2022 PLP 585 (PTD)

MUHAMMAD NAEEM ANWAR. J.

Through this single judgment, we intend to decide the instant and the connected Reference Applications, as in all these Reference applications, identical questions of law are involved. The particulars of the connected Reference Applications are tabulated at the end of this judgment.

2. These Custom References have been filed by the applicants under section 196 of the Customs Act, 1969 (The Act), for determination of the following questions of law: - "Questions of law: i. Whether as per facts and in the circumstances of the case, the Federal Government through Notification SRO.499(I)/2013 dated 12.06.2013 has exempted customs duty, sales tax and withholding tax on import of new Hybrid Electric Vehicles (HEVs) to the extent specified in column (3) of the Notification? ii. Whether as per facts and in the circumstances of the case, "The Tribunal" has wrongly held that old imported Hybrid Electric Vehicles (HEVs) imported by respondent No.1 is entitled for the exemption notified under Notification SRO.499(I)/2013 dated 12.06.2013? iii. Whether as per facts and in the circumstances of the case, the old and used vehicle imported by respondent No.1 has wrongly been extended the benefit of SRO.499(I)/2013 dated 12.06.2013 by "The Tribunal" committing gross illegality? iv. Whether as per facts and in the circumstances of the case, where it is discovered as a result of an audit or examination of importer's documents, that any duty, taxes or charge has been short levied, the importer can be served within five years with notice under section 32(3A) of "The Act" requiring him to pay the amount specified in the notice? v. Whether as per facts and in the circumstances of the case, the adjudicating authority has correctly issued notice to the importer and customs clearing agent under section 32(3A) of "The Act" 1969 read with section 3(1) of the Imports and Exports (Control) Act, 1950, section 31(b) of the Sales Tax, 1990, section 148 of Income Tax Ordinance, 2001 having wrongly availed exemption of SRO.499(I)/2013?

3. Summarized facts of the instant petition as per contents of the show cause notice, issued by the Deputy Collector, Collectorate of Customs (Adjudication) Islamabad, Camp Office, Custom House, Peshawar dated 04.09.2019 bearing No. DC(Adj:) 862/Dry Port/40/2019/2717 are that the Principal Appraiser Customs Dryport, Peshawar vide Circular No. Cus/POP-5946- Cus/259 dated 22.08.2019 reported that audit of the office of Deputy Collector Customs (Imports) Dryport, Model Customs Collectorate, Peshawar for the financial year 2017-18 led to the disclosure that Hybrid Suzuki Hustler / Wagon-R/(660cc), used Hybrid Mazda Flair Cross-over (660cc) and used Suzuki IGNIS (1248cc) were cleared on a leviable duty and taxes by granting 50% exemption from duty and taxes in term of SRO No.499(I)/2013 dated 12.06.2013 and since, the SRO is applicable to Fully Hybrid vehicles which have larger batteries and enough power to drive the vehicles for certain period of time as such, this benefit is not applicable to those Hybrid vehicles which do not have larger batteries and not to produce enough energy for driving the vehicles. Thus, the Custom authorities have ignored these facts and released used imported Semi Hybrid vehicle and granted the benefit of the SOR ibid to importers. For non-applicability of SRO ibid, the Collectorate of Customs has made reliance on Circular vide C.No.SI/MISC/102/2018-VII dated 05.10.2018, by which, the respondents of the instant Reference and the others of connected References have committed violation of section 32(3)(a) of the Custom Act, 1969 read with section 3(1) of Import and Export Control Act, 1950, section 3(1)(b) of the Sales Tax Act, 1990, section 148 of the Import Tax Ordinance, 2001 punishable under Clauses 1(i), 4 of subsection (1) of section 156 of the Customs Act, 1969 read with section 3(3) of the Import and Export Control Act, 1950, Section 33(5) of the Sales Tax Act, 1990 and Clause 1(15) of section 182 of the Income Tax Ordinance, 2001. The respondent was directed to deposit the short-paid amount pointed out by the audit team amounting to Rs.161,830/- into the Government Treasury but he failed. Likewise, the respondents of the connected reference applications have also not paid the amount pointed out in the show-cause notices and the matter was then submitted before the Deputy Collector of Customs (Adjudication) who vide Order-in-Original No.1366/2019 dated 03.12.2019 held that benefit of SRO No.499(I)/2013 dated 12.06.2013 was wrongly extended and ordered for recovery of Rs.161,830/- along with imposition of penalty of Rs.15,000/- on importer and Rs.25,000/- on clearing agent. Aggrieved from the said order, respondent of the instant reference and the respondents of the connected reference applications have filed separate appeals before the Collector (Appeals). The learned Collector Customs (Appeal) while dismissing the appeals of the respondents on the grounds mentioned in show-cause notice has also added the reference to the circular dated 05.10.2018 issued by the MCC Appraisement-West, Group-VII, Karachi bearing No.SI/Misc./ 102/2018-VII by interpreting SRO No.499(I)/2013 that the phrase Hybrid Electric Vehicles (HEVs) mentioned in the ibid SRO shall be read as "Fully Hybrid" and not "Semi Hybrid". The respondents being aggrieved from the dismissal of their appeals vide Order-in-Appeal No.70-118/2020 dated 18.06.2020, approached the Customs Appellant Tribunal, Peshawar Bench, through their separate custom appeals, where the matter was heard on 27.08.2020 and through consolidated judgment of even date, the appeals of respondents were allowed and the orders impugned were set aside, hence, these Custom References.

4. Mr. Abdul Rauf Rohaila, Advocate appearing on behalf of the applicants contended that notification dated 12.06.2013 was in respect of the exemption of custom duty, sales tax and withholding tax to the extent of 50% in leviable duty and taxes only on the import of new Hybrid Electric Vehicles (HEVs) falling under PCT Code 87.03 specification whereof given in column No.2 mentioned in ibid notification having engine capacity upto 1800-cc. He vociferated that in show-cause notice, it was outrightly mentioned that the ibid notification pertains to new vehicles whereas it was observed in show-cause notice that used Hybrid vehicles were imported by the respondents and this observation is also reflected in Order-in-Original No.1360/2019 and in Customs Order-in-Appeal No.708-118/2020, therefore, the respondents could not claim 50% exemption under the ibid Standing Regularity Order (SRO) of the year, 2013 for the reason that respondents have imported used vehicles as observed from the first ever show-cause notice issued to them and was analyzed in consonance with record, nonetheless, he added at the bar that Circular dated 05.10.2018 issued by the Assistant Collector of Customs, MCC Appraisement-West, Group-VII, Karachi can neither be considered to be an interpretation of SRO of the year 2013 nor it could be relied upon in the matter in hand. Lastly, he added that SRO ibid could only be applied besides new import cars to Fully Hybrid whereas the import of vehicles mentioned in the respective show-cause notices were Semi Hybrid as such, benefit of SRO ibid could not be extended to them.

6. Conversely, Mr. Amir Bilal, Advocate for the respondents contended that SRO ibid of the year 2013 was self-explanatory and was not required to be interpreted otherwise and that too as per their own whims, wishes and desire and the same was rightly taken into consideration by the learned Tribunal. Further he contended that Customs Collectorate (Appeals) and Collector Customs, both have relied upon the circular dated 05.10.2018 which has got no nexus with the controversy in hand, he supported the judgment and submitted that all these custom references require dismissal and the questions formulated therein may be answered in "negative".

7. We have heard the learned counsel for the parties and perused the record.

8. Before dilating upon the controversy in question, it would be appropriate to reproduce SRO No.499(I)/2013 dated 12.06.2013 which reads as under: - GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE, ECONOMIC AFFAIRS, STATISTICS AND REVENUE (REVENUE DIVISION) *** Islamabad, the 12th June, 2013. NOTIFICATION (Customs, Sales Tax and Income Tax) S.R.O. 499(I)/2013.- In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), clause (a) of subsection (2) of section 13 of the Sales Tax Act, 1990 and sections 53 and 148 of the Income Tax Ordinance, 2001 (XLIX of 2001), and in suppression of Notification No. S.R.O. 607(I)/2012, dated the 2nd June, 2012, the Federal Government is pleased to exempt customs duty, sales tax and withholding tax on import of Hybrid Electric Vehicles (HEVs) falling under PCT Code 87.03, specified in column (2) of the Table below, to the extent as specified in column (3) thereof, namely:- TABLE S. No Engine Capacity Extent of exemption in leviable duty and taxes (1) (2) (3) 1 Upto 1800 CC 50% 2 From 1800 cc to 2500 cc 25% This notification shall take effect from the 13th day of June, 2013 (Mohammad Riaz) Additional Secretary and similarly the Circular dated 05.10.2018, which for convenience is reproduced as under: - GOVERNMENT OF PAKISTAN MODEL CUSTOMS COLLECTORATE OF APPRAISEMENT WEST CUSTOM HOUSE, KARACHI No.SI/MISC/102/218-VII dated 05.10.2018 CIRCULAR It is for information of all concerned that the benefit of exemption from custom duties, sales tax and income tax on import of Hybrid Electric Vehicles (HEVs) under S.R.O. 499(I)/2013 dated 12.06.2013 is only available and extended to Fully Hybrid Vehicles. Only those vehicles are termed as Full Hybrid, which have larger batteries and motor to drive the vehicle on EV (Electric Vehicle) made for certain period of time. The concession under aforesaid S.R.O is not being extended to any other vehicle claimed to be HEV like Mild/Micro Hybrid vehicles. (Raissa Kanwal) Assistant Collector of Customs MCC Appraisement-West Group-VII

9. The term "Hybrid" is quite simple, as Hybrid combines at-least one electric motor with a gasoline engine to move the car, and its system recaptures energy via regenerative breaking. The result is less gasoline burned and therefore, better fuel economy. Adding electric power can even boost performance in certain instances. Collin's Dictionary defines "Hybrid Vehicles" as a vehicle using two different forms of powers, such an electric motor and an internal combustion engine, or an electric motor with a battery and fuel cells for energy storage. Whereas, Semi Hybrid vehicle may be defined as "a vehicle that has a higher degree of hybridization then a simple start-stop system but cannot operate in full electric mode." In markets the vehicles available are micro hybrids, semi hybrids and fully hybrids.

10. It is undisputed that the vehicles imported by the respondents having engine capacity less than 1800-cc, the phrase used in the ibid SRO is withholding tax on import on Hybrid vehicles with the specification of PCT Code No.87.03 and the term Hybrid Electric Vehicles (VECs) was neither particularized as fully or Semi Hybrid and similarly, used or new, at the time of issuance of Standing Regulatory Order (SRO). The controversy in the matter in hand in the result of interpretation of SRO, as intended at first instance through circular dated 05.10.2018 and other by the learned counsel for applicants whereas, interpretation according to Salmond, is the process by which the court seeks to ascertain the meaning of the legislature through the medium of authoritative forms in which it is expressed. In law, interpretation refers to exposing the true sense of the provisions of the statutes/ notification/regulations and to understand the exact meaning of the words used in any text. Interpretation refers to the linguistic meaning of the legal text. In the case where the simple meaning of the text is to be adopted then the concept of interpretation is being referred to. The first rule of interpretation is Literal or Grammatical Rule, according to which the words used in the text are to be given or interpreted in their natural or ordinary meaning. After the interpretation, if the meaning is completely clear and unambiguous then the effect shall be given to a provision of a statute regardless of what may be the consequences. While interpreting SRO or law or any clause of it, only the plain meaning shall be construed without adding any meaning not mentioned therein because addition or subtraction or interpreting it otherwise would negate the spirit of law and if it is allowed then every authority, official or officer shall interpret any clause of law as per his own philosophy which is neither permissible nor lawful.

11. Besides, when SRO relates to Hybrid Electric Vehicles, it does contain new or used, kind of vehicles i.e., used or new could be gathered from import policy of the respective year when the vehicles in question were imported by the respondents. Insofar as, the applicability of the circular dated 05.10.2018, is of two folds, firstly, as to whether SRO requires to be interpreted by any officer and that too without having any legal sanctity attached to it, authority vested in it or powers delegated. Admittedly, the issuance of circular by Model Custom Collectorate of Appraisement (West), Karachi would amount to classify Hybrid vehicles and the extension of SRO to any specific class of vehicle i.e., fully Hybrid was not within the domain of authority rather it can be either by direct legislation or by delegated and in case of any ambiguity it shall be interpreted by the Court. Likewise, the contention of the learned counsel for the applicants that SRO relates only to new vehicles and could not be extended or applied for exemption of tax, custom levy of tax to the specification mentioned in column No.2 is also misconceived. Neither the specification of the vehicles i.e., Fully Hybrid or Semi nor new or used was given in the standard regulatory order while issuing SRO of the year 2013, therefore, in such an eventuality, neither the Model Custom Collectorate of Appraisement (West), Karachi nor the learned counsel for the applicants could interpret it otherwise. It is by now well settled principle of law that when the law requires a thing to be done in a particular manner, it must be done in that manner and not otherwise especially the principle enunciated in the judgment of the Apex Court in case titled "Muhammad Hanif Abbasi v. Imran Khan Niazi and others" (PLD 2018 SC 189), it was ruled by the apex Court that it is settled law that where the law requires something to be done in a particular manner, it must be done in that manner. Another important canon of law is that what cannot be done directly cannot be done indirectly. Secondly, the date of issuance of the circular is of worth consideration i.e., 05.10.2018 whereas the vehicles in question were imported earlier to 2017 as reflected in the audit report for the year 2017/18 by alleging therein violation of section 3(1) of the Import and Export (Control) Act, 1950 etc., thus, the circular dated 05.10.2018 could not be given retrospective effect. It is well established principle of interpretation of statutes, notifications, executive orders that they would not operate retrospectively unless they expressly provide for retrospective operation. The Hon'ble Supreme Court of Pakistan in the case of "Hashwani Hotel Ltd. v. Federation of Pakistan" (PLD 1997 SC 315) has enunciated that the interpretation of notification and / or an executive order will be operated prospectively and not retrospectively. This principle is equally applicable to a Statute in the absence of any express or implied intendment contrary to it. Hence when it is clear that notification / circular of an authority (even if equipped with powers) cannot be given retrospective effect when the same itself was issued on 05.10.2018 whereas, the import of the vehicles was made earlier to the issuance of circular. In the case of "Anode Power Generation Ltd. and others v. Federation of Pakistan and others" (PLD 2001 SC 340) it was held by the apex Court that "notification cannot operate retrospectively and benefits and advantages if already accrued in favour of a party during substance of a notification or available to the party unless the same is amended or rescinded. Where the notification has been used for the benefit of the subject then the same can be made operative retrospectively but if its operation is to the dis-advantage of party who is the subject of the notification then the same would operate retrospectively. Reliance can be placed upon "Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 6 others" (PLD 1997 SC 582), "Federation of Pakistan v. Shaukat Ali Mian and others" (PLD 1999 SC 1026) and "Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan" (1992 SCMR 1652).

12. More particularly, there is no cavil with the legal proposition that the notification which confers a benefit or right to a person can be given retrospective effect, whereas the notification which disturbs or impairs a vested right of a person or creates a new liability cannot be applied retrospectively in absence of a legal sanction to that effect. The Honorable Supreme Court in the case reported as (2012 SCMR 1698) (Collector of Customs, Lahore and others v. Mrs. Shahida Anwar) while dealing with the Import Policy Order has once again held that where a notification confers a right to a person, the same ought to have been given effect retrospectively. Therefore, we are of the view that since SRO No.499(I)/2013 was beneficial notification where it allowed exemption in leviable duty and taxes @ 50% on the import of Hybrid Electric Vehicles (HEVs), hence, it cannot be interpreted for addition of "old" or "new", "fully" or "semi" and the Customs Appellate Tribunal, Peshawar Bench has rightly set at naught the findings of the fora below and allowed the appeals.

13. In view of the above discussion, questions formulated in all the Reference Applications are answered in "negative", in favour of respondents against the applicants, as such, the instant Reference and the connected Reference Applications are dismissed. The Registrar of this Court is directed to send copy of this judgment under the seal of the Court to the Tribunal for information. Particulars of connected Reference Applications:

1. Customs Reference No.270-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Waseef-Ullah and another"

2. Customs Reference No.271-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Akhtar Badshah and another"

3. Customs Reference No.272-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Aurangzeb Khan and another"

4. Customs Reference No.273-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Fazal Rahim and another"

5. Customs Reference No.274-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Niaz Ali Shah and another"

6. Customs Reference No.275-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Muhammad Kashif and another"

7. Customs Reference No.276-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Javid Khan and another"

8. Customs Reference No.277-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Ansar Ali and another"

9. Customs Reference No.278-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Inamullah and another"

10. Customs Reference No.279-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Pir Muhammad and another"

11. Customs Reference No.280-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Noor Taj and another"

12. Customs Reference No.281-P/2020 "Collector of Customs, Model Customs Collectorate, Peshawar v. Khalil Ahmad and another.

13. Customs Reference No.282-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Ghulam Qadir and another.

14. Customs Reference No.283-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Yaseen Khan and another.

15. Customs Reference No.284-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Ali Akbar Shah and another.

16. Customs Reference No.285-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Irfan and another.

17. Customs Reference No.286-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Bakht Zaman and another. 18 Customs Reference No.287-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Usman Khan and another.

19. Customs Reference No.288-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Ali Rahman and another.

20. Customs Reference No.289-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Suleman and another.

21. Customs Reference No.290-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Ikramullah and another.

22. Customs Reference No.291-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Ali Khan and another.

23. Customs Reference No.292-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Fazal Subhan and another.

24. Customs Reference No.293-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Said Malook Jan and another.

25. Customs Reference No.294-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Sajid Muhammad and another.

26. Customs Reference No.295-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Khalid Jan and another.

27. Custom Reference No.296-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Nizam-ud-Din and another.

28. Customs Reference No.297-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Habib-Ullah and another.

29. Customs Reference No.298-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Bawar Khan and another.

30. Customs Reference No.299-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Israr Khan and another.

31. Customs Reference No.300-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Riaz Khan and another.

32. Custom Reference No.301-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Habib-Ullah and another.

33. Customs Reference No.302-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Nabi Roz Khan and another.

34. Customs Reference No.303-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Ziarat Khan and another.

35. Customs Reference No.304-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Musa Khan and another.

36. Customs Reference No.305-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Zahir Khan and another.

37. Customs Reference No.306-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Muhammad Ismail and another.

38. Customs Reference No.307-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Zubair Shah and another.

39. Customs Reference No.308-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Said Atif Shah and another.

40. Customs Reference No.309-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Mohib Ullah and another.

41. Customs Reference No.310-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Naveed Jan and another.

42. Customs Reference No.311-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Abdul Rabbi and another.

43. Customs Reference No.312-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Tayabullah and another.

44. Customs Reference No.313-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Anwar Ullah and another.

45. Customs Reference No.314-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Muhammad Ali and another.

46. Customs Reference No.315-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Ashraf Ali and another.

47. Customs Reference No.316-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Adil Hussain Shah and another.

48. Customs Reference No.317-P/2020 Collector of Customs, Model Customs Collectorate, Peshawar v. Asfandyar Khan and another. MH/14/P Reference dismissed.