This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, seeks a declaration that the action of the respondents, withdrawing the Production Capacity Procedure approved by the Committee of the Federal Government, is without lawful authority, with further prayer that the Central Board of Revenue be directed not to enforce the `Supervised Clearance Procedure' on the members o$ Pakistan Pulp Paper & Board Makers Association, which is duly registered under the Companies Act and a licensee of the Ministry of Commerce, Government of Pakistan. Before proceeding with the merits of the case, a preliminary question as to the maintainability of the writ petition in its present form should be adverted to. The writ petition has been filed by M/s. Pulp Paper & Board Makers Association through Mr. Kamran Khan, Member, Executive Committee of the Association who has been authorised by the Association to file this writ petition. The question' arises, whether the petitioner Association can be deemed to be an aggrieved person in terms of Article 199 of the Constitution. In Anjuman Araian, Bhera v. Abdul Rashid and others PLD 1982 SC 308, it was held that the petition filed by the Anjuman Araian under Article 98 of 1962 Constitution was incompetent, because if any member of the Anjuman wanted to file a petition, the proper procedure to follow was to obtain the leave of the Court under Order 1, Rule 8, C.P.C. Here, the writ petition has been filed by the Association which is a juristic person and has a separate entity being duly registered under the Companies Act and covered by the definition of "person" under Article 260 and clause (5) of Article 199 of the Constitution according to which "person" includes any body politic or corporate therefore, the petitioner is deemed to be an "aggrieved person" within the purview of Article 199 of the. Constitution. The ratio laid down in Anjuman Araian Bhera (supra) is not attracted here. It may also be pointed out that the issue regarding the change of collection of duty/sales tax from Supervised Clearance Procedure to Production Capacity Procedure has been the subject-matter of dispute between the Petitioner Association and the Central Board of Revenue. The documents on record show that all correspondence in connection thereto has been made between the Association and the respondents, therefore, the petitioner has every locus standi to file this petition.
Be that as it may, M/s. Flying Paper Industries Ltd., Lahore Cantt., M/s. Flying, Board and Paper Product Ltd., Lahore, and M/s. Premier Paper Mills Ltd., Sheikhupura, directly affected by the impugned orders have since been impleaded as petitioners by order dated 3-7-1994 passed in C.M. No.1 of 1994, this is an other circumstance for holding the petition maintainable in its present form.
2. The facts relevant for disposal of this petition are that the Central Board of Revenue. In formed the Collector, Central Excise and Sales Tax, Lahore, vide C.No.1(22) C.E.B/93, dated the 26th October, 1993, that collection of central excise duty on paper and paper-board industries shall be collected under Supervised Clearance - System instead of Capacity Basis w.e.f. 1-11-1993. All ~ paper and paper-board units/associations were directed to be informed of the change. The petitioner association challenged the aforesaid circular by means of Writ Petition No.15294 of 1993 which was admitted to a regular hearing by order dated 31-10-1993 with the following observations: -- "Contends that pursuant to the Finance Bill, 1991, the Federal Government appointed a Committee to review the system of collection bf excise duty payable by the manufacturers of paper and paper-board for home consumption. The Committee replaced the `Supervisory Capacity Procedure' by the `Production Capacity Procedure'. This recommendation was accepted by respondent No.2 and the production capacity was also approved. In consequence, the manufacturers of the paper and paper-board started paying the excise duty and sales tax under the Central Excises and Salt Act, 1944, and Sales Tax Act, 1959, read with Sales Tax Amendment Act, 1990, on Production Capacity Basis from July, 1992 onward.
(2) The grievance is that instead of issuing relevant rules for givinglegal cover to the aforesaid recommendations of the Committee, respondent No.2 unilaterally decided to withdraw the Production Capacity Procedure with effect from 1-11-1993. Notwithstanding the fact that the Central Board of Revenue vide its Letter No.5(17)PC/91, dated 5-9-1993, confirmed that the existing interim arrangement of the duty on the basis of Provisionally Assessed Capacities of Units was extended up to 30-11-1993, the Government has rescinded the earlier order vide Letter No. 1(22)-CEB/93 dated 26-10-1993 by withdrawing the order about, the collection of Central Excise Duty on paper and paper-board industry on Production Capacity basis with effect from 1-11-1993.
(3) The question whether on the principle of locus poenitentiae, respondent No.2 is not authorised to withdraw the Production Capacity Procedure approved by- the Committee duly appointed by the Federal Government and in conformity with the directions contained in Finance Bill, 1991, needs consideration. Admit. Notice.
(4) Mr. Faqeer Muhammad Khokhar, Deputy Attorney-General accepts notice on behalf of the respondents.
(5) Status quo meanwhile subject to notice for 10-11-1993. This is subject to the condition. That the petitioners manufacturers shall maintain the account of actual production of the items produced by them under intimation to the Collector, Central Excise and Sales Tax Department, Lahore, respondent No.4 herein."
3. During the pendency of the writ petition, Mr. A. Karim Malik, learned counsel for the Central Board of Revenue Authorities produced a copy of letter bearing C.No.1(22)-CEB/93 dated 6-11-1993, from the Secretary (C.E.) Central Board .Of Revenue, Government of Pakistan to the Collector, Central Excise and Sales Tax, Lahore, to show that the Central Board of Revenue have taken a decision for collection of Central Excise duties under the `Capacity Tax Procedure' instead of `Duty on Actual Production' under Supervised Clearance Scheme w.e.f. 1st September, 1993. The contents of the letter are as follows: --- "Please refer to Board's circular dated 31st October, 1993, whereby you were asked not to give effect to Board's orders issued vide Board's letter of even number dated 26th October, 1993, for collection of central excise duty on paper and paper-board under supervised system of clearance w.e.f. 1st November, 1993. You are requested to continue the collection of central excise duty from paper and paper-board units till 30th November 1993; under the existing arrangement. You are also requested to send your final proposals/report on the issues/matters indicated in Board's Letter C.No. 5(17)
PC/91, dated 19th September, 1993. Paper and Paper-Board Association of Manufacturers may be informed that if the revised scheme which is to be prepared by 10November does not reflect the true capacities of the factories then Government will be constrained to collect central excise duty on actual production under supervised clearance scheme w.e.f. 1st December, 1993."
4. In view of the aforesaid undertaking, Writ Petition No.15294/93 was withdrawn but the petitioner reserved its right to make a fresh petition if its interest is adversely effected in future. Subsequently, it is alleged that the Central Board of Revenue abruptly reverted to Supervised Clearance Procedure without preparing a revised scheme by 10th November, 1993, in the light of undertaking given to this Court. Hence,this petition.
5. The case of the petitioners is that following the withdrawal of Writ Petition No.15294/93, pursuant to the undertaking given by the respondents, only one meeting was held between the petitioner- Association and the Member, Central Board of Revenue, when the actual production figures of different factories were given for the years 1990-91, 1991-92, 1992-93 and other desired data, but the Central Board of Revenue did not thereafter revert to the petitioners. It was alleged that it was only on 28-11-1993 when the petitioner was seeking time for a promised meeting with them, they abruptly informed on telephone that capacity tax will be discontinued w.e.f. 1-12-1993, whereafter the goods will be cleared under Supervised Clearance Procedure.
6. During the pendency of this petition M/s. Flying Board and Paper Products Pvt. Ltd., Lahore Cantt and M/s. Premium Paper Mills Ltd., Sheikhupura, received demand notices for the payment of Rs.1.25m, towards sales tax on the basis of Supervised Clearance for the period from 1-12-1993 to 31- 5-1994. The notices also placed an embargo on the clearance of the goods till the demand made is met. The petitioner also moved C.M. No.1 of 1994, for impleading the aforesaid Members of the petitioner-Association as petitioners and also ,for an interim relief restraining the respondents from giving effect to the notices in question. C.M. No.1 of 1994 was allowed- to the extent of the impleadment of the aforesaid members on 3-7-1994. After hearing the parties on merits of the writ petition and in order to avoid multiplicity of proceedings and prolonging the hearing, the writ petition was treated as a notice case and by consent of the learned counsel for the parties was directed to be heard today.
7: Mr. Fakhar-ud-Din G. Ibrahim, learned counsel for the petitioner argued that the contents of the undertaking detailed in the communication dated 6-I1-1993 made to the Court be treated as binding in so far as the matter in dispute is concerned.
8. Mr. A. Karim Malik, learned counsel for the respondents, submitted on the basis of report filed in the present writ petition as under: -- "Paper and Paper Board are liable to Central Excise duty and Sales Tax. In the months of March and April, 1992, the Collectorate of Central Excise and' Sales Tax, Lahore, initiated and exercise to determine the capacities of the paper and paper-board mills with a view to bringing them under production capacity system in terms of subsection (4) of section 3 of the Central Excises and Salt Act, 1944. Meanwhile some manufacturers requested for permission to pay excise duty and sales tax provisionally on tentatively assessed capacities. Since these tentatively assessed capacitiesth promised accountable of greater production than these manufacturers were previously showing their request was provisionally accepted subject to the condition that they would maintain a prescribed excise and sales tax record as they were already doing."
9. As to framing of the revised scheme in terms of the undertaking given to this Court, it was argued that the exercise could, however, not be finalised mainly because of lack of cooperation from the manufacturers and partly because no legally tenable and acceptable formula for determination of capacities could be evolved due to multiple variables, therefore, it was decided to dispense with the provisional arrangements and to start the collection of central excise duty on the basis of actual production.
10. Mr. A. Karim Malik, learned counsel for tile respondents vehemently controverting the plea raised by Mr. Fakhar-ud-Din G. Ibrahim, learned counsel for the petitioners further argued that letter dated 6-11-1993 reflected in the Court's order, dated 31-10-1993 in Writ Petition No.15294/93, was merely in the nature of proposal, therefore, no right has accrued in favour of the petitioners. In support of his contention reliance has also been placed on subsections (1) and (4) of section 3 of the Central Excises and Salt Act, 1944, as well as the corresponding provisions of the Sales Tax Act, 1990, to contend that levy and collection of duties of excise/sales tax is to be done in such a manner as may be prescribed, on all goods produced or manufactured and on all excisable services provided or rendered in Pakistan, and at the rates set --forth in the First Schedule. Whereas, subsection (4) of section 3 of the aforesaid enactments empowers the Central Board of Revenue to impose and recover duties/taxes on various excisable goods on the basis of Production Capacity in lieu of levying and collecting the same on the basis of actual production.
11. I have considered the arguments of the learned counsel for the parties and have also perused the material available on record. The provisions of subsections (1) and (4) of section 3 of Central Excises and Salt Act, 1944, have been held to be intra vires of the Act in Messrs Swat Textile Mills Ltd. v. Pakistan through Secretary, Ministry of Finance, Islamabad 1985 SCM R 517 and Zaibtun Textile Mills Ltd. v. Central Board of Revenue and others PLD 1983 SC 358. The corresponding provisions of the Sales Tax Act being in pari materia with the provisions of Central Excises and Salt Act, 1944, also requiresimilar treatment. It is, however, not necessary to go into the detailed history of this case.
Suffice it to say, that the main issue which arises for consideration is whether any right enforceable in law had accrued to the petitioners in terms of the undertaking given by the respondents to this Court in the previous writ petition. A bare reading of letter, dated 6-11-1993 (supra) would show that it was an undertaking- in which it was expressed in an unequivocal terms that collection of central excise duty of paper and paper-board will continue on production capacity system till 30th December, 1993; the Collector, Central Excise and Sales Tax, Lahore, will submit his final proposal/report on the issues raised by Pakistan Pulp and Board Makers Association and the revised scheme will be made by the 10th November, 1993 and if the revised scheme does not reflect the true capacities of the factories; the Government will be constrained to collect central excise due, on actual production under Supervised Clearance Scheme w.e.f. 1st December, 1993. I am, therefore, inclined to agree with Mr. Fakhar-ud-Din G. Ibrahim, that the letter, dated 6-I1 1993 (supra) was a representation made to the petitioners-Association as well as the Court that the parties would evolve a Scheme which would reflect reasonably the true capacities of the factories, therefore, it is for the respondents to demonstrate that they had acted in terms of this representation fairly and reasonably and the scheme prepared by the functionaries of the Central Board of Revenue giving the capacities of the factories, did not reflect the true capacities. The material placed on record does not show that the Federal Government/Central Board of Revenue have fairly adjudicated upon these matters after giving hearing to the petitioners-Association.
12. When faced with this, Mr. A. Karim Malik, placed reliance on the fax message bearing correspondence No.5(17)PC-91 (C), dated 5th December, 1993, whereby the Chairman, Pakistan Pulp Paper and Board Makers Association, petitioner herein, were informed that proposal given in their letter can be considered only if it fulfils the following conditions:---
(i) Duty on 60% higher production capacity should be paid for the whole financial year 1993-94.
(ii) The proposed capacity scheme will apply only to central excise. The manufacturers shall have to pay sales tax on actual clearance and observe all the formalities pressed in the Sales Tax Act, 1990.
(iii) The proposed scheme shall be liable to review or withdrawal at the end of the current financial year.
The petitioner-Association was also asked to intimate their views on the above points. The fax message dated 5th December, 1993, however, is no legal consequence, in that, status quo was ordered to be maintained with regard to capacity scheme on paper and paper-board in respect of levy and collection of sales tax and central excise duty vide order, dated 30-11-1993 passed in Writ Petition No.16532/93, therefore, Central Board of Revenue had no jurisdiction to impose conditions in respect of proposed capacity scheme in violation of the status quo order (supra). Furthermore, if the Central, Board of Revenue had their own capacity worked out they should have confronted the same to the petitioners, which was never done. Clearly, the documents relied upon by the respondents and additional documents produced by Mr. A. Karim Malik, during the hearing of this case, do not reflect the application of the mind of respondents on the issues which were to be determined in the light of undertaking (supra). There is no mention of the revised scheme at all in any of the documents relied upon by the respondents much less reflecting the position one way or the other. It appears that the functionaries of the Central Board of Revenue had acted with preconceived notion in the matter of mode of levy and collection of duty/sales tax impugned in these proceedings.
13. At this stage, it may be pointed out that Mr. A. Karim Malik, has also placed on record a photostat copy of C. No. IV(2)S-TAX/164/91/1351, dated 14-12-1993, sent by the Deputy Collector (South) to Member (Central Excise), Central Board of Revenue, Islamabad, that the petitioner association has expressed its inability to give an increase of 60% in revenue as compared to previous years or give 64% shot-up in the revenue during the current interim period. As to this document, suffice it to say, that the letter in question is in the nature of internal correspondence and in any case the petitioners were never informed of the contents of the said correspondence, therefore, on the basis of this document there was no justification to unilaterally revert to the Supervised Clearance Procedure in violation of the undertaking given to the Court. As pointed out earlier, the revised scheme in terms of the undertaking given to the Court was to be framed by 10th November, 1993. This was admittedly never done. Therefore, the petitioners are entitled to press in service the doctrine of `Promissory Estoppel' against the Central Board of Revenue. Refer: l Federation of Pakistan and others v. Salahuddin and 3 others PLD 1991 SC 546 and Messrs Army Welfare Sugar Mills Ltd. And others v. Federation of Pakistan and others 1992 SCM R 1652.
14. There is also no force in the submission made by Mr. A. Karim Malik, that even if the letter dated 6-11-1993 (supra) is treated to be an undertaking, the dispute raised in this petition relates to levy and collection of central excise duty alone and not sales tax. This plea is ex facie contrary to the averments made in paragraph 14 of the writ petition which is to the following effect: -- "14.That the petitioner Association members received letters from respondent No.2 that fixation of Central excise/sales tax was provisionally approved and the said procedure is withdrawn under the directions of respondent No.2 and directed to switch over to `Supervised Clearance Procedure' without affording an opportunity and reasons to switch over from `Capacity Production Procedure' to `Supervised Clearance Procedure'. Specimen of one letter annexed (Annexure-C)". , It is also stated in the notice dated 8-6-1993, issued by the Custom Authorities, Central Excise and Sales Tax, to Messrs Flying Paper Industries Ltd., Sheikhupura, a copy of which is Annexure "C" to writ petition, that they are required to pay custom duty/sales tax on the basis of monthly fixed revenue for the first 10 days of June, 1993 and after 10th June, 1993, the Central Excise Duty/Sales Tax should be deposited on the basis of actual clearance/supply. The perusal of letter bearing C.No.5(17)PC- 91, dated 20th January, 1992, a copy of which is Annexure "B" to writ petition, also shows that the Federal Government revised the composition of Committee for fixed excise duty/sales tax under the "Shoorai Taxation Scheme". Reference be also made to ground 23(g) of the writ petition which is to the following effect: -- 'That the main objective of the respondent No.2 is to collect the revenue and to plug corruption while collecting central excise duty/sales tax, under main revenue heads which after having made an agreement on production capacity with the petitioner have increased by 30% than under `Supervised Clearance Procedure' without employing additional supervisory staff but on contrary the expenditure of supervisory staff with this production capacity mode of assessment has drastically reduced."
15. As per the fax message C.No:5(17)PC-91 (C.E.), dated 5-12-1993 (supra) it is the case of the Central Board of Revenue itself that the Association was informed for the first time in December, 1993, during the pendency of the writ petition notwithstanding the grant of status quo that the proposed capacity scheme will only apply to central excise and not sales tax which will be paid on actual clearance. I, therefore, cannot agree with Mr. A. Karim Malik, that proposal regarding capacity scheme on paper and paper--board made by the petitioner-Association related to central excise duty alone. The undertaking given by the Central Board of Revenue, coupled with the averments made in the writ petition and the documents annexed thereto, lead to an irresistible conclusion, that the dispute raised by the petitioner-- Association in respect of collection/levy of central excise duty is interlinked with sales tax. The revised scheme proposed to be made by the 10th L November, 1993, covered both the items i.e. Central excise duty as well as sales tax but through unilateral fax message dated 5th December, 1993 (supra) it was decided through an ex parte executive order that the proposed capacity scheme will apply only to the central excise and not sales tax which shall be paid on actual clearances.
16. Be that as it may, the matter does not end here. The next question to be examined is that how long the production capacity system will be operative in the light of the undertaking given to the Court and having regard to the facts and circumstances of this case.
17. Mr. Fakhar-ud-Din G. Ibrahim, frankly conceded that the newly impleaded petitioners have already started paying central excise duty/sales taxon the basis of Supervised Clearance System w.e.f. 1-6-1994, therefore, the interim arrangement of production capacity tax, would remain in force till 31st May, 1994. Consequently, the respondents are entitled to levy and collect central excise duty/sales tax under the Supervised Clearance Procedure-w.e.f. 1-6-1994, and the petitioners are not required to pay the impugned taxes on the basis of Supervised Clearance System for the period 1-12-1993 to 31-5-1994 alone.
18. In view of above, notices dated 6-6-1994 for recovery of outstanding dues under section 48 of the Sales Tax Act, 1990, issued to M/s. Flying Board and Paper Products (Pvt.) Ltd., Lahore Cantt. M/s. Flying Paper Industries Ltd., Lahore, respectively, and notice dated 4-6-1994 issued to M/s. Premium Paper Mills Ltd., Sheikhupura, under the said enactment, are without lawful authority and of no legal effect. The result is, that the embargo placed on the clearance of the goods of newly-added petitioners, is also declared as without lawful authority and of no legal effect.
With above observations, the writ petition is accepted but the parties shall bear their own costs.