MRS. KHALIDA RACHID, J.--1. The petitioner, Zabeel Palace Hotel, was established in 1989 and was allowed to provide excisable services with effect from 1-7-1989 through a licence issued on 1-7- 1989. There were many other Hotels in the said market area which were providing services to the customers comparatively at lower rates, therefore, realizing the incompatible position, petitioner reduced the room rent rates thus bringing them to a level where they would fall in the range of inexcusable service. Accordingly he informed A.C. Excise and Customs of his action with a note referring to the changes made by the Federal Government for the Budget 1989-90 under S.R.O.
569(I)/89 issued on 3rd June, 1989, amending the schedule of room rent on excisable duties from Rs. 100 to Rs. 200 per day.
2. On 11-3-1990 Superintendent Audit and Anti-Evasion visited the hotel of the petitioner and observed that petitioner had discontinued charging central excise duty from the customers with effect from 5-8-1989. Respondent No. 2 served the petitioner with a show-cause notice on 15-4- 1990 alleging therein that the petitioner had contravened the provisions of S.R.O. No. 555(I)/79, dated 28-6-1979 and thus avoided central excise duty amounting -to Rs. 41,451 calculations based on average. He was directed to pay the amount because he was issued the licence for the whole year. The show-cause notice was accordingly replied to by taking the plea of section 3-C of the Central Excises and Salt Act, 1944, that duty is only paid when excisable services are provided and rendered; that petitioner discontinued the excisable services with effect from 5-8-1989, therefore, no excise duty was payable. This was rejected and the petitioner was ordered to obtain a fresh licence and in the meantime to pay all past dues with effect from 16-2-1990 to 30-6-1990.
Aggrieved of the order, the petitioner filed an appeal before the Collector, Customs (respondent No. 3) which was also rejected. The petitioner then filed a revision petition on 30-7-1991 before the Additional Secretary, Central Board of Revenue (respondent No. 4) which was partially accepted and additional duty of Rs. 8,617 remitted. Finding no other remedy, the petitioner has challenged all the orders before this Court under Article 199 of the Constitution of Islamic Republic of Pakistan with the prayer to declare all the orders of the lower forums as illegal, void, having no legal effect and without lawful authority on the ground that petitioner is not liable to pay any excise duty for the period for which it did not render any excisable services. The petitioner further sought declaration of proviso of Clause D to item No. 13.01 in Table-II of S.R.O. No. 555(1)/79 as ultra vires and discriminatory.
3. Arguments of Mr. Abdul Rauf Rohaila, Advocate, for the petitioner and Mr. Eid Muhammad Khattak, Advocate and Mr. Mursaleen Khan, Standing Counsel, for the respondents, were heard at length and available record of the case examined carefully.
4. For proper appreciation of the submissions made by the learned counsel for the parties, it will be of great assistance to reproduce all the relevant provisions of law mentioned above. Section 3-C of the Central Excises and Salt Act, 1944, reads as under:- "3-C. Determination of tariff value and rate of duty.-The tariff value of, and the rate of duty applicable to, excisable 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 export or for home consumption;
(b) in the case of services, on the date on which the services are provided or rendered; and
(c) in the case of excisable goods produced or manufactured outside the areas to which this Act y has been applied and brought for consumption to those areas, the date on which the goods are brought to those areas."
S.R.O. No. 555(I)/79, dated 28th June, 1979, is reproduced as follows:-- "S.R.O. No. 555(I)/79.--In exercise of the powers conferred by subsection (1) of section 12-A of the Central Excises and Salt Act, 1944 (I of 1944), and in supersession of the Ministry of Finance Notification No. S.R.O. 492(1)/77, dated the 11th June, 1977, the Federal Government is pleased to exempt goods and services specified in column (2) of Tables I and II below, respectively, and falling under item Nos. Of part I or part II of the First Schedule to the said Act specified against corresponding entries in column (1) of the said Tables, from so much of the duties of excise as are in excess of the rates of duty specified in the corresponding entries in column (3) of those Tables, subject to the conditions specified in the corresponding entries in column (2) thereof. TABLE II Item No. In Part II of the First ScheduleDescription of services and conditions. Rate of duty 1 2 3 13.01. (a) Services provided or rendered by Nil. Hotels and restaurants other than those which fall under any of the following categories:-
(i) Any hotel the daily rent of any room or apartment of which, with of without service charges and charges on account of breakfast or air- conditioning, exceeds twenty-i.e rupees on any day during the financialN i l year, or which provides cabasset or any other floor show on any day during the financial year, or which provides alcoholic drinks.
(ii) A restaurant the annual turnover of which, as determined by the Assistant Collector of Central Excise, in any financial year subsequent to the financial year 1972-73 was not less than i.e lac rupees: Provided that in respect of the financial year preceding the financial year which is current the owner or the manager of such restaurant shall submit to the Assistant Collector of Central Excise a statement of the annual turnover of the restaurant for the preceding financial year within thirty days after the close of the financial year or within such extended period not exceeding sixty days as the Collector may, in his discretion, allow on receipt of a written request made by the owner or manager of such restaurants in this behalf, and the Assistant Collector shall examine the said statement and determine the turnover of such restaurant for the purpose of the grant of this exemption.
(iii) A restaurant or night-club which provides cabaret or other floor show on any day during a financial year .
(iv) A restaurant which provides alcoholic drinks.
(b) The meals provided by a hotel or restaurant to its staf f free of charge.
(c) Services provided in canteens run by industrial or commercial concerns for their workers.
(d) Services provided by messes, hostels, guest-houses and clubs, other than night clubs, the membership of which is restricted to any particular class of people or which are run on the basis of mutuality: Provided that the exemption granted in clauses (a), (c) and (d) shall be subject to the condition that it shall not be available in respect of services provided or rendered by any hotel or restaurant which, on any day during the financial year, charges any amount on account of excise duty from any customer ." Following amendments were made in S.R.O. No. 555(I)/79 vide S.R.O. No. 569(I)/89: "S.R.O. 569(I)/89.--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 No. S.R.O. 555(I)/79, dated the 28th June, 1979, namely: - In the aforesaid Notification, in Table II against item No. 13.01 in column (1), in clause (a) in column (2), in sub-clause (i), for the words 'One hundred rupees' the words 'Two hundred rupees' shall be substituted."
5. Hie learned counsel for the petitioner contended that due to change in tariff rate, petitioner did not charge the customers any excise duty as he was not providing any excisable services within the limits of the Notification, therefore, petitioner-hotel is not liable to pay any excise duty.
6. As against this the learned counsel for the respondents argued that the petitioner hotel could not reduce the room rent to or below the exemption limit during a financial year for which it had obtained the licence. The learned counsel further submitted that the benefit of the exemption under S.R.O. No. 569(I)/89 would be available to the petitioner from the financial year subsequent to the year in which the room rent was so reduced.
7. We have not been able to persuade ourselves to agree with the contention made by the learned counsel for the respondents for the simple reason that it does not make any sense. In the form of S.R.O. No. 569(I)/89, Government increased the exemption limit so that consumer be benefited and to boost the hospitality/service industry and help the tourism which have been in a slack in Pakistan since long. Looking in general terms of economics and for a healthy economy, competition plays a vital role and a businessman should not be deprived of to enter in the market with the spirit of a fair play. Supply and demand are considered important factors in determining the price of a commodity; here it is service industry. We firmly believe that any effort to keep an entrepreneur out of a fair competition shall not be encouraged in the name of natural justice.
8. It is evident from the record that a licence to operate a Hotel was provided in 1989, after S.R.O. No. 569(I)/89 was in effect. After running the business for one year petitioner realized that the tariff
(rate) what he was charging was not compatible and much too high to serve in the market so he notified the authority concerned for lowering tariff (rate) and thus excluding himself from providing excisable services. To us penalising him from participating in a fair competition is against any norms of natural justice.
9. Excise duty is a form of a direct taxation which is charged by the person who avails the services of certain establishment and that establishment acts as an agent who collects and deposits this collected amount in the Government treasury.
10. It is his prerogative to avail the opportunity given to him by that amendment in law. The exemption clause is couched in clear and unambiguous language and it is susceptible of only one interpretation namely, that the exemption will not be available if the amount charged as room rent with or without other charges exceeds Rs. 200. In other words any tariff (rate) below Rs. 200 is exempted from excise duty. It is an established principle of law that where a specific provision is made to deal with a particular situation it supersedes the general provision to the same effect. In this case an exemption is granted while Excise and Taxation Department is bent upon taking it back.
In the result we declare the orders of respondents illegal, void and without lawful authority and hence the petitioner is not liable to pay excise duty, if he had abided by the restrictions imposed by the said S.R.O., on the contrary if any tariff (rate) charged which exceeds the exemption limits granted by the S.R.O. No. 569(I)/89 may be re-assessed and petitioner shall pay excise duty at the applied rate or any tariff (rate) charged over Rs. 200 per day inclusive of all charges.
This Writ Petition, therefore, is allowed in the terms indicated above with no order as to costs.