2003 PLP 2867 (PTD)

7. The arguments of the learned Advocate and the learned representative of the department have been heard. So far as question of jurisdiction is concerned it may be pointed out that where an allegation of maladministration has been made and established the Federal Tax Ombudsman has jurisdiction to investigate into the matter. In Complaint No.435 of 2002 such objection to jurisdiction raised by the department was rejected. The objection of jurisdiction is overruled. It may be pointed out that the complainant has challenged the order of the Additional Collector, dated 8‑8‑2002. The complaint was filed on 9‑1‑2003 within the period of six months from the date of the impugned order. The complaint is not barred by time.

8. Now coming to the merit it may be pointed out that the Supreme Court in Civil Appeal No. 1512 of 1999, Collector, Central Excise, Customs House, Lahore and others v. Messrs Riaz Bottlers (Pvt.) Ltd. referred to subsection (2) of section 4 of Central Excises Act, 1944 rejected the appeal with the following observations: "It is quite clear from the above provisions of law that retail price of the goods/articles chargeable with duty is to be fixed by the manufacturer which would include all the charges and taxes other than the sales tax levied and collected under section 3 of the Sales Tax Act, 1990. Admittedly, the retail price is to be fixed by the manufacturer but while fixing such price he has to include all charges and taxes incurred and, payable by the manufacturer/producer and tax payable by him which are to be taken into account while fixing retail price of the goods. It is the right of manufacturer to fix retail price of the goods/articles consequently he cannot be dictated to include the chilling charges when he has not incurred in the production of saleable goods/articles. It has been conceded by the learned counsel for the appellants/petitioners that aerated water/juices are supplied to the whole‑sellers and retailers in un chilled condition consequently the chilling charges could not be included in the retail office of articles/goods sold. It has also been admitted before us that retail price is printed on each bottle or packet as required by subsection (2) of section 4 of the said Act, therefore, excise duty would be charged only on the retail price fixed by the manufacturer, considering that the manufacturer has not incurred any amount on the chilling process therefore, cannot charge the same towards the retail price to be fixed by him. The inclusion of the chilling charges towards the retail price of the article when the same is not incurred by him would be against the spirit of subsection (2) of section 4 of the said Act. Even if it be assumed that the retailers sell their aerated water/juices in chilled condition then also, because the factories supply the said beverages/juices in un‑chilled condition, the expenses incurred on chilling cannot be included in the retail price by the manufacturers. There is no logic to burden the retailers, who have to sell the articles to the consumers, with the chilling charges when the same have not been received by them to chilled condition. In the circumstances, the respondents cannot be compelled to add chilling charges not incurred by them, towards the retail price:"

9. On the basis of this judgment when the complainant applied for refund show-cause notice, dated 23‑7‑2002 was issued by the Additional Collector requiring the complainant to show why refund claimed may not be rejected on the following grounds: (i) That as Messrs Pakistan Mineral Water Bottling Plant Gadoon Amazai was not the party in the main writ petition therefore, the judgment, dated 31‑1‑2001 passed by the august Supreme Court of Pakistan is not applicable in their case. (ii) The consumer price of their product prior and after the inclusion of chilling charges has not been provided; (iii) The incidence of tax has been passed on to the consumer; and (iv) The judgment mentioned at sub‑para (i) above‑is not applicable with retrospective effect. From the grounds quoted above, particularly ground No. (i) it is clear that the Additional Collector was proceeding on incorrect presumption without considering the provision of law and Constitution regarding binding force of judgment of the Supreme Court. Under Article 189 any decision of the Supreme Court shall to the extent that it decides question of law or is based upon or enunciates a principle of law be binding on all other Courts in Pakistan. Where a Supreme Court adopts an interpretation of the provision of law or Constitution or lays down a principle of law it is binding on all Courts in Pakistan. It is not necessary that a party should be involved or be a party in the appeal or proceeding in which principle has been laid down. The authorities concerned must be aware of this principle of law but in many cases it has been observed that such objections are raised which merely waste time and energy. Such objection raised by any Officer reflects his inefficiency, lack of knowledge and proper training. C.B.R. instead of asking the department not to raise such frivolous objections remain silent, which gives encouragement to the officials working under it.

10. Further objection that the above judgment of the Supreme Court is not applicable is again an incorrect and illegal enunciation of principle of law. Where a point of law has been decided by the Supreme Court it is binding in all cases and does not operate only prospectively. Further more, the contention of the department that in the judgment, of the Supreme Court section 3D was not considered is completely irrelevant. The principle of law as enunciated by the Supreme Court completely answered the query raised by the department. Once it was held that the chilling charges did not comprise in the retail price the question of charging duty did not arise. Even section 3D is not relevant for the purpose of determining the controversy raised in the case: The entire order suffers from illegality and is against the judgment of the Supreme Court. In cases, where illegal orders are passed which are contrary to law and against judgment of the Supreme Court it amounts to maladministration requiring interference. In cases, where tax or duty is charged illegally it is refundable as such amounts which are not tax or, duty if recovered cannot be retained by the Government even on technical ground.

11. It is recommended that:‑‑ (i) C.B.R. set aside the order passed by the Additional Collector and direct the Collector of Sales Tax and Central Excise, Peshawar, to (a) ask the complainants to furnish the certificate from a Chartered Accountant. (ii) examine the refund claim in the light of the Chartered Accountant's certificate and affording the complainants the opportunity to substantiate the refund claim; (iii) decide the refund case within two months; and (iv) compliance be reported within three months. C.M.A./871/FTO Order accordingly.