P L D 1962 Supreme Court 83 (PLP)

CORNELIUS, C. J.‑

This appeal by special leave calls in question a decision of a learned Single Judge of the High Court of East Pakistan delivered in Civil Revision Case No. 1188 of 1959, in which revision was sought of a decision by the Small Cause Court Judge of Chittagong, on the suit of Messrs Habib Industries Limited of Chittagong, holding that on a certain importation of 98 bags of sulphur powder, the plaintiff‑company had been over‑charged by the Customs Authorities at Chittagong, the sum of Rs. 63‑3‑0 as sales‑tax. The case turns upon the rate of exchange at which the relevant sterling price was to be converted into Pakistan rupees for the purposes of application of sales‑tax. On the date of importation, namely, the 9th October 1955, the rate of exchange was Is. 5.15/16d. per rupee. The case for the importers, namely, Messrs Habib Industries Limited was that the rate applicable for levy of the tax was that at which the contract was placed namely, the official rate of exchange, via 2s. 1.25/32 d. per rupee which was in force on the 16th June 1955, the date of the contract. It is clear that at the last‑mentioned rate, the number of rupees required to meet the sterling cost is smaller than that required at the rate of Is. 5.15/16d. per rupee, and this explains the difference of Rs. 63‑3‑0 which the plaintiff Company alleged had been over‑charged by way of sales‑tax. It is desirable that we should emphasise that the suit was not concerned with customs duty, as might appear from certain references in the judgment under appeal, but was confined to the charge of sales‑tax. The case has proceeded on the basis that the law as to assessment of sales‑tax, in relevant respects, is the same as for assessment of customs duty. The plaintiff‑company first approached the Customs Autho rities for a refund. They applied to the Assistant Collector on the 18th November 1955, enclosing with their application the sales‑tax bill of entry arid a banker's certificate, dated the 17th October 1955, which was to the effect that Messrs Habib Industries had opened a letter of credit No. CH/2587 for 155 on the 16th June 1955, for which "forward exchange rate" was to be at 2s. 1.25/32d. and that the shipping documents received by the Bank had been released to Messrs Habib Industries "against payment at the above rate." Particulars were mentioned which clearly show that the reference was to the present importation of 98 bages of sulphur powder. Certain further documents were sought for by the Assistant Collector, who, thereafter, on the 19th February 1958, made an order refusing refund. The order makes it clear that Messrs Habib Industries were claiming "the benefit of pre devaluation rate of exchange and consequential refund of duty and sales‑tax on the ground that the relative letter of credit was opened prior to 2‑8‑55." This benefit was refused on the following ground : ‑‑ "The claimants were asked to produce the relative purchase and sales contract, indent, acceptance and other documents, if any, to verify whether or not a particular rate of exchange was stipulated in the contract. They have submitted invoice and bank certificate none of which indicate that such a rate of exchange was stipulated." An appeal was taken to the Collector of Customs and was rejected on the 20th August 1958, for the same reason as that, given by the Assistant Collector, namely :‑ "The documents submitted in support of their claim do not show that a forward exchange contract was entered into between the importers and suppliers stipulating a particular rate of exchange." Thereafter, the Company filed a revision before the Central Ministry of Finance, which would appear to lie under section 191 of the Sea Customs Act. This revision was also dismissed on the 19th September 1958 on the ground that "the order of the Collector is correct in law and in fact." It will be convenient to mention here that by section 188 of the Sea Customs Act, an order such as that passed by the Collector of Customs in appeal from the order of the Assistant Collector is declared to be final, subject only to the power of revision conferred by section

191. The only provision in the Sea Customs Act affecting the jurisdiction of Courts in matters decided under the Act is in section 198, which reads as follows :‑ "No proceeding other than a suit shall be commenced against any person for anything purporting to be done in pursuance of this Act without giving to such person a month's previous notice in writing of the intended proceeding and of the cause thereof, or after the expiration of three months from the accrual of such cause." It is important to note the difference between such a provision and, for example, that contained 9n section 65 of the Bengal Agricultural Income‑tax Act, 1944, which reads :‑ "No suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any officer of the Crown for anything in good faith done or intended to be done under this Act." The provision in section 198 of the Sea Customs Act merely subjects a proceeding against a person for something done in pursuance of the Act to the requirement of a month's notice in writing, and of three months' limitation from the accrual of the cause for such notice. There is no bar provided against suits. This difference will need to be considered later in relation to one of the grounds upon which the judgment under appeal proceeds. It will also be convenient to consider here an argument raised on behalf of the respondent, namely, the Pakistan Government, that the suit was not competent in a Small Cause Court because it was In fact a suit asking for a declaration. As has been stated, the suit was framed as a suit for t refund of money over‑paid, and a ground was stated for the belief that there had been an over‑payment. This objection, it appears to us, amounts to making the jurisdiction depend not upon the subject‑matter butt upon the correctness of the plaintiff's contention as respects the subject‑matter, the very procedure which was deprecated by the Judicial Committee of the Privy Council in the Raleigh Investment Company case (67 I A 222 (236)). We do not consider that any substance can be allowed to the objection. Before the trial Court, the defendant Government took the plea that the sales‑tax had been rightly assessed, on the basis that the exchange rate applicable under the law was that prevailing on the date when the bill of entry was first presented. The specific contentions of the plaintiffs‑Company (a) that they had contracted with their foreign‑exchange bankers, who were undertaking to pay the exporters in Europe, that they would be repaid in Pakistan at the pre‑devaluation rate of exchange, and (b) that upon arrival of the goods the Company paid the Bank, against the shipping documents, at the contracted, i.e., the pre‑devaluation rate, were not denied on behalf of the Pakistan Government in their written statement and have not been denied at any subsequent stage of the litigation. Before the trial Court a reference was made to the General Manual of Orders relating to Customs and Tariff Laws issued by the Pakistan Government governing the actions of the Customs Authorities in the relevant respect. There is a lengthy commentary in this book with reference to the relevant section, namely, section 30 of the Sea Customs Act, and the trial Court reproduced in its judgment the provisions of paragraph 16 of the instructions under section 30 regarding the Government's decision that an importer's claim to the benefit of "a forward exchange contract" should be allowed under section 30 (b) provided the Customs Authority is satisfied that the exchange contract was a bona fide transaction and that it was entered into at or before the time that the order for the goods was placed. As has been seen, all the authorities acting under the Sea Customs Act have concurred in holding that there was no forward exchange transaction at all. The trial Court however found on the basis of documents that there was such a contract, and accordingly decreed the suit. In the High Court, the learned Single Judge considered firstly the question of the Civil Court's jurisdiction, and secondly, the question of the correctness of the valuation. He found "a great deal of substance" in the contention raised by the Pakistan Government that the Civil Court had no jurisdiction to enter into the question of assessment which arose In the case, for the reasons that it was not alleged that the assessment was entirely without jurisdiction, but only that it had been wrongly made. There was no suggestion that any essential requirement of judicial procedure had not been met. The learned Judge thought that on these grounds, the question which arose before the Civil Court was one directly concerning the assessment of the tax, and this was "a question which the Customs Authorities alone were empowered under the Sea Customs Act to decide and decided finally." The learned Judge then made a reference to the reported case of Dewan Abdul Alim Mutawali (9 D L R 26) relating to the Bengal Agricultural Income‑tax Act, and purported to follow the decision In that case. We have already pointed out that the bar to jurisdiction expressed in the Bengal Agricultural Income‑tax Act is in very clear and specific terms, and nothing appearing in the Sea Customs Act, with reference to the jurisdiction of the Civil Courts has anything of the same quality. In the precedent case, however, the point had been raised that "the mere provision in the statute of an alternative machinery for the determination of the rights or liabilities created by the statute is per se sufficient to lead to the Inference that the jurisdiction of the Courts in respect of those rights and liabilities is impliedly barred even if there be no express provision in that behalf In the statute." This argument in the precedent case was sought to be supported by reference to the decision of a Full Bench of the Lahore High Court in the case of the Ravi Paint, Colour and Varnish Works Limited (P L D 1954 Lah. 551). The learned Judges of the Division Bench of the Dacca High Court considered the observations made in the Lahore case and having regarded them in the light of the views expressed in a number of other cases which they cited, expressed their conclusion as follows :‑ " . . . . . we are inclined rather to the view that not only is the mere presence of an alternative machinery not by itself sufficient to oust the jurisdiction of the Civil Courts, but that even the existence of express provision in that behalf coupled with the alternative machinery may not always have the effect of completely ousting the said jurisdiction in all cases, e.g., in cases where the Statutory Tribunal or authority set up to give effect to the said alternative machinery acts manifestly in excess of the jurisdiction given to it by the statute or purports to do that which is expressly prohibited by the statute itself or is clearly outside the scope of the Statute." That conclusion appears to us to go wholly in favour of the existence of jurisdiction in the present case. In our opinion, although the special jurisdiction of the Customs Authorities to deal with the question of assessment of sales‑tax In the present case cannot be doubted, and the machinery provided for the purpose by the Sea Customs Act is elaborate and is expressed so as to achieve finality, yet that finality is only to be under stood within the limits of the statute, and those special provisions cannot by implication have the effect of excluding the general jurisdiction of the Civil Courts, the more so as the Act itself does not expressly stand in the way of that jurisdiction, but merely, in section 198, prescribes certain conditions subject to which it will be exercised in particular cases. Therefore, in our view the finding of the learned Single Judge that the judgment and decree of the Small Cause Court in the present case was "wholly without jurisdiction" cannot be supported. As to the valuation, the learned Judge referred to section 30 of the Sea Customs Act, as in force at the time of the importation. It will be convenient to reproduce the terms of the section for proper understanding of the argument :‑-- "

30. Real value defined.‑For the purposes of this Act the real value shall be deemed to be‑ (a) the wholesale cash price, less trade discount, for which goods of the like kind and quality are sold, or are capable of being sold, at the time and place of importation or exportation, as the case may be, without any abatement or deduction whatever, except (in the case of goods imported) of the amount of the duties payable on the importation thereof ; or (b) where such price is not ascertainable, the cost at which goods of the like kind and quality could be delivered at such place, without any abatement or deduction except as aforesaid." The learned Judge observing that the section related the value for taxation to the time of importation which was the time when the goods were unloaded from the ship, proceeded to conclude that the "valuation the Customs Authorities have calculated in the present cases Is the market value prevailing on the date of the bill of entry". With respect, it is necessary to observe that this conclusion can only rest on a misconception. There was no attempt made to ascertain "market value". In another place, the learned Judge has observed that in the cases before him (which included the present case): "there is no evidence that the goods were of a kind where its whole‑sale price could not be ascertained (sic.) or that goods of like nature were not sold in the market at the place of importation, nor is there any evidence to show that the contract in question was entered into at or before the time the order for the goods was placed." Here again, a misconception appears, for the whole proceeding clearly shows that the assessment by the Customs Authorities was under section 30 (b) and not under section 30 (a). Under section 30 (a) the "whole‑sale cash price" being referable to the place of importation, must be a sum in Pakistan rupees, and the question of a "forward exchange transaction" could not possibly arise. As has been seen, the Customs Authorities throughout were laying their decision on the basis that no forward exchange transaction had been proved to their satisfaction. The learned Single Judge found that Paragraph 16 in the Manual to which reference has been made above was not applicable to the facts, but, with respect, it seems that it is applicable, beyond all question. It was evident even from the two documents which were initially presented to the Customs Authorities by the plaintiff‑Company, that the contract for the purchase of sulphur powder from Messrs I. C. I. Limited, London was supported by a subsidiary contract with the Habib, Bank, which had supplied the necessary foreign exchange, namely, 155 in London. The certificate produced from the Habib Bank gave all the necessary details, and these are matched exactly by the details appearing in the invoice from I. C. I. Ltd. which is Exh. A(2). This invoice shows that the customer's reference and date was of the 21st June, 1955, i.e. a date prior to devaluation of its currency by Pakistan. The terms of payment are entered on the invoice and read as follows :‑ "Payment of full C & F invoice value to be made out of a Confirmed Irrevocable Credit No. CH. 2587/99183 established with the Chase Menhattan Bank, London, against presentation of shipping documents." The letter of credit has been produced on the record and is Exhibit I (r). It is dated the 16th June 1955, and is described as a "confirmed, irrevocable commercial letter of credit, without recourse to Drawers No. CH/2587". Briefly, it states that the credit of 155 has been established in favour of Messrs I. C. I. Ltd. and that upon production of a certificate in the usual form "to the effect that documents, in order and drawn strictly In terms of the above letter of credit, have been sent to us", the Chase Menhattan Bank in London would pay the amount in question to Messrs I. C. I. Ltd., out of the account maintained with them by the Habib Bank. Again, there is on the record a Memorandum from Messrs Habib Industries to the Habib Bank (Exh. 2(b) con firming the purchase of ;E 155 against the letter of credit No. CH/ 2587, at the rate of 2 s.1.25/32d. delivery to be by the 30th September 1955, and the contract being of date 16th June 1955. There are a number of ether documents on the record which are also relevant to this question, and they clearly show that there was a contract between Habib Industries and Habib Bank made on the 16th June 1955, and valid up to the 30th September 1955, under which the Habib Bank undertook to make payment of the sum of 155 against the letter of credit CH/2587, and to receive payment in Pakistan rupees at the rate of 2 s.1.25/32d. There fore, the conditions of the "instruction" contained in Paragraph 16 to the commentary in Manual above‑mentioned under section 30 of the Sea Customs Act was clearly satisfied. The provisions of that paragraph appear to us to be quite clearly in accordance with the requirements of section 30(b), and its application in the present case was strictly correct, for no attempt had been made to ascertain the price with reference to section 30 (a). This was not a case in which there was any allegation that the rate of exchange was a special one applicable only to this transaction. It was the normal official rate of exchange in force at that time. It is not alleged that the transaction was in any other sense unusual i.e. that there bad been any arrangement between the importer and the exporter to obtain a favourable price for any special reason. The assumption must be that it was a transaction entered into in the ordinary course of business. It is not suggested that the period which elapsed between the placing of the contract and the importation of the goods was unusual. That too appears to have been as ordinary and normal interval. We may here refer to another instruction in Paragraph 6(v) in the commentary in the Manual, under section 30, and it will be convenient to reproduce a portion of this sub‑paragraph here :‑ 6 (v) "Assessment ordinarily to be made on the Actual Landed Cost.‑Consignment of goods assessable on the real value as defined in section 30 (b), Sea Customs Act, are ordinarily to be assessed on the actual landed cost of the consignments, this method being only departed from for special reasons . . .". No special reasons appear in this case, and therefore for ascertain ment of the cost at which the goods in question "could be delivered" at Chittagong, there is no better criterion than the actual landed cost to the importer. That cost would necessarily in a case like the present, where the purchase was supported by a forward exchange contract, fall to be calculated on the basis of such contract, which is the purpose and intention set out in paragraph 16 aforesaid. In the absence of any charge of mala fides, it may fairly be assumed that the Customs Collector should have been satisfied that the exchange contract was a bona fide transaction provided he could hat been induced to agree that there was a forward exchange contract at all. The documents clearly show that the contract as respects the exchange was made in advance of the date on which the goods were ordered. For these reasons, we are of the opinion that this appeal should be allowed, and we hereby allow it and setting aside the decision of the High Court, we restore the judgment and decree of the Small Cause Court Judge. We make no order as to costs in this Court. A.H. Appeal allowed.