MESSERS PALACE HOTEL, KARACHI vs THE ADDITIONAL SECRETARY, MINISTRY

' AJMAL MIAN, J.-In this petition the petitioners have impugned orders dated 25th March, 1979, dated 29th October, 1979 and dated 10th September, 1980 passed by respondent No, 3, respondent No, 2, and respondent No, 1, respectively.

' The brief facts leading to the filing. Of the above petition are that the petitioners were served with a show-cause notice dated 22nd November, 1978 for alleged contravention of provisions of section 4 (3) (a) and rule 96 of the Central Excise and Salt Act, 1944, for not paying the' differential amount on account of the concessional rates of rent allowed by the petitioners to some of the customers, namely, Rs, 82,474.40 and additional duty at 50% of the duty involved, namely, Rs, 20,582.17. The above demand was resisted by the present petitioners. However, respondent No, 3 through his aforesaid order dated 25th March, 1979 maintained the above demand and also imposed a penalty of Rs, 1,00,000. The petitioners being aggrieved by the above order filed an appeal, which was dismissed by - respondent No, 2 by his aforesaid order dated 29th October, 1979. After that the petitioners went in revision, which was dismissed by respondent No, 1 by his aforesaid order dated 10th September, 1980. The petitioners being aggrieved by the above order have filed the present petition.

2. In support of the above petition Mr. Muhammad Jamil, learned counsel for the petitioners has made following submissions :-

(1) That the concessional rates of rent for the rooms were charged by the petitioners for the reason that the petitioners were unable to provide the required facilities and, therefore, the impugned levy of Rs, 82,474.40 on account of .Difference in the rates is not sustainable.

(ii)' That the S. R.

0. Relating to imposition of additional duty at 50% came into force on 19th August, 1976 and therefore, no additional duty could have been charged on the alleged differential amount for the period prior to 5th August, 1976.

(iii) That the levy of penalty of Rs, 1,00,000 under rule 226 was not warranted by the facts of the present case.

3. As regard the first contention Mr. Muhammad Jamil has referred to the case of Sky Rooms Limited, Karachi v. Assistant Collector of Central Excise & Land Customs, Karachi in which a Division Bench of this Court while construing section 4 of the Central Excises and Salt Act (1 of 1944)

(hereinafter referred to as the Act) held that the term concession will connote charging 'of lesser amount than the rate of prices already fixed for a class of customers, but fixing of, different rates of different classes of customers or for different qualities cannot be said to be concession within the purview of section 4 of the Act. However, Mr. Jamil has relied upon the following observation of the Division Bench in support of his above submission: in our view the convenient and safe criteria for judging whether a concession has been allowed or not would be that if two customers of the same class are sold the same goods in the same or similar quantity at different rates, then in the absence of some other good reason, the one who purchases the sane at lower rate can be said to have been granted a concession.

' The learned counsel has given emphasis on the words "then in the absence of some other good reasons". It has been urged by him if there is some other good reasons the different rates can be charged for the same room even for the same class of persons, Even if we were to accept the above interpretation canvassed by the learned counsel for the petitioners, the burden of proof was on the petitioners to show that there were some other good reasons, which in our view the petitioners have failed to show. However, it has been urged by Mr. Muhammad Jamil, that the respondents were aware of the fact that the main building of the petitioners' hotel was under demolition and that the hotel was run in the annexe to the main building. In our view, simpliciter the above facts do not entitle the petitioners to charge different rates for the same rooms from different persons of the same class. In this view of the matter no exception can be taken to the impugned demand of Rs, 82,474.40.

4. As regards, the second contention that the respondents could have levied additional duty at 50% in respect of the period subsequent to 5th August, 1976 it may be observed that reliance has been placed on notification No, S. R.

0. 101/(101)175, dated 31st January, 1975 and S. R.

0. No, 879(1)/76, dated 5th August, 1976. It has been urged that the latter S. R.

0. Dated 5th August, 1976 first time provided the levy of additional duty of 50% on the differential amount and, therefore, any demand in respect of a period prior to 5th August, 1976 is not in accordance with the law. It may be observed that Mr. Inayat All learned counsel for the respondent has not pointed out any other S. R. Contrary to what has been urged by Mr. Muhammad Jamil. It will suffice to observe that in case, the above contention of Mr. Muhammad Jamil is correct, the above additional duty will have to be re-calculated as the impugned demand involved the period from July, 1973 upto June, 1977. We would, therefore. Remand the case to respondent No, 3 with the direction to re-calculate the above amount of Rs, 20,582.17, in case there is no other S. R.

0. Or provision entitling the respondents to levy additional duty since July, 1973, on the basis of the aforesaid S. R. O. However, we are not inclined to declare the levy of the above additional duty as without lawful authority.

5. Reverting to the, above third contention of Mr. Muhammad Jamil, in respect of the amount of penalty, it may be observed that the reliance has been placed on rule 226 of the Central Excise Rules, 1944 which reads as follows :-1 "226. Mow entry books stock accounts and warehouse registers should be maintained.-(l) Where any person is required by these Rules to maintain any entry book, stock account, or warehouse register in respect of goods produced, manufactured or stored by him (or a register in respect of excisable services provided or rendered by him), he shall-

(i) at the time of maldng 'any entry, insert the date when the entry is made ;

(ii) correctly keep such books, account or register in the manner required, and shall not cancel, obliterate, or alter any entry therein, except for correction of any errors with the sanction andin the presence of the proper officer, and shall not make any entry therein which is untrue in any particular

(iii) Keep the book; account or register at all times ready for the inspection of the officers and shall permit any officer to inspect it and make any such minute therein or any extract therefrom, as the officer thinks fit, and sale, at any time if demanded, send it to the proper officer ; and any person who fails to enter the required particulars within the time prescribed in the relevant rules, or who fails to keep such book, account or register, as the case may be, or to deliver it up to the officer on demand, or who obstructs or hinders such officer in making any minute therein or extract therefrom, or conveys away or conceals it, or destroys or tears out any leaf therefrom, or makes any false entry therein or fraudulently alters any entry therein, shall be liable to a penalty which may extend to (two thousand rupees or ten times the amount of duty involved, whichever is greater) and all the goods of which due entry has not been made, in such book shall be liable to confiscation.

(2) If the manufacturer of any excisable goods liable to duty under the Act fails to render proper accounts regarding the manufacture, storage, or disposal of such goods or of the receipt storage, utilization or disposal of raw materials (including manufactured and semi-manufactured components, used in the manufacture of such goods, as prescribed by these Rules, to the satisfaction of the officer empowered by the Central Board of Revenue in this behalf, the officer shall determine the amount of duty payable in respect of such goods in his discretion : ' Provided that, if the officer is satisfied that the accounts maintained by a manufacturer show a lesser quantity of excisable goods manufactured and accounted for than should have been shown on the basis of the quantities of raw materials (including manufactured and semi-manufactured components) received by the manufacturer, he may demand from the manufacturer such amount of duty as is, in his judgment, payable by the manufacturer.

(3) Any demand for duty under sub-rule (2) shall not prejudice action under any other provision of these Rules or of the Act."

A plain reading of this rule indicates that a penalty can be imposed in terms of the above rule if a person fails to enter the required particulars in the record within the time prescribed in the relevant rules or who fails to keep such books, account or register as the case may be or fails to deliver it up to the officer on demand or who obstructs or hinders such officer in making any minute therein or taking any extract therefrom or conveys away or conceals it or destroys or tears out any leaf therefrom or makes any false entry therein or fraudulently alters any entry therein.

' In the instant case respondent No, 3 while imposing a penalty of Rs, 1 lac has not adverted to this aspect. Nor the other two respondents have applied their mind to the requirement of the above- quoted rule. It is an admitted position that during the period in question the main hotel building of the petitioner was under demolition and in fact it was sold. Respondent No, 3's department has discovered the above concession on the basis of the B record maintained by the petitioners and not from some information receive from any other source. In this view of the matter, we are inclined to hold that the levy of the above penalty to the tune of. Rs, 1 lac was not warrante by law. We would, therefore, declare the same as without lawfu authority.

6. For the aforesaid reasons, the petition is allowed to the extent mentioned hereinabove but there will be no order as to costs. PLD 1982 Kar. 244