Rs. 2,03,484 from Denmark per S.S. "Taxila" I.G.M. No. 759, dated 30-5-1976, Index 73.
We have instructions from M/s. S. Khalid Ebrahim & Co. Katchi Gali No. 1, Marriot Road, Karachi, to acknowledge your No. SI/Misc/81/75-I, dated 30-8-1977 and to write back as follows:-
(1) There is no provision in section 32 of Customs Act, 1969, authorising you to raise any demand provisionally. Even otherwise, the condition precedent in sub-sections (2) and (3) of section 32 is that the party should be required to show cause why the party should not pay the duty short- levied. Your letter of 14-5-1977 does not comply with the provisions of section 32 and is otherwise without authority of law. It may be of interest to quote PLD 1974 Kar. 81, in which it was held: "Where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all."
(2) You will further appreciate that C.B.R, gave a decision on 2-6-1975, while the goods were cleared on 10-6-1975 or thereafter. Your keeping quiet for 2 years and 3 months appears to be an extraordinary thing, and it is evident that the Customs House did not agree with the C.B.R, on that point.
(3) Kindly supply a copy of C.B.R, letter C. No. 16(80) T/1/73, dated 2-6-1975 on which you rely for the purpose of your alleged demand and on receipt of such letter the case will be examined further to see how far the observations of the C.B.R, are logical.
(4) We notice from the record that Bill of entry was presented on 31- 5-1975 and the I,C,M. No. Is 759/30-5-75. Your alleged provisional demand letter of 1 4-5-1 975 shows I.G.M. No. 79 (ii) t23107/23-4-75 and it, appears that such a letter does not tally with the subject shown on the communication under reference. A provisional demand could not issue before the arrival of the ship.
(5) The clients imported the stores while its import was free of payment of Custom duty and sales tax. The vesting rights of the clients could not be disturbed by the impugned decision of the C.B.R.
The relevant law on the point was decided by the Lahore High Court in M. Afzal &. Sons and others vs. Federal Government of Pakistan and others (decided on 3-5-1977) reported as PLJ 1977 Lah, 549.
This was a case of import of white woodfree writing paper.
(6) This case could be agitated by the Sales Tax Officer under the Sales Tax Act. You can only agitate a matter if Custom Duty is also involved.
(7) The alleged claim put forward by you is barred by section 32(3) and the demand is otherwise mala fide.
(8) Please cancel hearing of 27-9-1977 and let us have a copy of C.B.R, letter, dated 2-6-1975 to enable us to send you a further and complete reply."
A perusal of the reply, dated 22-9-1977 shows that various pleas were raised on behalf of the petitioners and they had also sought a copy of the decision, dated 2-6-1975, whereby the Central Board of Revenue is supposed to have decided that "Klim" milk powder is chargeable to sales tax at the rate of 20 per cent under heading 04.02. A request had also been made that the hearing fixed on 27-9-1977 be cancelled and a copy of the letter, dated 2-6-1975 be supplied to enable the petitioners to send a further complete reply to the notice, dated 30-8-1977. It appears that the copy of the decision, dated 2-6-1975 of the C.B.R, was not supplied to the petitioners and by a third letter, dated 1 3-1 1-1977, which acknowledged the receipt of reply, dated 22-9-1977, the Assistant Collector of Customs informed the petitioners that the demand for Rs. 40,697 had been enforced against them and they were required to pay the demand, of sales tax immediately, failing which action under section 202 of Customs Act, 1969, was threatened against the petitioners. The letter, dated 2- 1-1978 was then written by the petitioners to the Collector of Customs (respondent No. 1 herein) in which reference was made to the exchange of correspon-dence/noticed and a grievance was made that no reply was sent to the letter, dated 22-9-1977 and without ary adjudication a threat was given for taking action against the petitioners under section 202 of the Customs Act, 1969. A request was made to the Collector of Customs for a direction to the Assistant Collector of Customs to afford- a hearing to the petitioners and to pass a proper order so that the petitioner may be able to file an appeal Challenging the grounds on which the order was based. The levy of sales tax on the consignment is challenged in this constitutional petition. We have heard Mr; Sohail Muzaffar, learned counsel for the petitioners, and Mr. Muhammad Akram Zuberi, learned counsel, who has appeared on behalf of the respondents.
2. It is evident from a perusal of the documents filed with the memo, of petitibn. That a proper hearing had not been granted to the petitioners by the Assistant Collector of Customs and even an approach to the Collector of Customs through letter, dated 21-1-1978 by the petitioners did not redress the grievance of the petitioners that they had not been granted a proper hearing. A copy of the order, dated 2-6-1975 of the Central Board of Revenue was not supplied to the petitioners as was requested by them through their letter, dated 22-9-1 977. Further in the letter, dated 13-11-1977 of the Assistant Collector of Customs there is no indication at all whether the points raised on behalf of the petitioners in their letter, dated 22-9-1977 had at all been considered by the Assistant Collector of Customs. The letter/order Dated 13-11-1977 is liable to be set aside on this ground alone.
3. As a result, Constitutional Petition No. D-881 of 1978 is allowed to the extent that the order, dated 1 3-1 1-1977 of the Assistant Collector of Customs, Appraisement Group-I, Custom House, Karachi, and the subsequent letter/orders based on this order, dated 1 3-1 1-1977 are declared to have been passed without lawful authority and to be of no legal effect. The case is remanded to the Assistant Collector of Customs for fresh decision in accordance with law after supplying a copy of the decision, dated 2-6-1975 of the Central Board of Revenue to the petitioners and after affording them a full opportunity of hearing and after considering all such material and arguments that may be placed/made before the Assistant Collector of Customs. The Assistant Collector of Customs is directed to finalize this case by 31-5-1984.