1. ' IFTIKHAR MUHAMMAD CHAUDHRY, J.--Petitioner such Power Limited, has instituted present Constitutional Petition, against the Federation of Pakistan through Chairman, Central Board of Revenue, challenging vires of Notification dated 22nd October, 1996, issued by the Government of Pakistan, Ministry of Finance and Economic Affairs. For sake of convenience, the Notification, in extenso, is reproduced here in below:- GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE AND ECONOMIC AFFAIRS Islamabad the 22nd October, 1996.
2. NOTIFICATION (Customs)
3. S.R.O. 1198(1)/96. In exercise of the powers conferred by section 18-B of the Customs Act. 1969 (IV of 1969) the Federal Government is pleased to levy a service charge equivalent to two per cent. Ad valorem on all such goods as are specified in the First Schedule to the said Act and are subject to inspection, under the Inspection, Valuation and Assessment of Imported Goods Rules, 1994.
4. ' C. No, 6(18)/96-CB)
5. (Khalid Akbar)
6. Deputy Secretary."
7. ' Although in prayer clause, relief has also been claimed for declaring section 18-B of the Customs Act, 1969, in pursuance whereof, above Notification has been issued, to be illegal void and of no legal effect, but during arguments, Qazi Faiz Essa, learned counsel for petitioners contended that he will confine himself to the extent of Challenging the above Notification.
8. ' It is the case of petitioners, that in pursuance of incentives granted by the Federal Government in respect of exemption from every kind of customs duty and tax, in terms of Notifications Nos.S.R.O.
9. 279(1)/94 and 280 (1)/94 both, dated 2nd April, 1994, the petitioner - Company, to utilize valuable natural resources of Balochistan from Uch Gas Field, sponsored a Project for the generation of 586 MW electricity from special low Btu Gas Turbines at Dera Murad Jamali. Therefore, to complete the Project, Implementation Agreement, dated 19th November, 95 was executed between the Federal Government through President of Pakistan and the Petitioner. The Implementation Agreement had a provision namely Article 18.1(b) in pursuance whereof, the petitioner prior to the commercial operation was allowed to import all items of Plant and equipment and spare parts to be used in the construction operation and/or maintenance of, or to be incorporated into the complex, in each case, without payment of Customs duties in Pakistan. But despite this clause, vide impugned Notification dated 22nd October, 1996, service charge has been levied on the items, which are being imported prior to commercial operation of the Project, in Article 18.1(b) of the Implementation Agreement, for which, respondents have no jurisdiction. As such, having left with no remedy, instant Constitutional Petition has been filed.
10. ' Qazi Faiz Essa, Learned counsel for petitioner, argued that action of respondent in recovering service charge from petitioner is in violation to the commitment made with the petitioner in the Implementation Agreement because definition of Customs duty, defined in the agreement, has provided, exemption from all types of duties including sales taxes, surcharges, Import Licence Fees etc. Moreover in the implementation agreement a solemn commitment has been made with the petitioner, therefore, service charge cannot be recovered from petitioner. He stated that on declaring the impugned Notification illegal, void and of no legal effect, respondent be restrained from recovery of service charge from the petitioner.
11. ' On the other hand, Mr. Tariq Mehmood, learned Deputy Attorney-General contended that petition is not maintainable as Ministry of Finance and Economic Affairs, who had issued the impugned Notification is not party before the Court, and he is also not holding brief on their behalf. Moreover, Government of Pakistan has been sued wrongly through Chairman, D. For the purpose of seeking relief to declare the impugned Notification void and illegal. Besides it, entering into a contract with the petitioner by the Functionaries of the Federal Government would not mean that for all times to come, the legislature is estopped to promulgate any law, for the purpose of recovering any tax, which legitimately can be imposed upon the Importers. As for as the clause pertaining to exemption of custom duty is concerned, it does not provide protection for the recovery of service charge or any other duty, if it has been levied, subsequent to the execution of Agreement. The service charge was levied in pursuance of statutory provisions of law by the Federal Government.
12. Therefore, Doctrine of Promissory Estoppal, would not be attracted.
13. We have heard the parties' counsel at length and also perused the record of case, so made available, carefully. It would be appropriate to first of all consider the preliminary objection raised by learned Deputy Attorney-General that in absence of the authority who issued impugned notification relief as has been claimed cannot be awarded. In this behalf it is to be observed that impugned notification has been issued under section 18-B of the Customs Act, 1969 by the Federal Government. As far as section 18-B is concerned it was added in the Customs Act, 1969 by means of the Tax Adjustments Ordinance, 1996 whereby the Federal Government was authorised to levy a service charge equivalent to 2% ad valorem of all such goods specified in the first schedule to the Customs Act as are subject to pre-shipment inspection by issuing a notification. The text of the notification re-produced hereinabove itself clarifies that it was issued by the Ministry of Finance and Economic Affairs, therefore, without impleading said Ministry as a party as well as due to non- affording opportunity of hearing to them vires of the notification cannot be examined legitimately.
14. Admittedly, this notification has not been issued by the respondent Chairman Central Board of Revenue. Thus, it is held that the petition is bad for non-joinder of necessary party. However, we can examine the validity of the notification in the light of arguments put forth by parties' counsel with an observation that whatever is stated for or against the validity of the notification it should not cause prejudice to the Ministry of Finance and Economic Affairs, as said Ministry is not a party neither any of these observations shall ever be quoted by any one against the interest of the Ministry.
15. ' The edifice of Qazi Faiz Essa' counsel for petitioner's arguments is that in presence of a valid contract between petitioner and Government of Pakistan whereby in terms of Article 18.1(b) the Project is exempted totally from the levy of any type of subsequent tax, if imposed by the Government even by making legislation because against all kind of levy the principle of promissory stopple will operate.
16. ' First of all it may be noted that in terms of Article 18.1 (B) exemption of customs duties in Pakistan prior to the commercial operations of the Project in respect of items mentioned therein were granted because in pursuance of Notification No,SR0-279(1)194 issued by the Federal Government in exercise of the powers conferred upon it under section 19 of the Customs Act, the machinery and equipment including coal mining equipment were exempted from the whole of customs duty leviable under the first schedule to the Customs Act, if imported for setting up or for balancing modernization and extension of power generation, i.e, power, gas, coal, wind and waive energy projects including under construction projects which entered into an implementation agreement with the Government of Pakistan.
17. ' On the even date another Notification being S.R.O.No,280(1)/94 was issued wherein customs duties was exempted on the raw material and components which are not produced or manufactured locally or are imported for use in the manufacture of machinery equipment intermediary or capital goods and specialised vehicles (4 X 4 non---luxury) including passenger vehicles to be supplied to electric power generation, i.e, oil, gas, hide, coal wind and waive energy projects, their expansion or modernization, including under construction' projects. At this juncture reference to expression customs duty defined in the implementation agreement would not be irrelevant according to which customs duty means:-- ' In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), the Federal Government is pleased to exempt from the whole of the customs duty leviable under the First Schedule to the Customs Act, 1969 if imported for setting up or for balancing, modernization, and extension of power generation, i.e, oil, gas, coal, wind and wave energy projects including under construction projects which entered into an implementation agreement with the Government of Pakistan."
18. ' It is contended by. Qazi Faiz Essa, Advocate that the impugned notification is void and illegal because the service charge also fall under the definition of customs duties as defined hereinabove in terms of the implementation agreement, therefore, violation of the agreement by the respondent by levying service charge cannot be allowed in view of the equitable promise made by the President of Pakistan while entering into said agreement not to charge customs duties from the petitioner. In this behalf he made reference to judgments reported in AIR 1979 SC 621 (Motilal.
19. Padampat Sugar Mills Company v. The State of U.P. And others), 1985 SCC 369 (Union of India and others v. Good Fry Philips India Limited), PLD 1970 SC 439 (Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Limited Chittagong), PLD 1965 (WP) Peshawar 47 (M/s. Mardan Industries Limited Sakha Kot Malakand Agency and another v. Government of Pakistan and another), PLD 1962 Peshawar 51 (Qazi Abdul Kafeel Khan v. Faqir and, others, PLD 1992 Karachi 266 (Muhammad Abdullah v. Government of Pakistan and others), PLD 1996 Lahore 718 (M/s. Flying Board and Paper Products v. Central Board of Revenue Government of Pakistan and others), PLD 1991 SC 884 (M/s. Qaiser Brothers (Pvt.) Limited v. Government of Pakistan and others), judgment of this Court dated 8-5-1997 in Civil Petition No,401 of 1996 (Pakistan Paper Sack Corporation v.
20. Federation of Pakistan, through Ministry of Finance & Economic Affairs Pakistan Secretariat and 3 others).
21. ' Learned Deputy Attorney-General argued that there is no question of promissory estopple in the instant case because service charge has not been levied in terms of implementation agreement, but by the law gives as they added section 19-B in the Customs Act, 1969 by means of the Tax Adjustment Ordinance, 1996. Since the service charge has not been levied as a matter of policy, therefore, principle of promissory estopple cannot be invoked.
22. ' He further contended that in the instant petition vires of impugned notification dated 27-10-1996 have been challenged as according to petitioner it has been issued without lawful authority and jurisdiction in pursuance of section 18-B of the Customs Act, 1969, therefore, the petitioner is estopped to raise the argument that service charge can be equated with the customs duty as no such ground has been urged in the petition nor for such reason any relief has been claimed, therefore, an argument which is being raised for the first time without specifically pleading cannot be entertained. He also relied on PLD 1991 SC 884 (M/s. Qaiser Brothers (Pvt.) Ltd. v. Government of Pakistan and others), 1992 SCMR 1652 (M/s. Army Welfare Sugar Mills v. Federation of Pakistan) and 1997 SCMR 641 (M/s. Gadoon Textile Mills and 814 others v. WAPDA and others).
23. ' After perusing judgments cited by learned counsel for parties in support of their respective contention question for determination is whether in view of facts and circumstances of instant case, doctrine of promissory estopple would operate or not moreover whether after making a contractual commitment the Government through its law-givers body is estopped for all the times to come not to levy any other tax in respect whereof at the time of execution of contract no exemption was granted.
24. ' In this behalf first of all we would like to refer to the case of M/s. Motilal Padmapat Sugar Mills (AIR 1979 SC 621). The Honourable Supreme Court of India held that as per rule of law the Government stands on the same footings as a private individual so far as the obligation of the law is concerned and the Government cannot claim to be immune from the applicability of the rule of promissory estopple and repudiate a promise made by it on the ground that such promise may fetter its future executive actions. But since the doctrine of promissory estopple is an equitable doctrine, it must yield that the equity so desires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired it would be inequitable to hold the Government to the promise made by it. The Court would not raise an equity in favour of the promisee and enforce the promise against the Government. The doctrine of promissory estopple would be displaced in such a case because on the facts equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the facts which have transpired since making of the promise public interest would be prejudiced if a Government were required to carry out the promise, the Court would have to balance the public interest if the Government carry out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way equity lies. The Government cannot claim to be exempted from the liability to carry out the promise on some indefinite and undisclosed ground of necessity or expediency nor can the Government claim to be the sole Judge of its liability and repudiate it on an ex parte appraisement of the circumstances.
25. ' If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempted from the liability and it would be for the Court to decide whether those events are such as to-render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability. The Government would have to show what precisely is the change policy and also its reason and justification so that the Court can judge for itself which way the public interest lies and what the equity of the case demands. The plea enunciated in this judgment was followed in the case of "Union of India and others v. Good Fry Philips India Limited (1985 SCC 369).
26. ' In the case of M/s. Qaiser Brothers (Pvt) Limited Honourable Supreme Court of Pakistan was ceased with the matter in which after opening of the letter of credit by the Importer regulatory duty was levied under section 18(2) of the Customs Act and as a consequence whereof a notification was also issued, therefore, importers case was that after opening of letter of credit imposition of regulatory duty cannot be levied/recovered in respect of the transactions which were concluded earlier because a vested right has been created in favour of the importer. But the Honourable Supreme Court on having surveyed good number of judgments including the one relied upon by petitioner's counsel PLD 1970 SC 439 (Collector of Central Excise and Land Customs and 3 others) opined as follows:-- "It may further be observed that levy of Regulatory duty not only regulates the price structure of the item concerned but it also generates additional fund for the public purpose. To put constraint upon the exercise of the power contained in subsection (2) of section 18 of the Act of the nature sought to be pressed into service by the petitioner will not be in the interest of the public. This Court already in the case of Messrs Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan and others (supra) has examined the vires of the Regulatory duty and has held that 'what is prohibited by the Legislature is the delegation of its function to make the law but not the authority exercised under and in pursuance of the law itself to another agency'. It was also held that levy of the Regulatory duty in terms of subsection (2) of section 18 of the Act was intra vires. It may be observed that the Legislature has provided the framework for the levy of the Regulatory duty, the extent, the period for which it can be levied and the authority which can levy. The levy of Regulatory duty in question is within the above framework and, therefore, no exception can be taken to it, the impugned judgment of the High Court seems to be in consonance with law."
27. ' Before making reference to any other judgment of Hon'ble Supreme Court it would be proper to examine the judgment of "Muhammad Abdullah" and "M/s, Flying Board and Paper Products" by Honourable Karachi and Lahore High Courts respectively. In the . Former citation vide notification dated 29-5-1986 levy of sales tax was exempted at the time when importer concluded a contract with supplier in respect of imported goods and letter of credit was also opened in his favour. But subsequently by another notification dated 26-6-1988 earlier notification was superseded, therefore, protection of levy of the sales tax was claimed by importer u/s 31-A Customs Act VI of 1969 on the ground that contract had already been concluded between the importer and suppliers as irrevocable letter of credit had also been opened. The Honourable High Court with this background held that after opening of letter of credit when such imported goods were exempted from levy of sales tax, on such imported goods on the basis of subsequently notification was without lawful authority and of no legal effect.
28. ' In the later judgment facts involved were that vide notification dated 29-10-1995 regulatory duty was imposed upon the goods imported into Pakistan, therefore, the case of importer was that the notification cannot be made applicable to them for the reason that in some cases contract for the import of goods had already been completed with the foreign manufacturers prior to the promulgation/issuance of impugned S.R.Os. While in other cases L.Cs. Had been opened and in some cases goods subject-matter of Constitutional petitions had already been imported into Pakistan. The Honourable High Court held that the exemption in the payment of customs duty envisaged under section 19 of the Customs Act cannot be interfered with by inclusion of section 30-A in the Customs Act a vested right cannot be pressed into service in that regard.
29. ' It may be noted that section 30-A of the Customs Act was promulgated to displace any decision of any Court under sections 30 and 31 concerning the rate of duty applicable to any goods including any amount of duty imposed under section 18 and the amount of duty that may have become payable in consequence of withdrawal of the whole or any part of exemption or concession from duty whether before or after the conclusion of a contract or agreement for the sale of such goods or opening of a letter of credit in respect thereof. The Honourable High Court also observed that exemption granting notification would not be interfered with unless such power given to the Federal Government under section 31 (A) is exercised for withdrawal of the same ' As in the instant case as far as exemption from customs duty allowed to petitioner company is concerned that was in terms of Article 18(1)(B) of the implementation agreement and this clause had backing of two notifications dated 2-4-1994 which have been referred to hereinabove. As far as these two notifications are concerned they have not been withdrawn, rather by promulgating law, i.e, section 18(B), Customs Act, the impugned notification has been issued, therefore, if the argument advanced by the petitioner's counsel is tested on the touchstone of the judgment of Honourable Lahore High Court, prima facie there could not be any other conclusion except that as far as the equitable commitment of the Government of Pakistan through President is concerned that still holds the field so far exemption of the customs duties which were leviable when the agreement was concluded, but subsequently any other tax like service charge is concerned ,that was not exempted even in the implementation agreement, therefore, tax imposers who are not party before the Court cannot be estopped not to levy service charge upon petitioner.
30. ' Now we would advert to the case of M/s. Army Welfare Sugar Mills and another v. Federation of Pakistan and others (1992 SCMR 1652). Brief facts are that a good number of sugar producers challenged two notifications dated 6-6-1989 in pursuance whereof the commission as to the payment of excise duty on the production of sugar enjoyed by the Sugar Mills till issuance of the notifications were withdrawn. The Supreme Court examined the principle of prontissory estopple viz-a-viz the vested rights accrued to individuals on the basis thereof . It would be appropriate to reproduce herein below the limitations highlighted in the judgment with regard to the doctrine of promissory estopple:-- "It may also be observed that at the same time, it was also highlighted that the doctrine of promissory estopple was subject to the following limitations:--
(i) the doctrine of promissory estopple cannot be invoked against the legislature or the laws framed by it because the legislature cannot make a representation;
(ii) promissory estopple 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 stopple will not apply where no steps have been taken consequent to the representation or inducement so as to irrevocable 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."
31. ' His Lordship Mr.Justice Ajmal Mian in the preceding para. Keeping in view the above limitation has held that if exemption from payment of excise duty or any other tax has been granted for a specified period on certain condition and if a person fulfils those conditions, he acquires a vested right, he cannot be denied exemption before 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,...
32. ' It may be noted that service charge was levied under section 18-B by the law gives to meet expenditures incurred on pre-shipment inspection company, for the purpose of examining the quality, quantity, process and origin of goods being imported in the country, therefore, conveniently it can be argued that levy of service charge was in the public interest in order to improve quality of imported goods and also to curtail chances of evasion of customs duty. The notification impugned in this petition has not been issued administratively by the Ministry of Finance and Economic Affairs because it has been issued as it is indicative from its perusal that the Federal Government in exercise of statutory powers had issued it, therefore, with this background we are inclined to hold that the plea of promissory estopple would not be applicable in the instant case nor the Government of Pakistan can be restrained from promulgating in future a law to generate revenue for the purpose of meeting specific objects as it has been noted hereinabove. In as much as in the implementation agreement there is no article prohibiting the Government not to levy any other tax on petitioner.
33. ' During hearing of arguments it was pointed out by learned Deputy Attorney-General that in this case as well pre-shipment inspection was carried out at the port from where the goods were imported in the country. In addition to it we would like to observe that in the earlier judgment which has been relied upon by Qazi Faiz Essa himself, i.e, Civil Petition No,401 of 1996, we examined the vires of section 18-B of the Customs Act as well as the impugned notification and it was held that both are intra vires.
34. The law gives actually had provided a legal sanction to the amount which is to be recovered from petitioners by levying a service charge equivalent to 2% ad valorem on all such goods specified in first schedule to this Act as are subject to pre-shipment inspection. There is nothing in impugned section which negates any provision of the Constitution. Had the Parliament being in session on 27- 10-1996 when section 18-B was inserted in Customs Act it was also competent to enact law of the same nature and consequent thereof impugned notification has been issued with lawful authority.
35. Thus, the impugned section is intra vires the Constitution of Islamic Republic of Pakistan and notification being legally issued cannot be struck down. Since the above judgment was given by this Division Bench who has heard the instant case, therefore, we are bound with our earlier decision.
36. ' Now turning towards the contention of learned counsel for petitioner that if in the earlier judgment, i.e, Civil Petition No,401 of 1996 service charge has been treated to be a customs duty, thus, it being so in terms of Article 18.1(B) of implementation agreement service charges being a customs duty cannot be recovered from the petitioner. Suffice to observe that petitioner had not pleaded this fact in the petition nor there is any alternative request to treat the service charge as a customs duty contrary to it. In the prayer clause petitioner had challenged the vires of section 18-B of the Customs Act as well as impugned notification, dated 27-10-1996, but it was during arguments learned counsel stated that he would not be pressing for relief for declaring section 18-B ultra vires to the Constitution, therefore, once the petitioner has taken up a specific stand that in view of the notification which is void and illegal service charge cannot be recovered from them, how they can turn round to say that it may be treated as the customs duty and petitioners cannot be allowed to blow hot and cold in one breath. Thus, argument being devoid of force is not entertained.
37. ' Learned counsel for petitioner also contended that petitioner is entitled for the protection of financial as envisaged under Protection of Economic Reforms Act, 1992. In support of his argument he also relied on PLD 1993 Lahore 914. There is no denial to the protection of financial obligations to petitioner to the extent of the commitment made by the Government of Pakistan in the implementation agreement. It may be seen that as far as this Act is concerned it has also not prohibited to Legislature to legislate any fiscal law in future for the benefit of general public, therefore, the authority relied upon by him is also distinguishable and his this contention as well is overruled.
38. ' As far as judgments cited by the learned counsel pertaining to the cases 'Mardan Industries Ltd., Qazi Abdul Kafeel Khan' are concerned they need no discussion in view of the above conclusion.
39. ' Lastly Qazi Faiz Essa learned counsel argued that violation of the commitment of implementation agreement is contrary to the injunctions of Islam. Without dealing with this aspect of case it is sufficient to observe that in the memo of petition the impugned notification has not been assailed on this ground, therefore, with all respect to the provisions of Holy Qur'an this argument can also not be entertained.
40. ' Thus, for the foregoing discussion we see no merits in the petition which is accordingly dismissed leaving the parties to bear their own costs. #EndJudgment