2007 PLP 1311 (PTD)

4. The Deputy Collector of Customs (Appraisement), Bank Guarantee Cell, replied to the complaint that the importer was not entitled to duty and tax exemption under S.R.O. 279(I)/94 after the issuance of two Notifications S.R.O. 584(I)/95 and 585(I)/95, dated 1-7-1995 and 10% customs duty and 15% sales tax were leviable on the aforementioned import after 1-7-1995. The goods were released against bank guarantee and insurance guarantee and on expiry of the Constitutional period of six months and as per the condition of bank guarantee, it was encashed vide pay order, dated 4-5-1996.

5. It was submitted that issue of exemption/concession, in light of the Supreme Courts of Pakistan judgment in the case of Messrs Anoud Power Generation Limited v. Federation of Pakistan and others (PLD 2001 SC 340), was under active consideration of the Board/Law and Justice division. The question whether the date of opening of letter of credit or of filing of bill of entry should be the crucial date for application of tax exemption was yet to be decided. All such cases have been kept in abeyance and the final decision from the Attorney General was awaited. As such in terms of para. 9(2)(b) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, the matter was beyond the jurisdiction of this office.

6. The respondent further pleaded that the Supreme Court, vide order, dated 27-7-2002, on the contempt application filed by the importers, had advised them to await the decision of the Customs Authorities regarding interpretation of the Supreme Court's judgment in the case of Anoud Power Generation Limited v. Federation of Pakistan. The issue under reference being under active consideration of the Board for necessary clarification, it would be discriminatory against other importers if the refund of the Complainants was allowed/decided at this stage.

7. The complainant referred to the judgment of the Supreme Court in the Petition of Messrs Anound Power Generation Limited that the Companies which opened the L.Cs. after issuance of S.R.O. 584(I)/85, were not entitled to the benefit of S.R.O. 279(1)/94 and in the case of Messrs Shadman Cotton Mills Limited, the Court held that the notification of withdrawal of exemption would not operate retrospectively and the importers would be entitled to claim refund of the payments made against the duties and taxes not chargeable before the issue of the notification.

8. The Departmental Representative stated that the Collector of Customs (Appraisement) has sent a Letter No. W.P. 341/95-LAW(A), dated 27-4-2004 to the C.B.R. regarding the refund of customs duty paid on consignments of power plants with reference to the decision of the Supreme Court, dated 23-7-2002 that the Customs Authorities decide the questions raised in the contempt applications and if the importers felt aggrieved they might seek remedy in accordance with law if available to them. The Collector also referred to the Law and Justice Division ruling that the benefit of S.R.O. 279(1)/94, would be available to those importers who had established the letter of credit before 1-7-1995.

9. From the narration of above facts and contention of the parties the question arises whether the respondent should refund the amount of bank guarantee recovered by them. The bank guarantee was deposited under orders of the Lahore High Court which in its final judgment ruled that the complainants were not liable to pay duty and sales tax as the letter of credit was established before the amendment of S.R.O. No.279(I)/94. It seems that this judgment was pronounced on the basis of the judgment of the Supreme Court in the case of Messrs Anoud Power Generation Limited v. Federation of Pakistan and others PLD 2001 Supreme Court

340. This judgment was passed by the Honourable Supreme Court on civil petition filed by the respondent against the judgment disposing of similar writ petitions which were allowed by the Lahore High Court holding respondent's action of charging sales tax and customs duty from the complainant illegal. The Honourable Supreme Court refused to grant leave to appeal against the said judgment and dismissed the petition. It is to be noted that the complainant was not a party in these petitions. Although similar matters were agitated before the Supreme Court, the judgment by which the writ petition of the complainant was allowed was not subject-matter before the Supreme Court. In the case of Anoud Power Generation Ltd. The following observation of the Supreme Court is reproduced to clarify the confusion created by the respondent and for better understanding of the law of the land: -- "A perusal of impugned judgment indicates that the amending notifications i.e. S.R.O. 584(I)/95, dated 1st July, 1995, has been declared discriminatory qua the Companies who have opened letters of credits or submitted bills of entry before the date of issuance of notification, thus holding that it will have no effect retrospectively but prospectively. The conclusion so drawn by learned High Court is entirely in consonance with the law laid down by this Court from time to time that a notification cannot operate retrospectively and benefits and advantages if already accrued in favour of a party during subsistence of the notification shall be available to it until the notification is amended or rescinded as held in Messrs Army Welfare Sugar Mills Limited and others v. Federation of Pakistan (1992 SCMR 1652), Taj Mahal Hotel Limited v. Karachi Water and Sewerage Board (1997 SCMR 503), Hashwani Hotels Limited v. Federation of Pakistan and others (PLD 1997 SC 315), Messrs. Elahi Cotton Mill Limited and others v. Federation of Pakistan through Secretary M/o Finance, Islamabad and 6 others (PLD 1997.SC 562), and Federation of Pakistan v. Shaukat Ali Mian and others (PLD 1999 SC 1026). At this juncture another important aspect of the retrospectivety of a notification may also be noted that if the notification has been used for the benefit of the subject then it can be made operative retrospectively but if its operation is to the disadvantage of a party who is the subject of the notification then it would operate prospectively. This point has been elaborately discussed by this Court in the judgment pronounced in the case of Messrs Army Welfare Sugar Mills Limited and others (1992 SCMR 1652)." In view of these observations the complainants were entitled to the benefits of exemption as held by the High Court in the writ petition filed by them.

10. The learned representative for the Department has contended that the decision in the case of Anoud Power Generation Limited as ordered by the Supreme Court is under consideration therefore no decision can be made and the matter is sub judice. The matter becomes sub judice between the parties when the subject-matter between them is under consideration by any Court. Therefore so far the complainants are concerned the matter is not sub judice. The matter under consideration before the Court was the contempt application filed by petitioners (not the complainants) in other cases for non-compliance of the judgment. The complainants are not party in this petition and therefore these proceedings are completely irrelevant to the present case.

11. The Department further contended that the Collector has referred the matter to the Law and Justice Division for ruling whether the benefit of S.R.O. No.279(I)/94 is available to those importers who have opened letter of credit before 1-7-1995 is awaited. The Law and Justice Division is not an Adjudicating Authority. They can express their opinion. However the proposition of law propounded and decided by the Supreme Court are binding on every authority, person and Ministry. Therefore all these pleas are completely irrelevant for the controversy in this case. It is merely intended to delay the proceedings for refund of the amount which has been held refundable by the High. Court. The order of the Supreme Court, dated 7-7-2002 referred by the Department arose out of contempt proceeding and cannot be made sheet anchor to delay the refund. It is noteworthy that directions of the Supreme Court by Order, dated 7-7-2002 have not yet been complied even after 2 years. How long can the respondent make it a ground for non-payment of refund. Mal-administration is established as in spite of the judgment of the superior Courts laying down the binding law the respondents have failed to pay the compensation which the claimants are entitled under law and also for not replying various letters of the complainants.

12. It may be clarified that while applying and following the law laid down by the superior Courts the Federal Tax Ombudsman does not execute the said judgments. Only reliance is placed on the law enunciated by superior Courts which is binding on all authorities, departments and Courts. At time, the observations in NBP case PLD 1992 Karachi 374 have been misread and misapplied. It is therefore necessary to clarify. There the facts were totally different. The Wafaqi Mohtasib had decided a service matter having no jurisdiction and allowed the prayer to execute the judgment of the Court. In such circumstances it was observed as follows: "Learned counsel for the petitioner also contended that respondent No.1 cannot be turned into an Executing Court. The writ is a Constitutional jurisdiction and not a proceeding `stricto senso'. Normally the Executing Court for such purpose is High Court, except as provided under Article 9(1) of the Presidential Order 1 of 1983. The respondent No.1 is not legally competent to take upon himself the functions of Executing Court in such matters. The case in hand is not covered by the aforesaid exception." (Emphasis supplied). The writ petition against the recommendation of Wafaqi Mohtasib was accepted with the above observation as the Wafaqi Mohtasib had passed order in a service matter which was not within his jurisdiction as provided by Article 9(1) of Presidential Order 1 of 1983. It is thus clear that in matters within the jurisdiction of the Federal Tax Ombudsman or the Wafaqi Mohtasib if any Department, Division, Ministry agency or office fails to comply with the judgment of any Court without any legal or reasonable cause it is cognizable. In these circumstances the following recommendations are made: (i) Respondent to refund the amount realized through bank guarantees within 15 days. (ii) Compliance be reported within 30 days. C.M.A./293/FTO???????????????????????????????????????????????????????????????????????????????? Order accordingly: