1990 PLP 638 (CLC)

SALEEM AKHTAR, J.‑‑The petitioner has set up a sheet glass manufacturing unit located in Deh Kaloo Kohar, Taluka Boola Khan District Dadu Sindh. By Notification SRO No.700(1)/80 dated 26‑6‑1980 the Federal Government in exercise of its power under section 19 of the Customs Act exempted all Government Financed Industrial Estates situated in district Dadu from the whole of the duty leviable on machinery imported for initial installation. In paragraph 4 of the petition it has been stated that the land whereupon manufacturing unit of the petitioner company was constructed was declared as industrial estate vide Notification No.AD(EC)II‑682 dated 24‑9‑1984 issued by the Government of Sindh. The petitioner approached the respondents for issuance of an import licence as required by Import and Export (Control) Act 1950 hereinafter referred as `The Act' for the import of plant and machinery. They required the petitioner either to pay licence fee at 2% of the value of the machinery or furnish a bank guarantee to the tune of Rs.20,20,000 in lieu thereof. The petitioner furnished bank guarantee dated 8‑2‑1984 through the National Development Finance Corporation. Thereupon, import licence dated i1‑2‑1984 was issued for import of machinery and equipments. Petitioner also imported chemicals subsequently under licences issued by the respondent, but it has not challenged the recovery of licence fee in respect of these import licences. Respondent No.2 by letter dated 7‑2‑1986 called upon the petitioner to pay Rs.20,20,000 being the import licence fee payable on the import of machinery. It was further stated that in case of failure action will be taken under clause 4(1)(b), 4(1)(0 of the Registration (importers & Exporters) Order 1952. The petitioner took the plea that under SRO 700(1)/80 it was exempted from payment of import fee. The petitioner also pleaded that import fee is not payable as it was led to believe by the Central and Provincial Governments through their notifications that its project was located in the specified area. The petitioner has challenged that the demand, levy of import licence fee and recovery thereof is illegal, unlawful and without jurisdiction. In the comments filed by the respondents it has been pleaded that exemption granted related only to the customs duty leviable on plant and machinery and levy of import fee. The petitioner had offered the bank guarantee in lieu of licence fee and that exemption granted under section 19 of the Customs Act is not a special exemption and is regarded as general exemption, and therefore, in view of the deletion of clause 5(vi) of Import Policy Order 1969 vide SRO 577(1)/84 dated 26‑6‑1984 import fee is payable. Mr. Akhtar Ali Mahmood, the learned counsel for the petitioner has contended that import fee cannot be levied under the Import and Export (Control) Act 1950 as the same is charged without rendering any service, and, therefore, it amounts to taxation and has unlawfully been imposed. The word fee has not been defined in the `Act'. The learned counsel has referred to Black's Law Dictionary where the word `fee' has been defined as follows:‑ "FEE. A charge fixed by law for services of public officers or for use of a privilege under control of Government. Fort Smith Gas Co. v. Wiseman, 189 Ark. 675,74 S.W. 2nd 789,

790. A recompense for an official or profession service or a charge or emolument or compensation for a particular act or service. Craig v. Shelton, 201 Ky. 790, 258 S.W.

694. A fixed charge or perquisite charged as recompense for labour and trouble, a reward, compensation, or wage given to a person for performance of professional services or something done or to be done. People v. Goulding, 275 Mich. 353, 266 N.W. 378, 379:" The learned counsel has referred to the Commissioner Madras v. Siri Lakshmira Teerath Sive AIR 1954 SC 284 in which at page 294 the following observations have been made:‑ "Coming now to fees, a `fee' is generally defined to be a charge for a special service rendered to individuals by some Governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay, vide Lutz on "Public Finance" P.215. These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, it is not possible to ‑ formulate a definition that would be applicable to all cases. (45) As regards the distinction between a tax and a fee, it is argued in the first place on behalf of the respondent that a fee is something voluntary which a person has got to pay if he wants certain services from the Government; but there is no obligation on his part to seek such services and if he does not want the services, he can avoid the obligation. The example given is of a licence fee. If a man wants a licence that is entirely his own choice and then only he has to pay the fees, but not otherwise. We think that a careful examination will reveal that the element of compulsion or coerciveness is present in all kinds of imposition, though in different degrees and that it is not totally absent in fees. This, therefore, cannot be made the sole or even a material criterion for distinguishing a tax from fees." Reference has also been made to Muhammad Ismail & Co. v. Chief Inspector P L D 1966 S C 388 in which after considering the above‑quoted case and several other judgments it was observed as follows:‑ "I gather that in the cases cited, no hard and fast rule was laid down, which could serve to distinguish a tax from a fee. It would appear that the question has to be decided on the basis of the special facts and circumstances of each case. This appears to me to be the correct approach in a case of this kind." The learned counsel referred to Mahboob Yar Khan and others v. Municipal Committee and 2 others P L D 1975 Lah. 748 and two others in which the distinction between the terms `tax' and `fee' was laid down in the following manner:‑ "The distinction between a tax and fee is well established. A tax is a compulsory exaction of public money by public authority for public purpose, enforced by law and is not a payment for services rendered. This main distinction between them lies primarily in the fact that a tax is levied as a part of common burden while fee is a payment for special benefit, or privilege (See (1) Abdul Majid v. Province of East Pakistan and (2) Muhammad Ismail & Co. Ltd. v. Chief Cotton Inspector." (1) (P L D 1960 Dacca 502, (2) P L D 1966 S.C. 388). The view taken in Mahboob Yar Khan's case was approved in Harjina Salt Chemicals (Pak) Ltd. v. Union Council and others 1982 S C M R 522 pages 525 and

526. From the aforestated authorities it is clear that there is distinction between fee and tax. Fee is a charge which is levied for rendering service, whereas tax can be charged irrespective of any service that may be rendered to the public or to the persons from whom it is charged. The fee cannot be restricted only for rendering any material service but if any special benefit is conferred or any privilege is bestowed and for obtaining that privilege or benefit any amount is charged it will fall within the category of fee. It is, therefore, to be considered whether the licence fee charged by the respondent is a fee or a tax. The Act regulates import and export in the country and thus regulates trade and commerce. The import and export is always regulated by an import and export policy which is issued every year taking into consideration the economy of the country and its requirements. General import and export, unless so provided by law, are prohibited, therefore, when any licence to import or export any goods is granted it is a sort of benefit or privilege which is conferred upon such a person. The levy of import fee will therefore fall within the category of fee. The learned counsel for the petitioner has emphasised that as no services are rendered the question of imposing of any fee does not arise. Mr. Zahiruddin Khan the learned counsel for the respondents has contended that respondents by regulating import and export restrict the public from importing and exporting any goods unless permitted by law and according to the learned counsel for the respondents this is one of the services rendered by the respondents. Import and export in any country have a bearing on its economy and prosperity. If it is not properly regulated the economy of the country may be affected and may even run in shambles. In order to regulate import and export a close examination of the needs, protection, industrialisation and many other aspects of similar nature which affect the prosperity and economy of the country are considered and then permission is given to import specified goods. Customs, Foreign Exchange and Import and Export laws impose restrictions on import and export of certain articles, after consideration of national policy specially in view of its own foreign trade and currency. Besides imposing restrictions the Act has by amendment in 1980 introduced the establishment of Commercial Courts which are competent to try cases regarding contravention of order made under section 3 relating to export trade. A revolving fund has also been set up by the Federal Government to compensate any importer importing goods from Pakistan if in the opinion of Commercial Court it is in the best interest of the country. These are the measures which have been adopted to boost the exports and to create a healthy climate in the business circles. Mr. Akhtar Ali Mahmood has contended that Commercial Courts are restricted only to export and not the import. Import and export are so much interlinked with each other that one cannot be separated from the other. They are regulated to balance each other and have to be considered together. It was next contended that services if any rendered are so insignificant that they do not commensurate with the fee charged by the respondents. We may at the outset state that in our view the regulation of trade of import and export as described above falls within the category of rendering services and conferring privilege and benefit to a person to whom licence is issued. It is not necessary that fee charged should be in proportion to the services rendered. This can never be a criterion for charging a fee for the services rendered. Service is rendered taking into consideration not only the individual from whom it is charged, but to the public‑at‑large. If by any service public‑at‑large is benefited then though the same is nominally and insignificantly rendered to the persons from whom fee is charged, it will not invalidate levy and imposition. Since we have held that licence fee under the Act is a fee it is not necessary to deal with the contention of the learned counsel for the petitioner that imposition of tax is ultra vires, unconstitutional and illegal. The learned counsel for the petitioner contended that in any case the petitioner is entitled to concession granted in terms of clause 6 of the Licence Fee and Permit Fee Order 1979. Licence and Permit Fee Order 1979 was issued by SRO dated 1‑7‑1979 in pursuance of the powers conferred by subsection (1) of section 3 of the Act. Para. 5 of the order provides ,that it shall not apply to any licence or permit issued to persons and for goods mentioned in sub‑paras.1 to

11. The petitioner claims to be covered by para.5(6) of the said order which reads as follows:‑ "For the import of goods which as a special case, are exempted from the payment of customs duty by the Federal Government or the Central Board of Revenue (goods with normal statutory rate of customs duty) as zero shall not be eligible for this concession and shall have to pay the usual fee." Para.5(6) was omitted by SRO 577(1)/84 dated 26‑4‑1984. Therefore, the benefits under clause 5(6) was available upto 25‑4‑1984. According to the petitioner at the time when licence was issued to it in 1982 clause 5(6) was applicable, and therefore, it is entitled to its benefit. Under clause 5(6) if for the import of any goods exemption from payment of customs duty has been granted as a special case by the Federal Government or Central Board of Revenue then provisions of Licence and Permit Fee Order 1979 which require the payment of licence fee will not apply. It is, therefore, to be considered whether there is any special exemption granted by the Federal/Central Government or Central Board of Revenue. According to the learned counsel for the petitioner SR0.700(I)/80 issued on 26‑6‑1980 is applicable to the petitioner. According to this SRO, the Federal Government in exercise of power conferred under section 19 of the Customs Act directed that the plant and machinery imported for initial installation, balancing, modernising or extension of the project approved by the Government for specified area in the given table shall be exempted from the Customs Duty leviable thereon under the 1st Schedule to the Act to the extent mentioned in column 3 of the table. In Col. 3 of the table of the Notification, the area to which exemption was granted has been described as "all Government Financed Industrial Estates in the districts of Shikarpur, Tacobabad and Dadu excluding Kotri in the province of Sindh". The Industry installed in these areas was exempted from whole of customs duty. Relying on these entries, the learned counsel has claimed exemption. The petitioner has, therefore, first to establish that its factory is situated in a Government Financed Industrial Estate in District Dadu excluding Kotri. The learned counsel stated that there is no dispute that the petitioner is not situated in District Dadu. The fact, however, remains that in view of the admission in para.4 of the petition, the areas where the petitioner's factory is situated in Dadu was included in the Industrial Estate on issuance of Notification NoAD(EC)II‑6‑82 dated 24‑9‑1984 issued by the Government of Sindh. The petitioner's factory may have been in district Dadu, but all factories in district Dadu cannot claim exemption unless it is established that they are situated within the Government Financed Industrial Estate situated in district Dadu. The area in which the petitioner's factory is situated was included in the Industrial Estate Dadu on 24‑9‑1984, therefore, at the time when licence was issued on 11‑2‑1984 the petitioner's factory was not situated within the limits of Industrial Estates District Dadu. In the notification of 1984 on which reliance has been placed reference has been made to notification of 1983 which was superseded by this Notification. In the Notification of 1983 as pointed out by the learned counsel for the petitioner, the areas mentioned are the same as in the Notification of 1984 except that the "land covered by Kabooli land and the villages land" were not included in the Government Financed Industrial Estate Dadu. In the Notification of 1984 the words Kabooli lands and the land covered by village are excluded have been deleted. The effect of this amendment is that the industry which is installed in the specified area of district Dadu though situated on Kabooli land or villages land will be entitled to exemption. The benefit was not available under the notification of 1983. The learned counsel for the petitioner insisted that the petitioner's factory is not on a Kaboolu land or village land but we cannot accept this contention for the simple reason that the petitioner itself has stated that its factory was brought within the limits of Industrial Estate by Notification dated 24‑9‑1984. If the petitioner would have stated in the petition that from its inception its factory was in the Industrial area Dadu. the respondents may have filed a reply to controvert it. But due to petitioner's admission in para.4 of the petition and the certificates produced by it which also speak of the Notification of 24‑9‑1.984 it is established on record that the land on which petitioner's factory is installed was made part of the Industrial Estate Dadu by virtue of Notification dated 24‑9‑1984 that is much after the licence was issued to the petitioner. The learned counsel wants to investigate into this aspect of the case, but such disputed question of facts cannot be investigated in Constitution petition. We are, therefore, of the view that the petitioner has not been able to establish that it was entitled to exemption granted under SR0.700(1)/80 dated B 26‑6‑1980. The petition, therefore, fails and is dismissed with no order as to costs. AA./S‑465/K Petition dismissed.