Sale of Goods Act (HI of 1930)--

----S.64-A---Contract Act (IX of 1872), S.2(h)---Constitution of Pakistan (1973), Art.199---Constitutional petition---Additional amount---Claim for-- Petitioner who was awarded contract for replacement of "PRCC pipeline" with "ductile cast iron pipe" had contended that during currency of contract entered into between parties, customs duty as well as sales tax having been enhanced, it was liability of Authority to pay such enhanced amount-- Petitioner had submitted demand for payment of additional amount on account of customs duty and sales tax, but that claim was denied by Authority---Petitioner relying on S.64-A of Sale of Goods Act, 1930 contended that if after entering into contract, rate of customs duty or sales tax was enhanced, liability, in absence of any contract to the contrary, would pass on to purchaser---Contention of petitioner was repelled because S.64-A of Sale of Goods Act, 1930 had no applicability in case of petitioner as same related to contract of sale whereas contract arrived at between petitioner and Authority was not for sale of goods, but was for carrying out certain works---Element of sale being totally missing in contract between parties, S.64-A of Sale of Goods Act, 1930 relied upon by petitioner, had absolutely no applicability---Petitioner having contracted to carry out work for specific amount, could not turn around and claim any additional amount.

Nagina Cotton Mills Ltd. v. Government of Pakistan and 2 others PLD 1988 Kar. 1 and Messrs Chaudhry Brothers v. Province of the Punjab and others 1993 MLD 2437 ref.

Ch. Fazal Hussain for Petitioner.

Ch. Ghulam Hassan Gulshan for Respondents

Date of hearing: 25th June, 1998

JUDGMENT

Messrs Waheed Corporation (Regd.), the petitioner herein, was awarded a contract on 5-6-1995 for replacement of 30" dia and 24" dia PRCC Line with ductile cast iron pipe for a sum of 8,57,06,008.87. The work was to be completed within 12 months. According to the petitioner, ductile cast iron pipes are not manufactured in Pakistan and were imported by it from abroad in different consignments and during the currency of the contract entered into between the parties, customs duty as well as sales tax was enhanced, which, according to the petitioner, was-the liability of the respondents. The petitioner submitted its demand for payment of certain additional amount including Rs.19,62,743.74 and Rs.7,94.911.20 on account of customs duty and sales tax respectively. This claim/demand of the petitioner was rejected by the Capital Development Authority respondent herein on 11-3-1997. Hence this petition.

2. Ch. Fazal Hussain, the learned counsel appearing for the petitioner has relied upon section 64-A of the Sale of Goods Act, 1930 to contend that if after entering into contract rate of duty or tax is enhanced the liability in the absence of any contrary to the contrary passes on to the purchaser. It was elaborated that admittedly in the present case the petitioner had to pay additional amounts mentioned above on account of increase in the rate of taxation and the respondents are liable to reimburse the petitioner.

3. In reply, Ch. Ghulam Hussain Gulshan, the learned counsel appearing for respondents, has pointed out that section 64-A of the Sale of Goods Act, 1930 has no applicability inasmuch as contract which was entered into between the patties was not for sale of goods but was for carrying out certain works.

4. Section 64-A of the Sale of Goods Act, 1930 on which both the learned counsel for the parties rely and reads as under:

"64-A. In contracts of sale-amount of increased or decreased duty to be added or deducted.---In the event of any duty of customs or excise (or tax) on any goods being imposed, increased, decreased or remitted after the making of any contract for the sale of such goods without stipulation (as to the payment of duty or tax where duty or tax) was not chargeable at the time of the making of the contract, for the sale of such goods (duty paid or tax paid where duty or tax) was chargeable at that time:--

(a)if such imposition or increase so takes effect that (the duty or tax or increased duty or tax) as the case may be, or any part thereof, is paid the seller may add so much to the contract price as will be equivalent to the amount paid (in respect of such duty or tax or increase of duty or tax) and he shall be entitled to be paid and to sue for and recover such addition, and

(b)if such decreased or remission so takes effect that the decreased duty (or tax) only or no duty (or tax), as the case may be, is paid, the buyer may deduct so much from the contract price as will be equivalent to the decrease of duty (or tax) or remitted duty (or tax), and he shall not be liable to pay, or be such for or in respect of, such deduction).

Explanation.---The word 'tax' in this section means the tax payable. under this Sales Tax Act, 1951. "

As is obvious from the above, this provision applies only to contracts of sale of goods. Therefore, the sole question, which falls for determination in the present case is as to whether the contract between the parties was one for sale of goods or was for carrying out certain works. On the face of the contract, the answer to this question has to be in the negative. Under the contract, the petitioner was required to replace 30" dia and 24" dia P.R.C.C. Line with ductile cast iron pipe and there is nothing in the contract, which provides for any sale of goods by the petitioner to the respondents. Furthermore, there is also nothing in the contract, which obliged the petitioner to import the pipe. As the element of sale is totally missing in the present case, section 64-A of the Sale of Goods Act, 1930 has absolutely no applicability at all. The petitioner, having contracted to carry out works for specific amount, cannot turn around and claim any additional amount.

6. The learned counsel for the petitioner has relied upon Nagina Cotton Mills Ltd. v. Government of Pakistan and 2 others PLD 1988 Kar. 1 which is clearly distinguishable inasmuch as the contract in that case was for supply and sale of cotton yarn. Again reliance on M/s. Chaudhry Brothers v. Province of the Punjab etc. 1993 MLD 2437 is misplaced, for that case dealt with white printing paper and not for carrying out work of construction or laying down any ductile cast iron pipe.

In view of the above, this petition is found to be without any merit and is dismissed, leaving the parties to bear their own costs.

LM.A./W-35/LPetition dismissed.