CRESCENT PAK. INDUSTRIES (Pvt.) LIMITED vs GOVERNMENT OF PAKISTAN and others

WAJIHUDDIN AHMED, J.--The petitioner, an industrial importer, in the context of indents dated 30- 4-1988, obtained an import licence dated 29-5-1988 for import of Tallow from Sydney. Letters of Credit, for such import, were opened on 18-6-1988 and Bills of Entry were filed on 10-8-1988. While, earlier on, under an Exemption Notification, dated 29-5-1986, Tallow, covered by PCT Heading 15.02- A, was exempt froth Sales Tax, Notification dated 26-6-1988, issued under section 7 of the Sales Tax Act, 1951, altered that situation, posting withdrawal of such exemption and introducing Sales Tax at 12-1/2%.

2. Petitioner's contention is that on its making firm commitments and making disbursements through Letters of Credit dated 18-6-1988, vested rights had come into being and Notification dated 26-6-1988 could not be applied so as to take away such vested rights. Mr. Abdul Sattar Memon in support relies on Al---Samrez Enterprise v. The Federation of Pakistan (1986 SCM R 1917) and Punjab Steel Ltd. v. Deputy Collector of Customs (PLD 1989 Lah. 237).

3. For the respondents Mr. Asim Afzal places reliance on the decision of this Court in the case of Yasin Sons (PLD 1989 Kar. 361) where construing the newly inserted section 31-A in the Customs Act, 1969, it was observed that by introducing such provision the legislature intended to offset the effect of the decision in the case of Al-Samrez Enterprise which, as a result, stood negatived. It was further observed that mere curative measures, with a view to remedy the consequences of declarations of law made by the superior Courts, through legislative action, did not render the legislative exercise invalid unless some constitutional provision was, in the process, violated. We would, however, like to add that the legislative measure would, in such context, also, be bad if it transgresses or impinges upon a constitutional guarantee or a Fundamental Right. On these premises, it is further urged that section 3(5) of the Sales Tax Act, in relation to recovery of Sales Tax, applies the provisions of the Customs Act, pursuant whereto the operative part of the Customs Act has become applicable in the context of Sales Tax, as well, thereby also involving the operation of the newly inserted section 31-A in the Customs Act to t-he levies of Sales Tax under the Sales Tax Act. In consequence, the contention is that no vested right in relation to Sales Tax also can be claimed such as one that may be hit by section 31-A of the Customs Act, 1969.

4. There is little to argue on the point that the Sales Tax Act of 1951 and the Customs Act of 1969, though taxing statutes, operate in different fields. To our minds what section 3(5) of the Sales Tax Act, 1951, achieves is the introduction of machinery operating under the Customs Act to realizations under the Sales Tax Act, as well. There is a clear d1stinction between charging provisions of a statute and the machinery part thereof. It is axiomatic that mode and manner of recovery does not alter the nature of a tax nor can a tax be introduced or imposed by implication. We are clear in our minds that it is only payability which is covered by section 3(5) of the Sales Tax Act and not the imposition or levy of Sales Tax, which is provided for elsewhere in the Sales Tax Act itself. Merely, because of the invocation of section 3(5) of the Sales Tax Act and the application of the Customs Act, 1969, pursuant thereto Sales Tax is not divested of its inherent attributes and does not become Customs duty and, therefore, the introduction of section 31-A in the Customs Act, cannot take away vested rights under the Sale Tax Act and does not make any difference whatever on that score.

5. The above conclusion is strengthened on the language of section 31-A of the Customs Act itself.

Nowhere in that provision the word "tax" is found to be employed and throughout the tenor of the provision the legislature has and obviously on purpose, chosen to use the expression duty or duties by which nomenclature is underscored a limitation to specified duties only and not to any tax going by that name, such as Sales Tax. This also stands to reason as the protection against vested rights, if otherwise lawful, was considered in the context' of Customs Act only which deals with specific duties alone. For this reason, cover was not intended to be extended to any other rights falling under a different statute not mentioned in section 31-A ibid. It is manifest therefore, that section 31-A has no nexus with Sales Tax levied under the Sales Tax Act, 1951.

6. On the above rationale, the dictum of the Supreme Court of Pakistan, in Al-Samrez Enterprise's case and the principle underlying the same un-escapably applies to this case, since the application of the doctrine invoked thereunder was not limited to Customs duty alone. No vested rights of exemption in relation to the levy of Sales Tax can, accordingly, be affected adversely once the same have matured and come to occupy the field. The withdrawal of exemption, therefore, under section 7 of the Sales Tax Act w.e.f. 26.6.1988 could not be given effect to retrospectively so as to infringe petitioner's rights, which on payment and opening of Letters of Credit, on 18-6-1988, had duly been established. Even otherwise, it is well settled that a notification operates only prospectively and not retrospectively. The imposition of Sales Tax, by withdrawal of exemption through Notification dated 26-6-1988, thus, can only be prospective and not retro-active.

7. The foregoing were our reasons for the short order dated 18-9-1989 in virtue whereof the above petition stands allowed.