1. ' ZAFFAR HUSSAIN MIRZA, J.---These appeals by the Government of Pakistan and others arise out of common judgment of a Division Bench of the Sindh High Court, dated 16th November, 1987 by which a number of Constitutional petitions including those filed by the respondents in the present appeals, out of which these appeals arise were allowed. Leave to appeal was granted in these cases on the basis of a large number of connected petitions for leave to appeal in which the common questions of law and fact had arisen for consideration relating to section 31-A of the Customs Act, 1969 (hereinafter referred to as the Act) and the effect of the said section on the ratio of Al-Samrez Enterprise v. Federation of Pakistan 1986 SCM R 1917.
2. ' The facts as are reflected in the judgment of the High Court are that the respondents in these appeals except in Civil Appeal No,493-K of 1990 and Civil Appeal No,494-K of 1990 had imported large consignments of Soyabean Oil into Pakistan after obtaining import licences for the purpose, at a time when there was no customs duty leviable on the commodity in question, namely, Soyabean Oil, according to the Heading No,15.07 of the Pakistan Customs Tariff 1985-86. In this connection reference has been made to SRO 645 (I)/85 dated 1st July, 1985 whereby notification was issued under section 18(2) of the Act but no duty was levied on Soyabean Oil. However, subsequent to the opening of the Letters of Credit by the respective respondents and shipment of imported goods by the foreign suppliers, by means of notification dated 7th April, 1986 issued under section 18(2) of the Act, the earlier notification dated 1st July, 1985 was amended so as to add a new Heading, namely, 15.07-A inserted in the table according to which a duty at the rate of Rs,3,000 per tonne was imposed on Soyabean Oil. Subsequently by another Notification No,SRO 396(I)/86 dated 17th April, 1986 the rate of regulatory duty on Soyabean Oil was reduced to Rs,2,350 per tonne. Being aggrieved by the imposition of regulatory duty after. Firm commitments were made by the respondents for the import of goods, by means of contract for the sale of goods with foreign suppliers and opening of Letters of Credit, the respondents filed respective Constitutional petitions challenging the levy of regulatory duty by means of the aforesaid notification dated 7th April, 1986 and 17th April, 1986: firstly on the ground that Soyabean Oil was an item free from levy of duty on the aforesaid date and therefore subsequent imposition and collection of duty on the goods affecting the vested rights of the respondents was illegal. Secondly, it was urged that imposition of duty, in such circumstances, rendered the imported consignments wholly uneconomical if not wholly onerous and as the respondents were exposed to very substantial monetary loss the imposition was mala fide and un-Constitutional.
3. ' In Civil Appeal No,494-K of 1990, the facts are that the respondents imported Palm Oil into Pakistan. According to them at the time of entering into contract with foreign suppliers and the opening of the Letters of Credit, the aforesaid commodity was subjected to the payment of regulatory duty at the rate of Rs,2,350 per metric ton. But before the arrival of the goods in Pakistan the rate of duty was revised on Palm Oil by enhancing it from Rs,2,350 to Rs,5,350 per metric ton with effect from 22nd August, 1986 and Rs,6,000 per metric ton with effect from 20th September, 1986 vide notification dated 22nd August, 1986. Therefore the respondents in the said appeal also challenged the levy of enhanced duty on the same grounds as stated above.
4. ' In Civil Appeal No,493-K of 1990, respondents namely, Ghee Corporation of Pakistan Limited had imported RBD Palm Oil on the basis of an import licence dated 3rd February, 1986. The goods arrived at Karachi on 24th March, 1986. According to the respondents at the time when the import licence was granted and the Letter of Credit was established there was no customs duty leviable on edible oil vide Heading No,15.07 of the Pakistan Customs Tariff. It is their case that much after the arrival of the goods by notification dated 7th April, 1986 under sections 18(2) and 19 of the Act customs duty was imposed at the rate of Rs,3,000 per metric ton, if imported in bulk by a recognized manufacturer of edible ghee and cooking edible oil subject to certain conditions.
5. Subsequently the duty was reduced from Rs,3,000 to Rs,2,350 per metric ton under section 18(2) of the Act. In this case also the respondents' grievance was that as a result of the impugned notifications dated 7th and 17th April, 1986 they were demanded duty on Palm Oil, although no such duty was leviable at the time of their entering into contract or opening of Letters of Credit. They further submitted that at the time when the first notification dated 7th April, 1986 was issued the goods had already arrived at Karachi and were awaiting clearance but the Bill of Entry was submitted on 8th April, 1986.
6. ' All the respondents in these appeals relied in support of their cases before the High Court on the judgment of this Court in Al-Samrez Enterprise (supra). The learned Judges of the Division Bench referring to the case of AlSarmez Enterprise and some other decisions recorded their conclusion as hereunder:-- "Reference to the above case-law makes it abundantly clear that when any exemption or concession in respect of payment of any tax or duty is granted a subsequent notification cannot operate with retrospective effect so as to destroy any vested rights already created by virtue of such concession, when the effect of the subsequent notification is to expose a person to an unforeseen loss in a business transaction. Hardly any doubt can be expressed as far as the proposition is concerned."
7. ' As to the submission on behalf of the Government to the effect that in such a case the newly- imposed customs duty by means of subsequent notifications could be paid by the importers and transferred to the consumers, by virtue of section 64-A of the Sale of Goods Act, the learned Judges observed that in the present cases there is neither any similar condition in the contracts nor the Sale of Goods Act is applicable, besides this being a question of fact, depending upon the conditions of the market at the relevant time and supply and demand. Learned Judges expressed that they would have examined the contention raised on behalf of the Government, but for the law laid down in the case of Al-Samrez Enterprise which was on all fours with the facts and circumstances obtaining in the present cases. On these grounds the Constitutional petitions were allowed and it was declared that "any duty charged in pursuance of the impugned notifications would be without lawful authority and of no legal effect in view of the opening of the Letters of Credit by the petitioners already on the basis of the concessions earlier enjoyed by them". So far as Constitutional Petition No, D-1039 of 1987 out of which Civil Appeal No,494-K of 1990 arises and Constitutional Petition No,D-666 of 1987 out of which Civil Appeal No,493-K of 1990 arises, it was further clarified by the learned Judges that "any duty charged in excess of the already imposed on the Palm Oil would be without lawful authority".
8. ' It would be pertinent to state here that the learned Judges of the Division Bench in the judgment under appeal have observed that the factual aspects pleaded by the respondents were not controverted or resisted by the respondents before them (the appellants herein) "on the factual plane", but the controversy related to only the question of law whether on the facts pleaded by them they acquired any vested rights which could not be taken away by the imposition of duty through the means of the impugned notifications.
9. ' In support of these appeals we have heard Chaudhry ljaz Ahmed, learned Deputy Attorney- General for Pakistan, who has relied on section 31-A which was inserted in the Act by the Finance Act, 1988 and has submitted that by virtue of the said provision of law the vested rights if any of the respondents were retrospectively taken away. He has further submitted that the effective rates of duty to be imposed on various goods under section 189(2) of the Act is a matter within the ambit of policy of the Government and the Court has no jurisdiction to take cognizance of any such matter, as that is not a justiciable issue. His other arguments have been noted and dealt with in connected Civil Appeal No,915-K of 1990 (Molasses Trading and Export Co. Ltd. v. Federation of Pakistan and others) which has been decided by this Court separately. In that case we have already held that section 31-A has, effectively nullified the judgment of this Court in Al-Samrez Enterprise's case, and that it has retrospective operation except as to the past and closed transactions, namely, those cases of import of goods in which the Bill of Entry was submitted before the date of insertion of the said section, namely, Ist July, 1988 and on that date the rate of duty and the value of goods stood determined by virtue of the then existing law including the principles enunciated in the case of Al- Samrez Enterprise.
10. ' However, the question whether the ratio of Al-Samrez Enterprise would be attracted in the case of regulatory duty under section 18(2) of the Act is a separate matter. The case of Al-Samrez Enterprise dealt with the question of the effect of withdrawal of an exemption notification under section 19 of the Act. As discussed in Civil Appeal No,915-K of 1990 and others in AI-Samrez Enterprise the concept of exemption as applied to taxation, which presupposes a liability and constitutes grant of immunity from the liability created by the charging section, was the essential principle on which the decision proceeded. So far as the power of the Government to impose a regulatory duty is concerned, the case falls within the domain of delegated legislation, whereby duty or tax is imposed under the law as authorised by Article 77 of the Constitution, under the authority of the Act of Parliament. Therefore, on no principle or rule of law, it can be urged that merely because at one time no regulatory duty was imposed and was in force, when the contract was entered into, any embargo is thereby created upon the delegatee of the legislature to impose the tax at any time irrespective of any transaction entered into on the basis when no such tax was in force. We have not been shown any authority for the proposition that abstention of the Government or non-exercise of delegated authority to impose the tax at a given time under delegated authority, gives a vested right to any one to be exempted from the payment of such tax ipso facto subsequently when such tax is imposed.
11. ' Mr. Rahimtoola, learned counsel for some of the respondents besides arguing that duty could not be imposed so as to destroy vested rights created in favour of the importer after a contract of sale was concluded and L.C. Opened, further urged that the policy announced by the Government imposing no regulatory duty on Soyabean Oil in the first instance constituted promissory estoppel as in the meantime his clients had acted on the initial declaration of policy providing no regulatory duty on the commodity in question. Mr. Fakhruddin G. Ebrahim and Mr. Khalid Anwar also advanced a similar argument in urging that, once the Government takes a conscious decision on what articles regulatory duty should be imposed, if subsequently within the same financial year duty is imposed on one of the items free from such duty, a question of vested right and promissory estoppel does arise and the Government cannot be allowed to go back upon such representation.
12. However, as already discussed abstention from subjecting a particular item of goods from regulatory duty at a given time, or for that matter at the commencement of the financial year, does not create any vested right in favour of any party who may have entered into contracts on that basis, because the authority to levy the duty is the sovereign power of the State by the device of delegated legislation for imposing a tax. So far as the argument on promissory estoppel is concerned, there is no question of a representation on the part of the Government, which is an essential element of the principle of promissory estoppel, when particular item is not subjected to duty at the initial stage. In a recent case reported as Pakistan v. Salahuddin PLD 1991 SC 546 the operation of the doctrine of promissory estoppel is stated to be subject to several limitations, including the one that it cannot be invoked against the legislature or the laws framed by it because the legislature cannot make a representation. If there was any representation extended by the law, it was that under subsection (2) of section 18 of the Act the Government could impose a duty at any time. Another limitation spelt out by the aforesaid decision was that no agency or authority can be held bound by a promise or representation not lawfully extended or given. It goes without saying that it is difficult to hold that the mere fact that no duty was imposed when the initial notification was issued imposing duty on other items, it amounted to a valid promise or representation on the part of the Government not to invoke its powers of imposition of the duty, if upon consideration of the relevant and pertinent factors, it became necessary to impose the duty subsequently during the same year. Therefore, reliance on the doctrine of promissory estoppel and on Pakistan v. Salahuddin (supra) is inapt besides the facts in that case being distinguishable.
13. ' Messrs Fakhruddin G. Ebrahim and H Rahimatoola, learned counsel appearing for some of the respondents, however questioned the validity of the impugned notifications imposing regulatory duty on Soyabean Oil on yet another argument which deserves separate consideration. It was urged that in the circumstances of this case the imposition of duty rendered the imported consignments wholly uneconomical resulting in tremendous loss in monetary terms to the clients of these learned counsel and on this score the imposition was mala fide and unconstitutional.
14. Before going into the facts pleaded in the petition relevant to this contention it will be appropriate first to deal with the argument on the legal plane. Mr. Fakhruddin G. Ebrahim urged that the power of taxation cannot be exercised in an arbitrary, unreasonable and prohibitive manner, and any such exercise would be ultra vires the power of the State legislature and can be struck down as unconstitutional. He has placed reliance on several judgments from the Indian jurisdiction. In Devkumarsinghji Kastruchandji v. State of Madhya Pradesh and others AIR 1967 Madhya Pradesh 268 where the property tax on lands and buildings was challenged, it was observed as follows:-- "There are no doubt limits to taxation. If those limits are crossed, then apart from the evils following in the field of economics and public finance, a tax may become invalid in :aw because of its confiscatory character and effect. If the magnitude of the tax is such as to eliminate the owner or to compel him to part with the taxed property for the payment of the tax assessed on him, or if it destroys the businesses of the persons taxed, then such a tax would be confiscatory in character and invalid -- see A.G. Of Alberta v. A.G. Of Canada, AIR 1939 PC 53; Srinivasamurthy v. State of Mysore, AIR 1959 SC 894, and Kunnathai Thathunni Moopil Nair v. State of Kerala, AIR 1961 SC 552.
15. The contention that the tax imposed on lands and buildings by the impugned Act is confiscatory and invalid cannot however be examined because of the declaration of Emergency by the President under Article 352 suspending the protection of Article 19, and also for the reason that it is a point which necessarily involves an investigation into facts and the petitioners have placed no material before us to show the alleged confiscatory character of the tax."
16. ' In the Corporation of Calcutta and another v. Liberty Cinema AIR 1965 SC 1107, the levy of licence fee on cimena houses was called in question. The levy was challenged on the ground that it amounted to expropriation and was therefore violative of Article 19 of the Indian Constitution.
17. However this plea was rejected on the ground that the materials brought on the record did not establish that the rate was so high as to make it impossible for the respondent to carry on its business. On this reasoning the Supreme Court affirmed the view taken by the High Court that the levy was not unreasonable.
18. ' The next case referred to was M/s. Diwan Sugar & General Mills (Pvt.) Ltd. v. The Union of India AIR 1959 SC 626. In this case the legality of notification issued by the Government of India fixing the ex- factory price per maund of sugar produced in some of the Provinces, was challenged. The exercise of power was related to the Essential Commodities Act, which was passed for the control of production, supply and distribution of essential commodities and trade and commerce therein.
19. One of the grounds on which the notification was impugned was that it imposed an unreasonable restriction on the right to trade under Article 19 of the Indian Constitution, inasmuch as: (i) it compels factories to sell sugar at a loss, (ii) if fixes the price arbitrarily, and (iii) there is no reasonable safeguard against the abuse of power and no provision for a check by way of appeal or otherwise. This contention, was however repelled, on the facts of the case and the provisions of the Order issued under the aforesaid enactment by the Government, which was held to provide for the factors, which had to be taken into consideration in fixing prices, which ensured a reasonable margin of profit for the producer and any incidental charges. It was found as a fact that these matters were kept in mind when prices were fixed by the impugned notifications. Apparently, the learned counsel has relied upon this judgment in order to show that if on the materials placed before the Supreme Court of India the petitioners had succeeded in, showing that the impugned notification fixed the prices which compelled the factories to sell the commodity at below cost of production, the notification could have been struck down as arbitrary and unconstitutional.
20. ' The next case on which reliance was placed by the learned counsel is Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and another. AIR 1961 SC 552 in which the constitutionality of the Travancore-Cochin Land Tax Act, 1955 was challenged. One of the grounds urged in assailing the Act as unconstitutional was that the whole Act has been conceived with a view to confiscate private property, as no compensation was being paid to those who may be expropriated as a result of the working of the Act. This argument was based on the assertion that the tax proposed to be-levied on private property in the State of Kerala has absolutely no relation to the paying capacity of the persons sought to be taxed, with reference to the income they could derive or actually did derive from the property. In accordance with the majority opinion, the Court held, upon examining the facts of the case that the provisions of the Act, without proposing to acquire the privately-owned forests in the State of Kerala, have the effect of eliminating the private owners through the machinery of the Act. J. Was held that in so far as in actual operation, as demonstrated by the facts, the Act would result in imposing unreasonable restrictions on holding of the property, the same was clearly confiscatory in character and effect, accordingly the Act was declared as unconstitutional and in violation of the fundamental right to hold property.
21. ' From the aforesaid, the contention of Mr. Fakhruddin G. Ebrahim is fully supported by the case-law cited by him, so far as the Indian jurisdiction is concerned that any legislation whereby either the prices of marketable commodies are fixed in such a way as to bring them below the cost of production and thereby make it impossible for a citizen to carry on his business; or tax is imposed in such a way so as to result in acquiring property of the on whom the incidence of taxation fell, then such legislation would be violative of the fundamental right to carry on business or to hold property as guaranteed in the Indian Constitution and thereby be rendered unconstitutional. We were not referred to any case-law contrary to what has been relied upon, by the learned Deputy Attorney-General. There is no reason for taking a different view so far our Constitution is concerned and therefore on the same principle the imposition of duty would be open to challenge qua its constitutionality or validity.
22. ' Mr. Fakhruddin G. Ebrahim is appearing for respondents in three appeals, namely, Civil Appeals Nos. 475-K of 1990, 485-K of 1990 and 488-K of 1990. According to him in each of the said cases before the High Court a plea was raised in the Constitutional petitions to the effect that the imposition of the duty had rendered the respective imported consignment wholly uneconomical if not wholly onerous and the respondent in each case claimed that he would suffer a tremendous loss in monetary terms. On this basis the levy was challenged as niala fide and unconstitutional. It was pointed out that in reply to this plea, the Government merely stated that the goods imported by the respondents, being consumer goods which had a market in Pakistan could be sold by including the element of duty imposed in the sale price. To this averment in the counter-affidavit of the Government, in each case a rejoinder affidavit was filed to show that the purchase price of Soyabean Oil in the market per maund was Rs,284 and the average sale price per maund was Rs,339.15, with the result that the respondents could earn a profit of Rs,45.15 per maund, if no duty was imposed. However, after the duty was imposed the respondents were forced to pay Rs,87.75 per maund, so that clearly the goods could be sold only at a loss of Rs,42.60 per maund. In all the three appeals such pleas were taken by the respondents and the necessary facts placed before the High Court in order to support the contention that the resultant effect of the imposition of duty by the impugned notifications, was to make it impossible for the respondents to dispose of the goods at a profit or to carry on their business leaving them a margin of profit to survive in such business. It was pointed out by the learned counsel that the High Court did not advert to this aspect of the matter notwithstanding its finding that the burden of the newly-imposed duty could not be transferred to the purchasers of the goods in the home market under section 64-A of the Sale of Goods Act because that provision was not attracted, since in its view the case could be disposed 01 on the basis of the ratio laid down in the case of Al-Samrez Enterprise. Beim us the learned Deputy Attorney-General maintained that in order to assess the level of regulatory duty to be levied with the decontrol of ghee, a lost sheet was prepared for the industry on the basis of the current import prices and overhead and processing costs of the public sector units. It was in this data according to him that a regulatory duty was found viable at the rate of about Rs,4,000 per tonne on the imported edible oil. However, we do not consider it appropriate to go into these questions of fact and record, because in the fitness of things they should first be examined by the High Court. From the judgment it appears that if the High Court had not proceeded on the basis of Al-Samez Enterprise, it would have examined the question whether the duty wa, confiscatory in nature. It was therefore rightly urged by Messrs Fakhruddin G. Ebrahim and J.H. Rahimatoola that the appeals in which they are appearing as counsel may be remanded to the High Court to decide the question whether the impugned notifications were unconstitutional and in violation of fundamental rights because the effect of the notifications was confiscatory in nature and in violation of the fundamental rights to conduct any lawful trade or business as enshrined in Articles 18 and 23 of the Constitution.
23. ' I have also perused the record of Civil Appeals in which Mr. J.H. Rahimtoola is appearing for the respondents in which this question has been raised by taking up pleas that as a result of the imposition of duty the import of Soyabean Oil had become uneconomical resulting in loss to the respondents. Learned counsel has referred to some of the rejoinders filed by his clients in some of the petitions in which particulars of duty and market rates etc. Have also been mentioned in support of the said pleas.
24. ' So far as Civil Appeal No,493-K of 1990 is concerned, Mr. Sami Ahmad, learned counsel for the respondent adopted the arguments of the other counsel appearing for the respondents. It has already been held that non-imposition of regulatory duty at a time when the contract for the sale of goods was entered into with the foreign suppliers or Letter of Credit was opened is no ground and does not create a vested right to be immune from such duty at any subsequent time.
25. Therefore this case is also liable to be disposed of on that argument and the principles laid down in the case of Al-Samrez Enterprise are not attracted in the facts of this case. This is a case in which Palm Oil was imported and except a general and vague plea made by the respondent that imposition of customs duty could not possibly be absorbed and passed on to the consumers, there are no specific pleas that the goods could not be disposed of in the market at a profit or otherwise used in business viably. Therefore this case does not deserve to be remanded to the High Court for considering the question of the unconstitutional nature of the imposition of duty on this item.
26. Similary, Civil Appeal No,494-K of 1990 relates to the import of Palm Oil and the respondent in that case did not appear or represent his case before us. That case also cannot be remanded to the High Court.
27. ' For the foregoing reasons all these appeals except Civil Appeals Nos. 493-K and 494-K of 1990, are partly allowed and the cases are remanded to the High Court for decision of the question referred to above in the light of this judgment. The costs in these cases shall be the costs in the cause.
28. ' Civil Appeals Nos.493-K and 494-K of 1990 are, however, allowed with costs and the judgment of the High Court in respect of these cases is set aside.
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