1991 PLP 1191 (CLC)

This petition under Article 199 of the Constitution of Islamic Republic of Pakistan calls in question the order dated 7‑3‑1988, whereby the order passed by the subordinate Central Excise and Customs authorities was upheld and the petitioner was asked to pay the duty on the goods manufactured on actual production basis instead of capacity tax system.

2. The background of the case is that vide notification dated 28‑6‑1979, the Central Board of Revenue gave a choice to the manufacturers either to be assessed on capacity tax basis or under the supervised clearance system. In consequence, the permission was granted to the petitioners pending the issuance of licence which was granted on 20‑2‑1980. The petitioners' grievance is that on the basis of his licence, he embarked upon' manufacture of electric fans and started paying duty on capacity tax basis and the department started to collect the duty under this system without objection. It was further submitted . that throughout the department posted no staff on the petitioners factory which further support the contention of the petitioners that supervised clearance system was not applied to him. These facts are not disputed by Sh. Maqbool Ahmed, learned Standing Counsel for Pakistan appearing on behalf of the respondents.

3. Be that as it may, on 4‑4‑1981, on the basis of audit report, a notice was issued to the petitioner as to why his case be not re‑opened and duty be realised from him on the basis of supervised clearance system. Under this system the petitioner's total liability comes to Rs.2,30,120 minus the duty he had already paid that is Rs.78,

750. Thus the difference under the two systems comes to Rs.1,51,370, which according to the respondents is recoverable from the petitioner.

4. Learned counsel for the, petitioner argued that permission to be assessed on capacity tax basis having once been granted and acted upon could not be recalled in view of the principle of locus poenitentiae. Sh. Maqbool Ahmad, learned Standing Counsel for Pakistan has argued that the permission granted to the petitioner for paying the tax on capacity tax basis was provisional in nature and would not confer any right on him. It is further submitted that the permission was granted by the Superintendent, who was not authorised to do so, in that, the Collector alone was competent to grant the same.

5. The learned Standing Counsel has not denied that certain other manufacturers have been permitted to pay the duty on capacity tax basis. It is also not denied that the petitioners were eligible to opt for payment of duty on capacity tax basis, provided the application was submitted to the Collector within the prescribed time. The petitioners are, therefore, entitled to the similar treatment. In any event, permission having once been granted and acted upon was not liable to be withdrawn without issuing show‑cause notice. Refer Pakistan v. Muhammad Himayatullah Farrukh (P L D 1969 S C 407).

6. In view of the above, the impugned orders are declared lawful authority and of no legal effect. The writ petition is accepted, but there shall be no order as to costs. H.B.T./S‑899/L Petition accepted.