TANDLIANWALA SUGAR MILLS LTD. VS FEDERATION OF PAKISTAN
2001 P T D 2094
[Supreme Court of Pakistan]
Present: Munir A. Sheikh, Qazi Muhammad Farooq and
Rana Bhagwan Das, JJ
TANDLIANWALA SUGAR MILLS LTD. and others
Versus
FEDERATION OF PAKISTAN through Secretary,
Ministry of Finance, Revenue and Economic Affairs,
Islamabad and others
Civil Petitions Nos. 1956‑L to 1967‑L, 2169‑L, 2210‑L to 2213‑L, 2219‑L of 1999, 114‑L, 116‑L to 119‑L, 142‑L, 148‑L and 149‑L of 2000 converted int6 appeal and decided on 19/05/2000.
(On appeal from the judgment dated 15‑11‑1999 of the Lahore High Court, Lahore, passed in Writ Petitions Nos.14425, 14426, 14809, 14810, 14812, 14813, 14887, 14888, 14889, 14971, 14972, 14973, 12867, 15085, 15179, 15180, 15240, 2076 of 1999, 47 of 2000, 8329, 15911, 15747, 14619, 12313 of 1999, 19045 of 1998 and 12312 of 1999 respectively).
Sales Tax, Act (VII of 1990)
‑‑‑‑S.3 [as amended by Finance Act (III of 1998) and Finance Act (IV of 1999)‑‑‑Constitution of Pakistan (1973), Art.185(3)‑‑‑Levy of sales tax‑‑ Pleas raised in the petition were not stressed by the petitioner and he stated to be satisfied if further tax at the rate of 1% levied by Finance Act, 1998, was, set aside‑‑‑Effect‑‑‑Earlier amendment was technically defective and the same was struck down on‑ the touchstone of the second amendment inserted vide Finance Act, 1999, which did not suffer from any legal infirmity‑‑‑Petition for leave to appeal was converted into appeal and was partly accepted to the extent of further tax at the rate of 1% levied by Finance Act, 1998, and dismissed in respect of further tax at the rate of 3% levied by Finance Act, 1999.
Ali Ahmed Awan, Advocate Supreme Court and Ch. Mehdi Khan Mehtab, Advocate‑on‑Record for Petitioners (in all Petitions except C.Ps. Nos. 2169‑L and 2219‑L of 1999).
A. Karim Malik, Advocate Supreme Court and K. M Virk, Advocate Supreme Court for Respondents.
Date of hearing: 19th May, 2000
QAZI MUHAMMAD FAROOQ, J.‑‑‑The abovementioned twenty six petitions for leave to appeal have arisen from an equal number of writ petitions which were dismissed by a learned Single Judge of the Lahore High Court, Lahore through a common judgment, dated 15‑11‑1999.
2. The dispute is traceable to two amendments made in section 3 of the Sales. Tax Act in 1998 and 1999. The first amendment was made through Finance Act, 1998 whereby subsection (1‑A) was inserted and a further tax at the rate of one per cent. of the value in addition to the rate specified in subsection (1) of section 3 was levied on taxable supplies made in Pakistan to a person other than a registered person. The second amendment was made by Finance Act, 1999 vide which rate of further tax was enhanced from one per cent. to three per cent. and for the expression "subsection (1)" the expression "subsection (1), clause (c) of subsection‑(2) and subsections (4) and (5)" was substituted.
3. The tax levied through the first amendment was struck down by the Peshawar High Court on acceptance of Writ Petition No.1713 of 1998, decided on 6‑10‑1999. The petitioners, who are manufacturers of sugar and bottlers of soft drinks, had also challenged both the amendments on various grounds but‑their writ petitions were dismissed by the Lahore High Court, Lahore. Hence, the petitions highlighted above.
4. When the petitions came up for hearing today Mr. A. Karim Malik, learned, Advocate Supreme Court appearing for the respondents, pursuant to notice issued on 17‑2‑2000, made a statement at the bar that he would not contest the challenge thrown to the first amendment as the petition, for leave to appeal (Civil Petition No.474‑P of 1999) directed against the judgment of the Peshawar High Court in Writ Petition No. 1713 of 1998 was dismissed by this Court on 30‑11‑1999. He also placed on record a copy of the judgment of this Court, relevant portion whereof reads thus:‑‑‑
It is quite clear that the sales tax is leviable at the rate of 12.50 per cent. both under section 3(1) as well as section 3(2)(c) of the Act. It is not disputed before us that the aerated water manufactured by the respondents is mentioned in the 3rd Sched. to the Act. The learned Judges of the High Court rightly came to the conclusion that the rationale behind levy of sales tax under clauses (1) and (2)(c) of section 3 of the Act is different. A plain reading of the above section will show that under section 3(1) of the Act the tax at the rate of 12.50 is recoverable on the taxable supplies by a registered person while the sales tax is recoverable under clause (c) of subsection (2) of section 3 of the Act at the same rate on the retail price of the product which is to be prominently, legibly and indelibly printed or embossed by the manufacturer on each packet; container, package, cover or label of the goods. It is, therefore, quite clear that the sales tax under subsection (2)(c) of section 3 (ibid), is .not payable on the basis of taxable supplies but on the retail price while under section 3(1) the sales tax at the rate of 12.50 per cent. is recoverable on the taxable .supply. Subsection (1‑A) which was added in section 3 after subsection (1), makes an additional tax payable at the rate of one per cent. of the value on the taxable supplies in addition to the tax payable under subsection (1) in respect of all supplies made in Pakistan to a person other than a registered person. It may also be mentioned here that through Finance Act IV of 1999 subsection (1‑A) of the Act has been further amended as follows:‑‑‑
(i)in subsection (1‑A),‑‑‑
(a)For the word 'one', wherever occurring, the word "three" shall be substituted; and
(b)For the expression 'subsection (1)' the expression subsection (1), clause (c) of subsection (2) and subsections (4) and (5)' shall be substituted; and
The above amendment introduced in subsection (1‑A) of the Act supports the conclusion that the cases falling under clause (c) subsection (2) were not previously within the mischief of sub section (1‑A) of the Act. We are, therefore, of the view that the conclusion reached by the learned Judges .of the High Court does not suffer from any legal infirmity. No case for interference with the judgment of High Court is made out. The petition is, accordingly, dismissed and leave is refused. "
5. Faced with this situation the learned counsel for the petitioners did I not address arguments on the questions raised in the petitions and took the stance that he would be satisfied if further tax at the rate of 1% levied by Finance Act, 1998 is set aside. The stance is understandable inasmuch as the first amendment being technically defective was struck own on the touchstone of the second amendment which does not suffer from any legal infirmity. Consequently, the petitions are converted into appeals and partly accepted to the extent of further tax at the rate of 1% levied by Finance Act, 1998 and dismissed in respect of further tax at the rate of 3% levied by Finance Act, 1999. No order as to costs.
Q. M. H./M. A. K./T‑15/SCOrder accordingly