1. ' SAEEDUZZAMAN SIDDIQUI, J.--The petitioner has challenged the orders, dated 14-12-1978, 5-5-1979 and 29-12-1980 passed by respondents Nos.3, 4 and 2 respectively. The back ground of the dispute is as follows:- ' The petitioner brought 48717 bags of white crystal sugar within the limits of respondent No,1 in April, 1971 and declared at the. Octroi Post on the Super Highway that the consignment was meant for export outside the country. The case of the petitioner is that it was issued transit passes for the consignment as the same was meant for immediate export, and, accordingly, the consignment was directly taken to sea port, wherefrom the same was exported to Ceylon per s.s. 'Mehdi' in April, 1971. The contention of respondents Nos. 1 to 4 on the other hand is, that on the request of petitioner, 481 Octroi passes, for temporary retention of above consignment for ultimate export, were issued to petitioner but they failed to produce the original Octroi passes and the shipping documents when demanded which proved that the above consignment of 48717 bags of sugar imported by them within the limits of K.M.C. Was not exported. On 14-12-1978, respondent No,3 issued a cyclostyled letter No,A A0/886/ Oct/Def/78 to petitioner, alleging that the goods imported by them under E.O.T.P/Warehouse Passes in April, 1971, were either not exported by the petitioner or they failed to get the passes entered at the export Octroi within the prescribed limit, and, accordingly, petitioner were called upon to pay Octroi on the consignment amounting to Rs,1,67,380 in addition to composition fee of Rs,16,73,880 within seven days from receipt of the letter. In response to the above letter the petitioner through their counsel denied the above allegations and demand for payment of Octroi duty and composition fee, by letter, dated 3-2-1979, and took the stand that demand for production of documents relating to consignment which was exported seven years ago was arbitrary. Nevertheless, the petitioner's counsel simultaneously supplied details regarding export of consignment by furnishing respondent No,3 photo copies of several documents to establish that the above consignment was exported in April, 1971 to Ceylon per s.s. 'Mehdi' respondent No,3, however, did not agree with the plea of petitioner and insisted for production of original octroi passes and attested photo copy of shipping documents which according to respondent No,3, were not surrendered by the petitioner at the Export Post at the time of exportation consignment. The petitioner, in reply, while expressing their inability to produce the above mentioned documents, supplied copies of Bill of Lading, Letter of Credit, Cash subsidy entitlement Certificate of State Bank of Pakistan, to establish actual export of goods outside the country. Dissatisfied with the above explanation of petitioner, respondent No,4 once again insisted production of original passes having endorsement of K.M.C. Staff posted at export gate, attested copies of Bill of Lading, Shipping Bill etc. In reply to the above demand of respondent No,4, the petitioner once again reiterated that as the consignment was exported about 7 years back, the petitioner could not be expected to preserve the relevant record for so long and requested that the documents already supplied by them may be accepted in proof of export of the above consignment. Respondent No,4, did not accept the explanation of petitioner and by his letter dated 25-6-1980 called upon the petitioner either to produce the coupons of disputed passes, original Octroi Passes having endorsement of Sea Dues Office, and export declaration duly verified from Sea Dues Office, or pay the Octroi amounting to Rs,1,67,388 plus 10 times composition fee amounting to Rs,16,73,880 within 7 days of the receipt of the letter. The petitioner was also informed that if they so desired, they could appeal against the above order before respondent No,2. The petitioner, accordingly, preferred an appeal before respondent No,2 against the order of respondent No,4, which was disposed of with the following observation on 29-12-1980.
2. "As regards to the contention of the appellants ,the Senior A.S.O.(I) has argued that export of the goods under the temporary retention scheme is subject to fulfilment of the conditions laid down under Rule 71 of the Octroi Rules and under Clauses 14 & 15 of the procedure. Merely production of the export documents does not entitle the appellants to regularise the pending entries unless the goods covered under the export documents were, duly presented at the export Octroi post during the time of actual export of the goods. Since the appellants have not observed the conditions of the rules referred to above as such the documents furnished by the party to regularise the export at a subsequent stage cannot be accepted. The appellants are therefore, guilty of violation of Octroi rules as such the offence committed by them may be compounded on payment of actual octroi plus composition fee.
3. ' I have gone through the facts of the case and have examined the documents on record. I am of the opinion that since the appellants failed to observe the pre-conditions of the export of the goods as laid down under the octroi rules referred to above and procedure of rule 83(e) as such they have been rightly called upon by the respondent to compound the offence on payment of actual octroi plus the composition fee. However, since the case pertains to the year 1971 and coupons of the octroi passes bearing export endorsements of the export octroi post are not traceable with the appellants as such a lenient view is taken and it is hereby ordered that the appellants should compound the offence on payment of actual octroi amounting to Rs,1,67,388 plus an equivalent amount towards composition fee i.e, total Rs,3,34,776.
4. ' Announced this day the 23rd December, 1980 in presence of the parties.
5. (Sd.)
' DIRECTOR OCTROI/TAXATION OFFICER KARACHI METROPOLITAN CORPORATION"
6. ' The learned counsel for the petitioner very vehemently contended that the petitioner could not be expected to preserve the original record of the consignment exported about seven years earlier and as such the demand of respondents to produce the above documents after about 8 years was not only arbitrary but was also mala fide. It is also contended by the learned counsel that the copies of documents supplied to respondents by the petitioner in response to their notices sufficiently established the export of 48717 bags of sugar, imported by the petitioner in April, 1971 within the limits of respondent No,1, but instead of accepting these documents, the respondents arbitrarily insisted for production of original transit passes knowing fully well that the petitioner could not produce the same after 8 years. It is also contended by the learned counsel for the petitioner that Octroi can be charged only on import of goods for consumption, use or sale in the local area and once it is shown that the imported goods were exported, no Octroi could be charged thereon. The learned counsel for the respondents on the other hand contended that failure of petitioner to produce the relevant record on demand by respondents was enough to establish their failure to export the consignment and as such they were liable to pay the Octroi duty on the disputed consignment which was rightly demanded. The learned counsel, however, very frankly stated that imposition of composition fee in the circumstances was not justified as the petitioner had not approached the respondents for such an action.
7. ' It is common ground between the parties that Municipal Committee Octroi Rules, 1964, hereinafer referred as 'the Rules' only, are applicable in the case. Rules 64 to 75 contained in Chapter IX of the Rules, relate to regulation of goods in transit. Rule 64 provides, that when an importer declares that the goods imported by him are intended for immediate export, the Octroi Clerk shall prepare in duplicate by Carbon process, transit pass for such goods and issue the original with the coupon to the importer. Every transit pass issued under Rule 64 is entered in the Register of Transit Passes (Rule 65). A transit pass issued under Rule 64 is valid for the period specified therein (Rule 66). If for any unavoidable circumstances the goods meant for immediate export are not exported within the specified period, the Taxation Officer on the application of importer is authorised to extend the validity period of transit pass for 24 hours by making an endorsement on the pass (Rule 68). Rule 70 prohibits use, consumption and sale of goods imported on transit pass within the Octroi limit.
8. When goods imported on transit pass are presented at the Octroi Port for export, the Octroi Clerk verifies the goods and tallies with the description given in the transit pass and if he is satisfied, makes the necessary entry in the transit pass and after tearing off the coupon, retains the transit pass himself and passes on the coupon to the person incharge of the goods and, thereafter, the goods are allowed to be exported (Rule 71). If the goods covered by a Transit Pass are not presented for export within the period of the validity of Transit Pass, the case is to be reported to Octroi Inspector who then investigates it as a case of an evasion of Octroi (Rule 75). Chapter X contains Rules 76 to 82 which deal with Transit refund but it is not necessary to refer here these rules as it is no body's case that the petitioner had deposited the amount of Octroi tax at the time of obtaining Transit Passes which they subsequently claimed after exportation of the goods.
9. Chapter XI contains Rules 83 to 85 relating to temporary retention of goods. Rules 83 and 84 provide that where the goods are imported for export purposes and the Octroi Clerk is satisfied about the claim for an Octroi pass, he may issue an octroi Pass to the importer for a period not exceeding 30 days. If the goods are not exported within 30 days due to circumstances beyond control of importer then on the application of importer, the Taxation Officer may extend the period of validity of Octroi passes for a period of 30 days or more by making endorsement on the pass. In exceptional cases on the written recommendation of Export Promotion Bureau that the goods could not be exported for reasons beyond the control of importer, the Taxation Officer, if satisfied, may extend the period of validity of Octroi Pass for a further period not exceeding 120 days.
10. However, in the event of natural disaster or other catastrophe, the extension may be granted in the validity period of Octroi Pass for a period not exceeding 150 days in aggregate by the council subject to the condition that the application for extension of time by the importer is accompanied with a certificate from an Officer of the Federal Government or Provincial Government authorised in this behalf to the effect that extension is required due to natural disaster or other catastrophe as a result of which it is beyond the control of importer to export the goods from local area. Rules contained in Chapters IX and X with regard to Transit Passes apply mutatis mutandis to Octroi Pass by virtue of Rule 85(2). On examination of above referred rules relating to Transit passes and Octroi Pass issued under Chapters IX and XI respectively, there appears to be no material difference between the two. Both, Transit and Octroi Passes are issued, in., respect of goods which at the time of importation in the local limit are declared by the importer as meant for export. Transit pass is issued in respect of consignment which is declared at the Octroi Post by the importer for immediate export, but in spite of this, the period for which the transit pass is valid is specified therein and such period is extendable on the application of importer by Taxation Officer upto 24 hours. In case of Octroi Pass the goods covered by it are to be exported within the period declared by the importer at the time of obtaining of Octroi Pass but not exceeding 30 days in any case which is entered therein but in certain circumstances the period of validity of Octroi Pass could be extended upto a maximum of 150 days. The rest of the rules governing the transit and Octroi Passes are same. In these circumstances, the assertion by the petitioner that they were issued transit passes for the disputed consignment and denial thereof, by respondent, with the assertion that the petitioner was issued Octroi Passes is of no real consequence. Whether the petitioner was issued transit passes or Octroi Passes for the consignment of 48717 bags of sugar, the fact remains that under rule 75, if the goods covered by the passes were not presented for export within the validity period of the passes the case should have been reported to Octroi Inspector who was required to investigate it as a case of evasion of Octroi. From the contents of counter affidavit of respondents it is quite clear that the petitioner was issued 481 Octroi Passes between the period from 5-4-1971to 11-44971. It is also an admitted position that the above passes issued to petitioner were valid for a period of 30 days only from the date of their issue. The respondents in their counter affidavit did not disclose the date on which the case was reported against the petitioner under rule 75. The first letter in this regard received by the petitioner from respondent No,3 was dated 14-12-1978, which.
11. Was written more than 7i years after the date of import of goods within the local limits of respondent No,l. The learned counsel for the respondents is unable to point out anything either in Sind Local Government Ordinance 1979 or in the Rules, which required an exporter of goods to preserve or retain the record of Transit or Octroi Passes for an indefinite period. There is also no explanation from the respondents for their failure to initiate any legal action against the petitioner for almost . 7 years and 8 months for their failure to present the goods for export "within the validity period of Octroi or Transit passes issued to them. In these circumstances, the respondent could not legitimately insist for production of original Octroi Passes or coupons of Transit passes from the petitioner in respect of a consignment for which Octroi/Transit Passes were issued 7 years and 8 months back and which the petitioner claimed was duly exported within the validity period of these passes. The object of issuing a transit and Octroi Pass is to ensure that the goods in respect whereof such a pass is issued is ultimately exported and that the same is not consumed or sold in the local Octroi limit. Under B Rule 75 of the Rules only non-production of goods for export within the validity period of Octroi or Transit Passes is considered as an evasion of Octroi. There is nothing in 'the Rules' to show that non-production of Octroi Pass or Coupon of Transit Pass by itself is an offence or it amounts to evasion of Octroi tax. In these, circumstances, what really needs determination is, whether the goods in respect whereof the petitioner was issued Octroi or Transit Passes were in fact exported outside the country as claimed by the petitioner or not. The petitioner in support of their claim produced before the respondents number of documents. These documents comprised of copy of Bill of Lading, Certificate of General Superintendence Co.
12. (Pakistan) Ltd., regarding quantity and weight control of export consignment of sugar, cash subsidy. Certificate Of State Bank of Pakistan in respect of export of sugar by the petitioner, Certificate of original of export consignment of sugar granted by Chamber of Commerce and Industry, Letter of Credit establish in respect of export of sugar in favour of petitioner etc. These documents sufficiently supported the contention of petitioner that they exported the consignment of 48717 bags of sugar . Brought by them within the Octroi limit in April, 1971. The fact regarding export of -above consignment of sugar by the petitioner was apparently otherwise not disputed by the respondents as well, as would appear from the observations of respondent No,2 in the appellate order, which we have reproduced earlier in this judgment. In fact, respondent 2.
13. Maintained the demand for recovery of Octroi and Composition fee by respondents Nos.3 and 4, not for the reason that the goods were not exported by the petitioner but for the reason that a pre- condition of export required by Rule 83(e) was not complied. This approach of respondent was totally misconceived as non-production of Octroi pass or Transit pass is neither punishable under the rules nor it amounts' to evasion of Octroi tax, specially in the circumstances of the present case when the respondents demanded production of original documents after 71 years of the export of the goods by petitioner. The demand of Octroi tax by the respondents on the consignment which was exported by the petitioner outside the country was, therefore, illegal. With regard to imposition of composition fee, the learned counsel for the respondents very frankly conceded that as the petitioner had not approached the respondents for composition, no composition fee could be imposed on them but he maintained that the respondents could proceed against the petitioner for violation of rules. We, accordingly, accept the petition and declare the demand of Octroi and Composition fee by the respondents in respect of 48717 bags of sugar exported by the petitioner in April, 1971 outside the country; as wholly without jurisdiction and lawful authority. The respondents are, however, at liberty to proceed against the petitioner for alleged violation of rules, if it is so available to them, under the law. After we dictated the above order, the learned counsel for the respondents requested that the bank guarantee furnished by the petitioner may not be discharged as the respondents may like to file an appeal before the Supreme Court against the above order. We accordingly direct that the bank guarantee furnished by the petitioner shall not be discharged for a period of two months from today. There will be no order as to costs.