GLAXO LABORATORIES OF PAKISTAN LTD VS FEDERATION OF PAKISTAN
1994 P T D 391
[Supreme Court of Pakistan]
Present: Ajmal Mian and Saleem Akhtar, JJ
GLAXO LABORATORIES OF PAKISTAN LTD
Versus
FEDERATION OF PAKISTAN and others
Civil Petition for Leave to Appeal No. 197-K of 1991, decided on 12/06/1991.
(From the judgment dated 8-4-1991 of the High Court of Sindh, Karachi, passed in Constitution Petition No. D-111 of 1990).
Sales-Tax Act (M of 1951)---
----S. 28---Central Excise Rules, 1944, Rr.10 & 210---Constitution of Pakistan (1973), Art.185(3)---Demand of sales tax from petitioners on their product "Dybenal Lozenges" ---Petitioners claiming exemption from sales tax-- Petitioner's such plea was rejected-by forums below as also by the High Court---Validity---Questions raised in support of exemption from sales tax- were the factum that there was difference of opinion among two Government Departments which raised a question of law requiring examination by the Supreme Court; that there was a conflict of views in the High Court on that question; and that Authorities had wrongly pressed into service R. 10, Central Excise Rules, 1944, and the relevant provision for alleged claim for payment was S.28, Sales Tax Act, 1951---Questions raised required examination---Leave to appeal was granted in circumstances.
Mansoor Ahmad Khan, Senior Advocate Supreme Court and M. Shabbir Ghaury, Advocate-on-Record for Petitioner.
Nemo for Respondents.
Date of hearing: 12th June, 1991.
ORDER
AJMAL MIAN, J.---This is a petition for leave to appeal against the judgment dated 8-4-1991 passed by a Division Bench of the High Court of Sindh in Constitution Petition No. D-111 of 1990, filed by the petitioners against the orders passed by the official respondents pursuant to the show-cause notice dated 24-10-1987 calling upon the petitioners to pay sales tax amounting to Rs.13,06,299.60 on 'Dybenal Lozenges' cleared by them without the payment of sales tax during the period from 1-10-1982 to 21-7-1987 on the ground that the same was a drug, dismissing the same.
2. The facts to be noted are that the petitioner, which is a public limited company, inter alia manufactures pharmaceutical products. One of such pharmaceutical products manufactured by them is Dybenal Lozenges, which according to the petitioners, is a medicinal antiseptic preparation containing 2:4 dichlorobenzyl alcohol and amylemeta cresol' as active ingredients. According to the petitioners, the above Dybenal Lozenges are 'drugs' and fall under PCT Heading 30.03 and are commonly used and prescribed by the doctors for the treatment of sore and afflicted throat and infections of mouth, as wholly distinguished from simple 'sugar confectionery' and/or ' sweetdrops' falling under PCT Heading 17.04. It has been averred by the petitioners that above Dybenal Lozenges have been registered under section 7 of the Drugs Act, 1976, with the Ministry of Health, Government of Pakistan as medicaments/drugs. IIL, seems that in the year 1981, respondent No.4 issued a show-cause notice dated 12-12-1981 calling upon the petitioners to produce evidence in support of their contention that Dybenal Lozenges are not liable to sales tax and are exempted under S.R.O. 666(1)/81 dated 20-6-1981. The above notice was replied to with the relevant material. However, after the expiry of nearly six years, the petitioners received the aforesaid show-cause notice dated 24-10-1987 calling upon them to show cause why sales tax amounting to x.13,06,288.1#0 should not be recovered from them under Rule 10 of the Central Excises Rules, 1944, and why the petitioners should not be penalised under Rule 210 of the aforesaid Rules.
3. The above show-cause notice was contested by the petitioners before respondents Nos. 3, 2 and 1 in the form of objections, appeal and revision, and then in the writ petition without any success. The petitioners have, therefore, filed the above petition.
4. In support of the above petition, Mr. Mansoor Ahmad Khan, learned Sr. ASC appearing for the petitioners, has contended as follows:--
(i) The factum that there is a difference of opinion among the two Government Departments concerned, raises a question of law requiring examination by this Court;
(ii) that there is a conflict of views even in the High Court of Sindh on the above question, inasmuch as a Division Bench in an earlier judgment dated 12-8-1990 passed in Constitution Petition No. D-814 of 1988 in the case of Messrs The Boots Company Pakistan Limited v. Central Board of Revenue, has taken the view that ' Sttepsils', which is also a specie of Lozonges, was a drug and was not subjected to sales, but whereas in the present case, a contrary view has been taken without distinguishing the above earlier judgment;
(iii) that the respondents have wrongly pressed into service Rule 10 of the Central Excises Rules, 1944 as the relevant provision for the alleged claim for payment was, section 28 of the Sales Tax Act,
5. We are inclined to hold that the questions raised require consideration. We, therefore, grant leave to consider the above question. Security Rs.5,000. Stay shall continue till further order in terms of the order dated 28-5-1991.
A. A. /G-454/SLeave granted.