1995 PLP 1737 (MLD)

Description of services and conditions. Rate of duty 13.01: (a) Services provided or rendered by hotels and restaurants other than those which fall under any of the following categories:‑‑ (i) Any hotel the daily rent of any room or apartment of which, with or without service charges and charges on account of breakfast or air conditioning, exceeds twenty‑five rupees on any day during the financial year, or which provides cabaret or any other floor show on any day during the financial year, or which provides alcoholic drinks. (ii) A restaurant the annual turnover of which, as determined by the Assistant Collector of Central Excise, in any financial year Nil. subsequent to the financial year 1972‑73 was not less than five lac rupees: Provided that in respect of the financial year preceding the financial year which is current the owner or the manager of such restaurant shall submit to the Assistant Collector of Central Excise a statement of the annual turnover of the restaurant for the preceding financial year within thirty days after the close of the financial year or within such extended period not exceeding sixty days as the Collector may, in this discretion, allow on receipt of a written request made by the owner or manager of such restaurants in this behalf, and the Assistant Collector shall examine the said statement and determine the turnover of such restaurant for the purpose of the grant of this exemption. (iii) A restaurant or night‑club which. provides combaret or other floor show on any day during a financial year. (iv) A restaurant which provides alcoholic drinks. (b) The meals provided by a hotel or restaurant to its staff free of charge. (c) Services provided in canteens run Nil. by industrial or commercial concerns for their workers. (d) Services provided by messes, hostels, guest‑houses and clubs, other than night clubs, the membership of which is restricted to any particular class of people or which are run on the basis of mutuality: Provided that the exemption granted in clauses (a), (c) and (d) shall be subject to the condition that it shall not be available in respect of services provided or rendered by any hotel or restaurant which, on any day during the financial year, charges any amount on account of excise duty from any customer." Following amendments were made in S.R.O. No.555(1)/79 vide S.R.O. No.569(1)/89:‑‑‑ "S.R.O. 569(1)/89.‑‑-In exercise of the powers conferred by sub section,(1) of section 12‑A of the Central Excise and Salt Act, 1944 (1 of 1944), the Federal Government is pleased to direct that the following further amendment shall be made in its Notification NO.S.R.O. 555(1)/79, dated the 28th June, 1979, namely:‑‑‑ In the aforesaid Notification, in Table II against item No.13.01 in column (1), in clause (a) in column (2), in sub‑clause (i), for the words `One hundred rupees' the words `Two hundred rupees' shall be substituted."

5. The learned counsel for the petitioner contended that due to change in tariff rate, petitioner did not charge the customers any excise duty as he was not providing any excisable services within the limits of the Notification, therefore, petitioner‑Hotel is not liable to pay any‑excise duty.

6. As against this the learned counsel for the respondents argued that the petitioner‑hotel could not reduce the room rent to or below the exemption limit during a financial year for which it had obtained the licence. The learned counsel further submitted that the benefit of the exemption under S.R.O. No.569(1)/89 would be available to the petitioner from the financial year subsequent to the year in which the room rent was so reduced.

7. We have not been able to persuade ourselves to agree with the contention made by the learned counsel for the respondents for the simple reason that it does not make any sense. In the form of S.R.O. No.569(1)/89, Government increased the exemption limit so that consumer be benefited and to boost the hospitality/service industry and help the tourism which have been in a slack in Pakistan since long. Looking in general terms of economics and for a healthy economy, competition plays a vital role and a businessman should not be deprived of to enter in the market with the spirit of a fair play. Supply and demand are considered important factors in determining the price of a commodity; here it is service industry. We firmly believe that any effort to keep an entrepreneur out of a fair competition shall not be encouraged in the name of natural justice.

8. It is evident from the record that a licence to operate a Hotel was provided in 1989, after S.R.O. No.569(1)/89 was in effect. After running the business for one year petitioner realized that the tariff (rate) what he was charging was not compatible and much too high to serve in the market so he notified the authority concerned for lowering tariff (rate) and thus excluding himself from providing excisable services. To us penalising him from participating in a fair competition is against any norms of natural justice.

9. Excise duty is a form of a direct taxation which is charged by the person who avails the services of certain establishment and that establishment acts as an agent who collects and deposits this collected amount in the Government treasury.

10. It is his prerogative to avail the opportunity given to him by that amendment in law. The exemption clause is couched in clear and unambiguous language and it is susceptible of only one interpretation, namely, that the exemption will not be available if the amount charged as room rent with or without other charges exceeds Rs.200. In other words any tariff (rate) below Rs.200 is exempted from Excise duty. It is an established principle of law that where a specific provision is made to deal with a particular situation it supersedes the general provision to the same effect. In this case an exemption is granted while Excise and Taxation Department is bent upon taking it back. In the result we declare the orders of respondents illegal, void and without lawful authority and hence the petitioner is not liable to pay excise duty, if he had abide by the restrictions imposed by the said S.R.O., on the contrary if any tariff (rate) charged which exceeds the exemption limits granted by the S.R.O. No.569(1)/89 may be re‑assessed and petitioner shall pay excise duty at the applied rate or any tariff (rate) charged over Rs.200 per day inclusive of all charges. This Writ Petition, therefore, is allowed in the terms indicated above with no order as to costs. A.A./1759/P Petition accepted.