1. IFTIKHAR MUHAMMAD CHAUDHRY, J.--(1) Precisely stating facts of the case are that appellant obtained sanction from the Federal Government of Pakistan to set up a 12600 spindles spinning plant at Dera Ghazi Khan under the Scheme known Pay as You Earn. (PAYE) and appellant entered into a contract with the Foreign Supplier for the supply of machinery. M/s. Dubai Bank Limited Multan established an irrevocable L.C. in favour of foreign supplier. However, the contract could not be matured with the result the L.C. was cancelled and later on a revised contract was executed on 6th September, 1983 by the appellant with the foreign supplier. Admittedly second L.C. was opened on 30.12.1985. Accordingly foreign machinery was imported by .the appellant which reached at Karachi Port on 15.10.1986 vide Bill of Lading No, 1/B from where it was transported to Dry Port Lahore on 25.11.1986. The appellant filed Bond No, 9025 with the Collector of Customs, Lahore, for transporting the goods to its private customs bonded warehouse situated at D.G. Khan. On 3rd January, 1987 a Bill of Entry claiming exemption from payment of the whole of the statutory customs duty leviable at the rate of 50% as well as full exemption from payment of 5% Iqra surcharge and 5% import surcharge in view of SRO 700(1)/80 dated 26th June, 1980 was filed but the goods were assessed under SRO 500(1)/84 and the appellant company was held liable for payment of the taxes before release of the goods. As such the appellant instituted writ petition before Lahore High Court Multan Bench, which has been dismissed vide impugned order. As such petition for leave to appeal was filed which was allowed on 19.5.1997. The leave granting order reads as under:-- "It is contended by the learned counsel for the petitioner that the revised contract for import of textile machinery under PAYE Scheme having been entered into and sanctioned/approved by the concerned authorities before the issuance of Notification No, SRO 500(1)/84 dated 14.6.1984, the import of goods by the petitioner was covered under the previous S.R.O. No, 700(1)/80 dated 26.6.1980. Reliance is placed in support of the above contention of Al-Samrez Enterprise vs. The Federation of Pakistan (1986 S. C.M.R. 1917 = PTCL 1987 CL. 99) and Molasses Trading & Export (Pvt.)
2. Limited v. Federation of Pakistan and others (1993 SCM R 1905 = PTCL 1994 CL. 222).
3. Leave is granted to consider the above contention. Appeal to be fixed at an early date."
4. 2.Learned counsel argued that appellant entered into a contract with the foreign supplier on 6th September, 1983 when PAYE Scheme was invoked, therefore, imported machinery was not liable to tax under SRO 700(1)/80 dated 26th June, 1980 thus a vested right has accrued to appellant notwithstanding the fact that this notification was superseded by SRO 500(1)/84 dated 14.6.1984 as it has been held in the cases which were noted in the leave granting order.
5. 3.On the other hand learned counsel for the official respondents contended that appellant in fact imported machinery from outside the country on 15.10.1986 vide bill of lading number I/B when SRO 700(I)/80 dated 26.6.1980 had already been superseded. The Government of Pakistan in order to protect locally manufactured machinery has issued SRO 500(1)/84 dated 14.6.1984, therefore, the foreign machinery so imported by appellant company after issuance of this SRO was not entitled for the benefit of superseded SRO 700(1)/80. He further stated that after entering into the contract no steps were taken by the appellant during subsistence of SRO 700(1)/80 as L.C. in pursuance whereof the machinery was imported was opened on 30.12.1985, therefore, no vested right has accrued to appellant in view of the judgment of this Court reported in 1998 SCM R 1404. Learned counsel further submitted that the appellant still can claim exemption of tax under the PAYE scheme if it can show before Customs Authorities that the machinery so imported is not being manufactured in Pakistan and the learned High Court had kept open this option for appellant. In this context he placed %reliance on PLD 1991 S. C. 329.
4. We have heard parties counsel in support of their respective contentions. It may be noted that as per SRO 700(1)/80 dated 26th June, 1980 Government of Pakistan floated a scheme to attract the Finances to install industry for balancing, modernization, replacement or extension of the existing unit etc.in an area specified in the Table and such other evidence as the Collector of Customs may require and after such inquiry as he deems fit, in order to establish such installation. It seems that with the approval of Government of Pakistan the appellant entered into a contract with the foreign machinery supplier and to implement the same with permission of the State Bank of Pakistan Lahore, Dubai Bank Limited Multan established an irrevocable LC No, ML/LC/00383 in favour of the foreign machinery suppliers on 4.8.1983 but this L.C. was returned by the Supplier and as per statement made by learned counsel payment of Rs, 18 Lac was also refunded to appellant on 29th March, 1984. Thereafter appellant got approved another contract with the foreign machinery supplier on 6th September, 1983 after observing necessary formalities and L.C. in favour of foreign supplier was opened by it in the National Bank of Pakistan on 30th December, 1985. In the meanwhile SRO 700(1)/80 dated 26.6.1980 has been superseded by SRO 500(1)/84 dated A 14.6.1984. Therefore, question for consideration would be as to whether in view of the judgments in the cases of Al-Samrez Enterprise vs. The Federation of Pakistan (1986 S. C.M.R. 1917 = PTCL 1987 CL. 99) and Molasses Trading & Export (Pvt.) Limited v. Federation of Pakistan through Secretary Finance and others (1993 SCM R 1905 = PTCL 1994 CL. 222) a vested right has accrued to the appellant. It may be noted that this Court in Al-Samrez Enterprise case has held that if a binding contract was concluded between the appellants and the exporter or steps were taken by the appellants creating a vested right to the then existing notification granting exemption, the same could not be taken away and destroyed in modification of the earlier one, on the ground that ander section 21 of the General Clauses Act, the Government could exercise the power of modification. In this very case it was further held that it will be inequitable and unjust to deprive a person who acts upon such assurance of the right to exemption and expose him to unforeseen loss in the business transaction by suddenly withdrawing the exemption after he has made legal commitments. It is in this perspective that a right is created in his favour and a subsequent withdrawal of exemption A can not be given retrospective operation by an executive act to destroy this right".
6. 5.After announcement of this judgment section 31-A was added in the Customs Act to give cover to an executive act.However, in the case of Molasses Trading & Export (Pvt.) Limited v. Federation of Pakistan and others (1993 SCM R 1905= PTCL 1994 CL. 222) the effect of newly added provision was examined and it was held "that the consequence that flowed from the act of withdrawal or modification of an exemption notification under section 31-A shall take effect with reference to the date of its issue, irrespective of the fact that the contract for the import of goods and the L.C. had come into existence prior to such date". It was further held that "the language of section 31-A clearly envisages and stipulates that the consequences that flow from the act of withdrawal or modification of an exemption notification, shall take effect with reference to the date of issue, irrespective of the fact that the contract for the import of goods and the L.C. had come into existence prior to such date. This effect has been now prescribed by a mandatory provision of law by legislative fiat. The court therefore would have to give effect to it notwithstanding the decision in the case of Al-Samrez Enterprise".
7. 6.Learned counsel for the appellant stated that section 31-A will have no effect on the case of the appellant as it was inserted in the Customs Act by Finance Act, 1988.
7. Be that as it may even on general principle the government or its functionaries can not be bound down for all the times to come not to modify, withdraw or promulgate SROs imposing tax only for the reason that one of the party had entered into a contract for the supply of foreign machinery particularly in those cases in which neither the Federal Government is a party nor in the superseded SRO it was mentioned that it will remain operative till a particular period. However, if any party interested to seek benefit from the favourable SRO/notification it becomes its duty to show from its conduct the steps which had been taken to materialize the contract to establish that a vested right had accrued to it. In this context in the case of Army Welfare Sugar Mills Ltd., v.
8. Federation of Pakistan (1992 SCAM 1652 = PTCL 1993 CL. 188) this court has laid down the criteria to protect the vested rights of the parties. Amongst those considerations one is that "the doctrine of promissory estoppel will not apply where no steps have been taken consequent to the representation or inducement so as to irrevocably commit the property or the reputation of the party invoking it." According to learned counsel appellant had taken steps to seek benefit of SRO 700(1)/80 as it had entered into a contract with the foreign supplier on 6th September, 1983 but this argument being not convincing is not acceptable to us because if at all such contract was executed between the private parties it will not bind the Government not to supersede the SRO because Government is not party to the contract and as per the available record and statement made by the learned counsel during arguments for implementation of the contract first step was taken by appellant on 30th December, 1985 when L.C. was opened in favour of foreign supplier and till that time SRO 500(1)/84 dated 14th June, 1984 had occupied the field. At this juncture a para from the case of Messrs M. Y. Electronics Industries (Pvt.) Ltd. through Manager and others v.
9. Government of Pakistan through Secretary Finance, Islamabad and others (1998 S. C.M.R. 1404 = PTCL 1998 CL. 450) being relevant in this context is reproduced herein below:-- "In the cases before us, the appellants are invoking the doctrine of promissory estoppel against the Government on the basis of alleged inducements and representations contained in the exemption notification No, 517(1)/89 dated 3.6.1989, No, 480(1)/88 dated 26.6.1988, and 481(1)/88 dated 26.6.1988 these notifications do not contain any time limitation during which the exemptions were to remain operative. The appellants have failed to bring on record any material to establish that the Government either before or after issuance of the notifications made any representation to the industries in GAIE that these exemptions will remain operative for any specified period. In the absence of the period having been specified in these notifications regarding their validity, the exemption under these notifications could not be availed by the appellants only during period these notifications were operative these exemptions ceased to be available from the date of above notifications were suspended or withdrawn."
10. 8.As in the instant case it is not known as to what are the terms of the contract. According to appellant's counsel, the company entered into contract with foreign machinery supplier on 6th September, 1983. Moreover for execution of such contract no effective steps were taken by the appellant till 14th June, 1984 when the earlier SRO 700(1)/80, dated 26.6.1980 was superseded by SRO 500(1)/84 therefore it can safely be held that till opening of L.C. dated 30th December, 1985 no concrete steps were taken to implement the contract, therefore, the Government can not be compelled to extend benefit of SRO 700(1)/80 to the appellant.
11. 9.As far as SRO No, 700(1)/80, dated 26th June, 1980 and SRO 500(1)/84 dated 14th June, 1984 are concerned they were examined by this Court in the case of Sohail Jute Mills Ltd. and others v.
12. Federation of Pakistan through Secretary Ministry of Finance and others (1991 SCMR 329 = PTCL 1991 CL. 388). Relevant paras therefrom are reproduced herein below:-- "22. A reference to the notification under examination would .show that there was no suggestion, indication, or commitment of any'sort at all with regard to the future course of action as against the beneficiaries of those notification. The effect of these notification was that on satisfaction of certain conditions certain exemptions from customs duties and other taxes leviable alongwith it were to be enjoyed by a certain category of industrialists. That concession was not postponed to a future date. It took effect immediately. There was no element of promise, commitment or surrender of future executive power of the Federal Government."
13. "23. It is additionally to be noted that the Federal executive authority which was enjoying a delegated legislative power within the framework of Customs Act, 1969 (Section 19) could not fetter, surrender, limit or commit the Federal Legislative power as such. To expect the Executive to commit the legislature with regard to a future course of action would be untenable in the scheme of the Constitution that we have."
14. 10.The above observations by this Court has abundantly set at naught the controversy between the parties, therefore, by reiterating the same principle we are inclined to hold that the Government of Pakistan was not one of the contracting party to the so called revised contract dated 6th September, 1983, therefore, Government can not be bound down for all times to come not to supersede, rescind or modify SRO No, 700(I)/80. However, even now appellant can get the benefit of non-payment of additional duty of 20% ad valoram if it can show before the custom authorities to whom the case had been remanded by learned High Court that machinery so imported by the appellant was not being manufactured in Pakistan at the relevant time.
15. 11.Thus for the foregoing reasons appeal is dismissed. Parties are left to bear their own costs.