MUNAWAR AHMED MIRZA,J.--1. Constitution Petitions Nos.4 and 5 of 1989 involve identical facts and law, therefore, same are being decided by common judgment.
2. Facts are very simple and brief. Petitioners are Public Companies incorporated under the Companies Ordinance, 1984 having registered office at Karachi. Each of the petitioners proposes to instal textile industry at Hub, District Lasbella (Baluchistan) for manufacturing cotton/blended yarn and allied products. Petitioners in Petition No. 4 of 1989 imported machinery from a leading firm of Germany, namely Luwa, A.G. Ltd. Zurich; whereas petitioners in Petition No. 5 imported Swiss machinery from its agents at Hong Kong M/s.C. IHO. Co. Limited. At the time of clearance of respective consignments, petitioners claimed exemption from payment of customs duty, sales tax etc. On the basis of Notification No. SRO-500(I)/84, dated 14th June, 1984 and SRO-480(I)/88, dated 26th June, 1988, on the ground that said machinery was not manufactured locally. It is an admitted position that petitioners were granted benefit provided by aforementioned Notifications; but they were asked to pay "surcharge" under the Finance Ordinance, 1982 and "Iqra surcharge" under Finance Act, 1985 being 'additional duty' not covered by exemption clause. Petitioners aggrieved from demand of customs appraisement authorities regarding payment of 'surcharge' and 'Iqra surcharge' under respective finance enactments have filed present petitions challenging validity of levy and vires of said legislations.
3. Mr. Anwar Mansoor Khan, learned counsel for petitioners strenuously urged following points; (i) legislation relating to levy of 'surcharge' and 'Iqra surcharge' by way of 'additional customs duty' is in excess of law making powers of Federal Legislature because same falls bey^Vid the purview of items 43 to 45 of Federal Legislative List Part-1 and items 38, 39 and 44 of Concurrent Legislative List Part-II of Fourth Schedule under Article 70(4) of the Constitution. Following judgments were also relied:--
(i) AIR 1945 PC 98 (Now reported as PTCL 1986 CL 163) (ii) AIR 1970 SC 1771; (iii) AIR 1963 SC 703; (iv); PLD 1983 SC 451; (v) AIR 1965 SC 1379 and 1983 CLC 3204.
(ii) Section 2 of the Finance Ordinance, 1982, and section 5 of the Finance Act, 1985 imposing "surcharge" and "Iqra surcharge" respectively contain merely provision for charging taxes without providing machinery for collection and recovery; whereby for all intents and purposes provisions of Customs Act became automatically applicable by beneficial construction. Thus demand concerning 'surcharge' and 'Iqra surcharge' constitutes liability relatable to customs duty, fully covered by exemption notification.
(iii) 'Iqra surcharge' has been levied under section 5(1) of Finance Act, 1985 basically for educational emancipation which does not fall within the competence of Federal Legislature.. Thus to ascertain object of said legislation budget speech of Finance Minister is relevant and important.
In this behalf reference was also made to; (i) PLD 1974 SC 210, and (ii) AIR 1981 SC 1922. According to learned counsel, the recovery in respect of 'Iqra Surcharge', being exclusively allocated to education, the legislation is defective. Besides learned counsel placing reliance upon rule of 'pith and substance' canvassed that levy of additional duty requires to be declared ultra vires (i)AIR 1970 SC 1771;
(iv) Revival of the Constitution of 1973 Order 14 of 1985 was promulgated on 2nd March, 1985 and except certain provisions which included Article 270-A was enforced on 10th March, 1985. Whereas Article 270-A and remaining provisions were made effective and operative with effect from 29th December, 1985. Therefore under Article 89(2), Finance Ordinance, 1982 ought to have been brought before National Assembly within four months of its functioning, and after expiry of this period, said Ordinance has automatically lapsed. Accordingly demand about 'surcharge' is unlawful.
4. On the other hand learned Advocate-General vehemently opposing the petition made following submissions;
(i) Additional customs duty imposed by virtue of section 2(1) of the Finance Ordinance II of 1982 and section 5 of the Finance Act, 1985 are separate and independent categories of customs duties by way of surcharges, which Federal Government is competent to levy, therefore, exemption cannot be extended to 'surcharge' and 'Iqra surcharge'; in the circumstances demand raised by concerned competent Customs authorities is quite legitimate. He maintained that Finance Ordinance, 1982 and Finance Act, 1985 were within the competence of Federal Legislation by virtue of items Nos. 27, 43 and 54 Part-1 of the Fourth Schedule of the Constitution attached to Article 70(4); as well as Articles 141, 142 and 143 of the Constitution. Referring to principle of 'pith and substance' it was canvassed that nomenclature of the tax or duty is not relevant but real nature of the levy has to be taken into consideration. The real object according to him was to impose additional customs duty, for Federal consolidated funds and nothing else. Therefore, provisions of law being clear and unambiguous reference to speeches is neither relevant nor necessary.
(ii) Finance Ordinance, 1982 was promulgated in pursuance of powers vested in the President under Laws (Continuance in Force) Order, 1977 (C.M.L.A. Order I of 1977) and Provisional Constitutional Order 1 of 1981, therefore, reference to Article 89 of the Constitution is not relevant.
Evidently when on 29th December, Article 270-A of the Constitution was enforced the Finance Ordinance was an existing law, therefore same stood protected and its validity could not be questioned. Additionally since aforesaid Ordinance was not promulgated within the meaning of Article 89(1) therefore, objection raised on behalf of petitioner has no substance.
Firstly it may be seen that Customs Act is a general law which also deals with factum of duties leviable on the goods which are imported or exported. Section 18(1) manifestly suggests that rate of levy on the goods imported in or exported from Pakistan can also be specified through other laws.
Evidently section 2 of Finance Ordinance, 1982 further amended by Finance Ordinance, 1983 imposed additional customs duty of 'surcharge'; whereas section 5 of Finance Act, 1985 prescribes 'Iqra surcharge' by way of additional customs duty on the importation of goods, at the rates specified in said statutes. Both the enactments specifically exclude applicability of any notification allowing exemption of customs duty. Therefore by virtue of express provisions in aforesaid special enactments exemption in respect of imported goods granted under section 19 of the Customs Act, would be completely ineffective and inoperative for purposes of additional customs duty under said laws. Similarly when express provision of special enactment supersedes and excludes provisions of general law, the latter in that behalf and to the extent of inconsistency must yield. For authority reference can be made to cases; (i) Muhammad Steamship Co. Ltd. v. The Commissioner of Income-tax (Central) Karachi PLD 1966 SC 828; (ii) Rehmatullah & Sons v. Commissioner Income-tax 1974. SCMR 127 and (iii) State v. Syed Mir Ahmed Shah PLD 1970 Quetta 49.
5. Now considering objections about vires of Finance Ordinance, 1982 and Finance Act, 1985 on the ground of being beyond legislative competence of Federal Legislature; it may be examined, that 'surcharge' and 'Iqra surcharge' have been levied as additional customs duty. It undoubtedly discloses that new duty has been added up besides other existing customs duties in respect of commodities which are imported into Pakistan. Therefore factually character of enactment coupled with consequences sought to be achieved through impugned legislation would be most relevant factor for ascertaining its true nature, rather than incidental object vaguely discussed or the nomenclature. For better appreciation of the principle of law, reference also be made to the observation in case F.B. Ali v. State PLD 1975 SC 506 at 524. From the bare reading of both the aforementioned enactments, it is quite apparent that same were promulgated to secure "additional customs duty" which is Undisputedly sanctioned by Part-1 of the Federal Legislative List, attached to Fourth Schedule under the Constitution. In an identical set of circumstances dealing with mainly same objection in the light of principle covered by "pith and substance" Mr. Justice Rustam S. Sidhwa of Lahore High Court in case Lahore Textile & General Mills Ltd. v. Islamic Republic of Pakistan (PTCL 1988 CL 544) made following observation:-- "It is well-settled law that the validity of an Act is not affected if it incidentally entrenches upon matters outside the authorised field, if otherwise, by the rule of "pith and substance", it substantially falls within the powers expressly conferred upon the legislature which enacted it. If the basic object of the section 2 of the Finance Ordinance, 1982, and section 5 of the Finance Act, 1985, was to levy nothing more than additional customs duty, the fact that incidentally the whole of the customs duty under the latter Act was to be or still is diverted to education, the legislation cannot be held to be invalid merely because funds from the common pool have been specifically earmarked by the legislature for particular purpose. It cannot be denied that all customs duties fall into the common pool and from there can be diverted into various channels to meet expenditure regarding a host of subjects and activities. The fact that the legislature has diverted the income of one particular item of additional customs duty for a specific purpose, does not alter the "pith and substance" of the legislation, which is taxation. Once legislation, which specifically deals with taxation, is within the express powers, then it is not invalidated if incidentally the total income diverted from such taxation is directed to meet the expenditure on a particular subject. The legislature has powers to divert the income falling in the common pool into various activities and if the income of one source, which normally falls in the common pool, is channelized specifically to a particular purpose, the true object of the legislation, which initially was taxation, is not lost.
Thereafter an abortive attempt was made by learned counsel for petitioners to make distinction between levy of taxes, and mere right for recovering educational fees, thus challenging validity of impugned legislations. As already discussed mere form, or nomenclature of the enactment by itself is not material. Actually basic requirement, and anxiety of legislature appeared to be procuring of additional customs duty for enhancing Federal consolidated revenue, which obviously could be conveniently diverted to any of the useful purposes urgently needed for the nation. It may also be seen that except objection about Finance Ordinance, 1982 having been lapsed for not placing it before National Assembly, all other aspects have been elaborately and exhaustively dealt with and determined by Single Judge of Lahore High Court in case, Lahore Textile & General Milt Ltd. v. Islamic Republic of Pakistan (PTCL 1988 CL 544). We respectfully endorse on all the points, view taken by the worthy Judge in aforementioned report.
6. Now therefore, we proceed to decide last objection raised by learned counsel for petitioners, that Article 89 of the Constitution was revived with effect from 10th March, 1985. Therefore Finance Ordinance, 1982 as amended by Finance Ordinance, 1983 ought to have been placed before National Assembly within four months of its commencement from 23rd March, 1985 and on the failure to do the same, above enactment is deemed to have lapsed. It is not disputed that impugned Finance Ordinance, 1982 was promulgated by virtue of powers derived under C.M.L.A/S Order 1 of 1977 Laws (Continuance in Force) Order. Whereas Article 89(1) of the Constitution provides powers of President to promulgate Ordinances, under the Constitution; consequently sub- clause (2) of Article 89 expressly refers to Ordinances promulgated under Article 89(1) and in that behalf specifies performance of subsequent formalities. Therefore on the revival of the Constitution and creation of Assembly, only such Ordinances which under the Constitution were to be promulgated by the President, would stand repealed if not laid before National Assembly within four months or before expiration of said period resolution disapproving it, is passed. Obviously sub- clauses (2) and (3) are restricted to Ordinances under sub- clause (1) of Article 89 of the Constitution. Admittedly, the impugned Finance Ordinance, 1982 was not issued under Article 89, rather it derives authority from Laws (Continuance in Force) Order 1 of 1977, therefore, same under the law could not be subject to procedure prescribed under Article 89. Additionally Article 270(a) relating to validation of President's Orders, enactments and laws promulgated from 5th July onwards was enforced with effect from 29th December, 1985 whereby the impugned Ordinance which was clearly an existing law, thus stood validated and protected by the Constitution. In the circumstances objection raised by learned counsel for petitioners is fallacious, therefore, must fail.
For the foregoing reasons we are satisfied that impugned legislations do not suffer from any infirmity, defect or incompetency. Accordingly demand regarding levy of 'surcharge' and Iqra surcharge' made by Customs authorities under respective enactments is quite proper. Resultantly petitions have no merit which are thus directed to be dismissed.
For the foregoing reasons we are satisfied that impugned legislations do not suffer from any infirmity, defect or incompetency. Accordingly demand regarding levy of 'surcharge' and Iqra surcharge' made by Customs authorities under respective enactments is quite proper. Resultantly petitions have no merit which are thus directed to be dismissed.
Since important Constitutional points were raised, therefore, we do not feel inclined to impose costs.