MIAN ANWAR-UL-HAQ RAMAY Versus FEDERATION OF PAKISTAN

MUNIR A. SHEIKH, J. ‑‑‑This judgment will dispose of W.P. Nos. 2097 of 1991, 6518 of 1991 and 10732 of 1991 as common questions of raw have been raised in all of them. It shall, however, remain on the file of W.P. No.2097 of 1991.

2. In W.P. Nos. 2097 of 1991 and 6518 of 1991 the question of vires of section 19 of the Customs Act, 1969 and the validity of notification, dated 7‑7‑1991 issued thereunder whereas in W.P. No.10732 of 1992 the question of vires of section 7 of the Sales Tax Act, 1951 as amended through Finance Act No. VII of 1990 and validity of notifications, dated 27‑6‑1991 and 26‑6‑1988 alongwith notification dated 7‑7‑1991 have been raised.

3. In order to fully appreciate the controversy it is necessary to reproduce here section 19 of the Customs Act 1969 and section 7 of the Sales Tax Act, 1951, as amended through Finance Act, 1990. Section 19 of the Customs Act lays down:‑

"Section 19. General power to exempt from customs duties ‑‑‑The Central Government,. subject to such conditions, limitations or restrictions, if any, as it thinks fit to impose, may, by notification in the official Gazette, exempt any goods imported into, or exported from, Pakistan or into or from any specified port or station or area therein, from the whole or any part of the customs‑duties chargeable thereon."

Section 7 of the Sales Tax Act, 1951, as amended through Finance Act, 1990 lays down:‑

"13. Exemption‑‑‑(1) The Federal Government may, by notification in the official Gazette, exempt any taxable supplies made by a registered person in Pakistan or any goods or class of goods, from the whole or any of the tax chargeable under this Act, subject to such conditions and limitations may be specified.

(2) The Board may, by special order in each case stating the reasons, exempt any supply from the payment of the whole or any part of the tax chargeable under this Act."

Through notification dated 7‑7‑1991 impugned in W.P. Nos. 2097 of 1991 and 6518 of 1991, the Government of Pakistan, Ministry of Finance has exempted custom duty on Polyester Staple Fibre to the extent of Rs.5 per kilogram. It may be mentioned here that according to the Finance Act, 1990 custom duty at the rate of Rs.15 per kilogram had been imposed on the Polyester Staple Fibre.

4. Through notification dated 26‑6‑1988 as amended by notification dated 27‑6‑1991 the Government of Pakistan, Ministry of Finance and Economic Affairs under section 7 of the Sales Tax Act, has granted exemption from the tax payable under the said Act all goods produced or manufactured by such industries which are set up between the 1st July, 1988 and the 30th June, 1991 in the following areas:‑

(i) Province of Balochistan except in Hub Chowki area;

(ii) The North‑West Frontier Province.

It has also been provided that no tax under the said Act, would be levied on all such goods produced or manufactured by the industries set up in the Federally Administered Tribal Areas, Northern Areas administered by the Administrator, Northern Areas and Azad Kashmir during the period specified above. This notification is to remain effective for a period of eight years commencing from 1st July, 1988.

5. Learned counsel for the petitioner raised the following contentions:‑

(a) Section 19 of the Customs Act as also section 7 of the Sales Tax Act, 1951 as amended through Finance Act, 1990 are ultra vires the Constitution, for it vests in the Federal Government the power to exempt from import duty and payment of tax respectively whereas such being the legislative power and function which has to be exercised and performed by the Parliament and could not be delegated to any organ of the State.

(b) Whether section 19 squares with the Constitution, for it virtually amounts to abdication rather than delegation of the exclusive legislative power or function impermissible under the present Constitutional Scheme of things.

(c) These provisions of law arc ultra vires the Constitution for the reason that the discretionary power they confer on the Central Government to exempt any goods from import or export duty or from payment of tax is wholly uncontrolled and unfettered and the Parliament has failed to lay down any guidelines or set any parameters within which that power has to be exercised. .

(d) That the power exercised under the said provisions of law by issuing the impugned notifications has been exercised discriminately mala fide, injudiciously, inequitably and in total disregard of the equal protection‑clause of the Constitution.

(e) Section 19 of the Customs Act, 1969 in terms confers power on the Federal Government to exempt any goods from the import duty which cannot be construed so as to include reduction in the import duty, as such, no power vests in the Federal Government to reduce the import or export duty under the said section.

6. In support of these contentions learned counsel for the petitioner maintained that Article 73(2) of the Constitution of the Islamic Republic of Pakistan, 1973 provides that a Bill ~ or amendment shall be deemed to be a Money Bill if it contains provisions dealing with all or any of the matters mentioned thereunder which includes the imposition, abolition, remission, alteration or regulation of any tax from which it necessarily follows that the power to reduce custom duty which amounts to alteration of the tax and exemption from payment of whole or any part of the custom duty or the tax which in fact amounts to remission of the same, is the exclusive legislative power and function which had to be exercised and performed by the legislature itself and could not be delegated to any organ of the State, as such, section 19 of the Customs Act, 1969 and section 7 of the Sales Tax Act, 1951 arc ultra vires the Constitution as it has the effect of abdication of legislative function and power by the legislature which is violative of the express provisions of the Constitution.

7. Although apparently the argument appears to have some force but not tenable on close scrutiny of the relevant provisions of the Constitution. Article 77 of the Constitution provides that tax shall be levied by or under the authority of Act of Parliament. The framers of the Constitution in their wisdom intentionally omitted to bring within the scope of this Article the abolition, remission, alteration or regulation of any tax. There is no provision in the Constitution similar to Article 77 of the Constitution providing as a positive mandatory command that like the levy of tax, the abolition, remission, alteration or regulation of any tax levied under Article 77 should also be made only by an Act of Parliament so as to bring these matters within the scope of exclusive legislative function. Learned counsel for the petitioner has not been able to point out any such provision in the Constitution except Article 73(2) of the Constitution which provides that if a Bill contains provisions for remission, alteration etc. of a tax the same would constitute a Money Bill. This Article in our view simply defines the Money Bill and there is nothing in it that remission, alteration etc. of tax could only be made by the legislature exclusively through a Money Bill. Since in the scheme of the Constitution it is provided that a Money Bill unlike every bill has to originate in the National Assembly and after it had been passed the same has to be presented to the President for assent without being transmitted to the Senate, therefore, it was necessary to provide the definition of the Money Bill for the said purpose.

8. It is of no merits to say and it can safely be stated that Article 73(2) cannot be construed to have provided that alteration, remission or abolition like levy of tax is also the exclusive legislative power which could only be performed by the Parliament. A similar point came up for consideration in a case reported as M. Afzal & Sons v. Federal Government of Pakistan PLD 1977 Lah. 1327, in which this subject has been elaborately discussed and it was held that taxability and payability of tax are two different things, whereas imposition of tax could be made by an Act of Parliament or under the authority of any such Act whereas payment of the same could be exempted by the delegatee. The view has been upheld by the Supreme Court in judgment reported as Al‑Samrez Enterprises v. The Federation of Pakistan 1986 SCMR 1917. This question of law as to the interpretation of the Constitution having been decided by the Supreme Court the same is binding by virtue of Article 189 of the Constitution on all other Courts in Pakistan and it is not open to this Court to take a contrary view. Learned counsel for the petitioner then referred to various reported judgments from Indian jurisdiction in support of his argument but in view of the pronouncement of law made by our own Supreme Court as observed above we need not undertake scrutiny of the case‑law from Indian jurisdiction.

9. Learned counsel for the petitioner maintained that section 19 of the Customs Act and section 7 of the Sales Tax Act, 1951 confer unfettered and uncontrolled power on the executive without providing any guidelines for exercise of those powers, therefore, these provisions of law should be declared to be ultra vires of the Constitution.

10. The argument though appears to be ingenious but not tenable on close analysis. While presenting this argument learned counsel for the petitioner lost sight of the fact that we have a written Constitution which lays down expressly the scope and the limits within which the three organs of the State i.e. legislature, judiciary and executive are to perform their functions and those limits arc well‑defined and no organ of the Slate can overstep those limits in performing its functions. This being the position, the law is firmly settled that it is not for the Courts to question the wisdom of legislature in enacting provision of any law in any manner and their judicial function in this regard primarily is to confine to the interpretation of the law as it is. This, Court owes its creation to Article 175 of the Constitution, sub‑Article (2) of which provides negative mandatory command that this Court shall not have, any jurisdiction save as is or may be conferred on it by the Constitution or by C or under any law. Under Article 199 of the Constitution under which this petition has been made, this Court is vested with the jurisdiction to declare any law or any custom or usage having the force of law as void to the extent so far as it is inconsistent with the rights conferred by Chapter‑I of Part II of the Constitution known as the fundamental rights beyond which the jurisdiction of this Court to examine the vires of law in our view does not extend. Learned counsel for the petitioner has not been able to point out any prevision of the Constitution by which the legislature is required to lay down guidelines in the law to regulate the exercise of power which it confers on the executive. In the absence of any such provision, it is difficult to hold that this Court has the jurisdiction to declare any provision of law as ultra vires of the Constitution on that score. Section 12-A of Central Excises and Salts Act, 1944 which confers power on the Government to grant exemption from excise duty recoverable under the said Act in which no guidelines or condition have been laid down for exercise of said power by the Government, which provision of law is comparable to section 19 of the Customs Act and section 7 of the Sales Tax Act, 1951 came up for consideration before the Supreme Court in the cases reported as Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd. PLD 1970 SC 439 and Messrs Amin Soap Factory v. Government of Pakistan and others PLD 1976 SC 277 and the argument that the said provisions of law and the exercise of powers derived from it was improper was repelled. Further in a case reported as Zaibtun Textile Mills Ltd., Karachi and others v. Central Board of Revenue and others PLD 1971 Kar. 333 the vires of the law conferring power on the executive to recover excise duty on the basis of production capacity of the machinery installed in Textile Mill instead of recovering the same on the goods actually manufactured on the ground that the same was bad on account of excessive delegation of legislative function 'and that the same did not lay down the guidelines to regulate the exercise of the said power. The Court after elaborate survey of the case‑law held that the said provision of law was not ultra vires of the Constitution. An appeal was filed before the Supreme Court. The Supreme Court approved the view taken by the High Court in judgment reported as Zaibtun Textile Mills Ltd. v. Central Board of Revenue and others PLD 1983 SC 358. It is clear from this judgment that the main burden of argument presented on behalf of the appellant was that it was necessary for the legislature to have laid down guidelines for the exercise of the powers by the delegatee but this argument was not accepted. Reference may also be made with advantage to the rule laid down in judgment reported as Messrs Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan and others PLD 1988 SC 670 in which it was held that the delegation of power to the executive under section 18(2) of the Customs Act, 1969, for levy of "regulatory duly" on or any of the items specified in the First Schedule was not bad due to excessive delegation of the legislative function. It has been clearly held that such delegation of power did not constitute abdication of legislative function by a legislature but was a valid delegation of a discretion vested under the law. After examining the aforementioned reported case no scope is left for the argument that the provisions of section 19 of the Customs Act and section 7 of the Sales Tax Act, 1951, on account of failure of the legislature to lay down guidelines for the exercise of powers by the delegatee under the said provisions of law are ultra vires of the Constitution.

11. Learned counsel for the petitioner faced with this situation argued that any law which is capable of being applied, arbitrary, whimsically and discriminatory can be declared to be void under Article 199 of the Constitution on the ground of repugnancy to the right conferred under Article 25 in Chapter‑1. of Part‑11 of the Constitution i.e. right of every citizen to equal protection of law. It is no doubt correct that the vires of an Act can be challenged if it is shown that its provisions are ex facie discriminatory in which case actual proof of discriminatory treatment is not required to be shown. Neither section 19 of the Customs Act, 1969 nor section 7 of the Sales Tax Act, 1951 are ex facie discriminatory provisions, therefore, merely because they arc capable of being administered discriminatory cannot be declared to be E ultra vires according to the rule laid down in judgments reported as Messrs East and West Steamship Company v. Pakistan and others PLD 1958 SC 41 and Miss Benazir Bhutto v. Federation of Pakistan and another PLD 1988 SC 416.

12. Before parting with the discussion on this aspect of the case we may observe that we should not be understood to have held that the absence of any guidelines for exercise of discretionary power conferred under the Statute gives to the authority concerned a free hand to exercise the same arbitrarily and whimsically. We may state here that in our considered view to which no exception can be taken the authority is required to exercise power reasonably, justly and fairly on the basis of relevant considerations having legs: nexus with the object of law, with wisdom and maturity keeping in view above all the interest of the State. In our opinion these‑principles shall be read in the Statute as guiding principles to regulate the exercise o: powers conferred on the functionaries of the State and they are so fundamental in character that they need not be expressly provided in the Statute itself. Ch. Muhammad Farooq, the learned Deputy Attorney‑Genera; when questioned as a matter of principle did not dispute the correctness of this proposition.

13. Learned counsel for the petitioner then argued that the power under section 19 of the Customs Act, 1969 and section 7 of the Sales Act, 1951, has been exercised by the Federal Government while issuing impugned notifications, arbitrarily, whimsically and without taking into consideration the factors relevant in the matter. He also maintained that the law has been administered discriminatory inasmuch as the manufacturers of goods of such areas which are not included in the said notification have been deprived of the right to enjoy benefit of the exemption from payment of sales tax which is violative of fundamental right of equal protection of law as guaranteed by Article 25 of the Constitution. Learned counsel for the petitioner submitted that the exemption from the payment of sales tax and the import duty granted under the impugned notifications will adversely affect the petitioner who might be driven out of the market because respondent No.2 will be able to sell because of sales tax advantage its product at much cheaper price than that of the petitioner and other existing units because as a result of disparity in the costs of similar product, the petitioner's Company will not be in a position to compete with the respondent, as such, the same is calculated to cause immense loss to the petitioner.

14. The law is well‑settled by now that the citizens placed in similar situations are to be treated alike and treatment of a class of citizens, differently from another class which is not similarly situated does not offend against the fundamental right of equal protection 'of law, therefore, it could not be maintained that merely because the manufactures of goods situated in the G areas mentioned in the impugned notifications have been given different treatment from those who are not situated in that area the administration of the law is violative of fundamental right No.25. Sufficient material has been placed on the record from which it is manifest that before issuance of impugned notifications thorough and elaborate exercise was undertaken by the concerned authorities before taking a decision regarding the grant of exemption from sales tax with reference to goods manufactured in the areas mentioned in the notification. National Tariff Commission which is an advisory body of the Federal Government after thorough examination of the case recommended that the exemption should be granted which recommendation was placed before the Secretary's Committee and it was finally approved by the Economic Co‑ordination Committee which is headed by a Federal Minister. After considering the reports made by the National Tariff Commission we are not persuaded to agree with the learned counsel for the petitioner that the power in that behalf has been exercised arbitrarily, whimsically and not on relevant consideration having no logical nexus with the object of law. It may be mentioned here that while considering exercise of power under section 12‑A of the Central Excises and Salt Act, 1944 which provision of law is identical to section 7 of Sales Act, 1951 the Supreme Court in a case reported as PLD 1970 SC 439 held that it was not circumscribed by any conditions and the Court was not entitled to make its own surmises as to the propriety of reasons motivating Government issuing notification in exercise of its powers.

15. Learned counsel for the petitioner then urged that the notification under challenge under section 7 of Sales Act, 1951 is ultra vires of the said section being in conflict thereof inasmuch as the exemption is to be granted under the said provision of law with reference to goods whereas in this case the benefit is intended to be granted to the manufacturers of goods in specified areas and the exemption has also been granted with reference to areas and not the goods. According to the learned counsel if the exemption was granted with reference to goods only the benefit of the same would have been enjoyed by all the manufacturers of those goods throughout Pakistan without any discrimination on the basis of area.

16. The argument though appears to have some force but cannot stand the test of scrutiny. It has been argued by Mr. Khalid Anwar, learned counsel for respondent No.2 that under section 7 of Sales Tax Act, 1951, exemption from payment of sales tax can be granted to any goods or class of goods, and that classification of goods for the purposes of grant of such exemption could be with reference to nature of goods, the area where they are being manufactured and the persons manufacturing the same.

17. The argument of the learned counsel for the respondent No.2 has considerable force. The objections similar to those raised by the learned counsel for the petitioner were raised in relation to notification issued under section 12‑A of Central Excises and Salt Act, 1944 which is similar provision of law through which exemption from payment of excise duty levied under the said Act, was granted to laundry soap, produced without the aid of power, steam or gas subject to the condition that the manufacturers of such goods had no financial interest in any other industrial or commercial enterprises to qualify to derive benefit of the said exemption, on the ground that the exemption was not relatable to the goods because the 'benefit was intended to be given to the manufacturers in the case reported as "PLD 1976 SC 277". The Supreme Court repelled the argument by holding that whatever may be the reason behind the grant of exemption, in the ultimate analysis the impact of the exemption from payment of duty is on the manufacturer. In this case the exemption from excise duty was granted not in relation to the laundry soap as a whole but only in respect of laundry soap, produced without the aid of power, steam or gas which was upheld by the Supreme Court from which it is clear that it has been settled as a matter of rule of interpretation of the said law that for the purposes of grant of exemption from excise duty the goods can legitimately be classified with reference to those considerations. It can safely be stated that it is implied that the exemption in this case was also relatable to the area where facility of power, steam or gas was not available. In the present case the considerations which weighed with the Government to confine the exemption from payment of sales tax to the areas specified in the notification was to attract investors through this incentive to set up suitable industries as a measure of development of those regions. We have not hesitation in holding that there was no legal impediment that exemption must invariably relate to goods and not to persons. Sometimes it may he granted to provide incentive for a particular industry or business. Considering all these factors we arc fully convinced that the exercise of power in the present case does not suffer from arbitrariness and that the same has been exercised on good reasons and relevant considerations.

18. We have noticed that the authorities in order to give relief to the petitioner directed that no duty should be charged on the import of Polyester Chips. Learned counsel for the petitioner complained that it has been erroneously assumed as if the petitioner imports Polyester Chips whereas they are manufactured by the petitioner locally, as such, no benefit as a matter of fact is to be derived from the said exemption. Learned counsel submitted that an application was made that if the petitioner is intended to be given the relief then exemption from payment of duty on import of PTA and MED should be granted which are imported by the petitioner as raw material which has not received the consideration and is still pending.

19. If the Government has decided as a matter of principle to give relief to the petitioner, then it is prima facie appears to be correct that the grant of exemption from payment of duty on the import of such material should have been given which is in fact imported. The Federal Government is hereby directed to decide the aforementioned application made by the petitioner within a reasonable time and in no case later than one month from the receipt of this judgment. 1f any order is passed of which the petitioner do not feel satisfied they may seek remedy in that regard.

20. Lastly learned counsel for the petitioner maintained that the provisions of section 19 of the Customs Act, 1969 and section 7 of the Sales Tax Act, 1951 may be declared to be repugnant to the Injunctions of Islam as by virtue of Article 2‑A having been made the part of the Constitution the case should be examined by this Court from that angle. He argued that according to Islamic Injunctions there is no room for conferring any power on the functionaries of the State to exempt any person from payment of any amount recoverable for the State. There can be no cavil with the proposition that in case any law is repugnant to any express provision of the Constitution the same can be declared to be void by this Court. To invoke this principle it has to be shown that an act is repugnant to any provision of the Constitution which is express in its terms and no inquiry is required to be made m this regard. As to what are the Injunctions of Islam on this point which has been relied upon by the learned counsel for the petitioner, requires elaborate exercise in the matter, therefore, it cannot be said that the provision of law is repugnant to express provision of the Constitution, to declare it as void. In this connection it may be observed that a more suitable, appropriate and efficacious remedy lies in invoking the provisions of Chapter 3 A of the Constitution which provides complete code for getting a law declared as repugnant to the Injunctions of Islam. It may be observed that the judgments pronounced by the Federal Shariat Court and the Appellate Shariat Bench of the Supreme Court, as the case may be, under the said Chapter are self‑executory and a law which has been declared to be repugnant to the Injunctions of Islam ceases to be the law on the date fixed by the Court. The judgments pronounced under the said Chapter are comprehensive and binding on all the Courts. The petitioner may if so advised seek remedy from the Federal Shariat Court in this respect and we are not inclined to embark upon an inquiry in these proceedings.

21. For what has been discussed hereinbefore it is declared that section 19 of the Customs Act, 1969 and section 7 of the Sales Tax Act, 1951, and the impugned notifications issued in pursuance thereof are intra vires to the Constitution. The writ petitions arc dismissed with no order as to costs.

A.A./A‑163/L Petition dismissed.