HCJD/C-121

JUDGMENT SHEET
IN THE ISLAMABAD HIGH COURT, ISLAMABAD

I.T.R. No.213 of 2011

Commissioner Inland Revenue, LTU, Islamabad

Versus
M/s Askari Cement Limited, Islamabad

Applicant by : Mr. Mohammad Abdul

Hassan, Advocate.

Respondent by : Hafiz Mohammad Idris

and Syed Farid Bokhari,
Advocates.

Date of Decision : 23.10.2023

Babar Sattar, J:- This reference emanates from order of

the Appellate Tribunal Inland Revenue, Islamabad (“ATIR”)

dated 04.10.2010 pursuant to which a demand for collection of

federal excise duty in the amount of Rs.8,360,553/- pursuant to

Order-in-Original dated 02.03.2000 were set aside.

2. Learned counsel for the tax department submitted that

the matter related to collection of excise duty for sale of bulk

cement in loose form. The taxpayer sought to pay excise duty

at the contractual price agreed between the petitioner and the

purchaser Ghazi Barotha Contractor even though the retail price

at which the product was available to the general body of retail

traders at the time was higher. Through the assessment order

the tax department sought the collection of short payment

together with an additional duty at the rate of 2% per month

under section 3(b) of the Central Excise Act, 1944 (“1944

Act”), and a penalty for Rs.100,000/- for non-compliance with

provisions of the 1944 Act. The demand was upheld by the

Tribunal and in a reference filed before the High Court, the High
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Court by order dated 13.05.2009 remanded the matter back to

the Tribunal after which it passed the impugned order and set

aside the assessment order and the demand raised. He

submitted that such order was not in accordance with section

4(2) of the 1944 Act.

3. Learned counsel for the respondent submitted that no

question of law arose from the order of the Tribunal. In the said

order the Tribunal had taken into account the fact that the

product sold by the taxpayer to Ghazi Barotha Contractors was

a bulk sale of cement in loose form as opposed to sale of

cement bags and the tribunal while relying on the case law

including, inter-alia, Crescent Textile Mills Ltd.

Lyallpur Vs. Member, Central Board of Revenue (Central

Excise), Islamabad (1980 SCMR 773), Crescent Textile

Mills Ltd. Lyallpur Vs. Member, Central Board of Revenue

(Central Excise), Islamabad (1989 CLC 2045 Peshawar),

Souvenir Tobacco Co. Ltd. Vs. Deputy Collector, Central

Excise and Land Customs (1989 CLC 1134) and

Government of Pakistan Vs. Hashwani Hote Limited (PLD

1990 SC 68) found that the packaging of a product was to be

taken into account while determining the retail price and based

on packaging there could be a price differential even when the

underlying product was the same. He further submitted that the

Tribunal took into account the fact that prior to declaring the

retail price of cement the taxpayer wrote to the Assistant

Collector, Federal Excise conveying that the price of the product

was Rs.2538.45/- per metric ton, which was not agreed to by

the Assistant Collector. The matter was brought before the

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Central Board of the Revenue (now Federal Board of Revenue

“FBR”) and by letter dated 28.09.1996, FBR directed the

Collector, Rawalpindi to decide the issue in accordance with the

law. Subsequently by letter dated 18.12.1996 the Assistant

Collector, Central Excise, Islamabad communicated to the

taxpayer that the competent authority had been pleased to

accept the retail price declared for supply of cement to Ghazi

Barotha Contractors at Rs.2538.48/- per metric ton and directed

that such price be printed on the bowsers and also be published

in the National daily newspapers. He submitted that letter dated

08.12.1996 was issued pursuant to the power vested in the

Federal Government under section 4(2) of the 1944 Act and it

was consequently held by the Tribunal that once such price was

accepted by the Collector and communicated to the taxpayer by

the Collector, the tax department could not renege on the

acceptance of the price and seek to charge additional excise

duty on the basis of retail price for cement bags available to the

general body of retail traders.

4. A perusal of the order of the Tribunal reflects that two

factors prevailed with the Tribunal. One, that the product sold

by the taxpayer to Ghazi Barotha Contractors was bulk sale of

cement in loose form (i.e. not bagged), and the Tribunal after

relying on case law concluded that the said product by virtue of

not being packaged was different from cement sold in bagged

form. And by virtue of the difference in packaging it could not

be said that the retail price of cement in loose form ought to be

the same as the retail price fixed for sale of cement in bagged

form. And two, the tax department had accepted the retail price
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agreed between the taxpayer and Ghazi Barotha Contractors for

purposes of section 4(2) of the 1944 Act. And the value of the

product as agreed to by the Federal Government was

communicated by Assistant Collector through letter dated

08.12.1996, after which the question of price of the product

became settled. Therefore, when the show cause notice for

purposes of collection of federal excise at a higher rate was

raised on 15.07.1999 the question of price as agreed to by the

Collector under the direction of FBR was a past and closed

transaction.

5. We are not convinced by the arguments of the learned

counsel for the tax department that there is a question of law

that emanates from the order of the Tribunal. The Tribunal as a

factual matter has determined that the product sold by the

taxpayer to Ghazi Barotha Contractors (i.e. bulk sale of cement

in loose form) was different from the product the retail price of

which was being taken into account by the tax department for

purposes of generating excise duty demand against the

taxpayer (i.e. cement in bagged form). In our reference

jurisdiction we cannot second guess a factual determination

made by the Tribunal. The second factor that prevailed with the

Tribunal was that FBR had directed the Controller to determine

the price for bulk supply of un-bagged cement, which was

determined at Rs.2538.48/- per metric ton as communicated to

the taxpayer by letter dated 08.12.1996 written by the

Assistant Collector. This letter states that the competent

authority has been pleased to accept the retail price for the

product supplied by the taxpayer. The Tribunal, as a matter of

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fact, also determined that the competent authority referred to in

letter dated 08.12.1996 was the Federal Government for

purposes of section 4(2) of the 1944 Act. The tax department

now seeks to raise a factual question as to whether the

Assistant Collector was vested with authority by the FBR at the

relevant time to issue such letter accepting the retail price of

cement as proposed by the taxpayer. This once again involves

determination of a fact which the Court cannot undertake in its

reference jurisdiction. In the event that any such objection to

lack of authorization of the Assistant Collector was to be taken,

it ought to have been done before the Tribunal. This was not

done as the Tribunal has observed in para-07 of its order that it

confronted the tax department with the content of the letter of

Assistant Collector date 08.12.1996 whereby the retail price of

Rs.2538.48/- per metric ton was accepted and representative of

the tax department had no explanation to offer in such regard.

6. For the aforementioned reasons, we find that no question

of law arises from the order of the Tribunal. The reference is

without merit and is dismissed. A copy of this order is directed

to be sent to the Registrar of the Tribunal under the seal of this

Court.

(CHIEF JUSTICE) (BABAR SATTAR)

JUDGE

*M.A. Raza*