AJMAL MIAN, J.--1. By this common judgment, we intend to dispose of the above 20 civil appeals, which have been filed with the leave of this Court, against a common judgment dated 29-11-1990 passed by a Division Bench of the High Court of Sindh in Constitution Petitions Nos. D-668/89, D- 686/89, D-687/89, D-693/89, D-706/89, D-713/89, D- 739/89, D-754/89, D-760/89, D-669/89, D- 676/89, D-468/89, D-437/89, D-741/89, D-742/89, D-821/89, D-822/89, D- 743/89, D-846/89 and D- 51/90, filed inter alia by 17 appellants in the above appeals, challenging SROs Nos. 555(I)/89 and 556(I)/89 both dated 3-6-1989, hereinafter referred to as 'the 2 impugned SROs'. The former SRO omitted entries in Clause (e) in Columns 2 and 3 of SRO No. 555(I)/79, dated 28-6-1979. Whereas, by the latter SRO, earlier SRO No. 815(I)/85, dated 29-8-1985 was rescinded. The effect of the above two impugned SROs was that the concessions as to the payment of excise duty on the production of sugar, enjoyed by the sugar mills till the issuance of the above two impugned SROs, were withdrawn.
2. Out of the above 20 Constitution petitions, 17 petitions were dismissed and 3 Constitution petitions were allowed. The operative portion of the judgment reads as follows:- "As the result of above discussion we find no merit in the petitions filed by the old Sugar Mills being C.P. No. D-686/89, CP No. D- 687/89, CP No. D-693/89, CP No. D-706/89, CP No. D-713/89, CP No. D- 739/89, CP No. D-759, CP No. D-760/89, CP No. D-846/89, CP No. D-669/89, CP No. D-767/89, CP No. D-742/89, CP No. D- 821/89, CP No. D-322/89 and CP No. D-51/91 and the two petitions being CP No. D-437/89 and CP No. D-468/89 mentioned in the preceding paragraph, and dismiss the same with costs while in case of petitions CP/No. D-668/89, CP No. D-741/89 and CP No. D- 743/89 we declare that the notification No. SRO 556(I)/89, dated 3rd June, 1989, so far as it applies to withdrawal of 50% exemption from payment of Central Excise Duty before the expiry of period of two years calculated from the date of their production of sugar-i'> without lawful authority and of no legal effect and allow these petitions only to this extent."
3. Petitions for leave to Appeals Nos. 547-K of 1990, 548- K of 1990, 551-K/90 to 560-K of 1990, 562- K/90 to 564-K/90, 572-K/90 and 22-K/91 were filed by the appellants, whose above 17 Constitution petitions were dismissed, hereinafter referred to as 'the Private Appellants', whereas, petitions for leave to Appeal Nos. 18-K of 1991 to 20-K of 1991 were filed by the Federation of Pakistan, hereinafter referred to as 'the Federation of Pakistan', against allowing of the three Constitution Petitions mentioned hereinabove in para. 2.
4. Leave to appeal was granted to consider the following questions:- "(i) Whether the High Court is justified in holding that under section 12-A read with section 21 of the General Clauses Act, 1897, the Federal Government enjoys unfettered power to rescind the notifications of the nature in issue;
(ii) Whether the rescission of the earlier notifications through the notification dated 3-6-1989 infringes any vested right of the old and new sugar mills? Reliance was placed on the case of Al- Samrez Enterprises v. The Federation of Pakistan PTCL 1987 CL. 99.
(iii) Whether the private appellants were entitled to press into service the doctrine of promissory estoppel against the official petitioners in the present case? Reliance was placed on the 'case of Federation of Pakistan and others v. Salahuddin and 3 others PLD 1991 SC 546.
(iv) If the doctrine of .Estoppel could be pressed into service in the present case, it was to operate for how long period?
(v) Whether the official respondents could levy Central Excise Duty on the sugar which was already produced by the private petitioners prior to the date of above notification, namely, 3-6-1989?
Reliance was placed on the case of Colony Sarhad Textile Mills Ltd. v. Superintendent, Central Excise and Land Customs 1970S CMR 640 and the case of Central Board of Revenue etc. v. Colony Thai Textile Mills Ltd. 1981S C M R 303.
(vi) From what date, the notification dated 3-6-1989 became operative, if it was legal?"
5. The facts to be noted are, that the private appellants are engaged in manufacture of sugar and their sugar mills are situated in various places in the Province of Sindh, it may be observed that manufactured sugar is subject to levy of excise duty at the rate of Rs. 2.50 per kilogram under item No. 02.02 of the First Schedule appended to the Central Excises and Salt Act, 1944, hereinafter referred to as 'the Act'. The Federal Government pursuant to the powers conferred under section 12- A of the Act, issued Notification No. SRO 555(I)/79, dated 28-6-1979 exempting certain goods from the payment of Central Excise Duty including sugar which was covered under Item No. 02.02. The relevant entry in the above notification dated 28-6-1979 reads as follows:- Item No. Description of Goods Rate of duty 02.02 (a) Sugar manufactured in a factory which is operated without the aid of power , steam or natural gas.Nil (b) Confectionery , icing,dererara and candy sugar manufactured in a factory from sugar on which duties of excise have already been paid, provided that the procedure prescribed under the Act or the rules made thereunder is followed.Nil
(c) Sugar produced for demonstration and experimental purposes in the...
Agricultural Station, Faisalabad.
Agricultural Farm, Tarnab, and Agricultural Farm at Mastankilli in Mardan District.
Nil Nil Nil (i) (ii) (iii) (d) Khandsari sugar Nil (e) Sugar manufactured in a factory in a financial year which exceeds the annual average production of the preceding two financial years in that factory: Provided further that in the case of a factory which is in production for less than seven years, this exemption shall apply if, in a financial year its production exceeds the annual national average, as determined by the Central Board of Revenue, for that year, on the basis of total production of sugar during the last i.e years in the sugar factories which are in production for at least seven years."Sixty eight paisa per kg.
6. It seems that the Federal Government, from time to time, amended the above quoted clause (e) in column 2 of the aforesaid SRO inasmuch as by SRO No. 263(I)/82, dated 21-3- 1982, it was provided that the quantity of sugar manufactured in a financial year which exceeded production from the preceding four years in a mill was partly exempted from the payment of duty. The above amendment was to operate with effect from 1-7-1981. This was followed by a notification bearing SRO No. 560(I)/82, dated 14-6-1982 whereby the above clause (e) of column 2 to the First Schedule was substituted and it was provided that the quantity of sugar that was produced by sugar mills in a financial year which exceeded average production for the preceding two years was exempted from payment of Central Excise Duty. The above amendment was to take effect from first day of July, 1982. It appears that the above notification was followed by a notification bearing SRO No. 132(I)/86, dated 6-2-1986, which is not relevant for the controversy in issue. After that, notification bearing SRO No. 814(I)/85, dated 29-8-1985 was issued under above section 12-A of the Act, granting 50% exemption from the payment of Central Excise Duty on sugar produced by new sugar mills on their production for the first two years commencing from the date of production. The sugar mills which had commenced production in the years 1982-83 and 1983-84 or thereafter, were also .Allowed the above exemption. It was also provided that the latter sugar mills, if they had already paid Central Excise Duty on their production of sugar, were entitled to refund/adjustment against such payment to the extent of 50%, which was to be adjusted towards the payment of excise duty on their production for the years 1985-86 and 1986-87. However, by a subsequent SRO No. 509(I)/87, dated 21-6-1987 the aforesaid 1986-87 years was substituted by the year 1988-89 for the above adjustment. Five of the private appellants, who were petitioners, in the constitution petitions, fell within the category of new sugar mills, the detail of which is as follows:- S.No. Name of the Mill Date of Commencement of production
1. Messrs Army W elfare Sugar Mills (CP No.D-437/89)C.A.
No.100-K/1991.28-2-1984
2. Messrs Faran Sugar Mills (CP No.D-468/89)C.A.
No.103-K/1991.1983-84
3. Messrs Sanghar Mills (CP No.D-668/89)C.A. No.1 19- K/1991.18-1-1988
4. Messrs Dewan Sugar Mills (CP No.D-741/89)C.A.
No.108-K/1991.28-11-1987
5. Messrs Al-Asif Sugar Mills (CP No.D-743/89)C.A.
No.115-K/199127-10-1987
7. After the issuance of the above two SROs Nos. 814(I)/85 and 509(I)/87, dated 29-8-1985 and 21- 6-1987- respectively, under section 12-A of the Act, entry No. 02.02 read as follows:-- "02.02 Exemptions (a) Sugar manufactured in a Free factory which is operated without the aid of power , steam or natural gas.Free
(b) Confectionery , icing, demerara and candy Free sugar manufactured in a factory from sugar on which duties of excise have already been paid, provided that the procedure prescribed under the Act or the rules made thereunder is followed:Free
(c) Sugar produced for demonstration and experimental purposes in the...
Agricultural Station, Faisalabad.
Agricultural Farm, Tarnab, and Agricultural Farm at Mastankilli in Mardan District.
Free Free Free (i)
(ii)
(iii)
(d) Khandsari sugar
(e) Sugar , other than sugar manufactured Free from beet by the factories in the North-W est Frontier Province, manufactured by a factory in a financial year which exceeds the average production of sugar , other than sugar manufactured from beet by theFree factories in the N.-W .F.P, for the preceding two financial years.
(f) Sugar produced from beet during the Free financial years 1985-86 to 1989-90 by the sugar mills located in N.-W .F.P.Free
(g) New sugar mills, which commenced operation during 1982-83 crushing season or thereafter or which may commence operation hereafter from payment of fifty per cent of central excise duty leviable on their production of first two years commencing from the date of operation.
The new sugar mills which commenced production during 1982-83 and 1983-84 and which have already paid excise duty on the first two years of their production of sugar will be entitled to refund/adjustment of the duty in such a manner that fifty per cent of the total amount of sufi refund/adjustment will be made against the duty payable by them during 1985-86 and fifty per cent against the duty due from them during 1988-89."Free
8. That the old and new sugar mills continued to enjoy the concessions under above SROs till the issuance of the two impugned SROs followed by a letter issued by the Customs and Central Excise Department informing the private appellants that according to the Budget Speech for the years 4.989-90, exemption of Central Excise Duty on cane sugar for the older as well as for the new mills had been withdrawn with immediate effect and, therefore, the entire stock of sugar available in the factories was subject to Central Excise Duty at the rate of Rs. 2.15 per kilogram. Some of the private appellants were directed to refund the amounts allegedly wrongly adjusted on the basis of notification, dated 29-8-1985 granting exemption from payment of Central Excise Duty on sugar retrospectively for the years 1982-83 and 1983-84. Thereupon, the above 20 constitution petitions were filed, which were heard together and disposed of by the aforesaid common judgment in the above terms. The private appellants and the Federation o!' Pakistan filed the above petitions for leave to appeal. Leave to appeal was granted to consider the above questions.
9. Before proceeding with the contentions raised by the learned counsel for the appellants, it may be pertinent to observe that SRO No. 560(I)/82 dated 14-6-1982 and SRO No. 814(I)/85, dated 29-8- 1985, referred to hereinabove, are the two SROs which are in issue. It may be advantageous to reproduce the same, which read as follows :-- S.R.O. No. 560(I)/82 "SRO No. 560(I)/82, dated 14th Jun, 1982.-In exercise of the powers conferred by subsection (1) of section 12-A of the Central Excises and Salt Act, 1944 (I of 1944), the Federal Government is pleased to direct that the following further amendment shall be made in its Notification SRO 555(I)/79, dated 28th June, 1979 namely:-- * In the aforesaid Notification in Table I, in item 02.02 for clause (3), Column (2) and the entry relating thereto in column (3) the following shall be substituted, namely:-
(e) "Sugar manufactured in a factory in financial year which exceeds the average production for the preceding two years in that factory .Nil
(2) The amendment shall take effect on the first day of July, 1982."
S.R.O. No. 814(1)/85 Notification SRO 814(I)/85, dated 29th August, 1985.-In exercise of the powers conferred under subsection (1) of section 12- A of Central Excises and Salt Act, 1944 (I of 1944), the Federal Government is pleased to exempt new sugar mills, which commenced operation during 1982-83 crushing season or thereafter or which may commence operation hereafter, .From payment of fifty per cent of central excise duty leviable on their production of first two years commencing from the date of operation.
(2) The new sugar mills which commenced production during 1982-83 and 1983-84 and which have already paid excise duty on the first two years of their production of sugar will be entitled to refund/adjustment of duty in such a manner that fifty per cent, of the total amount of such refund/adjustment will be made against the duty payable by them during 1985-86 and fifty per cent against the duty due from them during 1988-89."
10. A perusal of the above quoted SROs indicates that the effect of SRO 560(I)/82 was that the sugar manufactured in a mill in a financial year which exceeded the average production for the preceding two years in that mill was exempt from payment of the central excise duty to the extent of excess. The above SRO was to be effective from 1-7-1982.
It may further be noticed that the effect of above SRO 8J4(1)/85 was two-fold, namely:
(a) The sugar mills which commenced operation during 1982-83 crushing season or thereafter or which might have commenced operation after the issuance of the SRO, were exempted from payment of 50 per cent of central excise duty leviable on their production of the first two years from the date of operation.
(b) That the new mills which had commenced production during 1982-83 and 1983-84 and which had already paid central excise duty on the first two years of their production of sugar, were entitled to refund/adjustment of duty in such a manner that 50 per cent of the total amount of such refund/adjustment was to be made against the duty payable by them during 1985- 86 and 50 per cent against the duty due from them during 1986-87, which was substituted by SRO 509(I)/87, dated 21-6- 1987, by the year 1988-89. The above quoted SRO 814(I)/85 contained the substituted year.
11. (a) It may be pertinent to observe that Civil Appeals Nos. 102-K, 103-K, 104-K, 105-K, 106-K, 107-K, 109-K, 110-K, 112-K, 113-K and 114-K, all of 1991, relate to above SRO No. 560(I)/85, dated 29-8-1985, hereinafter referred to as 'Category I appeals'. The case of the private appellants therein is that, notwithstanding the issuance of the impugned SRO 555(I)/89, dated 3-6-1989, referred to hereinabove, they are entitled to exemption from the payment of central excise duty on the quantity of sugar manufactured in excess of the average production of the preceding two years by the time of issuance of SRO dated 3-6-1989.
(b) It may also be mentioned that Civil Appeals Nos. 108- K/1991 and 115-K/1991 also relate to SRO 560(I)/85, dated 29-8-1985, hereinafter referred to as 'Category II appeals'. The case of the private appellants is that they are entitled to exemption from the payment of central excise duty on the excess quantity manufactured by them even in the following financial year after the issuance of the above SRO dated 3-6-1989.
(c) It may further be observed that Civil Appeals Nos. 100- K/91, 101-K/91 and 116-K/91 pertain to para. 2 of the above SRO No. 814(I)/85, dated 29-8-1985, hereinafter referred to as 'Category III appeals'. The case of the private appellants therein is that the official respondents are not entitled to claim refund of the 50 per cent central excise duty refunded/adjusted during the years 1985-86 and 1988-89 against the excise duty payable on the sugar manufactured during 1982-83 and 1983- 84.
(d) It may further be stated that Civil Appeals Nos. 117- K/91, 118-K/91 and 119-K/91, filed by the Federation of Pakistan, also relate to above para. I of SRO 814(I)/85, dated 29-8-1985, hereinafter referred to as the 'Category IV appeals'. The grievance of the Federal-Government is that the High Court was not justified in allowing 50 per cent concession on two years' production in terms of above para. 1 of the above SRO to the respondents/petitioners mentioned hereinabove in para. 5.
12. Since most of the above appeals fall under Category-I appeals, and as the thrust of the arguments of the learned counsel for the parties centered around the above appeals, we intend to take up the same after dealing with the above other categories of appeals.
13. There are two appeals which fall under Category-II appeals. The appellants in these appeals want to avail exemption on the excess quantity manufactured by them in the financial year subsequent to the issuance of the two impugned SROs. The relevant SRO, namely, SRO 560(I)/82, dated 14-6- 1984 has already been reproduced hereinabove in para. 9. Clause (e), which was substituted in Table-1 in item 02.02 of the SRO No. 555(I)/79, dated 28-6-1979, speaks of sugar manufactured in a factory in a financial year which exceeds the average production for the preceding two years and, therefore, after the rescission of the above notification by one of the above two impugned SROs, the appellants in the aforesaid two appeals have no legal basis to act upon the rescinded SRO. Neither Mr. Mansoor Ahmed Khan nor Mr. Khalid Anwar, learned counsel, appearing in the above two appeals was able to point out any rationale for the above claim of the appellants. Therefore, the above two appeals have no merits.
14. Adverting to Category-IV appeals, it may be observed that the three appeals referred to in para. 11(d) have been filed by the Federation of Pakistan against allowing of the three constitution petitions filed by the new mill owners, claiming exemption, in terms of SRO No. 814(I)/85, dated 29th August, 1985, reproduced hereinabove in para. 9, from the payment of 50 per cent central excise duty leviable on their production of the first two years, commencing from the date of operation. The High Court has sustained the above claim of the respondents on the basis of the judgments of this Court in the case of Pakistan, through the Secretary, Ministry of Finance v. Muhammad Himayatullah Farukhi PLD 1969 SC 407 and the case of Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries, Chittagong PLD 1970 SC 439.
Chaudhry Ijaz Ahmed, learned Deputy Attorney- General, has not been able to point out any infirmity in the judgment of the High Court on the above question. However, he has contended that the grant of exemption being discretionary, it would not result in creation of any vested right.
Reliance was placed by him on the cases of Messrs Amin Soap Factory and others v. Government of Pakistan and others PLD 1976 SC 277, Khyber Electric Lamps Manufacturing Co. Ltd. v. Federation of Pakistan through Ministry of Finance, Islamabad and another PLD 1983 Pesh. 112 and Bannu Sugar Mills (Pvt.) Ltd. v. Inspector, Customs and Central Excise, Bannu Sugar Mills Ltd., Bannu and 2 others 1990 CLC 569.
There is no doubt that nobody can claim exemption from the payment of central excise duty or, for that matter, from the payment of any tax. Indeed, grant of exemption, if any, is a discretionary matter. However, it is subject to what has been held by this Court in the case of Collector, Centred Excises and Land Customs and 3 others v. Azizuddin Industries (Supra), the relevant portion of which reads as follows:- "It was argued by Mr. Brohi that the Notification dated the 28th February, 1964, was without lawful authority, as the reasons on which it was based, namely, the exclusion of the District of Chittagong Hill Tracts was not relatable to the grant of exemption. The exercise of power under section 12-A to grant exemption as well as the power to withdraw the exemption under section 21 of the General Clauses Act is unconditional. It is, therefore, not open to Courts to go behind the Notification of the 28th February, 1964 on the ground that the exercise of the power by the Central Government was improper. However, if the grant of exemption was subject to the existence of certain conditions and the withdrawal of exemption was also made conditional on the happening of certain eventuality, then the Government could not withdraw the exemption unless the requirement of law was fulfilled.
As no such conditions are provided in section 12-A in the instant case, the High Court had no authority to make its own surmises as to the propriety of reasons which had motivated the issue of the Notification dated the 28th February, 1964."
15. The judgment of this Court in the case of Messrs Amin Soap Factory (supra) relied upon by Chaudhry Ijaz Ahmed, has no relevance to the controversy in issue, as in the above case, the question of withdrawal of an exemption notification was not involved. But, the question was, whether grant of exemption from payment of excise duty was a discretionary matter of the Government and in that context it has been held that the Government may, or may not, exempt any goods or any class of goods from the levy of excise duty and likewise it could grant exemption on any terms and conditions, according fo its own view of public policy and expediency. The other cases referred to by Ch. Ijaz Ahmed also have no bearing on the point in issue. No case has been cited by him in which a contrary view might have been taken by this Court to the view taken in the case of Collector of Central Excise and Land Customs and 3 others (supra).
Reference may also be made to the case of Pakistan through Ministry of Finance (supra) relied upon by the High Court, in which this Court, while considering section 2,1 of the General Clauses Act, 1897, has held that the authority competent to make order has power to undo it but, the order cannot be withdrawn or rescinded once it has taken legal effect and certain rights are created in favour of any individual and that the principle of locus Poenitentiae (the power of rescinding till a decisive step is taken) would be available.
16. We are, therefore, of the view that the above appeals also have no merits.
17. We may now revert to Category-Ill appeals, which are three in number, referred to in para. 11(c) hereinabove. The appellants in the above three appeals were given adjustment of the 50 per cent excise duty paid by them during 1982-83 and 1983-84 against their liability of excise duty for the years 1985- 86 and 1988-89 in terms of para. 2 of SRO 814(I)/85, dated 29- 8-1985. Upon the issuance of the two impugned SROs., the appellants in C.As. Nos. 100-K of 1991 and 101-K of 1991, namely, Messrs Army Welfare Sugar Mills, were called upon by respondent No. 3 through his notice dated 18-4-1989, to refund Rs. 3,89,15,645. Whereas, the appellants in C.A. No. 116-K of 1991, namely, Messrs Faran Sugar Mills, were also called upon by respondent No. 3, through his identical notice dated 18-4-1989, to refund Rs. 7,16,39,075. It will be advantageous to reproduce one of the above notices, which reads as follows:- To, Messrs Faran Sugar Mills, Shaikh Phirkio, District Hyderabad.
Under the Ministry of Finance Notification No. SRO 814(I)/85, dated the 29th August, 1985, issued under section 12-A of the Central Excise and Salt Act, 1944, you were granted refund or of excise duty amounting to Rs. 7,16,39,075 (Rupees seven crore sixteen lac thirty-nine thousand seventy-i.e) only according to the statement attached.
(2) In view of the settled law that a notification cannot have retrospective effect, Notification No. SRO 814(I)/85, dated the 29th August, 1985, was void ab initio in so far as it purported to grant exemption retrospectively.
(3) In view of the legal position staled above, the refund/adjustment granted to you was without legal authority and it has, therefore, been decided to call upon under Rule 10 of the Central Excise Rules, 1944, to pay the aforesaid amount of duty refunded to you or adjusted against the duty payable within 15 days of the delivery of this notice to you failing which action will be taken to recover the aforesaid amount.
(Sd.)
(Syed Ejaz Ali Shah)"
18. A perusal of the above quoted notice indicates that the demand was made for the refund of the aforesaid sums on the ground that SRO No. 814(I)/85, dated 29-8-1985, was void ab initio in so far as it purported to grant exemption retrospectively, being contrary to the well-settled law that a notification cannot have retrospective effect.
19. The High Court, while declining the above appellants' constitution petitions, accepted the above plea of respondent No. 3 by relying upon the case of Muhammad Akbar Khan Bugti v. The State P L D1967 Kar.
186. But the above case does not deal with the question of notification.
20. Mr. Khalid Anwar, learned counsel for the appellant in Civil Appeal No. 116-K of 1991, has vehemently urged that in terms of section 12-A of the Act, it is permissible to specify the date from which a notification of exemption is to operate and that there is no legal basis for holding that a beneficial notification cannot operate retrospectively. In furtherance of his above submissions, he has referred to subsection (3) of section 12-A of the Act which provides that "any notification or order issued under this section shall be effective from the day specified in the notification or the order, notwithstanding the fact that the issue of the official Gazette in which such notification appears is published, or the order is delivered to the person concerned, at any time after that day."
He has also referred to the following cases:--
(i) The Burmah Oil Company Ltd. v. The Tiustees for the Port of Chittagong PLD 1961 SC 452,
(ii) Commissioner of Sales Tax, Karachi West Messrs Kauddsons Ltd. PLD 1974 SC 180,
(iii) Crown Bus Service Ltd. v.- Central Board of Revenue and others PLD 1976 Lah. 1487, and
(iv) Salim Akbar v. The Government of Sindh through the Secretary Education, Karachi and another PLD 1984 Karachi 359.
In the above first case, this Court has held that a notification is to operate from the date of its promulgation unless it has been expressly or by necessary intendment made to take effect retrospectively.
In the above second case, this Court has held that a' notification cannot operate retrospectively to impair existing right or to nullify effect of final judgment, even if the notification be expressly so designed.
In the above third case a Division Bench of the Lahore High Court has held that the rules can be made to operate retrospectively if power to do so has been given in the parent Act.
Whereas, in the above fourth case a learned single Judge of the High Court of Sindh has held that a notification issued under purported exercise of delegated powers under a law cannot be made to operate retrospectively so as to impair an existing or vested right or to impose a new liability or obligation. Reliance was placed on the cases of Sh. Rahmatullah v. The Deputy Settlement Commissioner, Centre A, Karachi and others PLD 1964 SC 494, Sheikh Fazal Ahmed v. Raja Ziaullah Khan and another PLD 1964 SC 494, Works Cooperative Housing Society and another v. Karachi Development Authority PLD 1969 SC 430, Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries (supra), Commissioner of Sales Tax (West), Karachi v.
Kauddsons Ltd. (supra) and Muhammad sulman etc. v. Abdul Ghani PLD 1978 SC 190.
21. It seems to be well-settled proposition of law that a notification which purports to impair an existing or vested right or imposes a new liability or obligation, cannot operate retrospectively in the absence of legal sanction, but, the converse le. a notification which confers benefit cannot operate retrospectively, does not seem to be correct proposition of law. It may be observed that para. 2 of the above SRO 814(I)/85 was a beneficial provision and, therefore, in the absence of any prohibition in the Act or any other law, it was valid. It is also significant' to note that the above SRO 814(I)/85 was issued by the Federal Government in exercise of power conferred on it under section 12-A of the Act, whereas, the above impugned notices dated 18-4-1989 have been issued by the Collector. It is not understandable as to how the Collector, Central Excise and Land Customs, could have declared the above SRO as void ab initio in presence of sections 38 and 41 of the Act. The former section provides that 'all rules made and notifications issued under this Act shall be made.
And issued by publication in the official Gazette. All such rules and notifications shall thereupon have effect as if enacted in this Act', whereas, the latter section lays down that 'all officers and persons employed in the execution of this Act and the rules made thereunder shall observe and follow the orders, directions and instructions of the Central Board of Revenue'.
It may also be observed that nothing has been brought on record by the official respondent to indicate that above SRO 814(I)/85 was not issued competently.
22. Mr. Khalid Anwar has referred to the case of Rajan Ramkrishna vs. Commissioner of Wealth-Tax, Gujrat (1981 ITR (Vol. 127) 1), in which a Division Bench of the Gujrat High Court has held that the benevolent circulars issued by the Central Board of Revenue are binding on all ITOs and WTOs and all the persons employed in the execution of the Wealth Tax Act, 1957, even if the circulars deviate from legal position.
The above case has no relevancy to the case in had as it is not the case of the respondent department before us that SRO 814(I)/85 was issued incompetently. On the contrary, since the above SRO was gazetted in the official Gazette, it has the effect as if it was enacted in the Act, in view of above section 38 of the Act and secondly because of above section 41 of the Act, the above SRO was binding on respondent No. 3.
23. Mr. Khalid Anwar also urged that even if the above SRO 814(I)/85 would have been issued incompetently, keeping in view the averments contained in paras 3,4,5,6 and 7 of the memo of the Appellants' Appeal No. 116-K/1991, the same could not have been set aside, even if it was to be treated as a void SRO. Reliance was placed by him on the case of the Chief Settlement Commissioner, Lahore v. Raja Muhammad Fazil Khan and others (PLD 1975 SC 331) and the case of S. Sharif Ahmed Hashmi v. The Chairman, Screening Committee, Lahore (1980 SCMR 711).
In the above first case it has been held by this Court that order obtained by fraud is not void but voidable, whereas, in the above second case inter alia it has been held that a void order does not alter the fact that it was passed and such an order can create consequences and no had and fast rule can be laid down that such order must always be struck down. It has been further held that a void order must be struck down provided no statute or principle of law makes it unjust or inequitable to strike it down.
He has also referred to 'Wade, Administrative Law' VI Edition, wherein the author, while dealing with the question of void order under the caption "Remedies and relativity" has observed as follows:- '"void' is therefore meaningless in any absolute sense. Is meaning is relative, depending upon the Court's willingness to grant relief in any particular situation. If this principle of legal relativity is borne in mind, confusion over 'void or voidable' can be avoided. A case could be made for using either term in relation to invalid acts. But so long as the ultra vires doctrine remains the basis of administrative law, the correct epithet must be 'void".
24. In our view, the above cases and the above treatise on the administrative law have no direct bearing as there is nothing on record to indicate that the above SRO was void as to attract the ratio of the above cases and the above quoted observation from Wades, on Administrative Law.
25. The High Court has wrongly placed reliance on the general proposition that a notification cannot operate retrospectively without realising that there is a marked distinction between a notification which purports to impair existing/vested rights or imposes new liabilities or obligations retrospectively and a notification which purports to confer benefit retrospectively.
Ch. Ijaz Ahmad, learned Dy. Attorney-General is unable to cite any case-law to demonstrate that a beneficial notification cannot be operative retrospectively, nor he has pointed out that the averments of the appellants in paras. 3 to 7 of their memo of constitution petition, which contained details of the actions taken by the appellants on the basis of the above SRO inter alia by making investment, have been denied by the official respondents in their counter-affidavit to the constitution petition.
26. It is, therefore, evident that the High Court judgment in respect of the above appeals is not sustainable.
27. We may now take up the Category-I appeals, which are 12 in number. The plea of the private appellants in the above appeals is that they are entitled to exemption from payment of excise duty on the quantity of sugar manufactured in excess of the average production of the preceding two years notwithstanding the issuance of the impugned SRO 555(I)/89. In furtherance of the above submission Mr. Khalid Anwar has vehemently urged that there is a clear-cut line of demarcation separating the two concepts of 'liveability' and 'payability' and that as the above excess quantity of sugar was manufactured before the issuance of the above impugned SRO, the same cannot be subjected to the levy of excise duty at the time of clearance as it had gone out of the net of excise tax at the time when it was manufactured.
In furtherance of his above submission, he has referred to sub-section (1) of section 3 and section 3-(C) of the Act and has contended that the excise duty is leviable at the stage of production or manufacture and that quantification is to be made under section 3-(C) of the Act. According to him, the above two sections have different scopes. The same line of argument was adopted by Mr. Rashed Akhund.
28. On the other had, Ch. Ijaz Ahmed, learned Deputy Attorney-General, has urged that subsection
(1) of section 3 of the Act is to be read in conjunction with section 3-(C) of the Act and that, merely the fact that the excess quantity of sugar was manufactured prior to the issuance of the impugned SRO, was of no consequence in view of section 3-(C) of the Act.
29. Whereas, Mr. Noorul Arfin, learned counsel for one of the appellants, has submitted that section 3 and section 3-(C) are complementary to each other and that both are charging sections, but they do not negate operation of section 12-A of the Act, and as the impugned SRO is not retrospective in operation, it would not affect the exemption available on the excess quantity of sugar, referred to hereinabove.
30. It may be advantageous to reproduce subsection (1) of section 3 and section 3-C of the Act, which read as follows:- Section 3(1) 'There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods, produced or manufactured, and on all excisable services provided or rendered, in Pakistan, as, and at the rate, set forth in the First Schedule." Section 3-C "Determination of tariff value and rate of duty:--The tariff value of, and the rate of duty applicable to, any goods or services shall be the tariff value and the rate of duty in force:
(a) in the case of goods, on the date on which the goods are cleared for home consumption; and
(b) in the case of services, on the date on which the services are provided or rendered."
31. A perusal of the above quoted subsection (1) of section 3 of the Act indicates that it contemplates levy and collection of duties of excise in such a manner as may be prescribed, on all goods produced or manufactured and on all excisable services provided or rendered in Pakistan, as, and at the rates, set forth in the First Schedule. Whereas, section 3-C of the Act lays down that the tariff value of and the rate of duty applicable to any goods or services shall be the tariff value and the rate of duty in force: in case of goods, on the date when the goods are cleared for home consumption; and .In the case of services, on the date on which the services are provided or rendered.
32. Mr. Khalid Anwar, in furtherance of his above submission, has referred to the case of Central Board of Revenue etc. v. Colony Thai Textile Mills Ltd (1981 SCMR 303), in which the facts were that first notification levied excise duty on certain articles, whereas a second notification exempted cotton yarn and yarn made of men-made fibres from excise duty and the third notification withdrew the exemption granted earlier and levied excise duty at a certain rate. This Court, while declining a petition for leave to appeal, held that liability in respect of the goods manufactured prior to the issuance of third notification, was to be regulated by the second notification, which was in force when the goods in question were manufactured. However, it may be pointed out that the above judgment was rendered on 2nd November, 1980, when section 3-C, (which has been inserted by Finance Ordinance, 1983) was not in the field.
33. Ch. Ijaz Ahmad, learned Deputy Attorney-General, has referred to the cases of M/s. Yakab & Company & others v. The Collector of Central Excise and Land Customs, Chittagong and others (PLD 1969 Dacca 477), Abdul Rashid v. Central Board of Revenue and others (PLD 1965 Peshawar 249), M/s. Amin Soap Factory v. Government of Pakistan and others (PLD 1968 Lahore 1103), Muhammad Younus v. Central Board of Revenue, Government of Pakistan and others (PLD 1964 SC 113), and an "unreported judgment of this Court in Civil Appeals Nos. 197 to 200 of 1989 (Federation of Pakistan and others v. Noori Trading Corporation (Pvt) Limited and other firms/companies) rendered on 15-8-1991.
34. It is not necessary to refer the other cited cases, except the above unreported judgment of this Court, which is a recent judgment and in which the effect of section 3-C, has been considered.
35. The brief facts of the appeals, which were filed by the Federation of Pakistan, were that by Ordinance No. III of 1988 le. (Central Excises and Salt Act (Amendment) Ordinance, 1988) promulgated on 14-7-1988, a new entry bearing No. 09.07, was added in the First Schedule in Part-1 of section IX of the Central Excises and Salt Act, 1944, which read as follows:- "09.07 IRON AND STEEL PLATES- I ............... Iron and steel plates, all sorts, including ship plates, sheets, slabs and Hat bars of all sizes and shapes as are recovered through any process of dismantling or breaking of ships and vessels.Two thousand rupees per tonne"
The respondents imported and brought to Gaddani ships which were due for breaking. They paid the duties that were due at the stage of import. The ships were dismantled. It seems that on the date of promulgation of the above Ordinance, namely, 14-7-1988, the Government of Pakistan issued a notification in exercise of the powers conferred by subsection (1) of section 12-A of the Act, directing certain amendments to be made in its earlier exemption notification, the effect of which was that the duty on iron and steel plates recovered from any process of dismantling or breaking of ships and vessels from that portion of excise duty which exceeded Rs. 600. Per tonne was exempted. Upon the levy of the above excise duty, the same was resisted by the ship-breakers inter alia on the ground that they had already completed the ship breaking and recovered the excisable articles before the enforcement of the Ordinance on 14-7-1988, and that the process of manufacture, if any, was complete and was not dependent on its removal.
The above plea found favour with the High Court but, upon appeal, this Court reversed the judgment of the High Court and held as follows: "11. There is no inviolable rule of law, nor any constitutional command, that 'the excise duty is leviable only on the process of manufacture and on no other activity, legislative dispensation and intent being irrelevant or subordinate. It is only by reference to legislative provision (Preamble of the Act and section 3) that such a restriction has been inferred by the High Court. But then that legislative intent is manifestly over-ridden, departed from and not followed, ignoring a specific law in the form of Ordinance No. III of 1988 bringing within the net of excise tax the ship-breaking activity and on the recovery of iron plates etc. Thereby. Not one law on this specific subject was framed but three in quick succession that is-
(i) Ordinance No. III of 1988;
(ii) Ordinance No. XXII of 1988; and
(iii) Ordinance No. VI of 1988.
It is not the contention and never was that these laws were ultra vires for any reason. Even if the Schedule of the Act is given a subordinate position as was done in Premier Mills Ltd. v.
Commissioner of Income-tax (1985) 152 I.T.R. 457, the legislative intent and the object of this specific legislation remains beyond doubt. Such intent and purpose must be given effect to and not thwarted on any vague and nebulous theoretical thought.
"12. As regards the contention that the shipbreaking had already taken place and the plates were recovered before Ordinance No. III of 1988 came into the field, on the plain language of the added provision it is untenable. What has been made liable to tax is not the ship-breaking activity itself but certain items recovered as a result of ship-breaking and not all items. With regard to the stage, section 3-C of the Act (reproduced in paragraph 4) makes the liability as "on the date on which the goods are cleared for export or for home consumption". This statutory provision (section 3-C) was earlier a part of Rule 9-A of the Central Excise Rules. It came up for interpretation before Indian Supreme Court in Orient Paper Mills Ltd. v. Union of India (AIR 1967 SC 1564) and it was interpreted as hereunder: "It will thus be seen that in the case of manufactured goods the payment of duty and the clearance of goods may be synchronous or the payment may be postponed although the goods may be removed (provisos to R. 9). This immediately sets up two kinds of cases in respect of manufactured goods. The critical time thus becomes the removal from the factory or warehouse but if the payment of duty is made before the removal then the critical time is the payment of duty.
In the present case the payment of duty was synchronous with the clearance of the goods because the gate pass can only be issued when the goods have actually been cleared for removal. The above construction of the Rules agrees with the construction placed by the Board of Revenue in the ruling of 1957 where the effect of the sealing of the wagons by the Railway after loading and the issuance of railway receipts was considered. The Board ruled that such goods would not be considered as lying in the stock in the factory premises."
"13. Hence, as substantively excise duty was leviable on the specified product obtained by ship- breaking and that the levy had to take place at the stage of clearance as provided under section 3-C. Of the Act, these appeals are allowed. The judgments of the High Court are set aside and the constitution petitions filed challenging the levy are dismissed."
36. In our view, the above quoted extract from the above unreported judgment, on all fours, is applicable to the present case. We are inclined to hold that sections 3 and 3-C are complementary to each other and they are to be read together. The effect of incorporation of section 3-C seems to be that the liability of a manufacturer of excisable goods as to the payment of excise duty, is to be determined on the date on which the goods are cleared for home consumption, and not on the date when they were manufactured. It is true that the above two sections do not negate section 12- A of the Act. However, it may be pointed that the scope and the object of the above two sections on the one had and of the latter section on the other had, are different. There seems to be no conflict between the above provisions of the Act.
37. It may be observed that section 12-A of the Act empowers the Federal Government to exempt from time to time, by a notification in the Official Gazette, subject to such m conditions as may be specified therein, goods or class of goods or any service or class of services, from the whole or any part of the duty leviable under the Act. We may point out that any | N notification under the above section of the Act cannot negate any express provision thereof and in case of conflict between a notification issued under the above section with any provision of the Act, the latter is to prevail.
38. Mr. Khalid Anwar has referred to the case of Ellerman Lines Ltd. v. Commissioner of Income-tax, West Bengal I (1971 ITR (Vol. 82) 913), in which the Indian Supreme Court quoted the dictum from its earlier judgment in the case of Navnit Lai C. Javeri v. K K Sen, Appellate Assistant Commissioner, Bombay (1965) 56 ITR 198, and pointed out that the direction given by the Board in the circular clearly deviated from the provisions of the Act, yet the Indian Supreme Court held that the circular was binding on the Income-tax Officers. It may be advantageous to reproduce the relevant portion of the above judgment, which reads as follows: "Now, coming to the question as to the effect of instructions issued under section 5(8) of the Act, this Court observed in Navnit Lai C- Javeri v. K.K. Sen, Appellate Assistant Commissioner, Bombay: "It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loan to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision." "The directions given in that circular clearly deviated from the provisions of the Act, yet this Court held that the circular was binding on the Income-tax Officer."
39. In our view, a circular cannot negate an express provision of a statute but the question, whether an Income-tax Officer can ignore a circular issued by the Board of Revenue, which is at the apex of the hierarchy of the Taxation Department, is a different issue as in all the statutes dealing with the taxation/revenue matters it has been expressly provided that the instructions issued, by the Board of Revenue are binding on all officers and persons employed in the execution of the particular statute, like section 41 of the Act, already referred to hereinabove.
40. We may now take up the submission of Mr. Sharifuddin Pirzada, learned counsel for the appellants in Civil Appeals Nos. 112-K/1991 and 113-K/1991, that the above SRO 560(I)/82, reproduced hereinabove in para. 9, contains a representation to the effect that if a manufacturer of sugar in a financial year manufactures sugar which exceeds the average production of the preceding two years, the excess quantity of the sugar so produced would be exempt from payment of excise duty, and that since the appellants have acted upon the above representation to their detriment inasmuch as, they went on manufacturing sugar even when the yield from the sugarcane was very low and uneconomical, it is not open to the official respondent to deny the benefit under the above SRO in view of the doctrine of promissory estoppel.
41. On the other had, Ch. Ijaz Ahmed, learned Dy. Attorney-General, has submitted that the doctrine of promissory estoppel cannot be invoked by the appellants as the grant of exemption is a discretionary matter and in respect of which no vested right can be claimed by the appellants, and that in view of the instructions issued by the Central Board of Revenue on 3-6-1989 and because of the Budget Speech of the Finance Minister, the exemption on the excess quantity of sugar, granted by the aforesaid SRO 560(I)/82 has been taken away by a legislative instrument. He has referred to para, (d) of the aforesaid instructions issued by the Central Board of Revenue bearing No. 1(7)(C & B)/89 in respect of Federal Budget, 1989-90, and sub-para, (iii) of para 82 of the Minister of State for Finance, Economic Affairs and Planning and Development's Budget Speech for the above financial year. The same read as follows:- Instructions - Para, (d)
"(d) Exemption of central excise duty on cane sugar for the older as well as for the new mills has been withdrawn with immediate effect. The entire stocks of sugar available in the factories are now subject to excise duty (go 2.15 per Kg."
Para 82(iii) of the Finance Minister's Speech.
"(iii) Presently, sugar manufactured in factory in a financial year which exceeds the average production for last two financial years is totally exempt from duty. Besides, new sugar mills pay only 50% of the rate of excise duty on the entire production during the first two years of their operation.
These exemptions only provide windfall profits to manufacturers of sugar and the benefit of exemption is not passed on to the consumers. These exemptions are proposed to be withdrawn."
42. We are not inclined to agree with Ch. Ijaz Ahmad that the above quoted para, (d) of the Central Board of Revenue's instructions and the above para. 82(iii) of the Finance Minister's Budget Speech can be equated with a legislative instrument sufficient to take away a vested right, if any. However, it is true that the grant of exemption from payment ' of excise duty under section 12-A of the Act is a discretionary matter for the Government and that there are two basic principles of construing a provision of a statute involving exemption from payment of a tax, namely, the first rule is that the burden of proof is on the person who claims exemption. The second rule is that a provision relating to grant of tax exemption is to be construed strictly against the person asserting and in favour of taxing officer. On the above first rule, reference may be made to the case of Madras Provincial Cooperative Bank Ltd. v. Commissioner of Income-tax, Madras AIR 1933 Madras 489 and the case of Commissioner of Income-tax, Madras v. S. L. Mathias AIR 1939 PC 1. In the above first case, a Special Bench of the Madras High Court, while construing section 10 of the Income Tax Act 1922, held that when an assessee is under a section of the Income Tax Act assessable to income-tax, it is for that person to show that he has been exempted, whereas in the second , case, the Privy Council, while construing sections 2 and 4 of the Income Tax Act, 1922, held that there can be no general presumption that exemption from the provision of a subsection is intended as complete exemption- from tax and that the distinction is between exempting a class of income in some events and exempting it in all events.
43. In .Support of the above second rule of construction, reference may be made to the following passages from Sutherland on Statutory Construction, Vol. 3, Edition 3 at page 296, Cases on Statute Law Seventh Edition page 431, Crawford on Statutory Construction page 506, and N. S. Bindra on the Interpretation of Statutes, Third Edition at page 488: Sutherland on Statutory Construction, Vol. 3, Ed. 3 at page 296 "As a general rule grants of tax exemptions are given a rigid interpretation against the assertion of the tax-payer and in favour of the taxing power. The basis for the rule here is the same as that supporting a rule of a strict construction of positive revenue laws that the burden of taxation should be distributed equally and fairly among the members of the society. However, exemptions claimed by the State or its sub-divisions are usually liberally constructed and the same rule has frequently been applied to exemptions made in favour of charitable organisation."
Craies on Statute Law., Seventh Edition, page 431.
"In Smithers v. Blythe (1830) B. &Ad. 509, on a claim for lighthouse dues against the Crown, it was held that the claim was not maintainable as to post packet ships owned by the Crown, although the express exemption was as to ships of war only. It was said that the express exemption raised no implication that the general right to take charges granted by the Act extended to other vessels owned by the Crown."
Crawford on Statutory Construction page 506 "258. Exemption from Taxation, Tariff Acts, and laws to prevent fraud on the Revenue.-- Provisions providing for an exemption may be properly construed strictly against the person who makes the claim of an exemption. In other words, before an exemption can be recognized, the person or property claimed to be exempt must come clearly within the language apparently granting the exemption."
N. A. buidra on the Interpretation of Statutes, Third Edition, page 488.
"Since all exemptions from taxation increase the burden on other members of the community, they should be deprecated, except to the extent permissible by the express language of the statutes itself. All exemptions from taxation must be strictly construed and must not be extended beyond the express requirements of the language used. Taxation laws are not in the nature of penal laws; they are substantially remedial in their character and are intended to prevent . Fraud, suppress public wrong and promote the public good. They should be, therefore, construed in such a way as to accomplish those, objects."
Reference may also be made to the case of Muhammadi Steamship Co. Ltd. v. The Commissioner of Income-tax (Central) Karachi PLD 1966 SC 828, and the case of Messrs Bisvil Spinners Ltd. v.
Superintendent, Central Excise and Land Customs, Circle Sheikhupura, and another PLD 1988 SC 370.
44. Having dealt with the rule of construction of a statute involving exemption from payment of a tax, we may revert to the above submission of Mr. Sharifiddin Pirzada. In support of his above submission, he has referred to the cases of foreign jurisdiction as well as of this Court.
45. We may first take up the law obtaining in England on the question of promissory estoppel in context with the statutory provisions. The judgment of the Court of Appeals in the case of Falmouth Boat Construction Ltd v. Howell (1950) 1 All ER 538, was rendered by Denning, U, in which the facts were that the Admiralty, in pursuance of powers conferred on them by Regulation 55(1) of the Defence (General) Regulations, 1939, ordered that no ship repairer was to carry out any repairs or alterations to ships "except under the authority of a licence granted by the Admiralty". It seems that on June, 24, 1942, the Director of Merchant Shipbuilding and Repairs at the Admiralty sent--a circular letter to all the licensing officers as follows: 'I understand that it has been made clear to you that when you are dealing with reliable ship repairers and owners with a good record you ought not to delay the putting in had of obvious repairs, merely pending the actual issue of a licence.
It further seems that in or about May, 1947, the defendant entered into a contract with the plaintiffs, a firm of ship repairers, for the conversion of a naval vessel into a passenger carrying vessel. Before they began any work on the ship, the plaintiffs applied to the licensing officer of the Admiralty for a licence and from time to time the officer gave the plaintiffs verbal permission to proceed with the work, which they carried out under his inspection. On being presented with an account for the work done, the defendant refused to pay on the ground that the work was illegal, for want of a written licence under the provisions of Restriction of Repairs of Ships Order, 1940.
Denning, U, while rendering his opinion, pressed into service the doctrine of promissory estoppel and observed as follows:-- "The principle is this: Whenever Government officers, in their dealings with a subject, take on themselves to assume authority in a matter with which the subject is concerned, he is entitled to rely on their having the authority which they assume. He does not know, and cannot be expected to know, the limits of their authority and he ought not to suffer if they exceed it. That was the principle which I applied in Robertson v. Minister of Pensions and it is applicable in the present case also. It was not canvassed in Jackson Stanchfield v. Butterworth (1948) 2 All ER 558, and that case is, therefore, no obstacle to its adoption. In my judgment, therefore, the plaintiffs were guilty of no illegality, and their claim is not to be defeated on that account. The appeal should be allowed."
However, the above view was not upheld by the House of Lords in the appeal arising from the above judgment, though the appeal was dismissed on merits. The judgment is reported under the caption Howell v. Falmouth Boat Constructions Co. Ltd. 1951 Appeal Cases 837.
46. It may be pointed out that earlier to the above judgment of the Court of Appeal, Denning, J. (as His Lordship then was) rendered judgment in the case of Central London Property Trust Ltd. v. High Trees House Ltd. 19471 KB 130 and also reported in 1956 1 All. ER 1956, in which he pressed into service the doctrine of promissory estoppel against the landlord and held that the tenant was liable to pay reduced rent at L 1250 per year in place of 2,500 per year on the basis of the promise made by the landlord for certain years.
The above view was reiterated by Denning, J., in the case of Robertson v. The Minister of Pensions reported in (1949) 1 KB 227, in which the appellant, a serving army officer, wrote to the War Office regarding a disability of his and received a reply accepting the above disability as attributable to the military service. Relying upon the above assurance, he did not obtain an independent medical opinion. Later, the Minister of Pensions declined the appellant's claim. Denning, J., while hearing an appeal, held as follows:-- "Held that as between subjects such an assurance would be enforceable because it was intended to be binding, intended to be acted upon, and was in fact acted upon; (ii) that the assurance was binding on the Crown because no term could be implied that the Crown was at liberty to revoke it; and (iii) that the assurance was therefore binding on the Minister of Pensions, the appellant having become entitled to assume that the War Office had consulted any other departments concerned before it gave the assurance."
47. We may, at this juncture, refer to the treatise on The Law of Contract by D.W. Greig and J. L. R.
Davis, 1987 Edition, relied upon by Mr. Sharifiddin Pirzada wherein the Authors have summarised the legal position obtaining in the United States, United Kingdom and Australia in respect of promissory estoppel as follows:-- "(a) As a means of enforcing promises.-There is no doubt that promissory estoppel in the United States became a significant adjunct to contract doctrine as a means of enforcing promises in the absence of consideration. In England such a role may have been possible in the light of the terms in which it was first enunciated by Denning, J, in Central London Property Trust Ltd. v. High Trees House Ltd. (1947) KB, 130 (above, p. 139). However, the recent trend in England, in which Lord Denning, M.R. Himself participated, towards regarding it as an aspect of unconscionability, has shifted the emphasis towards the prevention of the exercise of legal rights where it would be unconscionable for the possessor of those rights to do so. The fact that the unconscionability in this exercise arises from the possessor's promise not to exercise them is of secondary importance.
The Choice between the two approaches is a matter of policy, of deciding whether to enlarge the role of contract. If, consciously or unconsciously, the Courts in Australia are prepared to extend the ambit of contractual liability that could be achieved through the medium of promissory estoppel."
48. We may now refer to the cases of Indian jurisdiction (i) The Union of India and others v. Messrs Anglo-Afghan Agencies etc. AIR 1968 SC 718. In this case the facts were that the Textile Commissioner published on October 10, 1962, a scheme called the Export Promotion Scheme, providing incentives to the exporters of woollen goods. By the scheme as extended to exports to Afghanistan, the exporters were invited to get themselves registered with the Textile Commissioner for exporting woollen goods, and it was represented that the exporters would be entitled to import raw materials of the total amount equal to 100 per cent of the F. O. B. Value of the exports. however, clause 10 of the scheme entitled the Commissioner to reduce the value of the import certificate if it was found that fraudulent attempt was made to secure an import certificate in excess of the true, value of the goods exported.
The respondents, who exported woollen goods, of Rs. 5,03,471.73 applied to the Textile Commissioner for the issuance of import entitlement certificate but instead of issuing for the full amount certificate for Rs. 1,99,459, was issued. Thereupon, the respondents- filed a constitution petition before the High Court of Punjab for a writ or order directing the Union of India, the Textile Commissioner and the Chief Controller of Imports and Exports, Bombay to issue a licence permitting import of wool-tops, raw wool, wool waste and rags of the value of Rs. 3,04,012.73, which was upheld.
Against the above judgment of the High Court, Union of India filed an appeal before the Indian Supreme Court, which was dismissed. While dismissing the appeal the following observations were made:- "19. We hold that the claim of the respondents is appropriately founded upon the equity which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it. On the facts proved in this case, no ground has been suggested before the Court for exempting the Government from the equity arising out of the acts done by the exporters to their prejudice relying upon the representation. This principle has been recognised by the Courts in India and by the Judicial Committee of the Privy Council in several cases. In Municipal Corporation of the City of Bombay v. Secretary of State (1940) ILR 29 Bom. 580 it was held by the Bombay High Court that even though there is no formal contract as required by the statute, the Government may be bound by a representation made by it...."
20. This case, is in our judgment, a clear authority that even though the case does not fall within the terms of S. 115 of the Evidence Act, it is still open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it, even though the promise is not recorded in the form of a formal contract as required by the Constitution."
(ii) Messrs Motilal Padampat Sugar Mills v. The State of Uttar Pradesh and others AIR 1979 SC 621. In the above case the facts were that the appellant, which was a limited company, primarily engaged in the business of manufacture and sale of sugar and it had also a cold storage plant and a steel foundry. On 10th October, 1968 a news item which appeared in the National Herald and in which it was stated that the State of U.P. Had decided to give exemption from sale tax for a period of three years under section 4-A of the U.P. Sales Tax Act, to new industrial units in the State with a view to enable them "to come on firm footing in developing stage." The above news item was founded upon a statement made by Shri M.P. Chatterjee, the then Secretary in the Industries Department of the Government. On the basis of the above news item, the appellant addressed a letter dated 11th October, 1968 to Director of Industries, stating that in view of the Sales Tax Holiday announced by the Government, the appellant intended to set up a Hydrogenation Plant for manufacture of Vanaspati and sought for confirmation that this industrial unit, which they proposed to set up, would be entitled to Sales Tax Holiday for a period of three years from the date it would commence production. The Director of Industries replied vide his letter dated. 14th October, 1968, confirming that there would be no sales tax for three years on the finished product of the proposed Vanaspati factory from the date it would commence production. However, a subsequent stage, the above concession was denied. The matter came up finally before the Indian Supreme Court. Bhagwati, J (as his Lordship then was) after tracing the history of the doctrine of the promissory estoppel and after referring to the case-law of foreign jurisdiction, including that of United Kingdom and U.S.A, concluded inter alia as follows:-- "33. The State, however, contended that the doctrine of promissory estoppel had no application in the present case because the appellant did not suffer any detriment by acting on the representation made by the Government, the Vanaspati factory set up by the appellant was quite a profitable concern and there was no prejudice caused to the appellant. This contention of the State is clearly unsustainable and must be rejected. We do not think it is necessary in order to attract the applicability of the doctrine of promissory estoppel, that the promisee, acting in reliance on the promise, should suffer any detriment. What is necessary is only that the promise should have altered his position in reliance on the promise."
(iii) Messrs Jit Ram Shiv Khumar and others v. The State of Haryana and another AIR 1980 SC 1285, in which the facts were that the appellants, who were petitioners before the High Court, had sought a writ of certiorari or mandamus or any other appropriate writ for quashing the resolution No. 6 dated 21st July, 1965 of the Municipality and the letter of the Government of Haryana to the President of the Municipal Committee, Bahadurgarh, dated 30th October, 1967.
The facts giving rise to the filing of the above petition were, that the Municipal Committee, Bahadurgarh, respondent No. 2, established Mandi Fateh in Bahadurgarh Town with a view to improve trade in the area. It was resolved by the Municipal Committee through resolution No. 8 dated 20-11- 1916 that the purchasers of the plots for sale in the Mandi would not be required to pay octroi duty on goods imported within the said Mandi. Pursuant to the above resolution of the Municipal Committee, had-bills were issued for the sale of the plots on the basis of the above resolution. It was proclaimed that Mandi Fateh would remain exempt from payment of octroi duty.
The above resolution was reiterated by a subsequent resolution No. 4 of 1917 of the Municipal Committee. However, when the above second resolution was received by the Commissioner of Ambala, he declined to give his approval. The matter remained under correspondence till 4-9- 1953, when the Municipal Committee, by its notification dated 4-9-1953, included Fateh Mandi, Bahadurgarh, within the octroi limits.
Thereupon, the above writ petition was filed, which was rejected by a Full Bench of the High Court of Punjab and Haryana. Against the above judgment of the High Court, the matter was taken up to the Supreme Court, which was dismissed. It was held by the Supreme Court that "when a public authority acts beyond the scope of its authority, the plea of estoppel is not available to prevent the authority from acting according to law." It was also .Held that "the principle of estoppel was not available against the Government in exercise of legislative or sovereign or executive powers". The view taken in the case of Motilal Padampat Sugar Mills (supra) was dissented from.
It may be advantageous to reproduce para, 12 of the above judgment, which reads as follows:- "12. A Bench of four Judges of this Court in a decision Excise Commissioner, U.P. Allahabad v. Ram Kumar, (1976) Suppl. SCR 532: AIR 1976 SC 2237, after examining the case-law on the subject observed that "it is now well-settled by a catena of decisions that there can be no question of estoppel against the Government in exercise of its legislative, sovereign or executive powers". The earlier decisions of this Court in N. Maranatha Pillai v. State of Kerala (1974) 1 SCR 515; AIR 1973 SC 2641 and State of Kerala, v. Gwalior Rayon Silk Manufacturing (Wng.) Co. Ltd. (1974) 1 SCR 671; AIR 1973 SC 2734, were followed. It may, therefore, be stated that the view of this Court has been that the principle of estoppel is not available against the Government in exercise of legislative, sovereign or executive power."
(iv) Union of India and others v. Godfrey Philips India Ltd. AIR 1986 SC 806, in which the facts were that Under Secretary, Central Board of Excise and Customs, addressed a letter dated 24th May, 1976 to the Cigarette Manufacturers' Association, in response to the representation made by the Association to the | Board on 19th May, 1976 to the effect that corrugated fibre board containers "are not an integral or essential requirement for the sale of cigarettes and are used for the sole purpose of protecting cigarettes from any damage that may arise during transportation." The Board accepted the above plea of the Association by its aforesaid letter dated 24-5-1976 and informed the Association that the Collectors of the Central Excise have been issued requisite instructions to implement the above decision. The respondent and the other members of the Association, on the basis of the above representation made by the Board, proceeded on the basis that the cost of corrugated fibre board containers was not liable to be included in the value of cigarettes for the purpose of assessment to excise duty and did not recover from the wholesale dealers to whom they sold the cigarettes, any amount by way of excise duty attributable to the cost of such corrugated fibre board containers.
The above representation continued to hold the field until 2nd November, 1982, when the Central Board of Excise and Customs addressed a circular letter to all the Collectors of Central Excise stating "that the matter had been re-examined in consultation with the Ministry of Law and in view of section 4 of the Act, the cost of packing whether initial or secondary in which the excisable goods are packed at the time of the removal may form part of the assessable value of such goods."
Upon issuance of the above circular the question arose, whether the respondents/manufacturers were liable to pay excise duty for the period commencing from 24-5-1976 to 2-11- 1982, on the corrugated fibre board containers.
The High Court upheld their claim. Union of India filed an appeal before the Indian Supreme Court.
Reliance was placed by the Union on Indian Supreme Court judgment in the case of Jit Ram Shiv Kumar and others (supra). It was vehemently contended that the doctrine of promissory estoppel was not available against the exercise of executive functions of the State and that the State could not be prevented from exercising its functions under the law. The above contentions were repelled and the view taken in Motilal Padampat Sugar Mills (supra) was reiterated as follows:-- "12. There can therefore, be no doubt that the doctrine of promissory estoppel is applicable against the Government in the exercise of its Governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. We must concede that the subsequent decision of this Court in Jeet Ram v. State of Haryana (1980) 3 SCR 689: A /, R 1980 SC 1285 takes a slightly different view and holds that the doctrine of promissory estoppel is not available against the exercise of executive functions of the State and the State cannot be prevented from exercising its functions under the law. This decision also expresses its disagreement with the observations made in Motilal Sugar Mills case A IR 1979 SC 621 that the doctrine of promissory estoppel cannot be defeated by invoking the defence of executive necessity, suggesting by necessary implication that the doctrine of executive necessity is available to the Government to escape its obligation under the doctrine of promissory estoppel. We find it difficult to understand how a Bench of two Judges in Jeet Ram's case could possibly overturn or disagree with what was said by another Bench of two Judges in Motilal Sugar Mills case. If the Bench of two Judges in Jeet Ram's case found themselves unable to agree with law laid down in Motilal Sugar Mills case, they could have referred Jeet Ram's case to a larger Bench, but we do not think it was right on their part to express their disagreement with the enunciation of the law by a co-ordinate Bench of the same Court in Motilal Sugar Mills."
However, at, the same time the limits of the applicability of the doctrine of promissory estoppel was highlighted as under:- "14. Of course we must make it clear, and that is also laid down in Motilal Sugar Mills case A IR 1979 SC 621 (supra), that there can be no promissory estoppel against the legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves wholly in agreement with what has been said in that decision on this point."
(v) Sirpur Paper Mills Ltd. v. Union of India and others 1984 (17) ELT 217 (AP) in which the facts were that the petitioner was carrying on business of manufacturing paper. The Government of India, first respondent, by its notification dated 1-10-1965, extended concessional rates in respect of paper which was attributable to enlarge production capacity of the producers and cleared after 1-3-1964.
The concession was to operate with reference to the period during which the paper was manufactured. However, the said notification was rescinded by notification dated 1-3-1973. The petitioners had claimed benefit of the concessional rates of excise duty - in respect of the paper produced during the period related to the enlarged production capacity but removed from the factory after 1-3-1973 i.e. The date on which the earlier notification was rescinded. The Assistant Collector, Central Excise, respondent No. 3 in the said petition, on the basis of Rule 9-A, rejected the claim of the petitioners. The petitioners' efforts to get redress from the Appellate Collector, respondent No. 2, and then before the Revisional Authority, Government of India, failed. Thereupon they filed the aforesaid writ petition, which was allowed by a Division Bench of Andhra Pradesh High Court. It may be advantageous to reproduce para. 25 of the above judgment, which reads as follows:-- "25. Yet another aspect. When a notification is issued extending exemption, partial or total with reference to, say, expansive production as in this case, and the assessee on that count produces or manufactures goods in compliance of the said notification and if the authority rescinds the same after the goods are manufactured and before the goods are cleared or removed for one reason or the other, then the very scheme and object behind such. Exemption clause is rendered abortive, stultifying the very incentive accorded to the manufacturer or producer. Surely, this could not be the intention of the authority concerned. We find it had to accede to the contentions advanced by the learned Standing Counsel for the Central Government."
49. We may now deal with the judgments of this Court, on the point in discussion:
(i) Federation of Pakistan and others v. Ch. Muhammad Aslam and others 1986 SCMR 916, in which the facts were that the Government of Pakistan, Ministry of Commerce and Local Government (Commerce Division) notified a revised policy dated 22-10-1973 through a Press Note for granting facility for the import of Tractors, Bus and Truck chassis against the foreign exchange earnings of the Pakistanis, abroad. The above policy was further modified through a Press Note dated 4-3-1978.
The respondent, Muhammad Aslam Chaudhry, acting upon the above notified policy, purchased abroad certain track chassis. On 18-9-1982, he applied to the Controller of Export and Import, Lahore for issuing him Import Permit. Along with the application, he submitted:-
(i) Earning Certificate,
(ii) Purchase Receipts,
(iii) Invoice,
(iv) Bill of Lading, and
(v) Certificate of Origin.
However, in spite of his best efforts, he was unable to obtain import permit and, therefore, he filed a constitution petition in the Lahore High Court. The High Court allowed the same by holding that since the respondent had fully satisfied the requirements of the Gift Scheme, as was in force immediately before 20-3-1983, he could not have been denied the benefit thereof by applying retrospectively the revised definition of the word 'new', as defined in the Press Note dated 20-3- 1983.
The Federation of Pakistan filed an appeal before this Court, with the leave of the Court, which was dismissed. The judgment was rendered by one of us, namely, Shafiur Rahman, J, who, after referring to the case-law of foreign jurisdiction as well as of Pakistani Courts, concluded as follows: The department's contention that it possessed untrammeled powers and could prospectively prohibit or control the imports is correct considering the wide amplitude of powers conferred by section 3(1) of Act XXXIX of 1950 and the nature of the right that a seeker of the import licence can claim. Such a power has been recognised by this Court in Zamir Ahmad's case (PLD 1975 SC 667).
All the same, even such an extensive power has its limits. One such limit was spelt out in Zamir Ahmad's case and it is that vested rights cannot be allowed to be overridden, unless it takes place by unequivocal words, by an organ or authority competent to impair or override the vested rights.
The question will still remain whether the respondent writ petitioner at that stage of the proceedings had at all acquired any vested: rights. The second limit now well-recognized is that all executive power has to be exercised fairly and justly, for advancing the object of the legislation. In other words every such exercise of power has to satisfy the test of reason and relevance.
In order to ascertain the nature of the right and to determine whether it has come to vest in individuals, we must in the first place note that it was not a totally unoccupied field which was sought to be controlled or regulated by Press Note dated 20-3-1981. The Gift Scheme had been in existence since It July, 1975. Pakistanis living abroad were the beneficiaries. They were provided the incentive to conserve. Their foreign exchange earnings, to enter into contracts with foreign suppliers for repatriation of their earnings in the form of specified goods and articles and to inject them in the mainstream of nation's economy. If these contracts had been bona i.e and legally entered into and had given rise to rights and liabilities enforcible at law then certainly vested rights had come into existence which could not be overridden even in the matter of import and export, except on express words of an authority competent to legislate retrospectively, competent to override or impair such vested rights. An agency or authority not empowered to override or impair vested rights cannot achieve that end simply by giving its dispensation in the form of a declaration.
(ii) Al-Samrez Enterprises v. The Federation of Pakistan PTCL 1987 CL. 99, in which the Federal Government of Pakistan, respondent No. 1, had issued a notification dated 8-6- 1972, in exercise of the powers conferred by section 19 of the Customs Act, 1969, exempting certain items of machinery or articles for use with machinery or as component parts or spare parts of the machinery, as defined in the notification and set out in the table given therein. The appellant, acting upon the above notification opened an irrevocable letter of credit. However, when the machinery arrived at the Karachi Port, before the goods were cleared, the above notification, granting exemption, was rescinded. The appellants' efforts to get redress from the High Court through a constitution petition, failed. Thereupon, an appeal with the leave of the Court, was filed in this Court, which was upheld.
The Federation's contention that in view of section 21 of the General Clauses Act, it could rescind the above notification at any time, was repelled as follows:-- 'The principle of law enunciated above has been recognized in Corpus Juris of this country and also statutorily in section 6 of the General Clauses Act. For instances of the application of this rule of interpretation reference may be made to IN re: March Mander v\ Hams (1884) 27 Ch. D. 166 and Jones v. Ogle (1872) LR 8 Ch. A 192. We are, therefore, dearly of the opinion that if a binding contract was concluded between the appellants and the foreign exporter or steps were taken by the appellants creating a vested right to the then existing notification granting exemption, the same could not be taken away and destroyed in modification of the earlier one, on the ground that under section 21 of the General Clauses Act, the Government could exercise the power of modification.
The question before us is not whether the second notification was ultra vires the powers of the Government but whether the second notification would be applicable to the case of the appellants resulting in taking away the exemption already granted.
As to the effect of issuance of the above notification granting exemption, the following observations were made:-- Therefore, the exemption notification is basically addressed to public-at-large or in any case to the respective importers. It will be inequitable and unjust to deprive a person who acts upon such assurance of the right to exemption and expose him to unforeseen loss in the business transaction by suddenly withdrawing the exemption after he has made legal commitments. It is in this perspective that a right is created in his favour and a subsequent withdrawal of exemption cannot be given retrospective operation by an executive act to destroy this right...''
(iii) Pakistan through Secretary, Ministry of Commerce and 2 others v. Salahuddin and 3 others PLD 1991 SC 546. In the above case the facts were that the Government of Pakistan notified a scheme for import of second had reconditioned machinery, which came to be known as N. R. I. Scheme, hereinafter referred to as 'the Scheme'. It was provided in the Scheme that import of second had reconditioned machinery on repatriable basis would not require permission of any Government agency provided that the conditions contained therein were met. The respondent, acting upon the above Scheme, purchased certain second had machinery in United Kingdom from his earning abroad. After submitting necessary documents, the respondent obtained, No Objection Certificate from the Investment Promotion Bureau, Government of Pakistan, Ministry of Industries. When he applied for an import licence, in spite of his best efforts he was unable to obtain the same.
Consequently, he filed a constitution petition in the High Court of Sindh for an order directing the Chief Controller of Imports and Exports, to issue the import licence, which was allowed. The Federation of Pakistan filed 4 petitions for leave to appeal, which inter alia included a petition for leave to appeal against the above judgment. Leave was granted to consider the question, whether the writ petitioners/ respondents had such a vested right in the matter of obtaining an import licence and in importing the machinery for which licence had already been issued notwithstanding a prohibitory notification issued under section 3 of the Import and Export Control Act, 1950. The above appeals were dismissed for the following reasons :~ "
15. What distinguishes the appeals now before us is that is not the case of the Government itself that the Non-Repatriable Investment Scheme was in any manner or to any extent beyond the competence of the Government of Pakistan or against the laws of the land. Therefore, the Scheme, the terms thereof and the inducement therein were in accord with law, were in advancement of public policy and had been presented by the competent authority inducing thereby Pakistanis, living and earning abroad to invest in machines of the required description. By providing that no sanction of any sort would be needed after a 'no objection certificate' had been granted and the practice having been so observed, it cannot be said that in those cases where the 'no objection certificate' had been granted any further impediment remained. Making of an application to the Chief Controller of Imports and Exports and getting an import licence from him was a consequential formal step and no discretion as such was involved where bona i.e 'no objection certificate' was held by an applicant. The contention of the learned Dy. Attorney-General that the doctrine of promissory not extend to legislative, executive or sovereign functions of the State is correct to the extent that it does not indeed extend to legislative and sovereign functions, but executive actions are not excluded from the operation of the doctrine. The learned Dy. Attorney- General has basically relied for his contention on the decision given in Ram Niwas Gupta and others v. State of Haryana through Secretary, Local Self-Government, Chandigarh and (mother AIR 1970 Punjab and Haryana 462 which was approved by the Indian Supreme Court in the case of Messrs Jit Ram Shiv Kumar and others AIR 1980 SC 1285, but both these decisions were overruled by the Indian Supreme Court itself in Union of India and others v. Godfrey Philips India Limited AIR 1986 SC 806...."
It may also be observed that at the same time, it was also highlighted that the doctrine of promissory estoppel was subject to the following limitations:-
(i) the doctrine of promissory estoppel cannot be invoked against the legislature or the laws framed by it because the legislature cannot make a representation;
(ii) promissory estoppel cannot be invoked for directing the doing of the thing which was against the law when the representation was made or the promise held out;
(iii) no agency or authority can be held bound by a promise or representation not lawfully extended or given;
(iv) the doctrine of promissory estoppel will hot apply where no steps have been taken consequent to the representation or inducement so as to irrevocably commit the property or the reputation of the party invoking it; and
(v) the party which has indulged in fraud or collusion for obtaining some benefits under the representation cannot be rewarded by the enforcement of the promise."
50. Reference may also be made to the case of Government of Pakistan v. Messrs Mardan Industries Ltd. And another 1988 SCMR 410, in which the facts were that the Central Government in exercise of powers conferred by subsection (1) of section 12-A of the Act, through a notification dated 30-6- 1961, exempted for a period of four years from It July, 1961, all excisable goods produced or manufactured in Tribal Areas from the excise duty leviable thereon. Pursuant to the above notification, the respondents established a factory for manufacturing cigarettes. It was discovered that the respondents were manufacturing cigarettes under the brand 'K- 2'. They despatched their first consignment to Karachi in first week of May 1964 and the second consignment was despatched on 7th May, 1964, which was stopped at Shergarh by the Central Excise and Land Customs Department and a demand for payment of excise duty was raised.
Thereupon, the respondents filed a constitution petition in the Peshawar High Court. While the above petition was pending, the Government of Pakistan on 19th May, 1964, issued SRO No. 31(K)/64, amending its earlier SRO by adding the following proviso: "Provided further that the exemption herein granted shall not apply to any excisable goods, manufactured in the tribal area which bear brand, or trade name, or trade marks under which similar goods manufactured in any area of Pakistan other than the said tribal areas are also marketed if such goods are removed from the tribal areas to any other area in Pakistan.
The constitution petition was amended as to impugn the above added proviso. The amended petition was allowed. Against the above judgment of the High Court, Government of Pakistan filed an appeal, with the leave of this Court, which was allowed against the declaration by the High Court that the above addition of the proviso is ultra vires. It was pointed out that "no doubt the power to take advantage of a notification can be terms as right. But the only right which it appears to us, can be said to have been conferred by the said notification, was that the new industrial undertaking should enjoy exemption from excise duty in respect of goods manufactured in tribal areas. That does not mean that a right had also been conferred on them to despatch free of excise duty out of the tribal areas, goods with such brands and trade marks, under which similar goods were marketed in other parts of Pakistan". It was also held that the grant of the above concession did not debar the Government from its power to regulate the above concession by a subsequent' notification. It may be pertinent to reproduce para. 14 of the above judgment, on the above aspect, which reads as follows:- "14. - Lastly it may be mentioned that the concession granted to the respondent belonged to the class of privileger favourable and as such the same could be regulated by a subsequent notification. In other words by the notification granting exemption the Government had hot stripped itself of its essential powers to regulate the said exemption. Furthermore, in view of section 21 of the General Clauses Act the power of the Government to issue such a notification cannot also be challenged."
51. From the above reports and treatises, it seems that in the United States the promissory estoppel has become a significant adjunct to contract doctrine as a means of enforcing promise in the absence of consideration, whereas, in England the trend seems to be that the above doctrine is pressed into service in order to prevent exercise of legal rights where it would be unconscionable and in Australia the doctrine of promissory estoppel is invoked in aid of extending the contractual liability.
It may further be observed that the House of Lords in England in the case of Howell v. Falmouth Boat Construction Ltd. (supra), reversed the judgment of Denning, LJ, who pressed into service the doctrine of promissory estoppel against the provisions of Regulation 55(1) of the Defence (General)
Regulations, 1939. In other words, the legal position obtaining in England seems to be that the doctrine of promissory estoppel cannot be pressed into service against the Government functionaries if their act/action was not in consonance with the provisions of the relevant statute.
The position obtaining in India appears to be that the Courts have given new dimensions to the doctrine of promissory estoppel and the same is pressed into service against the Government and its functionaries. It is founded upon the equity which arises in favour of the person who acted upon the representation, made on behalf of the Government or its functionaries, to his detriment, under the- belief that the Government/its functionaries would carry out the representation made by it.
In the case of Jit Ram Shiv Kumar and others (supra), the case which has been relied upon by the High Court in the impugned judgment, a somewhat contrary view was taken from its earlier judgments by holding that the "principle of estoppel is not available against the Government in exercise of legislative, sovereign or executive powers." But the Indian Supreme Court in the case of Union of India and others v. Godfrey Philips India Ltd. (supra) disapproved the above departure and reiterated its earlier view by holding that "no doubt that the doctrine of promissory estoppel is available against the Government in the exercise of its Governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. However, in India, the following limitations of the above doctrine are recognised and it has been held that in the following cases, the same shall not be available:--
(i) against legislature in the exercise of its legislative functions;
(ii) against the Government or public authority from enforcing statutory prohibition;
(iii) to compel the Government or a public authority to honour a representation or promise which is contrary to law;
(iv) to compel the Government or a public authority to carry out a representation or promise which was outside the authority of the officer of the Government or the public authority which made the representation; and (v) - having regard to the facts," if it appears that it would be inequitable to hold the Government or public authority to the promise or representation made by it.
52. This Court has also approved and pressed into service the doctrine of promissory estoppel in a number of cases. One of the earliest cases being the judgment in the case of Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries, Chittagong (supra) in' which the judgment of the erstwhile High Court of East Pakistan was partly upheld and it was held that the person having acquired vested right of exemption from the levying of excise duty on all goods for a period of four years under the notification dated 30-6-1961, could not be deprived of his vested right by a subsequent notification dated 28-2-1964.
It may be mentioned that by now, it is well-settled proposition of law obtaining in Pakistan that if an exemption from payment of excise duty or any other tax, has been granted for a specified period on certain conditions and if a person fulfils those conditions, he acquires a vested right, he cannot be denied the exemption before the expiry of the specified period, through an executive instrument like a notification, but he can be denied his vested right by a legislative provision, like section 31-A, which has been incorporated in the Customs Act in 1988 nullifying the effect of the judgment of this Court in the case of Al-Samrez Enterprises (supra) as has been held by the author of the above judgment, Zaffar Hussain Mirza, J., in a recent unreported majority judgment dated 24th September, 1991 in Civil Appeals Nos. 915-K to 918-K all of 1990 (Molasses Trading and Exports (Pvt.)
Ltd. v. Federation of Pakistan and others, wherein his Lordship observed as follows:- "For the same reasons it cannot be held that the non-obstante clause does not have the effect of setting at naught the effect of the judgment of this Court in the case of Al-Samrez, because as discussed above the new law is a departure from and is in conflict with the position expounded in Al-Samrez Enterprises. For the same reasons the argument of the learned counsel for the appellants is without substance that section 31 has not achieved the object of defeating the consequences of exemption granted under section 19 beyond the date on which any notification of modification of withdrawal of exemption is issued, or to nullify the judgment in the case of Al- Samrez Enterprises. The language of section 31-A, as discussed above, clearly envisages and stipulates that the consequences that flow from the act of withdrawal or modification of an exemption notification, shall take effect with reference to the date of its issue, irrespective of the fact that the contract for the import of goods and the L.C. Had come into existence prior to such date. This effect has been now prescribed by a mandatory provision of law by legislative fiat, to use the phrase earlier mentioned. The Courts would therefore, have to give effect to it notwithstanding the decision in the case of Al-Samrez Enterprises."
In the case of Federation of Pakistan v. Ch. Muhammad Aslam (supra) and the -case of Pakistan v.
Salahuddin and three others (supra), this Court pressed into service the doctrine of promissory estoppel in order to compel the Government to honour the Gift Scheme relating to import of tractors, bus and truck chassis and the reconditioned machinery respectively as the parties had acted upon the representation to their detriment before the amending notifications were issued.
It is, therefore, evident that the doctrine of promissory estoppel is available in Pakistan against the Government and its functionaries, subject to inter alia limitations highlighted by one of us, Shafiur Rahman, J., in the case of Pakistan v. Salahuddin (supra).
The question, therefore, arises as to whether the present cases falls within the parameters laid down by this Court in the above reports.
It may be mentioned that SRO 560(I)/82, dated 14-6- 1982, providing exemption from the payment of excise duty on the sugar manufactured in a factory in a financial year which exceeds the average production for the preceding two years in that factory, does not specify any period beyond a financial year during which the above exemption was to remain available though it provided that it shall take effect on the It day of July, 1982. The question, therefore, arises as to whether the rescission of the above SRO, by one of the two impugned SROs, has in any way impaired any vested rights of the appellants as to entitle them to press into service the doctrine of promissory estoppel.
It has been urged by Mr. Sharifiddin Pirzada and the other learned counsel for the appellants, that though the above SRO 560(I)/82 did not specify the period but the appellants had acquired vested right upon manufacturing sugar in excess of the average production for the preceding years, before one of the above 2 impugned SROs was issued, rescinding SRO 560(I)/82.
53. We are inclined to hold that the above SRO 560(I)/82 contained standing representation to the effect that if a factory would manufacture sugar in a financial year exceeding from the average production in that factory for the preceding two years, such an excess quantity of sugar shall be exempt from the payment of excise duty. The above representation could have been rescinded before it was acted upon or if it was acted upon, its effect could have been nullified by a statutory provision like section 31-A of the Customs Act (ibid) and not by an executive act. In the present case, the appellants acted upon the above representation before it was rescinded, to their detriment as, according to them, they went on with the production of sugar even when the recovery of sucrose from the sugarcane was comparatively low on account of change in the climate and thus, they had acquired vested right before the issuance of one of the two impugned SROs. However, if the appellants had passed on the additional burden of the excise duty after the two impugned SROs were issued, they are not entitled to press into service the doctrine of promissory estoppel as it will be inequitable to deny the State excise duty on the excess quantity of sugar referred to hereinabove, in terms of section 3-C of the Act. We may observe that doctrine of promissory estoppel has been evolved by the Courts as an j equitable doctrine with the object to pre-empt suffering of any loss by a promisee and was not designed or intended to provide a windfall profit to him, though Bhagwati, J, in the case of Motilal Padampat Sugar Mills (supra) had held that it was not necessary in order to attract applicability of doctrine of promissory estoppel, that the promisee, acting in reliance on the promise, should suffer any detriment, but this view was contrary to the Indian Supreme Court's earlier view and also to the subsequent view taken by Bhagwati, as C.J., in the case of Union of India v. Godfrey Philips India Ltd. (supra). It may be pertinent at this juncture to refer to a passage from Law of Contract by D.W. Greig and J.L.R. Davis (supra) on the above aspect, at pages 165 and 166, which reads as follows:-- "8. Promissory estoppel is based upon equitable principles.
(a) Founded in equity.
When, first as counsel in Salisbury (marquess of) v. Gilmore (1942) 2 KB 38, and then as a judge of first instance in Central London Property Trust Ltd. v. High Trees House Ltd. (1947) KB 130 Lord Denning sought some means of escaping from the straight jacket of consideration, he found it in the relatively narrow confines of equitable estoppel, enunciated as he saw it in Hughes v.
Metropolitan Rly. Co. (1877) 2 App. Cas 439 and Birmingham and District Land Co. v. London and North Western Rly. Co. (1888) 40 Ch. D. 268. The equitable basis of the doctrine was a convenient means of justifying its existence as a necessary and complementary gloss upon the rigidity of the common law. Thus, when the High Court finally gave its approval to the new doctrine in Jegione v.
Hateley (1983) 152 CLR 406, Mason and Deans JJ, referred to "established equitable principle" as one of the factors which led them "to conclude that promissory estoppel should be accepted in Australia" (at 345)."
The above approach of the authors is also in consonance with the recent trend obtaining in England, namely, that the doctrine of promissory estoppel is pressed into service in order to prevent the exercise of legal right where it would be unconscionable for the possessor of those rights to do so.
54. It may also be observed that section 64-A of the Sales of Goods Act, 1930, entitles a vendor to recover from a purchaser any duty or customs or excise or tax on any goods being imposed or increased after the conclusion of any contract for sale of such goods, if the contract does not contain any provision contrary to it.
55. In the present case, there is nothing on record to indicate, whether factually the appellants had passed on the additional burden to the purchasers under the above section or otherwise. The amount of the public revenue involved is very heavy. We are, therefore, of the view that it is a fit case in which the appeals are to be allowed but the cases are to be remanded to the Central Board of Revenue with the direction to inquire into the following aspects:--
(i) How much quantity of sugar manufactured by the appellants in the financial year in question up to the date of rescission of SRO 560(I)/82 on 3-6-1989, exceeded the average production for the preceding two years of the factories under reference.
(ii) Whether the appellants had passed on the additional amount of the excise duty or part thereof which became due and payable on the above excess quantity of sugar on account of the rescission of SRO 560(I)/82, to the purchasers and/or to any other person or persons.
If the answer to the above second question is in the negative, the Board of Revenue shall not charge any excise duty on the excess quantity of sugar, as determine in terms of above sub-para,
(i) of para. 55.
56. The upshot of the above discussion is that Civil Appeals Nos. 108-K/1991 and 115-K/1991, referred to in para 11(b) and Civil Appeals Nos. 117-K/1991, 118-K/1991 and 119- K/1991, referred to in para 11(d), are dismissed, whereas Civil Appeals Nos. 100-K, 101-K and 116-K, all of 1991, mentioned in para. 11(c) are allowed and it is declared that the respondents are not entitled to claim refund of 50 per cent excise duty, refunded/adjusted during the years 1985-86 and 1988-89, against the excise duty payable on sugar manufactured during 1982-83 and 1983-84. Civil Appeals Nos. 102-K, 103-K, 104-K, 105-K, 106-K, 107-K, 109-K, 110-K, 111-K, 112-K, 113- K and 114-K, all of 1991, referred to in para 11(a), are allowed but the cases are remanded to the Central Board of Revenue in the above terms, mentioned in para 55(i) and (ii).
57. The parties shall bear their own costs.