By this order I shall also dispose of Writ Petitions 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 wood free 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)/75, dated 7th June 1975. By that notification paper of the above quality had been exempted from payment of custom 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 bad become subject to payment of duty under section 30 of the Customs Act as the relevant 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 licence, 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 authorized by law.
Reliance was placed by them on Messrs Mardan Industries Ltd., Sakhakot. Malakand Agency and another v. Government of Pakistan and another (PLD &965 Posh. 47) and Controller or Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd.,, Chittagong (PLD 1970 SC 439).
The learned counsel also referred to Corpus Juris, Volume 61, page 408 and a passage in the Interpretation of Statutes by Bindera, III Edition, 1961, page 582, pare.
24. They also half heatedly challenged the imposition of regulatory duty at the rate of 15% ad valorem on the same goods. This additional duty had been levied vide notification dated 18th November 1975, under section 13 of the Customs Act.
4. The learned counsel for the respondent submitted that the above judgment of the Peshawar High Court had beer 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 190) ride order dated 22nd February 1966 and could not be cited by the petitioners in support of their plea. He relied on Abdur Rashtd v. Central Board of Revenue and others (PLD 190 Pesh. 249), to say that the Government had the right as a 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 Secretary, Ministry of Commerce and another v. Zamir Ahmad Khan (PLD 1975 SC 667). Messrs Sh. Abdur Rahim Allah Ditta v. Federation of Pakistan through Secretary. Ministry of Finance. Government of Pakistan, Islamabad and another (PLD 1976 Lah. 886) and Zalbtun Textile Mills Ltd., Karachi and others v. Central Board of Revenue and others (PLD 1971 Kar. 333 ).
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 bad been empowered to grant exemption could withdraw the notification under section 21 of the General Clauses Act so as to deprive the persons who bad 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 o duty. There is, however, no objection in delegating a power to a subordinate authority for allowing exemption. There is much difference is '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 b 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 ((1961) 3 A E R 1051 (P C)). '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 giant of immunity to persons of property which otherwise would have been liable to assessment. Furthermore, tire 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 thus stick till ii 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 legislative itself. As stated above, the power o" exemption has nothing to do with the 'taxability or the liability'. It only concern itself? With payability and therefore, would only revive a power to assess, quantify, demand and recover end not to re-impose a tag. In the Customers .Pct 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 assess to pay what he was not obliged to pay previously.
7. 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 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 eel D. W. Griffith, Ins. v. Laughman (249 N Y 1,9) the Court while holding that section 191 of the New York Tax Law was not intended to apply to past transactions declared that 'the general principle' that the laws am not to hi 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 avoid it and to use their money m other ways."
Similar situation as dealt with in Vol. 61 of the Corpus Juris, 1933 Edition, para. 384, 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 place, 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, or do they affect the power of the Legislature to fix the suits 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 . . . . . . . . .However, as affecting exemptions already expressly granted, the general rules apply that repeals by implication are not favoured, that subsequent Constitutional provisions of s general nature or subsequent taxing statutes will not be construed as retroactive so as to repeal such exemptions, and that a general law without negative words will not repeal a prior special statute granting an exemption, although the provisions of the statutes art different unless they are irreconcilably conflicting ; nor will a statute granting exemptions be repealed by a classification in a later statute which it negatory.
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 taxor 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 Industries Ltd. (PLD 1970 SC 439), wherein the Supreme Court held as under :- "The nest question which arises in this case is whether the Notification of the 28th February 1964, which purported to destroy 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 was an executive authority cannot in exercise of the n ale-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 41ardan Industries Limited). Dealing with the validity of the latter Notification dated the 11th 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 lacs 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 respect of the said cigarettes.
Who 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, therefore, be taken away by an executive action. The Notification dated the 216 February 1964, being completely destructive of the right rested 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 had by a notification issued under section 12-A of the Central Excise and Salt Act, 1944, exempted for a period of 4 years from 1st July 1961, all excisable goods produced or manufactured in the Tribal Areas from excise duty leviable thereon. A, new industry established subsequent to the notification came into production in April 1964 and sent a consignment of 20 lacs K-2 cigarettes to Messrs Premier Tobacco Company, Karachi without payment of excise duty. On a second consignment of 17 , lac cigarettes reaching Shergarb, 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. Put 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 dispatch free of excise duty out; of the tribal areas, goods with such brands and trade marts, under which similar goods were marketed, in other parts of Pakistan.'.
8. In view of the above, there can be no controversy on the point that 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 retrospective 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 Ltd., 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 only regulated the exemption by placing on embargo, in the exempted area, on the use of same brand or trade names were already in use in the settled areas, to avoid abuse of the exemption.
9. It is well-established proposition of law that an Act of a subordinate legislative authority cannot be applied retrospectively unless the lay under which it acted conferred expressly a power to do so.
The applicability of section 2 1 of the General Clauses Act has alter been discussed :a theth judgments referred to above and it is quite clear that it does not empower the subordinate legislative authority to take away vested rights by recalling or amending a previous notification. It can only regulate as held to tea 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 (PLD 1956 FC 46). 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. 'a 10. So far as the third question is concerned the learned counsel for the petitioners did not seriously press the same. The regulatory duty hard been levied under section 18(2) of the Customs Act. It may he noted here that a Division Bench of this Court in Abdul Rahlm's case (PLD 1976 Lah.
886), recently considered the same point in detail and came to the conclusion that the notification imposing the regulatory duty was Intra vireo 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 aced 16th September 1975. The subsequent notification dated 16th September 1915, 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,