(a) Sales Tax Act (VII of 1990)---

----S.2(35), (16)---Notifications Nos.598(I)/90, dated 7-6-1990and 555(1)/94, dated 9-6-1996---"Manufacture"---Definition---Goods manufactured for self-consumption fell within the ambit of "manufacture" and, thus, taxable.

(b) Sales Tax Act (VIII of 1990)---

----Ss.2(41) & 3---Constitution of Pakistan (1973), Federal Legislative List, Items 49 & 59---Tax on sales of goods---Legislation---Tax on sales of goods was covered by Item No.49 of Federal Legislative List of the Constitution of Pakistan---By levying sales tax on the manufacture of goods, whether for self-consumption or not, Legislature had not outstepped its limits provided in Item 49 read with Item 59 of the Federal Legislative List, Part I, Fourth Sched. of the Constitution.

Ijaz Ahmad Awan for Petitioner (in W. P. No.2027 of 1998).

A. Karim Malik for Respondent (in W. P. No.2027 of 1998).

Imtiaz Rasheed Siddiqui for Petitioner (in W. P. No.259 of 1998).

A. Karim Malik for Respondent (in W. P. No.259 of 1998).

Date of hearing: 14th April, 1998.

JUDGMENT

This judgment shall dispose of Writ Petitions Nos.259 of 1998, 29575 of 1997, 2728 of 1998, 4512 of 1998, 4513 of 1998, 2027 of 1998 and 29574 of 1997 as common questions of law and facts are involved therein.

2. In all these p6titions, the petitioners are engaged in the production of sugar. One of the by-product which is produced by the Factories in the course of operation is Bagasse which is admittedly capable of being sold separately. After the enactment of the Sales Tax Act, 1990, Bagasse was exempt from payment of sales tax under S.R.O. No. 598(1)/90, dated 7-6-1990 and then under S.R.O. No.555(I)/94, dated 9-6-1994. This state of affairs continued till June, 1996 when all the notifications granting exemption were done away with and instead Sixth Schedule was added to the Sales Tax Act, 1990 listing various exemptions granted under the Act. Bagasse was not one of the products which was mentioned in the Schedule with the result that the respondents started demanding sales tax from the petitioners on the production of Bagasse. In June, 1996, however, Sixth Schedule was amended and Bagasse was also listed as one of the items exempted from payment of sales tax. These petitions involve the payment of sales tax for the period from 1-7-1996 till 30-6-1997.

3. In support of these petitions, Mr. Imtiaz R. Siddiqui, Advocate has contended that as Bagasse is being consumed by the petitioners themselves and there is no sale by the petitioners to any 3rd person, the petitioners are not liable to pay any sales tax. It was elaborated that under the charging section viz., section 3 of the Sales Tax Act, 1990, tax is payable only when "taxable activity" occurs which in turn has been defined in section 2(35) to mean the supply of goods by one person to another. According to Mr. Siddiqui, as there is no second or third person involved to whom goods are sold, the self consumption of Bagasse does not constitute taxable supply. Hence there was no liability to pay the sales tax. Reference has been made to sections 22 and 26 of the Sales Tax Act, 1990.

4. It was also argued by Mr. Imtiaz R. Siddiqui, Advocate that the impugned order of the Additional Collector Sales Tax, is entirely based on a circular issued by the Central Board of Revenue which had no jurisdiction to issue such a Circular under the Sales Tax Act, 1990.

5. Mr. Ali Sibtain Fazli, Advocate who appeared on behalf of some of the petitioners has added that the word "supply" includes sale, lease or other disposition of goods, as defined in section 2(33) of the Act and it is outside the Federal legislative list and as such the Parliament has no jurisdiction to legislate on the subject.

6. The contention raised by Mr. Imtiaz R. Siddiqui, Advocate that the self-consumption is not taxable, cannot be accepted. Reference to section 2(35) shows that taxable supply not only includes sale by one person to another but also sales, manufacture, and production of any goods. The word "manufacture" has been defined in section 2(16) and clearly covers production of Bagasse. Consequently, even if the self-consumption is not covered by the earlier part of the definition of taxable supply yet it would clearly fell within the ambit of "manufacture" as mentioned in the extended definition. For the same reason, the contention raised by Mr. Ali Sibtain Fazli, Advocate cannot be accepted. Whatever, be the definition of word 'supply' is given in the Sales Tax Act, the fact remains that under section 3 of the Act it is the taxable supply, which is being taxed which has been separately defined in section 2(41). Be that as it may, the tax on the sales of goods is clearly covered by item No.49 of the Federal Legislative List and when read with item No.59 it cannot be successfully contended that by levying tax on the manufacture of goods whether for self-consumption or not, the legislature has out stepped its limits.

7. Although there is force in the contention raised by the learned counsel for the respondents that Central Board of Revenue could not have issued circular and thereby pre-empting jurisdiction of the Adjudicating Authority, but as I have myself adverted to the jurisdictional question as to whether any tax is payable on the use of bagasse, this question loses all importance.

In view of above, all these petitions are found to be without any force and are dismissed leaving the parties to bear their own costs.

C.M.A./262/LPetition dismissed.