1996 PLP 1221 (MLD)

(iv) W.P. No.1221 of 1995 recently filed in the Lahore High Court, Rawalpindi Bench in which interim orders had been passed; (v) Civil Petition No.695‑L of 1996 recently filed in the Supreme Court in which also interim orders have been passed;

8. In further support of his above contention, Mr. Muhammad Farogh Naseem has forwarded the proposition that in a fiscal tax matter once a petition is admitted the Courts as a matter of course ought to grant interim relief, since the very fact that the petition has been admitted confirms that the petitioner has made out a prima facie case. In this respect the learned counsel has placed reliance upon: ‑‑‑ (i) Inayat Hussain v. Union of India (1980) 122 ITR 227; (ii) Gulistan Textile Mills v. Federation of Pakistan 1994 PTD 58.1; (iii) Kamran Industries v. Collector of Customs PLD 1996 Kar. 68 p.100 M;

9. The learned counsel for the petitioner has further placed reliance upon a number of orders/decisions to state that while granting interim relief in a tax matter the Court ought also to consider the convenience of both parties. The Court in this regard ought not to put the petitioner on terms which are extremely onerous or which would amount to directly or indirectly making available funds, which are part of the disputed amount. The learned counsel stated that if such onerous terms are given the same would be completely against the concept of writ jurisdiction. In regard to this proposition as also by way of illustration as to how in some other tax matters the Superior Courts have granted interim relief, reliance has been placed upon:‑‑‑ (i) M/s. Usman Glass Sheet Factories Ltd. v. Assistant Collector, Customs PLD 1968 Dacca 276; (ii) M/s. Inter Ocean Cargo Services, Karachi v. Federation of Pakistan 1992 PTD 1411; . (iii) M/s. Nasir Flour Mills (Pvt Ltd., Karachi v. Federation of Pakistan 1994 PTD 1421; (iv) M/s. International Tea Traders v. Federation of Pakistan 1994 PTD 1422; (v) Pakistan Paper Products v. Income Tax Officer, C.P. No.B‑1584 of 1992; (vi) Mansoor Ali v. Federation of Pakistan C. P. No. D‑1044 of 1993 (vii) Abdul Cadir Adam Saedat v. Federation of Pakistan C.P. No.D‑122 of 1993. In the end Mr. Farogh Naseem has pressed that the idea of any interim injunction is to protect the weaker against the stronger 1987 CLC 1322 while in this case the petitioner, as assessee, a tax payer, who has placed reliance upon the Government's exemption has imported plant and machinery for its proposed project while in this case if an interim relief is not accorded great hardship would ensue, millions would be lost, feasibility of the project will be disturbed, and it is in the interest of all concerned that the interim relief be granted.

10. Mr. Farooq H. Naek, the learned Deputy Attorney‑General appearing for the respondents has vehemently opposed the listed application while propounding the following objections:‑‑‑ (a) the petition is premature as the bills of entry have neither been filed nor any assessment made thereon, while in default whereof it is not possible to determine as to whether the petitioner is entitled to the exemption under S.R.O. 484 and whether the petitioner is able to meet the conditions of the said S.R.O.

484. In this regard he has cited section 30 of the Customs Act, 1969; (b) Mr. Farooq H. Naek, the learned D.A.‑G. has further stressed that a person can only be entitled to the benefit of S.R.O. 484 if, inter alia, three important conditions stated therein are fulfilled‑‑‑ (i) the proposed plant and machinery to be imported is not locally manufactured; (ii) the imports are made before the cut off dated (i.e. 30‑6‑1995) spelt out in the S.R.O. 484; (iii) the proposed unit is to be set up in some rural area as stated in Table of S.R.O. 484; After spelling out the above conditions the learned D.A.‑G. has emphatically stressed that the petitioner has not been able to meet any of the conditions listed above in view whereof it is not entitled to the exemption under S.R.O. 484.

11. Mr. Farogh Naseem the, learned counsel for the petitioner in his reply to the objections of the learned D.A.‑G. has stated that the same are not tenable at all in that:‑‑‑ (a) Article 199 of the Constitution not only envisages an impugned action, which has already taken place but also a 'threatened action'. Furthermore, once the C.B.R. has already taken a stance by issuing 2 subsequent notifications in suppression to S.R.O. 484, it would be complete exercise in futility to wait for any assessment/order by the Collectorate who would not go against the orders of the C.B.R. In this respect reliance has been placed on:‑‑ (i) S. Abdullah & Co. v. Collector of Customs PLD 1992 Kar. 258; (ii) Balochistan Textile Mills Ltd. v. C.B.R. 1984 CLC 2192. (b) Also the very fact that the respondents have filed a counter‑affidavit to the main petition in which at various places it had been categorically stated that the petitioners are not entitled to the benefit under S.R.O. 484, the contention of the D.A.‑G. that the petition is premature since the department has not taken a decision as to whether or not the petitioner is in fact entitled to the benefit under S.R.O. 484, is completely misplaced; (c) the listed application has to be allowed since although a counter affidavit to the main petition has been filed, no counter‑affidavit to the interim application/affidavit has been moved; (d) as regards the objection of the learned D.A.‑G. that the conditions spelt out in S.R.O. 484 have not been met by the petitioner, Mr. Farogh Naseem stated that this is only an attempt to entangle the Court with facts that are neither in issue nor the same can possibly be in dispute in that‑‑‑ (i) there is no dispute that the plant and machinery in issue are not locally manufactured as the same have been confirmed by the letter of C.B.R. dated 14‑9‑1995 attached as Annexure I. Also in this regard there is no specific denial in the counter‑affidavit; (ii) there is little doubt that the petitioner's unit is proposed to be set up in a rural area i.e., District Tharparkar. In this respect the petitioner has attached letter of Government of Sindh dated 14‑12‑1989 and 15‑12‑1993 attached as Annexures A‑2 and C‑2 confirming the location, while there is no denial to that extent in the counter‑affidavit; (iii) as regards the cut off date argument put forward by the learned D.A. G. the counsel for the petitioner reiterated his argument on the front of vested rights, as summarized in paragraph 6 above.

12. I have gone through the record and analyzed the arguments of both sides. I am of the view that the contention of the learned counsel for the petitioner carries force that once a petition in a tax matter is admitted that ipso facto shows that the petitioner has made out a prima facie case, in view whereof interim relief may be granted. As regards as to what would constitute a prima facie case many decisions can be cited for the point that a prima facie case would not necessarily mean something that would definitely succeed but for which something could be said in favour by the petitioner. On this score the case of Inayat Hussain cited above and relied by the counsel for the petitioner is quite relevant. Furthermore, while examining the merits I also feel that there is a prima facie case since in the decision of Associated Trading Company Limited v. C.B.R. cited above it has clearly held that if during the pendency of an exemption notification contracts with foreign exporters are finalized the petitioner acquired a vested right to seek clearance of goods in terms of the said notification. In this respect the two orders from the Lahore High Court, Rawalpindi Bench, in W.Ps. Nos. 1174 of 1995 and 1221 of 1995 relied upon by the counsel for the petitioner are quite relevant as in both cases, the Lahore High Court while construing the same S.R.O. 484 on more or less identical facts has admitted the petition and granted interim relief while placing reliance upon the case of Associated Trading Company. Furthermore I have also perused the recent order and Memo. of the petition filed in the Supreme Court in Civil Petition No.695‑L/96 touching upon the same S.R.O. 484 where once again on more or less similar facts (i.e. that the contracts of imports have been finalized with the foreign exporters before 30‑6‑1995 and that some letters of credit have been established before that date and the remaining letters of credit established thereafter are to be construed as part and parcel of the earlier letters of credit), interim relief has been granted by the Hon'ble Supreme Court, despite the judgment in Molasses Trading v. Federation of Pakistan 1993 SCMR 1905, the import of section 31‑A of the Customs Act and that S.R.O. 484 itself spells out that the machinery has to be imported between 1‑12‑1990 and 30‑6‑1995. I have further been able to place my hands on M/s. M.Y. Electronics Industries (Pvt.) Ltd. v. Government of Pakistan 1994 SCMR 2123 where a Full Bench of the Honourable Supreme Court while continuing the interim relief has granted leave to examine inter alia, the question as to whether in comparable circumstances the doctrine of legitimate expectations can be invoked. In view of these facts as also because of the reason that the Government of Pakistan, Finance Division (Investment Wing) in 2 letters attached as Annexures C‑1 and E‑3 has confirmed that any delay is not attributable to the sponsors/petitioners and that the petitioner's project has been politically victimized, I have come to the conclusion that the petitioner has a prima facie case which warrants further probe and analysis and it would be very unreasonable to deny interim relief in C the form of release of goods till disposal of the petition, especially because the petition already stands admitted on this score vide admission orders of another Bench dated 17‑12‑1995. 13. 1 would now like to deal with the objection of the learned D.A.‑G. that the petition is premature and warrants dismissal since no bill of entry has been filed and no assessment or evaluation thereon has been made by the respondents to examine whether in the first place the petitioner is or not entitled to the sought exemption. I am of the view that this objection is not tenable. Article 199 of the Constitution clearly spells out that the High Court in a writ jurisdiction has not only the power to pass a corrective order by curing a defect in an existing order but it also has the power to prohibit a functionary from passing an illegal order. In other words the High Court under Article 199 has squarely the D power to pass a prohibitory order of restrain against a threatened action as well. Such interpretation is quite apparent from the language employed Article 199 (1)(a)(i). Also the decision reported as S. Abdullah & Co. v. Balochistan Textiles (cited above) are also quite relevant to build and extend the proposition that once the C.B.R. through a subsequent notification clearly supersedes and overrides the exemption so claimed, an attempt to get an assessment on the bill of entry or thereafter pursue the matter in the departmental hierarchy would be an exercise in futility. Furthermore, even. in the counter‑affidavit the Respondents have clearly taken the stance that the petitioner is not entitled to relief under S.R.O.

484. Accordingly, to say as suggested by the learned D.A.‑G. that the respondents have yet to decide as to whether the petitioner is entitled to the benefit under S.R.O. 484 is quite unconvincing. To wait for the department to process the bill of entry and then frame an assessment either on the bill of entry or in separate speaking order would unnecessarily delay relief. Even if the petitioner is able to secure a finalisation of the assessment of the bill of entry it can hardly be envisaged that there will be a real or any chance for petitioner to expect a relief in the departmental hierarchy. The learned D.A.‑G. has in this regard vehemently relied upon section 30 of the Customs Act for the proposition that till such time the petitioner is able to seek an assessment on his bill of entry he cannot come to this Court under Article

199. Once again I cannot subscribe to this view as no such interpretation can be borne out from the provisions of the said section

30. In the present case the petitioner has no doubt filed the bill of entry containing the requisite declarations in terms of S.R.O. 484 and attached copies to the present petition, but has not secured an assessment on/of the said bill of entry. That learned counsel for the petitioner has contended that there is nothing wrong with this course since admittedly through the departmental hierarchy no relief on this score can be sought by the petitioner and getting an assessment on the bill of entry is only a mere formality. To a question from the Bench as to what ought to be the amount or value of interim relief in the absence of an assessment on the bill of entry, the learned counsel has pleaded that the same can be determined to the satisfaction of the Collector as the calculation of the duty is not in issue. It is only the applicability or otherwise of S.R.O. 484 that this Court has to decide and knocking the doors of other functionaries in this regard is only an illusory exercise. I am of the view that there is nothing wrong with the course adopted by the petitioner who became aggrieved the moment, the subsequent notifications dated 4‑10‑1995 and 29‑10‑1995 were issued by the C.B.R. There is every indication that assessment on the bill of entry is a mere formality as is also apparent by the stance taken in the counter‑. E affidavit. I accordingly hold that the petition is not premature while in doing so I may also point out that nowhere in the counter‑affidavit has this objection been taken. The stance taken by the learned D.A.‑G. in this regard is quite at variance with the stance taken in the counter‑affidavit wherein it had been categorically stated that the petitioner is not entitled to relief under S .R.O. 484

14. The next objection by the learned D.A.‑G. that it is also a matter of dispute as to whether the plant and machinery imported by the petitioner are/are not locally manufactured, the same is also prima facie untenable. The petitioner in this regard has attached as Annexure a copy of a letter by the C.B.R. dated 14‑9‑1995 confirming that the machineries except Diesel Generating Sets (1,000 KVA) are not locally manufactured and they are to be treated as such. In this regard it may also be stated that this fact has been averred by the petitioner as ground 1(a) while there is no specific denial in the corresponding contents of the counter‑affidavit.

15. The last objection of the learned D.A.‑G. that it is disputed as to whether the proposed site of the unit is in a rural area and not falling under Table 1 of the said S.R.O. 484 is also misplaced. The petitioner has attached as Annexure B‑1 letter by Government of Sindh dated 14‑12‑1989 confirming location of the proposed sugar mill to be at Samaro/Kot Ghulam Muhammad/Umerkot in District Tharparkar. At paragraph 2 of the Memo: of the petition this fact has been alleged which has been admitted in the corresponding paragraph 4 of the counter‑affidavit. Prima facie the fact that the proposed unit of the petitioner falls in a rural area and does not fall in any of the areas mentioned in Table 1 of S.R.O. 484 is quite apparent.

16. The question which warrants consideration is as id' what should be the terms given to the petitioner while granting them interim relief. The learned counsel for the petitioner has submitted that the Court ought to take judicial notice of the fact that it is very onerous for the assessee to arrange a bank guarantee since the same can only be arranged by coming up with a 100 % cash margin or collateral. This argument of the learned counsel for the petitioner carries force since there are decisions of our own superior Courts (including PLD 15168 Dacca 276) wherein it has been held that any appeal to a departmental hierarchy conditional upon deposit of the outstanding amount is not an efficacious remedy and the assesses can directly approach the High Court in a Writ Petition. Applying the same analogy I feel that the Courts while granting interim relief in a tax matter ought to consider that it would be completely against the concept of writ jurisdiction to give such terms to the assessee which would amount to directly or indirectly depositing the demand amount. If the assessee is an identifiable person and also holds assets it can be asked not to sell or dispose of that property whereon some lien or charge can be created or otherwise the assessee can be asked to arrange an insurance guarantee to the satisfaction of Nazir of the Court according to the directions given by the Hon'ble Supreme Court in Trustees of Port of Karachi v. Manzoor Sons Corporation 1993 SCMR 69.1 have also noticed that in income‑tax matters since the assessees are associated with the exchequer not only in a one‑off transaction the Courts have been willing to grant unconditional stays. In the end a lot would depend upon the facts and nature of each individual case and the above are only some guidelines. Although I was inclined to direct release of goods upon submission of an insurance guarantee to the satisfaction of Nazir and/or upon an undertaking of the petitioners that till disposal of the petition the factory shall not be sold, however, in identical petitions the Lahore High Court in W.P. No.1174 of 1995 and W.P. No.1221 of 1995 has granted an interim relief by directing the respondents to release goods in terms of S.R.O. 484 subject to the petitioner furnishing an idemnity bond for the disputed amount. Interestingly, in another identical matter, the Lahore High Court directed the petitioner to submit a bank guarantee instead of indemnity bond while on appeal in that matter the Supreme Court through order, dated 11‑2‑1996 in Civil Petition No.695‑L of 1996 modified the order of the Lahore High Court and directed release of goods on furnishing of indemnity bond to the satisfaction of Collector of Customs.

17. As the Honourable Supreme Court has already taken the view on a similar matter we feel bound to offer the petitioner the same terms. It would not be out of point to cite Ashique Hussain v. The State PLD 1994 .SC 879 wherein a Full Bench of the Supreme Court has sternly admonished the Courts below to follow the decisions of the Supreme Court. Accordingly the respondents are directed to release the goods of the petitioners as per list enclosed as Annexures F‑3 and F‑4 (i.e. for goods where contracts are finalized prior to 30‑6‑1995 of F the petition in terms of S.R.O. 484(1)/92, dated 14‑5‑1992 upon. the petitioner submitting an indemnity bond to the satisfaction of the Collector of Customs. In view of the delay occasioned in‑ disposing of the listed interim application we G direct the Collector of Customs to comply with the instant order as expeditiously as possible without any further delay.

18. Before parting, it is needless to mention that the observations herein above are tentative. (Sd.) Ghous Muhammad, J. 21‑3‑1996 Application under Order 39, Rules 1 & 2 read with section 151, C.P.C. (C.M.A. No.5039 of 1995) is allowed in the terms and to the extent indicated below: (a) The respondents are directed to release the goods of the petitioners as per list enclosed as Annexures F‑3 and F‑4 (i.e. for goods . where contracts are finalized prior to 30‑6‑1995) of the petition in terms of S.R.O. 484(1)/92, dated 14‑5‑1992 upon the petitioner submitting an indemnity bond to the satisfaction of the Collector of Customs. In view of the delay occasioned in disposing of the listed interim application we direct the Collector of Customs to comply with the instant order as expeditiously as possible without any further delay. (b) The office is directed to fix the matter for regular hearing within three months hereof. A.A./T‑2/K Order accordingly.