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Petition No. 22 of 1967, decided on 14th February 1968.

Ss. 3 & 12‑A(1) and Central Government Notification No. S.R.O.‑1284(K)/66, dated 2nd December 1966‑‑‑Exemption from payment of duty‑Discre tion of Central Government as to what goods were to be exemption Central Government competent to lay down any condition for exemption or even to withhold such exemption completely Notification declaring that exemption would apply to laundry soap manufacture by factories the owners of which had no financial interest in any, other industrial or commercial enterprise‑Conten tion that Government could make exemptions in respect of "goods or class of goods" but exemption cannot be made relatable to "any person or class of persons"‑Held, Government by making such declaration merely imposed a condition for exemption in respect of a "class of goods" (laundry soap) and imposition of this condition did not make exemption relatable to "person or class of persons"‑Such exemption being in nature of privilegis favourabilia" could be regulated by the Central Government.

Ikram Bus Service and others v. Board of Revenue, West Pakistan and others P L D 1963 S C 564 ref.

Muhammad Amin Butt for Petitioner.

Salah‑ud‑Din Hanif for Respondents.

Date of hearing : 5th May 1967.

This order will dispose of Writ Petitions 22, 322, 323, 337 and 403 of 1967, as the question of law raised is common to all these petitions. The petitioners in these writ petitions are the manufacturers of Laundry Soap and have asked for a declaration that the Notification No. S. R. O. 1284(K)/66, dated the 2nd December 1966, issued by the Central Government, under subsection (1) of section 12‑A of the Central Excise and Salt Act of 1944, granting an exemption from excise duty to the Laundry Soap produced in the factories which are operated without the aid of power, steam or gas, and the owners of which have no financial interest in any other industrial or Commercial enterprise, is without lawful authority. Under section 3 of the Central Excise and Salt Act of 1944 (Act or 1944); (hereinafter called tine Act excise duty is payable on excisable goods manufactured in Pakistan at the rate set out in the First Schedule. Under section 12(A) of the same Act. the Central Government has the discretion to exempt any goods or class of goods from the whole or any part of the duty leviable under the Act. Section 12‑A reads as under :‑

"Section 12(A)‑(1) The Central Government may from time to time, by Notification in the official Gazette exempt any goods or class of goods from the whole or any part of the duty leviable under this Act.

(2) The Central Government may, by special order in each case, exempt from the payment of the whole or any part of the duty leviable under this Act, under circumstances of an exceptional nature to be stated in such order, any goods on which such duty is leviable."

2. The Central Government issued a Notification No. S. R. O. 38(R)/64, dated 12‑6‑1964, declaring the Laundry Soap produced without the aid of power, steam or gas, exempt from whole of the excise duty leviable under the said act with effect from 13‑6‑1964. A copy of this Notification is Annexure 'A' with Writ Petition No. 22/67. This exemption was further made stringent by the impugned Notification dated 2nd of December 1966. It would be of some advantage to reproduce the same here:‑--

"In exercise of the powers conferred by subsection (1) of section 12‑A of the Central Excise and Salt Act, 1944 (I of 1944) and in suppression of the Ministry of Finance Notification No. S. R. O. 38(R)/64, dated the 12th June 1964, the Central Government is pleased to exempt, Laundry Soap produced in a factory which is operated without the aid of power, steam, or gas and the owner of which has no financial interest in any other Industrial or Commercial enterprise, from the whole of the duty leviable thereon under the said Act."

It would appear from the above that two conditions were imposed for exemption of the Laundry Soap from excise duty. Firstly, that the soap should have been produced in a factory, which is operated without the aid of power, steam or gas and secondly that its owner should have no financial interest in any other Industrial or Commercial enterprise.

3. The petitioners in all the writ petitions do not deny that they have financial interest in some Industrial or Commercial enterprise other than the factories, which are run by them for manufacture of Laundry Soap. Their contention, however, is that the imposition of the further condition in the impugned Notification that exemption shall be given only in respect of the Laundry Soap, the manufacturer of which has no financial or commercial interest in any other enterprise is void and of no legal effect. The learned counsel appearing on behalf of the petitioners elucidated their argument by asserting that the exemption was to be made in the case of goods, or class of goods, but in issuing the impugned Notification, the Central Government has transgressed their powers and have made inviduous distinction in respect of persons, who have some financial interest in some other industrial or commercial enterprise. It is argued that whereas it was open to the Central Government to choose the goods or class of goods, there was no warrant for them to change the nature of this exemption, and make it relatable to persons, who have no financial interest in any other commercial or industrial enterprise. The exemption, it is asserted, under the impugned Notification will now operate in favour of persons rather than goods and this runs counter to the clear intent of the Legislature, which was to exempt the goods only. To supplement their arguments, the learned counsel have referred to section 7 of the Sales Tax Act of 1951, which also deals with exemption from the Sales Tax and where along with the words 'Goods' or class of goods, the words 'any person, or class of person have also been used. It is asserted that the provisions of the two enactments are pari materia, and if the Legislature had intended that a person's qualification was to be a relevant consideration for exemption from the excise duty, they should have certainly used the words person or persons' in section 12‑A of the Act also.

4. Reference was made to the case of Ikram Bus Service and others v. Board of Revenue, West Pakistan and others (P L D 1963 S C 564), on behalf of the petitioners in order to show that the Central Government had transgressed the legislative mandate in imposing the condition complained of with regard to the grant of exemption to Laundry Soap from excise duty. We are afraid the authority relied upon by the learned counsel is not helpful to them. In the case of Ikram Bus Service, the Regional Transport Authority purporting to act under some instructions issued by the Government had refused to consider the application for grant of route permits to individuals, and had insisted that the right to apply for route permits was confined to Limited Companies. In pursuance of this policy, they did issue route permits to a Limited Company, which had not even put in an application for grant of a route permit, although a large number of its members excluding eight had out in applications individually for grant of route permits. Their Lordships after referring to sections 44 (3) (4), 47 and 57 of the Motor Vehicles Act of 1939 held that the action of the Regional Transport Authority in excluding the individuals from grant of route permits was wholly illegal, because section 47, which dealt with the qualifications for grant of route permits bad not introduced any classification among the applicants, and that the Regional Transport Authority by their refusal to consider the applications of the individuals was introducing extraneous considerations in determining the eligibility of the applicants for permits. It would, therefore, become clear that in the case under reference the Regional Transport Authority had acted against the clear letter of the law and it introduced uncalled for classification among the applicants. Under section 12(a) of the Excise and Salt Act of 1944, it has been left to the discretion of the Central Government to decide as to what goods were to be exempted. The Legislature has not given any mandate, as to which goods are to be exempted from the excise duty. It was conceded before us that it was within the discretion of the Central Government to grant exemption, and they could have completely withheld the exemption in favour of the Laundry Soap. This being the case, it would be legitimate presume that the Central Government could lay down any' conditions for the exemption. The condition laid down in the, first Notification, dated 12‑6‑64, was that the exemption would overate only in the case of factories, which are not operated by power, etc A further condition was introduced in the impugned notification that the exemption would apply only to the Laundry Soap manufactured in factories which are not aided in its operation by electricity, etc. and whose owners have no financial interest in any other industrial or commercial enterprise. The exemption is in the nature of "privilegis favourabilia" and could regulated by the Central Government by imposition of conditions. The Government has every power to regulate the exemption and it cannot be said that they became functus officio after issuing the first Notification dated the 12th of June 1964. The object of the power of exemption is to encourage the manufacture of and protect certain commodities which may ordinarily be amendable to exise duty.

5. We do not think that the Government have changed the nature of the exemption which remains in respect of the Laundry Slap. The intention of the Notification is to protect particular gods manufactured in factories, which are not aided by electricity and whose owners cannot compete with the mechanised process of production and have no financial interest in any other industrial or commercial enterprise. The learned counsel appearing for the petitioners did not cite any authority in support of their contention. They contented themselves only with the statement of their case and reference to the case of Ikram Bus Service mentioned earlier. No authority was cited the learned counsel appearing for the Central Government either. He asserted that the Government was within its rights to issue the impugned Notification.

6. Since we find that the nature of exemption remains in respect of the Laundry Soap itself and has not become relatable to persons, we need not examine the argument advanced in respect of the language of the Sales Tax Act of 1951. Nor has any argument been addressed to us in that behalf except by way of reference to its language.

7. In view of the above discussion, we do not find any force these writ petitions, which are hereby dismissed. The parties ark left to bear their own costs.

A.E Petitions dismissed.

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