Messrs PIONEER CEMENT LIMITED, JAUHARABAD, DISTRICT KHUSHAB VS ASSISTANT COLLECTOR SALES TAX, SARGODHA
2002 P T D 920
[Lahore High Court]
Before Naseem Sikandar and ManSoor Ahmad, JJ
Messrs PIONEER CEMENT LIMITED, JAUHARABAD, DISTRICT KHUSHAB
versus
ASSISTANT COLLECTOR SALES TAX, SARGODHA and I others
Writ Petition No.17378 of 1998 and Customs Appeal No.11‑S of 2001, decided on 09/01/2002.
(a) Civil Procedure Code (V of 1908)‑‑‑
‑‑‑‑O. VI, R.17‑‑‑Amendment of pleadings‑‑‑Amendment of pleadings can be made only with the permission of Court and to the extent allowed by Court‑‑‑No change or alteration in pleadings will be made unless permitted by Court‑‑‑Amendments not bringing change or alteration in cause of action and vital/necessary for effectual decision of controversy are normally allowed by Court‑‑‑Power to permit amendment is discretionary with Court, which has to be exercised by Court keeping in view the various judicial principles, one of which is to avoid multiplicity of litigation‑‑‑Amendment would be allowed, where applicant had acted in good faith.
(b) Civil Procedure Code (V of 1908)‑‑‑
‑‑‑‑Preamble‑‑‑Object‑‑‑Procedure provided in C.P.C., is meant to regulate the exercise of jurisdiction by Courts in a judicious manner‑‑ Such procedure is normally important in the proper administration of justice as it provides the bounds for exercise of jurisdiction by the Courts.
(c) Civil Procedure Code (V of 1908)‑‑‑
‑‑‑‑O. VI, R.17‑‑‑Constitution of Pakistan (1973), Art. 199‑‑ Constitutional petition, amendment of‑‑‑Petitioner was permitted only to add one legal ground, but while submitting amended Constitutional petition, besides such ground, amendments in the prayer as well as in the main body of Constitutional petition were also made‑‑‑Validity‑‑‑High Court did not permit such conduct of petitioner and held the same as not bona fide‑‑‑Amendments introduced in amended Constitutional petition, which were not permitted, were unauthorized and were excluded from consideration.
Haji Suleman Ali Muhammad v. Ahmad Ali and others PLD 1982 Kar. 111 and Mistri Muhammad Hassan v. Haji Said Muhammad and others 1986 CLC 1241 rel.
(d) Sales Tax Act (VII of 1990)‑‑‑
‑‑‑‑Ss. 3, 33, 43, 44, 45 & 46‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Maintainability‑‑‑Liability to pay sales tax by petitioner was fixed by Authority, which was directed to be recovered alongwith additional tax and penalty imposed thereon‑‑ Petitioner instead of challenging the order in Revenue hierarchy filed Constitutional petition‑‑‑Validity‑‑‑Petitioner had alternate remedy of filing an appeal before the Collector and the Customs, Excise and Sales Tax Appellate Tribunal‑‑‑Tendency of bypassing the statutory forum was deprecated and Constitutional petition was not competent.
Al‑Haram Builder v. Federation of Pakistan and others 1993 SCMR 29 rel.
(e) Sales Tax Act (VII of 1990)‑‑‑
‑‑‑‑Ss. 3 & 13‑‑‑Constitution of Pakistan (1973), Art. 199 & Fourth Sched., Entries Nos.49 & 51‑‑‑Constitutional petition‑‑‑Levy of sales tax! on .limestone/clay‑‑‑Petitioner/company was engaged in obtaining limestone/clay from its leasehold area and then consuming the same in manufacturing cement‑‑‑Challenge to such levy on the ground of its being ultra vires of the Constitution‑‑‑Validity‑‑‑Sales Tax Act, 1990,. was enacted in exercise of jurisdiction vested in Federal Government vide Entry No.49 of 4th Sched. of the Constitution, whereby sales tax was levied on sale and purchase of imported, exported, produced, manufactured or consumed goods‑‑‑Tax envisaged under Entry No.51 was quite distinct from the tax on sale, thus, such Entry . was not relevant‑‑‑Sales tax was not levied on any mineral, but the same contemplated charge of any taxable supply made even at intermediary stage of production process‑‑‑Limestone/clay as a minor mineral or kind of mineral, when made subject‑matter of taxable supply, then incident of sales tax would follow‑‑‑Petitioner had obtained limestone/clay, through process of manufacturing from his leasehold area and had consumed it for the purpose of manufacturing cement‑‑ Production of limestone and clay from the mine and bringing the same to factory as a intermediary goods, thus, constituted as taxable supply liable to charge of tax‑‑‑Constitutional petition was dismissed in circumstances.
M. M. Akram for Petitioner.
A. Karim Malik for the Revenue.
Kh. Saeedu‑uz‑Zafar, Dy. A.‑G. for Respondent.
Date of haring: 16th October, 2001.
JUDGMENT
MANSOOR AHMAD, J.‑‑‑By order of the Hon'ble Chief Justice the present writ petition was directed to. be heard alongwith Customs Appeal No. l l ‑S of 2001.
2. Through the present amended writ petition, the petitioner sought the relief in the following terms:‑‑‑
"Under the facts and in the circumstances of the case it is most humbly prayed that:‑‑
(i) the charge of sales tax on limestone and clay including Gypsum, latrite and bauxite be declared ultra vires the Constitution and, therefore, of no legal effect.
(ii) without prejudice to above, the charge of additional tax and penalty at Rs.93,31,398 and Rs.10,00,000 respectively may kindly be declared to be illegal and void ab initio.
(iii) the transportation charges included in the value of the supply of limestone and clay for the purposes of levying the sales tax thereon may graciously be declared to be illegal and void ab initio as the transportation charges are not covered within the definition of value of taxable supply given in section 2(46) of the Sales Tax Act, 1990. '
(iv) Any other relief; that this Hon'ble Court deems appropriate under the facts and circumstances of the case may kindly be allowed to the petitioner."
In the original writ petition, the relief sought was in the following terms:‑‑‑
"Under the facts and circumstances of the case it is most humbly prayed that the charge of Sales Tax on limestone/Clay used for the manufacturing of Cement, an exempt item, may kindly be declared illegal, void, ultra vires of the Sales Tax Act, 1990 and without lawful authority." ,
Vide C.M. No. 1501 of 1998, the petitioner by filing an application under Order 6, rule 17, C.P.C. sought the permission to add a legal ground in the following terms:‑‑‑
"That in terms of Entry No.51 of the Federal Legislative List contained in 4th Schedule to the Constitution of the Islamic Republic of Pakistan, 1973, the Federal Government can charge Sales Tax only on the minerals used in generation of nuclear energy whereas the limestone is a mineral not used in generation of nuclear energy and, therefore, cannot be charged to Sales Tax."
3. This application was allowed by order of this Court, dated 5‑11‑1998. It appears that by filing an amended writ petition besides the ground, amendment in the prayer as well as in the main body was‑ also made. Rules relating to amendment of the pleadings are well‑settled by now. Amendment in the pleadings have to be made with permission of the Court. Amendments sought for are normally allowed by the Court, if they do not bring about a change or alternation in the cause of action and the proposed amendments are vital and necessary for effectual decision of the controversy. The power to permit amendment is discretionary with the Court and this discretion is exercised by the Courts keeping in view various judicial principles one of which is to avoid, multiplicity of the litigation. Further, amendment is allowed where tire applicant acted in good faith. Procedural law laid down in the Civil Procedure Code is meant to regulate the exercise of jurisdiction by the Courts in a judicious manner. Such procedure is normally important in the proper administration of justice as it provides the bounds for exercise of jurisdiction by the Courts. One of the principles relating to the amendment of the pleadings is that amendment is made with the permission of the Court and amendment can only be made to the extent allowed by the Court and no change or alteration in the pleadings would be allowed unless permission for it was sought and the Court allowed that. In the present case the petitioner was allowed only to add one of the grounds by order of this Court but by submitting the amended writ petition, the petitioner brought about changes and amendments not only in the body of the writ petition but in the prayer clause of the writ petition as well. We do not permit this conduct of the petitioner and hold that this was not bona fide. Accordingly the amendments introduced in the amended writ petition by the petitioner which was not permitted are unauthorized and we exclude the same from consideration. Our view is supported by the judgments in cases titled Haji Suleman Ali Muhammad v. Ahmad Ali and others reported as PLD 1982 Karachi 111 and case titled Mistri Muhammad Hassan v. Haji Said Muhammad and others reported as 1986 CLC 1241.
4. The main argument of the petitioner that levy of sales tax on the Gypsum is ultra vires of the Constitution of Islamic Republic of Pakistan and in that reference is made to Entry No.51 of the Federal Legislative List contained in 4th Schedule to the Constitution of Islamic Republic of Pakistan, 1973. It is inter alia contended on behalf of the petitioner that the Federal Government can charge sales tax on mineral used in generation of nuclear energy whereas the limestone is a mineral not used in generation of nuclear energy and it could not be subject of sales tax. From the tenor of the writ petition, it transpired that the sales tax was 1 levied and in that the Additional Collector, Sales Tax, Faisalabad passed an order in original on 19‑6‑1999 whereby the liability of the petitioner to the payment of Rs.61,34,548 as sales tax was established which was directed to be recovered alongwith additional tax thereon and a penalty of Rs.10,00,000 was also imposed under section 33 of the Sales Tax Act, 1990. The petitioner did not challenge the order in original through an appeal under section 45 of the Sales Tax Act, 1990 before the Collector of Appeals, Northern Zone, Lahore and without challenging the order in the Revenue hierarchy opted to file the present writ petition. The tendency of by‑passing the statutory forum is deprecated by the apex Court and reference is made to case titled Al‑Haram Builders v. Federation of Pakistan and others reported as 1993 SCMR 29. We are, therefore, of the view that the present writ petition was not competent as E the petitioner had the alternate remedy of filing an appeal before the Collector as well as before the Customs, Excise and Sales Tax Appellate Tribunal..
5. Regarding the question whether the sales tax is chargeable on the supply of Gypsum and whether the levy claimed by the Sales Tax Department was ultra vires of the Constitution we have already held in Appeal No.ll‑S of 2001 that Entry No.51 was not relevant, in fact it is Entry No.49 of the 4th Schedule of the Constitution which vested jurisdiction to the Federal Government to levy taxes on sale and purchase of imported, exported, produced manufactured or consumed goods. The relevant question in the controversy is misconceived. That the sales tax is a sort of tax on mineral oil, natural gas and mineral for use in generation of nuclear energy. Tax envisaged under Entry No.51 is quite f distinct from the taxes on sale. The levy of sales tax is contemplated to the event of production, manufacture export or consumption of goods. It was in exercise of the jurisdiction finder Entry No.49 that the Sales Tax Act, 1990 was enacted whereby the sales tax was levied. Limestone/Clay as a minor mineral or kind of mineral when made subject‑matter of taxable supply, incident of sales tax would follow. The sales tax is not levied on any mineral but it contemplates charge on any taxable supply made even at intermediary stage of production process. Admittedly the petitioner obtained limestone/Clay through process of manufacturing from his lease‑hold area and consumed it for the purpose of manufacturing the cement. The production of limestone and Clay from the mine and bringing it to the factory as a intermediary goods constituted a taxable supply and the sales tax hierarchy has rightly held that it was a taxable supply liable to the charge of tax as in the original writ petition the only prayer was that the charge of sales tax on limestone/Clay be declared as void, ultra vires and we have held otherwise, therefore, the writ petition fails and accordingly the same is dismissed on merits also.
S.A.K./P‑76/L Petition dismissed.