MESSRS NAGINA COTTON MILLS LIMITED VS THE COLLECTOR OF CENTRAL EXCISE AND LAND CUSTOMS,
HYDERABAD
1991 P T D 522
[Karachi High Court]
Before Saleem Akhtar and Salahuddin Mirza, JJ
Messrs NAGINA COTTON MILLS Limited
versus
THE COLLECTOR OF CENTRAL EXCISE AND LAND CUSTOMS,
HYDERABAD and another
Constitutional Petition No.D-179 of 1990, heard on 19/09/1990.
Sales Tax Act (III of 1951)---
----S. 7---Central Excise Rules, 1944, R. 11 ---Constitution of Pakistan (1973), Art.199---Constitutional jurisdiction, exercise of---Exemption from payment of sales tax---Question whether certain type of cotton waste was soft cotton waste covered by P.T.C. Hdg. 55.03 or it was another kind of cotton waste falling under P.T.C. Hdg. 55.04 which was exempt from levy of sales tax, was a question of fact which could not be raised in Constitutional jurisdiction of High Court.
Rasheed A. Akhund for Petitioner.
Arif Hussain Khilji for Respondents.
Date of hearing: 19th September, 1990.
JUDGMENT
SALAHUDDIN MIRZA, J.---Under the Finance Division Notification dated 25th June, 1981 No. S.R.O. 666(1),'81 (Annexure "A"), cotton waste of all sorts was exempted from the levy of sales tax vide item No.4 of the said Notification which is reproduced below:--
"Ginned and unpinned cotton falling under heading 55.01, 55.04, cotton yarn falling under heading 55.05 and 55.06, cotton fabrics falling under heading 55.05 and 55.07, 55.08 and 55.09, cloth woven on hand looms falling under heading 55.09, hand spun yarn falling under heading 55.05 and 55.06, soft cotton waste falling under heading 55.03."
2. Subsequently, vide amending notification of the Finance Ministry dated 21st April, 1988 (S.R.O. 206(1)/88) which is on record as Annexure "B", the phrase "soft cotton waste falling under heading 55.03", which appeared at the very end of 1988 Notification, was omitted. Thus, whereas cotton waste of all kinds was earlier exempt from the levy of sales tax, now a distinction had been made in the cotton waste and some quality of it still remained exempt whereas some other quality became subject to the payment of sales tax. One quality is known as "soft cotton waste" which is covered by heading 55.03 and which has now become subject to the payment of sales tax after the amendment of 21st April, 1988. The other quality of cotton waste is known as "carded or combed soft cotton waste" covered by the heading 55.04. This second quality of the cotton waste still remains exempt from the payment of sales tax whereas the former quality has now become subject to payment of sales tax. The grievance of the petitioner is that since the coming into effect of the 1988 amendment respondents have commenced charging sales tax on both kinds of cotton waste. Learned counsel of the petitioners drew our attention to a letter dated 27th March, 1989 (Annexure "C") issued on the subject by the Central Board of Revenue, Islamabad, in which the Board made clarification as to whether carded or combed soft cotton waste still fell under P.C.T. heading No.55.03 and was liable to sales tax and the Board declared that heading No.55.03 did not include carded ex combed cotton waste which in fact fell under P.C.T. heading No.55.04 and, therefore, was exempt from sales tax. The further grievance of the learned in which the petitioners drew the attention of Respondent No.1 to the charging of sales tax even on carded or combed cotton waste falling under P.C.T. heading 55.04. These letters, which are dated 24th April, 1989, 22nd October, 1989 and 4th February, 1990 are Annexures `E-1', `E-2' and `E-3' respectively. Through the last letter Annexure `E-3' dated 4th February, 1990, the petitioners demanded refund of Rs. 1,43,291.65 (Rupees One Lakh forty-three Thousand Two hundred ninety-one and sixty-five paisas only) which, according to them, had been illegally recovered as sales tax on carded or combed cotton waste falling under P.C.T. heading 55.04 and which was exempt from such levy. In this regard. reference was also made to Rule 11 of the Central Excise Rules, 1944. Respondent No.1 has filed his counter-affidavit in which it was denied that any sales tax had ever been charged or collected on carded or combed cotton waste and that it was collected on the waste which was obtained during the process of carding or combing of cotton. Attention of this Court was also brought to the judgment in Constitutional Petition No.733 of 1989 [Sapphire Textile Mills Limited v. Collector of Central Excise and Land Customs (Sales Tax Wing), Hyderabad] a copy of which was placed on record as Annexure "C" to the counter-affidavit in which a similar point was raised but the petition was dismissed.
3. After hearing the learned counsel of the parties we are of the view that whereas it is a question of fact as to whether a certain type of cotton waste is "soft cotton waste covered by P.C.T. heading 55.03" or it is "carded or combed cotton waste falling under P.C.T. heading 55.04" cannot be raised in Constitutional petition but it was incumbent upon Respondent No.1 to hear the grievance of the petitioners when it was brought to his notice vide letter dated 24th April, 1981 Annexure `E-1', letter dated 22nd October, 1989 Annexure `E-2' and letter dated 4th February, 1990 Annexure `E-3' and decide the point raised before him through these letters. Through letter Annexure `E-3', the petitioners have sought the refund of substantial amount allegedly recovered by Respondent No.1 unlawfully. However, even the counter-affidavit of Respondent No.1 makes no reference to these three letters and, as such, the grievance of the petitioners that these three letters have remained unanswered must be taken to be correct. We would, therefore, direct Respondent No.1 -to decide the petitioner's claim for refund communicated to them vide letter dated 4-2-1990 within a period of one month.
4. This petition was disposed of on 19-9-1990 by a short order and these arc the reasons for the same.
H.B.T./N-345/KOrder accordingly.