1. ' SALEEM AKHTAR, J.--The Petitioner is engaged in the tea blending and trading and has its blending factories at Karachi as well at Khanewal in Punjab. On the import of tea required for factory at Karachi octroi duty is paid and the part of the consignment which is required at Khanewal is transported through truck after complying with the provisions and rules regarding levy and octroi duty on such consignment. After the tea is blended at Khanewal it is packed in cartons with the varying brands and names according to the nature of the blend, and then it is distributed to various markets in Pakistan. Some of the brands are exclusively blended at Khanewal but have a market in Karachi as well. These brands are imported in Karachi from Khanewal and at the octroi post at Karachi octroi duty is paid. On 11th March, 1986, a consignment of 2,498 chests weighing 1,37,390 kg,S. Net was imported by the petitioners from Kenya. On 18th March; 1986, the petitioner filed with the respondents a declaration under Rule 35 of the Municipal Committee Octroi Rules 1964, that the said consignment was detained for Khanewal. The petitioner also deposited with the respondent's account the full octroi payable on the said consignment as security deposit amounting to Rs,62,272. It has been alleged that the said consignment was transported in truck directly from the KPT Post to the Petitioner's Factory at Khanewal on 24th, 25th and 26th March, 1986 and the respondent had taken all precaution to ensure that the consignments were taken outside the KMC limits. On 1st April, 1986 84,000 Kgs. Of blended and packed tea consisting of 150 cases of Super Dust, 250 cases and 100 cases of Super Dust-20 were despatched from Khanewal to Karachi market in Truck No, BUA 3297 and reached Karachi Octroi Post the same day. It has been alleged that the Truck driver offered normal octroi duty on the aforesaid consignment but it was not accepted and the truck in question was taken by the octroi staff at the post to the office of the K.M.C. At MA. Jinnah Road, where seizure , memo was prepared by the petitioner's representative.
2. The respondent treating this consignment as the same consignment which was imported at Karachi from Kenya on 11th March, 1986 imposed octroi duty amounting to Rs,62,272 and additionally composition fee amounting to 10 times of the said octroi was also levied. Thus a total claim Rs,6,84,992 was made by the seizure memo. The petitioner was required to pay the said amount within 24 hours. On 2nd April, 1986 the petitioner submitted an application before the Mayor stating that the goods have been seized without affording it an opportunity of being heard and prayed for stay of the threatened action to enable the petitioner to file an appeal. The Mayor stayed the action on furnishing bank guarantee which was furnished and the goods were released.
3. On 3rd April, 1986 the petitioner applied to respondent No, 2 for copy of the order passed on 1-4- 1986 but copy of the order on the basis of which seizure memo was issued was not furnished to the petitioners till the date of filing the petition. The petitioner however filed appeal before the Mayor which is pending before Director Octroi K.M.C. The petitioner has also filed a copy of the order dated 22-3-1986 in which certain instructions were issued about the evasion of tax by the petitioner and directions were issued to the KMC staff and octroi post at Sohrab Goth to be alert so that no tea consignment is allowed entry in KMC limits and if any consignment comes it should be reported to the Director and truck should be detained.
4. ' The respondents had filed their comments which they have adopted in their counter-affidavit.
5. Averments made in paragraphs 5 to 11 of the petition have not been denied and it has been stated that when the matter came to light that the petitioner is bringing back to Karachi the goods cleared against transit pass, the consignment was subjected to action as admissible under the rules. It has been further stated that the goods were seized by respondent No, 3 on the basis of report of Octroi Officer, Super Highway under Rule 200(i) of Octroi Rules 1964.
6. ' So far the facts are concerned there is no dispute except that according to the respondents the action was taken against the petitioners as they were importing in Karachi the same goods which they had taken under the transit pass outside the limits of K.M.C. For transportation to Khanewal. It may be mentioned that when seizure memo was prepared the respondents had also taken samples of the goods seized and two packets duly sealed and signed were delivered to the petitioner. The petitioner has produced those packets in Court which were examined by Mr. Tasaduqe Hussain, Assistant Director of Octroi K.M.C. Who is present in Court and he confirmed that the signatures and seals were intact. Both the packets were opened in Court and its contents were taken out and examined. It contains packets of blended tea with brand name and trade name of the petitioners with the words 'blended in Pakistan' printed on the packets.
7. ' Mr. Mohammad All Sayced, learned counsel for the petitioner has contended that the entire action taken by the respondents is without jurisdiction. The petitioner was bringing within the local limits of K.M.C. Its blended tea from Khanewal and had offered to pay Octroi duty but the same was illegally seized and octroi duty not recoverable under the law was imposed and further that unlawfully composition fee was levied. On the other hand Mr. Muslim Naqvi, learned counsel for the respondents have contended that the action of the respondents was justified under Rules 202, 204 and 205 and as the goods which were seized were the same goods which had been taken out on transit pass the respondents were justified in taking the impugned action.
8. ' The first question which arises is whether the goods which were seized were the same goods which were taken away on transit pass. It is an admitted position that the goods which were transported to Khanewal were imported from Kenya and from K.P.T. Area the same were directly transported to Khanewal and were taken out of the limits of K.M.C. It was not blended tea and could not have been in packets which were seized. The samples contained cardboard packets of 250 gms. And the small paper packets of 20 gms. On these packets petitioners trade name, the price in Pakistan currency, weight and the words blended in Pakistan are printed. Considering the different nature of goods which were transported and which were seized, we enquired from Mr. Muslim Naqvi on what basis it has been held by the respondents that the seized goods were the same goods which were transported to Khanewal. He stated that it was merely on presumption that they were the same goods that were transported to Khanewal. This could hardly be a ground for seizing the goods much less imposing higher octroi duty and composition fee. Presumption cannot be made basis of any finding or imposing any duty or penalty.
9. ' The other aspect of the case is that the respondents treating the seized goods the same as transported to Khanewal imposed octroi duty of Rs, 62,272. It is the same amount for which the petitioner had furnished security in lieu of payment of duty while obtaining transit pass. We, therefore, enquired from respondent No,2 what would have been the octroi duty on the goods which were seized. The learned counsel for the respondents after calculating with the help of the Assistant Director, Octroi stated that octroi duty will be Rs,1,200. Therefore the octroi duty could not have been Rs,62,272. It clearly demonstrates that the respondents without applying their mind and without looking to the facts of the case labouring under the impression that the seized goods were the same goods in quantity and quality which were transported to Khanewal imposed the same octroi duty for which guarantee had been furnished. All these facts clearly show that at no stage the respondents had investigated into the identity, mark, nature and value of the seized goods. The impugned action was taken on preconceived and predetermined notion with bias and mala fides.
10. An action tainted with such infirmities cannot be treated as lawful or taken in exercise of legal authority.
11. ' Mr. Muslim Naqvi contended that the respondents were justified in imposing composition fee. He referred to Rules 200, 204 and Rule 192 of Municipal Committee:, Octroi Rules. Rule 204 reads as follows:- "If the person whose goods have been seized under these rules, pays the Octroi (including composition fee) and charges under Rule 203 and the case against him is compounded within such time as may be specified in the order of seizure, the goods shall be released and an entry to that effect shall be made in the Seizure Register."
12. It provides the condition under which the goods seized are to be released. Besides payment of Octroi and charges under Rule 203 if the case is compounded within the time, specified in the order of seizure, the goods shall be released. This rule does not authorise the respondent to impose any composition fee as it is imposed under Rule 192.
13. ' Any reference made to imposition of composition fee attracts Rule 192 which provides the manner and circumstances in which composition fee is levied. Where a case of evasion of octroi has been registered against any person and he applied for composition of the offence, then on payment of duty and composition fee the offence may be compounded. Therefore, before an offence is compounded and composition fee is paid a case of evasion of octroi should be registered and the person charged with the offence applies for composition of the offence. In the present case neither there is any evidence to show that case for evasion of octroi was registered against the petitioner nor there is any averment to the effect that the petitioner had applied for composition of the offence. The composition fee was imposed in violation of the rules particularly rule 192 which makes it completely without jurisdiction and illegal.
14. ' We, therefore, declare that the orders for seizure of goods, imposition of Octroi duty of Rs,62,272 and composition fee of Rs,62,2,270 were made without lawful authority and are of no legal effect.
15. The seized goods were released on furnishing bank guarantee which is still in operation. The respondents will however be entitled to charge octroi leviable on the goods which were brought within the limits of Karachi according to the rates given in Schedule 'B' to the notification issued under section 60 of the Sindh Local Government Ordinance, 1979. In case such octroi has not been paid the respondents will realise the amount of octroi from the guarantee and thereafter it shall stand discharged.