2003 PLP 1236 (CLC)

TANVIR BASHIR ANSARI, J.

Pakistan. Tobacco Company Limited purchases green Tobacco leaves from the grower which are taken to its Factory at Akora Khattak statedly for drying purposes where-after the stems of these leaves are cut and the leaves are packed into bales and, transported to the Cigarette manufacturing unit of the appellant at Jhelum for further processing cutting shredding and blending for use in the manufacture of Cigarettes. The claim of the appellant is that since 1981 the aforesaid Tobacco Leaves before they are further processed for making Cigarettes have continuously been treated as un-manufactured Tobacco leviable to Octroi under item 30 of the Schedule for Octroi charges issued by the Municipal Committee Jhelum. To be more specific these, dried tobacco leaves are described in the schedule as under:-- This according to the appellant is to be distinguished from the manufactured Tobacco described as ("ﺍﻮﻫﺎﻧﺒﻮﻛﺎﺒﻣﺗ") which is leviable to Octroi duty under item 31 of the said schedule.

2. The grievance of the appellant is that from 17-9-1997, the Contractor appointed for recovery of Octroi insisted to charge Octroi on the dried Tobacco Leaves under item 31 of the Schedule of Octroi charges on the ground that even at this stage of preparation (drying The Green Tobacco leaves) cutting their stems and packing them in bales amounts to subjecting these-leaves to a manufacturing process. The act of the Contractor was assailed inter alia on the grounds that the Specie of the dried tobacco leaves does not fall within the category of manufactured tobacco as contemplated in item 31 of the schedule and that in any event these dried tobacco leaves have been consistently treated to be un-manufactured tobacco for the purpose of Octroi at least since 1981.

3. The writ petition was strongly, contested both by the Municipal Committee Jhelum and the Octroi lessee (respondent No.2). Besides asserting that dried tobacco leaves, after being treated/processed though partly in Akora Khattak. Factory of the appellant indeed fell within the purview of manufactured tobacco and was liable to be taxed as such for Octroi purposes, it was also contended that in exercise of writ jurisdiction. It was not open to this Court to undertake a fact-finding inquiry as to what in fact was the subject-matter which was subjected to Octroi duty by the respondents.

4. It was strenuously urged that the alternate remedy of an appeal was available to the appellant under West Pakistan Municipal Committees (Octroi) Rules, 1964 as well as under section 166 of the Local Government Ordinance 1979 and that in such situation a writ petition was not competent.

5. After hearing both the parties the learned Judge in Chamber held that controversy in hand was of such a nature which could not be resolved by this Court in exercise of its Constitutional jurisdiction as it would entail a detailed examination of fact.

6. The learned Single Judge was of the view that the nature and extent of process carried on at Akora Khattak Factory of the appellant was a question of fact which could be decided only after carrying out extensive factual inquiry. It was observed that after the purchase of Green Tobacco Leaves, the same are dried through a mechanical process, the stalks of leaves are cut/separated, the leaves are graded and lacked for transportation. Whether this process amounted to converting the tobacco leaves into manufactured tobacco or not was left to be decided in 'appropriate proceedings in appeal/representation before the departmental authority. The writ petition in view of the above was found to be incompetent and was dismissed as such.

7. Mr. Farrukh Javed Parini, Advocate for appellant has contended that the right to collect the Octroi was granted on lease by the respondent No.1 to respondent No.2 and that the appellant was aggrieved of the demand of Octroi made by respondent No.2 whereby un-manufactured tobacco was being assessed to Octroi under item 31 of the schedule. He made reference to a Division Bench Judgment of Quetta High Court titled Al-Hamza Ship Breaking Co. Karachi v. Government of Balochistan and 2 others 1997 MLD 635 to contend that no appeal under rules 48 and 216 of the West Pakistan Municipal Committee Octroi rules 1964 was competent when the demand of Octroi was made by Contractors to whom the right of collection of Octroi has been leased out by Municipal Committee. He contended that in such a situation no remedy alternate to writ jurisdiction was available to the appellant. According to him the writ petition was competent and so is the instant Intra-Court Appeal.

8. It is next contended that items 30 and 31 of the schedule of Octroi charges deal with different matter and material and thus provide for charging of different leviable Octroi duty. Whether the goods are to be classified under item 30 or item 31 is not a pure question of fact and is a mixed question of fact and law. The learned counsel for, the appellant seeks to challenge that portion of the judgment of the learned Judge in Chamber, wherein, it has been held that the question involved is a pure question of fact upon the strength of dictum laid down by the Hon'ble Supreme Court in Collector of Customs, Customs House, Lahore and 3 others v. Messrs S.M. Ahmed and Company (Pvt.) Limited Islamabad 1999 SCMR 138 where classification of goods was held to be a mixed question of law and fact and not a question of fact alone.

9. It has also been contended that right from 1981 the respondent has been treating the dried tobacco leaves as falling under items 30 of the schedule and has been found leviable to Octroi Tax under the said item, According to him respondent cannot be allowed to change the long standing commercial practice at their own whim regarding the levy or chargeability or assessment of Tax liability of a particular item. Reliance is placed on Super Industries (Pvt.) Ltd. v. Central Board of Revenue and others 2002 PTD 955.

10. As to what amounts to "manufacture" and whether the process carried out in the Akora Khattak Factory converts the Green Tobacco Leaves into commodity different from its original substantial identity, the case of Commissioner of Income Tax. v. Lucky Mineral (Pvt.) Ltd. 1999 PTD 1004 was referred where the cutting of boulders into slabs through the aid of machinery was considered to be a process whereby the original commodity (boulders) were held to retain its continuing substantial identity through the processing stage.

11. On the other hand, Mr. Mehmood Ahmed Choudhry, Advocate and Syed Yousaf Ali Shah, Advocate for respondents vehemently opposed the appeal on the ground that the Constitutional jurisdiction was not available to the appellant as adequate and alternate remedy in the shape of appeal/representation was available to the appellant. It was contended that the learned Single Judge was fully justified in holding that the question raised by the appellant in writ jurisdiction was in fact a matter which could not be resolved without a factual inquiry for which only an appeal before the competent authority was the appropriate remedy. The learned counsel placed reliance upon Malik Akbar Khan and another v. Zila Council, Sargodha and another 1989 MLD 4761; ICT Pakistan Ltd. Soda Ash Works, Khewra District Jhelum v. Zila Council Chakwal through Chairman and another 1993 MLD 32 and Messrs Shifa Medico v: The Metropolitan Corporation of Lahore and another 1990 SCMR 639 to contend that in disputes relating to charge of Octroi etc. the Constitutional petition was rightly dismissed on the grounds that without availing of an appeal or representation, the invocation of writ jurisdiction was not competent.

12. After hearing both the learned counsel and perusing the record we are of the view that un-manufactured tobacco ("ﺍﻮﻫﺎﻧﺒﺮﻴﻐﺒﻮﻛﺎﺒﻣﺗ") must be distinguished from "manufactured tobacco" or "cut tobacco'" ("ﺍﻮﻫﺎﻧﺒﻮﻛﺎﺒﻣﺗ"). From the grower the green tobacco leaves are subjected to various processes which ultimately culminate in the product known as cut tobacco i.e. ("ﺍﻮﻫﺎﻧﺒﺮﻴﻐﺒﻮﻛﺎﺒﻣﺗ"). The green tobacco leaves may be subjected to a mechanical process whereby the said leaves are dried separated from their stalks/stems graded and packed for transportation for onward transmission to the Cigarette manufacturing unit. The said tobacco leaves can rightly be classified as ("ﺍﻮﻫﺎﻧﺒﺮﻴﻐﺒﻮﻛﺎﺒﻣﺗ") as it has to undergo further transformation inside the cigarette manufacture unit. It is then that tobacco is cut shredded and blended making the same fit for use in cigarettes. It is this commodity which can rightly be described as ("ﺍﻮﻫﺎﻧﺒﻮﻛﺎﺒﻣﺗ")". The very fact that under item 30 the rate of Octroi is Rs.8.66 per 100 K.Gs. as against Rs.23.96 per 100 K.Gs of commodity under item 31 would show that there is a marked difference between un-manufactured and manufactured tobacco as far as levialbe Octroi duty is concerned. It is only the tobacco in the shape and form of manufactured tobacco which can be used in manufacturing cigarettes. It cannot be urged that the tobacco which emerges from the processing plant from its Akora Khattak Unit is in the shape and form which can be used directly in the manufacture of cigarette without further process.

13. We also find force in the submission of the learned counsel for the appellant that different classification of un-manufactured and manufactured tobacco in Octroi schedule dates back to the year 1981 and that the, appellant has been continuously paying Octroi on dried tobacco under classification of un-manufactured tobacco from 1-7-1981 to 16-9-1997. The reliance placed upon the case of Super Industries (Pvt.) Ltd. v. Central Board of Revenue and others 2002 PTD 955 (Supra) is apt in the circumstances. The respondents cannot be allowed the shifting of position in respect of the same product particularly when such change of practice and, version acts to an unprecedented benefit to the charging authority and disadvantage to the Taxpayer.

14. There is considerable force in the submission of the learned counsel for, the appellant that classification of goods was not always a pure question of fact. Where chargeability of Tax is concerned such classification assumes the status of a mixed question of law and fact.

15. We are also not unmindful of fact that there is no specific order passed by the Municipal Committee Jhelum to, charge Octroi from the appellant under item 31 of the schedule.

16. On the other hand, it is an admitted position that Municipal Committee Jhelum has awarded the contract to collect Octroi to respondent No.2 as a lessee. There appears to be force in the submission of the learned counsel for the appellant that the demand of excessive Octroi was made by the contractor whom the right of collection of Octroi has been leased out and that to such circumstances no alternate remedy by way, of an appeal or representation was available to the appellant and, that his writ petition was competent.

17. In the light of the above, we allow this Intra-Court Appeal and hold that writ petition of the appellant was competent and the act of the respondents in charging Octroi duty from the appellant under item 31 of the schedule for Octroi charges issued by Municipal Committee from 17-9-1997 is without lawful authority. Parties to bear their own costs. S.M.B./P-138/L Order accordingly.