' This judgment disposes of the following Constitutional petitions, all involving the same questions of law, arising out of substantially similar facts t-
1. W. P. No, 1150/75 lqbal Akhter v. Ch. Muhammad Mushtaq etc.
2. W. P. No, 1215/75 Muhammad Akbar v. Ch. Muhammad Mushtaq Ahmad etc.
3. W. P. No, 1216/75 Sapha Khan v. Ch. Muhammad Mushtaq Ahmad etc.
4. W. P. No, 1217/75 Muhammad Rafiq v. Ch. Muhammad Mushtaq Ahmad etc.
5. W. P. No, 1218/75 Arzi Khan v. Ch. Muhammad Mushtaq Ahmad etc.
6. W. P. No, 1219/75 Muhammad Latif v. Ch. Muhammad Mushtaq Ahmad etc.
7. W. P. No, 1220/75 Sultan Khan v. Ch. Muhammad Mushtaq Ahmad etc.
8. W. P. No, 1221/75 Ghulam Rasul v. Ch. Muhammad Mushtaq Ahmad.
9. W. P. No, 1222/75 Sh. Abdul Homeed v. Ch. Muhammad Mushtaq Ahmad etc.
10. W. P. No, 1223/75 Muhammad Afzal v. Ch. Muhammad Mushtaq Ahmad etc.
11. W. P. No, 1224/75 Hazrat Muhammad Khan v. Ch. Muhammad Mushtaq Ahmad etc.
12. W. P. No, 1225/75 Muhammad Rashid v. Ch. Muhammad Mushtaq Ahmad etc.
13. W. P. No, 1147/75 Hamld Khan v. Ch. Muhammad Mushtaq Ahmad etc.
14. W. P. No, 1170/75 Khalid Mahmoad v. Ch._ Muhammad Mushtaq Ahmad etc.
15. W. P. No, 1171/75 Ghulam Rasool v. Ch. Muhamad Mushtaq Ahmed etc.
16. W. P. No 1202/75 Jannat Gul v. Ch. Muhammad Mushtaq Ahmad etc.
17. W. P No, 1203/75 Muzammil v. Ch Muhammad Mushtaq Ahmad etc.
18. W. P. No, 1204/75 Zahid Khan v Ch. Muhammad Mushtaq Ahmad etc.
19. W. P. No, 1205/75 Hassan Gul v. Ch. Muhammad Mushtaq Ahmad etc. V. P. No, 1206/75 Karim Dad V. Ch. Muhammad Mushtaq Ahmad etc.
21. W. P. No, 1207/75 Khasta Khan v. Ch. Mahammad Mushtaq Ahmad etc.
21. W. P. No, 1208/75 Gul Jamal Khan v. Ch. Muhammad Mushtaq Ahmad etc.
23. W. P. No, 1209/75 Ztaud Din v. Ch. Muhammad Mushtaq Ahmad etc.
24. W. P. No, 1210/75 Tans* Ahmad v. Ch. Muhammad Mushtaq Ahmad etc.
25. W. P. No, 1211/75 Mlrza Gul v. Ch. Muhammad Mushtaq Ahmad etc.
26. W. P. No, 1212/75 Noor Alim v. Ch. Muhammad Mushtaq Ahmad etc.
27. W. P. No, 1213/75, Mushtaq Ahmad v. Ch. Muhammad Mushtaq Ahmad etc.
28. W. P. No, 1214/75 Shezad v. Ch. Muhammad Mushtaq Ahmad etc.
29. W. P. No, 1151/75 Mukhter Ahmad v. Ch. Muhammad Mushtaq Ahmad etc.
30. W. P. No, 1152/75 Mir Zaman v. Ch. Muhammad Mushtaq Ahmad etc.
31. W. P. No, 1153/75 Muhammad Amin v. Ch. Muhammad Mushtaq Ahmad etc.
32. W. P. No, 307/76 Ashraf Khan v. Ch. Muhammad Mushtaq Ahmad etc.
33. W. P. No, 308/76 Sheikh Ehsan v. Ch. Muhammad Mushtaq Ahmad etc.
34. W. P. No:309/76 Muhamad llyas v. Ch. Muhammad Mushtaq Ahmad etc.
35. W. P. No, 310/76 Ghuman Khan v. Ch. Muhammad Mushtaq Ahmad etc.
36. W. P. No, 311/76 Abdul Hamid v. Ch. Muhammad Mushtaq Ahmad etc.
37. W. P. No, 312/76 Muhammad Riaz v. Ch. Muhammad Mushtaq Ahmad etc.
38. W. P. No, 313/76 Muhammad Akram v. Ch. Muhammad Ahmad etc.
2. With the suggestive names of "Rawalpindi Bara" and "Chota Bara", there has sprung up in the heart of Rawalpindi city, a market in consumer goods. It has flourished, and has firmly established itself, though not far from the seat of the Government of Pakistan, the Central Board of Revenue, and surrounded by the usual paraphernalia of the police and the Customs Authorities of various grades.
3. On the 5th of May 1975: Ch. Muhammad Mushtaq, D. S. P. Respondent No, 1 recorded the following report and sent it to the Police Station D Division, Rawalpindi for the registration of the case under section 156/89 of Customs Act where it was registered at No, 124 P. S. D Division at 10.00 a.m. On 5- 5-1975. It reads as follows 3
4. The D. S. P. Has explained his own performance in identical words in all these cases except for giving details of recovery, in the report furnished by him, there being no written statement : "On 5-5-1975 on the direction of the higher authorities, the District administration represented by two Magistrates, Police and Customs defendants conducted the joint Raid in the area known as Chota Bane. Some 52 shops were searched and foreign articles including cloth and electric articles in huge quantities were recovered, 739 yards of different qualities of foreign smuggled cloth."
5. Though a number of legal grounds were taken up by the petitioners for challenging, the raid, the search, the seizure, the Investigation, the adjudication and the trial, it will suffice to deal with the jurisdictional aspect of the case alone, nstricting it mainly to the role played by the respondent D. S. P. On the question of jurisdiction and lawfulness of the authority there are three main grounds.
6. The first contention of the learned counsel for the petitioners, on which he is very keen to obtain a decision, is that the delegation of functions under section 6 of the Customs Act in such wide terms is ultra vireo Article 146 of the Constitution and not in accord even with the powers possessed by C.
B. R. Under section 6. For bringing out this ground reliance has been placed on materially different language of Article 146 of the Constitution as compared to /Wide 147 of the Interim Constitution, Article 143 of the Constitution of 1962. Article 127 of 1956 Constitution, section 124 of Government of India Act which empowered the Central/ Federal Legislature to "confer powers and impose duties or authorise the conferment of powers and the imposition of duties upon a Provincial Government or officers or authorities of a Provincial Government". Article 146 of 1973 Constitution clause (2) provides "An act of Parliament may, notwithstanding that it relates to a matter with respect to which a Provincial Assembly has no power to make laws, confer powers and impose duties upon a Province or officers and authorities thereof". From this language it is inferred that there is no scope now, unlike the past, to make such an authorization except by the law itself. There is, according to the learned counsel, no place now for section 6 of the Customs Act reposing as it does such a power in Board of Revenue, instead of the Legislature itself providing for it.
7. The second ground taken up is that the notification under which the police officers derive their powers under the Customs Act is itself inconsistent with section 6 or section 3 of Customs Act. The Customs Act, according to the learned counsel for the petitioner, envisages appointment of Customs Officers and the conferment of functions of "any officer of Customs" "to any officer of the Federal or Provincial Government". It is contended that the transference or entrustment of powers had to take place by reference to the designation of the Customs Officer. Entrustment of powers and functions could not take place by referring to particular sections of the Customs Act.
8. Finally, assuming that the powers notified were possessed by the D. S. P. It is contended that the jurisdictional facts necessary were not present justifying its exercise nor was the strict procedure prescribed for its exercise was observed by him at the material stages of the proceedings. The various aspects of this contention will be examined in greater detail.
9. As regards the first two contentions, I do not propose to undertake an elaborate examination of it for I find that the petitions can succeed on the basis of third objection However, I had the benefit of hearing arguments on these points at great length from both the sides. The conclusion at which I have reached is that what a Legislature can do by law, it can also within permissible limits of delegation, authorise the various functionaries to do. Reading Article 146 as a whole, all its three clauses, keeping in view that it is a provision of the Constitution, the organic law of the country, it would be pedantic, and a narrow construction to hold this power to be nondelegateable in all its forms. The true test, therefore, would be whether such a provision in an existing law as is found in section 6 of the Customs Act transgresses the bounds of permissible delegation. In examining this question, we find that Customs Act while providing a complete code for establishing a hierarchy of officers enumerating their powers and limitation, creating offences and penalties, prescribing procedures for conducting the affairs makes provision also (i) by section 3(d), Customs Act to assimmilate official officers and functionaries, otherwise outside that hierarchy within it (ii) to confer powers and functions exerciseable within the heirarchy set out in section 3 on rank outsiders to the hierarchy with the only qualification of there being an officer of the Federal or Provincial Government. Th exceptional powers are manifestly individualistic in character, more concerned with the question of detail than in the domain of policy. Therefore, such an authorization would appear to be within the permissible limits of delegation by Legislature.
10. It is true that on a first reading of the various provisions of the Customs Act one gets the impression that all the powers; functions and procedures prescribed therein are related to officers of Custom, to various grades thereof, to ranks equivalent thereto and that the functions are inseparable from the officer. But this is as it should be for a highly technical, somewhat insular, a very well organized Department of the Government so vitally concerned with the movement of goods and persons on land, air and sea, and possession of movable property of specified description wherever be it. In this background the contents of section 6 of the Customs Act only indicate, and provide for the conferring of such persons on these as are exercisable by "any officer of customs". It is the powers which can be v conferred, not necessarily by reference to designation or rant of Customs Officer but by enumeration, definition or description of the power itself. Such a supervening and general power will have to be read into every power exercisable by an officer of Customs. The only limitation with regard to the power liable to be conferred is that it should be one, exercisable by an officer of Customs. Once this test is satisfied the power become delectable by enumeration, definition, description or even by reference.
11. Before considering the third ground it is necessary to note two features of the case in the domain of facts. Firstly, in these cases no written statement was ever filed by any of the respondents. These petitions came up for hearing in motion on 30-5-1975 when a report was called for from respondent No, 1 which was received from him by 3-7-1975. These petitions were then admitted on 9.12-1975. They were heard partly in November 1976 and thereafter due to elections and other events intervening the arguments were concluded in June 1977. At no stage either an intention was shown or the necessity felt by the respondents to file a written statement. In the absence of the written statement except to the extent disclosed in the report, much of the factual allegations made will have to be accepted as not controverted.
12. Secondly, in his report respondent No, 1 has in every case disclosed that "on 5-5-1975 on the direction of higher authorities, the District Administration represented by two Magistrates, Police and Customs conducted the joint raid in the area known as Chota Bara". The proceedings of the case, the record of it and the failure of the other respondents to own the proceedings makes it unmistakably clear that the D. S. P. Spear-headed the team. What a subversion and travesty of a scheme, the heirarchy and the insularity of the organization set up by Customs Act that an officer of the Police, possessed of specified and limited powers under the Customs Act to meet an urgent or exceptional situation should take over as if possessed of plenary and supervening powers over his associates. Apart from this, if the D. S. P. Surrendered his statutory discretion, to non-statutory "higher authorities" he committed a jurisdictional error by further delegating his non-delegatable authority to such "higher authorities". It is time that even the police officers come to realize that a command from "higher authorities" is not an answer to all objections but only the beginning of the objection. Before such an action can be justified, the nature of the power possessed has to be clearly determined, its location in the hierarchy ascerained and the nexus between the commanding authority, the command and recipient of the command has to be established without violating in the process any provision of the statute, any condition of the delegated power enjoyed or any principle of law. For this reason alone the power exercised by respondent No, 1, and all the proceedings conducted by him would be without lawful authority and of no legal effect.
13. Coming now to the merits of the third ground taken up by the learned counsel for the petitioners, the D. S. P. Came to be repository of powers under the following sections of the Customs Act on the strength of S. R.
0. 1029(1)74 dated 29th July, 1974.
Sections 158 ; 159(2) ; 160(1), (2) and (6) ; 161 ; 163(1) ; 163(4) ; 164 ; 165 ; 166 ; 168(1) ; 168(3) ; 172(1) ; 174.
14. The specific delegation order is reproduced hereunder "Islamabad, the 29th July, 1974 S. R.
0. 1029(1)74.-1n exercise of the powers conferred by section 6 of the Customs Act, 1969 (1V of 1969), and in supersession of S. R.
0. 538(1)172, dated the 25th July, 1972, the Central Board of Revenue is pleased to entrust to the officers of Police specified in the first column of the Table below the functions of officers of customs under the provisions of the said Act specified in the second column of that Table.
TABLE Officers (811MINSNIADINIMMil. All=114111 Provisions of the Act (Sections)
1 2 n 1. Officers not below the rank of Assistant 158; 160(1) ; and 161(1)
Sub-Inspector within their respective and (2) ; 164 ; 168(1) and jurisdictions. (3) ; 172(1) and 174.
Officers not below the rank of Sub-Inspector 161(3), (4), (5), (6) and within their respective jurisdictions. (7) ; 163(1); 165 and 166.
Officers not below the rank of Deputy 159(2) ; 160(2) and (6)
Superintendent of Police within their respective jurisdictions. And 163(4).
Deputy Iuspectors-General of Police. 157(2) and 176." {{TABLE}}
15. In the first place an attempt was made by the learned Advocate-General to invoke the more comprehensive and effective subsection (4) of section 163 of Customs Act for defending on the legal plane the action of respondent No,
1. When called upon to satisfy whether it was a case of an offence of exportation of notified goods the learned Advocate-General after obtaining the notification preferred to withdraw this argument. Then reliance was placed on subsection (1) of Section 163, Customs Act. There are two jurisdictional defects in the powers exercised by D. S. P. If the reliance be on this provision. Firstly, there was no recording by him of the grounds of his belief or even of the belief itself that goods of the specified description were in danger of being removed before search could be effected under section 162. It was necessary for him to do so for if it were a situation governed by section 162 then the D. S. P. Had no power to proceed under section 163. Even if he were to prepare such a record the admitted facts show that it was not a case where this jurisdictional requirement was present. It is undisputed that after recording this report the D. S. P.
Obtained the presence of two Magistrates having territorial jurisdiction. The access to and the participation of the Magistrates in the raid will show that it was not a case of such urgency and exception as to necessitate the doing away with the procedure prescribed in section 162. Recourse to Magistrate being possible under section 162, Customs Act powers under section 163(1) could not be exercised at all.
16. At one stage a suggestion was made by the learned Advocate-General that substitution of the search warrant by a Magistrate authorized to grant it may on the strength of section 105, Cr. P. C.
Cure the illegality. Such a suggestion cannot prevail for more than one reason. Assuming so for the limited purpose for which section 163 is being examined, it will then be not a case where observance of section 162 was impossible but of actually observing it. As the D. S. P. Was not delegated the power to observe it, such observance could not clothe him with authority where none was otherwise possessed by him. Section 105, Cr. P. C. Is not attracted to the case for Customs Act provides a complete code both in the matter of powers and procedures and only to the extent Criminal Procedure Code is expressly applied its provisions stood excluded. Admittedly it is so mentioned in subsection (3) of section 163 of Customs Act that "Ali searches made under this section shall be carried out mutatis mutandis in accordance with the provisions of the Code of Criminal Procedure, 1908", but this does notice Imply that all officers empowered under Criminal Procedure Code can get the search conducted for purposes of Customs Act. Power to search is entirely different in content than the procedure to be observed while conducting the search.
17. The other ground taken up by the learned counsel for the petitioners in this context is that statement prepared under section 163(1) was lacking in another respect, inasmuch as it provided neither the particulars of the place nor of the things to be searched. Besides, provisions of subsection (2) of section 163 were also not, observed. These are questions in the domain mostly of facts. It may not be necessary to adjudicate on them in view of the jurisdictional defects of a more Serious nature already discussed.
18. Finally, the learned Advocate-General referred to section 161 and section 168 of Customs Act for justifying the act of the D. S. P. Section 161 deals primarily with the apprehension of an offender and the inquiry that follows into his culpability at the stage of investigation or inquiry. There being a specific provision for said, search, seizure, which in fact was their procedure adopted, recourse to this provision is out of place. The arrest and bail followed the information, the raid, the search and seizure. It has been held by the Supreme Court in State v. Ziaur Rahman (1) that "it is a well- established rule of interpretation that where in a statute there are both genets; provisions as well as special provisions for meeting a particular situation, then it is the special provisions which must be applied to that particular case or situation instead of the general provisions".
19. Section 168 provides for seizure of goods liable to confiscation under this Act. What is liable to confiscation under the Act has been dealt with by the Supreme Court in Collector of Customs v. S. M. Yousaf (2). ,It was held that "anything liable to confiscation under this Act" makes it clear that the liability of confiscation is already determined or is no lone' in dispute". Applied this test the provisions of section 168 are also not of avail to respondent.
20. It therefore follows that all the proceedings taken by respondent No, 1, the raid, the search, the seizure and the prosecution of petitioners is without lawful authority and of no legal effect. It is so declared. All the subsequent proceedings which are based on such an illegality are all non-existent in the eye of law. The goods seized shall forthwith be returned to the respective petitioners. The petitioners shall have the costs of the proceedings from respondent No, 1.
Petition accepted.
(1) PLD 1973 SC 49 (2) 1973 SCMR 411 P I. D 1977 Lahore 1327 Before Gul Muhammad Khan, J M. AFZAL & SON saw OTHERS-Petitioners versus FEDERAL GOVERNMENT OF PAKISTAN AND ANOTHER-Respondents Writ Petition No, 155 of 1976, decided on 3rd May 1977.
(a) Customs Act (W st 1969)- -- SS. 19 & 30 read with Constitution of Pakistan (1973), Art. 77-Tax, imposition of- arability- Exemption-Tax or duty-Cannot be imposed except under aur'ority of an Act of Parliament- Imposition of tax-Essentially a legislative power ; hence cannot be delegated to a subordinate authority-Power to allow exemption-Can, however, be delegated. A tax or a duty can only be imposed under the authority of an Act of Parliament in view of Article 77 of the Constitution (1973).
This being essentially a legislative power cannot be delegated to a subordinate authority empowering it to levy a tax or duty. There is, however, no objection in delegating a power to a subordinate authority for allowing exemption. There is much diitzence in 'taxability or liability' and its 'payability'. The taxability or liability is created by the Legislature while payability follows to be enforced 1:4 the executive authority after quantification. The exemption concerns not the liability but only the payability. It means that though an assessee is liable to pay he can be excused payment on account of a power conferred on the subordinate legislative authority. [p. 1330] 4 Australian Mutual Provident Society v. Inland Revenue Commissioner (1961) 3 A E R (P C) 1051 ref.
(h) Customs Act (IV of 1969)- -- Ss. 19 & 30-Tax, imposition of-Exemption-Liability once created under an Act-Sticks till wiped out by Legislature itselfPayability of tax-Can, however, be excused under delegated power of exemption-Recall of a notification of exemption-Merely revives power to assess, quantify demand, and recover and not to re-impose a tax and obliges assessee to pay what was not obligatory on him to pay previously. [p. 1330
(e) Customs Act (IV of 1969)- - S. 19-Notification allowing exemption--Does not create a right. [p. 1331]C Bindra on Interpretation of Statutes, 3rd Edn., p. 582, para. 24 I Corpus 'uric Vol. LXI, 1933 Edn., para. 384, p. 385 ; Collector of Central Excise and Land Customs v. Azizuddin Industries Ltd. PLD 1970 SC 439 and Government of Pakistan v. Messrs Mardan Industries Ltd. Civil Appeal No, 3-P of 1965 ref.
(d) Customs Act (IV of 1969)- --- Ss. 19 & 30-Tax, imposition of-ExemptionL-Petitioner acting on notification allowing exemption and taking all steps to import goods- Held, acquired a vested right to import such goods free from payment of duty and subsequent notification !e-calling exemption mid not take away right derived under previous notification.-[Notification]. [p. 1333] D & E Messrs Mardan Industries Ltd., Sakhakot, Malakand Agency and another v. Government of Pakistan and another PLD 1965 Pesh. 47 ; Sflahbaz v. Crown PLD 1956 FC 46 and Abdul Rahlm's case PLD 1976 Lah. 886 ref. Raflq Ahamad Khan Bangash for Petitioners. Malik Rebmat All for Respondents Nos. 1 and 2.
Dates of gearing 11th, 14th and 31st March 1977.
' By this order I shall also dispose of W. Ps. Nos. 2966, 3225, 3180, 2886 and 2979 of 1975 which involve the same questions of law.
2. In all these cases the petitioners had placed orders to import white woodfree writing paper in sheets with weight of 55 to 60 grams per square metre from different countries on various dates ranging between 7th June and 16th September, 1975, in pursuance to the Notification No, S. R. O.
632(1)175 dated 7th June, 1975. By that notification paper of the above quality had been exempted from payment of customs duty under section 19 of the Customs Act, 1969. The import had been effected against import licences and all the steps for importing paper including indenting and opening of letter of credit had been taken prior to 16th September, 1975 when the abovesaid notification exempting payment of customs duty was recalled. It is admitted on both sides that except for the plea of exemption, the imported paper in all these cases had become subject to payment of duty under section 20 of the Customs Act as the re'evant dates for levy and collection of duty fell subsequent to the notification dated 16th September, 1975.
3. The petitioners, however, refused to pay the custom duty and have come to this Court on the ground that as the notification dated 7th June, 1975 had been acted upon by them, they had acquired a vested right to exemption from payment of custom duty. It is argued on their behalf that as they secured import licences, placed order of import and took all other steps in that direction, on an understanding that there was no import duty payable, a subordinate legislative authority could not take away that vested right on the basis of a subsequent notification and burden them with an unexpected demand of tax. It was further pleaded that in any case it will amount to giving retrospective effect to the subsequent notification which is not authorised by law.
Reliance was placed by them on Messrs Mardan Industries Ltd., Sakhakoi, Malakand Agency and another v. Government of Pakistan and another (1) and Controller of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd , Chittagorg (2). The learned counsel also referred to Corpus Juris, Volume 61, page 403 and a passage in the Interpretation of Statutes by Bindra, Ili Edition, 1961, page 582, para.
24. They also half-heartedly challenged the imposition of regulatory duty at the rate of 15% ad valarum on the same goods. This additional duty had been levied vide notification dated 18th November, 1975, under section 18 of the Customs Act.
4. The learned counsel for the respondent submitted that the above judgment of the Peshawar High Court had been set aside by the Supreme Court in Government of Pakistan and another v.
Messrs Mardan Industries Ltd. And another (Civil Appeal No, 3-P of 1965), vide order dated 22nd February, 1966 and could not be cited by the petitioners in support of their plea. He relied on Abdur Rashid v. Central Boa, d of Revenue and others (3) to say that the Government had the right as subordinate legislative authority to withdraw the notification dated 7th June, 1975, in view of the powers conferred under section 21 of the General Clauses Act. Reliance was also placed on Government of Pakistan through Se cretary, Ministry Commerce and another v. Zamir Ahmad Khan (4), Messrs Sh. Abdur Rahim-Allah Ditta
(1) PLD 1965 Posh. 47 (2) PLD 1970 SC 439
(3) PLD 1965 Pesh. 249 (4) PLD 1975 SC 667 v. Federation of Pakistan through Secretary. Ministry of Finance, Government of Pakistan, Islamabad and another (1) and Zaibtun Textile Mills Ltd., Karachi and others v. Central Board of Revenue and others (2).
5. The controversy between the parties is truly brought out in the following questions:-
(a) Whether the notification about exemption from payment of duty created a vested right in the petitioners in respect of goods which though ordered for when exemption was in force yet were received after the exemption notification had been recalled?
(b) Whether the authority which had been empowered to grant exemption could withdraw the notification under section 21 of the General Clauses Act so as to deprive the persons who had already acted upon the exemption notification?
(c)Whether an authority having the delegated power could Impose additional duty by way of regulatory duty, with regard to such goods the import of which had been ordered for on the basis of the customs duty already fixed?
6. As for the first question it is to be noted that a tax or a duty can only be imposed' under the authority of an Act of Parliament in view of Article 77 of the Constitution, This being essentially a legislative power cannot be delegated to a subordinate authority empowering it to levy a tax or duty. There is, however, no objection in delegating a power to a subordinate authority for allowing exemption. There is much difference in 'taxability or liability' and its 'payability'. The taxability or liability is created by the Legislature while payability follows to be enforced by the executive authority after quantification. The exemption concerns not the liability but only the payability. It means that though an assessee is liable to pay he can be excused payment on account of a power conferred on the subordinate legislative authority. This distinction was considered and accepted by this Court in other cases. The same opinion was expressed by the Privy Council in Australian Mutual Provident Society v. Inland Revenue Commissioner (3). 'Exemption' is defined in Corpus Juris, 1933 Edn., Vol. 61, para. 382, page 382 as under:- "Exemption, as applied to taxation, is freedom from the burden of enforced contribution to the expenses and maintenance of Government, and may include freedom from the burden of taxes accrued and unpaid as well as from the burden of future levies. The term, as here used, presupposes a liability, and is properly applied only to a grant of immunity to persons of property which otherwise would have been liable to assessment. Furthemore, the right to immunity is not inherent in the person or property exempted, but exists only by grant supported on grounds of public policy. The subject-matter of which may take the form of a contract, governed by the terms thereof, and subject to the rules of law applicable to contracts."
7. The liability once created under an Act would this stick till it is wiped out by the Legislature itself.
The payability on the other hand could be excused under the delegated power of exemption.
Connected with this aspect of the case is the question if recall of a notification of exemption would amount to imposition of tax, which could be done only by the Legislature itself. As stated above, the power of exemption has nothing to
(I) PLD 1976 Lah. 886 (2) PLD 1971 Kar. 333
(3) (1961) 3 A E R 1051 (P C) do with the 'taxability or the liability'. It only concerns itself with payability and therefore, would only revive a power to assess, quantify, demand and recover and not to re-impose a tax. In the Customs Act of 1969 this power of allowing exemption had been given to the Central Government under section 19 of the said Act. The recall of the notification dated 7th June, 1975, allowing exemption in respect of the duty imposed by the Legislature previously, by virtue of section 21 of the General Clauses Act would, therefore, not amount to re-imposition of a tax but only obliging an assesses to pay what he was not obliged to pay previously.
8. The next question that would arise is, what is the nature of the benefit created by a notification allowing exemption and if it can be claimed as a matter of right. It seems to be well-established that a notification C allowing exemption does create a right. Reference in this connection may be made to the Interpretation of Statutes by Bindra, III Edition, page 582, para. 24 which reads as under:- "A statute imposing a new penalty or a new liability will not be construed retrospectively if such effects can fairly be avoided by interpretation. In People ex ref D. W. Griffith, Inc. v. Laughman (249 N. Y. 369) the Court while holding that section 181 of the New York Tax Law was not intended to appply to past transactions declared that 'the general principle' that the laws are not to be considered as applying to cases which arose before their passage is preserved, when to disregard it would be to impose an unexpected liability that if known might have induced those concerned to aviod it and to use their money in other ways."
' Similar situation as dealt with in Volume 61 of the Corpus Juris, 1933 Edition, para. 381, page 385 reads as under.- "Exemptions from taxation may be created directly by the Constitution, or by act of the Legislature, subject to such limitations as the Constitution may plate, expressly or by implication, upon the power of the Legislature in the premises. Constitutional provisions limiting the power of the Legislature to exempt property from taxation, intended to be prospective in their operation, do not impair exemptions already in existence, nor do they affect the power of the Legislature to fix the situs of particular kinds of property even though such legislation may have the effect of withdrawing certain property from taxation."
' Portions of paras. 393 and 394 of the same Volume, in the same context run as:- "393. Ho never, as affecting exemptions already expressly granted, the general rules apply that repeals by implication are not favoured, that subsequent constitutional provisions of a general nature or subsequent taxing statutes will not be construed as retroactive so as to repeal such exemptions, and that a general la* without negative words will not repeal a prior special statute granting an exemption, although the provisions of the statutes are different unless they are irreconcilably conflicting; nor will a statute granting exemptions be repealed by a classification in a later statute which is nugatory.
394. One entitled to the benefit of a statutory grant of exemption must in some way manifest his acceptance of the grant, in order to obtain immunity under it, and in particular must comply with all conditions imposed by the statute ; and the same rule applies to a statute commuting taxes or providing for the payment of a gross earnings tax or other special tax in lieu of general taxation ....
' The point also came up for consideration in Collector of Central Excise and Land Customs v.
Azizuddin Jr dustries Ltd. (1), wherein the Supreme Court held as under..
"The next question which arises in this case is whether the Notification of the 28th February. 1964, which purported to destory completely the rights vested in the respondent by the Notification dated the 30th June. 1961, and the 17th May, 1963, is valid in law. It is a settled rule that an executive authority cannot in exercise of the rule-making power or the power to amend, vary or rescind any earlier order, take away the rights vested in the citizens by law. This very question fell for decision before the Court in Civil Appeal No, 3-P of 1965 (Government of Pakistan v. Messrs Mardan Industries Limited). Dealing with the validity of the latter Notification dated the 19th May, 1964, it was observed:- ' 'It is well settled that no statute shall be construed so as to have a retrospective operation unless its language is such as plainly to require such construction. We understand that 17 lac cigarettes which had been seized before issue of the impugned notification, have been released and the Excise Department do not claim any excise duty in the said cigarettes.'
' The respondent had acquired a vested right of exemption from the levy of excise duty on all the goods produced or manufactured by it for a period of four years under the Notification of the Central Government referred to above. That vested right could not, therefor, be taken away by an executive action. The Notification dated the 28th February, 1951, being completely destructive of the right vested in the respondent-Company was in this view without lawful authority and of no legal effect."
' The facts of the Mardan case (Civil Appeal No, 3-P of 1965) referred to above were that Central Government bad by a notification issued under section 12-A of the Central Excises and Salt Act, 1914, exempted for a period of 4 years from Ist July, 1961, all excisable goods produced or manufactured in tie Tribal Areas from excise duty leviable thereon. A new industry established subsequent to the notification came into production in April, 1964 and rent a consignment of 20 lacs K-2 cigarettes to M/s. Premier Tobacco Company. Karachi without payment of excise duty. On a second consignment of 17 lac cigarettes reaching Shergarh, the excise duty was demanded. It was held by the Supreme Court that "No doubt the power to take advantage of a Notification can be termed 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 under which similar goods were marketed, in other parts of Pakistan."
(1) PLD 1970 SC 439
9. In view of the above, there can be no controversy on the point that a notification allowing exemption does create a vested right and the same cannot be taken away by a subordinate legislation as it would amount to doing so with retropective effect. The position of law about right under a notification and its recall under a subsequent notification has been elaborately and ably discussed in the D. B judgment of Peshawar High Court in Messrs Mardan Industries Lid., Sakhakot, Malakand Agency and another v. Government of Pakistan and another and the Supreme Court judgment did not differ with that proposition of law as laid down therein. It rather approved that but upset the decision on the ground that the subsequent notification regulated the exemption by placing an embargo, in the exempted area, and the use of same brand or trade names as were already in use in the settled areas, to avoid abuse of the exemption.
10. It is well-established proposition of law that an act or a subordinate legislative authority cannot be applied retrospectively unless the law under which it acted conferred expressly a power to 'do so. The applicability of section 21 of the General Clauses Act has also been discussed in the judgments referred to above and it is quite clear that it does not empower the sub-ordinate legislative authority to take away vested rights by recalling or amending a previous notification. It can only regulate as held in the Mardan Industries' case referred to above. The above position of law was also laid down by the Federal Court in leading case of Shahbaz v. Crown (1). In view of the above, the petitioner did acquire a vested right to import their paper free from payment of duty as they had acted on the notification and taken all the steps to import that paper.
11. So far as the third question is concerned the learned counsel for the petitioners did not seriously press the same. The regulatory duty had been levied under section 18(2) of the Customs Act. It may be noted here that a Division Bench of this Court in Abdul Rahim's case (2) recently considered the same point in detail and came to the conclusion that the notification imposing the regulatory duty was antra vies and the-regulatory duty was valid and legal.
For the reasons given above I hold that the petitioners were entitled to import paper in accordance with the terms of the notification dated 7th June, 1975 in case they had been granted the import licence and they had taken all the steps to import that paper between 7th June, 1975 and 16th September, 1975. The subsequent notification dated 16th September, 1975, did not take away their right derived under the previous notification. The relief sought for against the demand of regulatory duty is, however, refused. The result is that these petitions partly succeed. The concerned authorities shall proceed to finalize the case in the light of the directions given above. The parties shall bear their own costs.
(1) PLD 1956 FC 46 (2) PLD 1976 Lah. 886