CENTRAL BOARD OF REVENUE GOVERNMENT OF PAKISTAN ISLAMABAD VS Messrs MAPLE LEAP CEMENT FACTORY. LTD.
2002 P T D 1889
[Supreme Court of Pakistan]
Presenr aztm Hussain Siddiqui and Javed Iqbal, JJ
CENTRAL BOARD OF REVENUE GOVERNMENT OF PAKISTAN ISLAMABAD through Secretary and 3 Others
versus
Messrs MAPLE LEAP CEMENT FACTORY. LTD. and 2 others
Civil Appeals Nos.790, 791 and 792, decided on 12/04/2002.
(On appeal from the judgment, dated 25-5-1994 of Lahore High Court, Rawalpindi Bench passed in Writ Petitions Nos. 1046, 1047 and 1048 of 1991). ,
(a) Central Excises and Salt Act (I of 1944)---
----S.4(1)--=Constitution of Pakistan (1973), Art. 185(3)---Leave to appeal was granted by Supreme Court to determine the scope of "wholesale cash price" within the meaning of SA(1) of the Central Excise and Salt Act, 1944.
Ittihad Chemicals v. Islamic Republic of Pakistan PLD 1993 SC 136 ref.
(b) Sales Tax Act (VII of 1990)---
----S.3--- Central Excises and Salt Act (I of 1944), S.4(1)---Constitution .of Pakistan (1973), Arts. 185(3) & 199---Constitutional petition---Sales tax---Recovery---Determination of wholesale cash price of cement for the purpose of sales tax---Authorities included the charges like loading, unloading, transportation, octroi duty and export tax in the ex-factory price of the cement for the purposes of levy of sales tax---Manufacturers of the cement assailed the order of the authorities before High Court in Constitutional petition---High Court allowed the petition and excluded the impugned charges from the ex-factory price of cement for the purposes of levy of sales tax ---Validity---Octori and transportation charges could be included by the authorities while determining the wholesale cash price of cement manufactured, as the same was permissible under S.4(1) of the Central Excises and Salt Act, 1944-- Judgment passed by the High Court was set aside and the post manufacture charges for the purpose of computation of wholesale cash price were included for the transfer of levy of sales tax---Appeal was allowed.
Pakistan through Secretary Finance and another v. Kohat Cement Company and others PLD 1995 SC 659 fol.
K. M. Virk, Advocate Supreme Court and-Ch. Akhtar Ali, Advocate-on-Record (in all Appeals) for Appellants.
Raja Muhammad Akram, Advocate Supreme Court and Ejaz Muhammad Khan, Advocate-on-Record (absent) (in all Appeals).
Date of hearing: 9th October, 2001.
JUDGMENT
NAZIM HUSSAIN SIDDIQUI, J.---These appeals by leave of this Court are directed against the judgment, dated 25-5-1994 passed by a learned Judge, Lahore High Court,. Rawalpindi Bench, whereby Writ Petitions Nos. 1046, 1047 and 1048 of 1991 were allowed.
2.. In all these matters common questions of facts and law are involved and the respondents namely, Messrs Maple Leaf Cement Company Limited (Civil Appeal No. 790/1995), Messrs White Cement Industries Ltd. (Civil Appeal No. 1791 / 1995) and Messrs . Pak Cement Limited Company (Civil Appeal No. 792/ 1995) are the companies incorporated under the Companies Ordinance, 1984 and are being run in the public sector under the control of the Ministry of Production, Government of Pakistan through State Cement Corporation of Pakistan. They are manufacturing cement in their respective plants, which are situated at Iskandarabad. Vide Notification No. 523(1)/83, dated 26-6-1988, their production was subjected to payment of sales tax. They claimed to have already paid sales tax according to law.
3. According to the respondents, the Assistant Collector, Customs and Central Excise served notices upon them, alleging that the sales tax paid by them was less than what was actually due against them. It was alleged that they had cleared their product on ex-factory price fixed by the State Cement Corporation rather than on assessable value under section 4(1) of the Central Excise and Salt Act, 1944, hereinafter referred to as "the Act of 1944". It was also alleged that sales tax of Rs.27,70,313.28 by Maple Leaf Factory, Rs.3,21,214.38 by White Cement Industries and Rs.14,82,875.20 by Pak Cement Ltd. Company was not paid. Further, it was alleged that while determining value of the cement for payment of sales tax charges like loading, unloading, transportation octroi duty and export tax should have been included. The Assistant Collector Customs had fixed the responsibility of the respondents as above and passed such orders.
4. The respondents being dissatisfied file appeals against above orders before the Collector (Appeals) Customs and Central Excise, Northern Zone, Lahore, who accepted the ex-factory price as value under section 4(1) of the Act of 1944 and set aside the Assistant Collector's orders. Being dissatisfied with the orders of the Collector, the Central Board of Revenue reopened the cases of the respondents, under section 35-A of the Act of 1944, and issued show-cause notices to the respondents for payment of the aforesaid amount. After hearing the parties on 19-8-1991, learned Member, Sales Tax, Central Board of Revenue set aside the common order of Collector and restored the orders of Assistant Collector. The respondents then challenged the above order of Member Sales Tax, through aforesaid writ petitions, which were allowed by a learned Judge in Chamber. Above order has been impugned in these appeals.
5. Section 4(l) of Central Excise and Salt Tax Act, 1944 is as follows:--
4. Determination of value for the purposes of duty.---(1) Where under this Act any article is chargeable with duty at a rate dependent on the value of the articles, such value shall be deemed to be the wholesale cash price for which an article of the like kind and quality is sold or is capable of being .sold to the general body of retail traders or, if there is no general body of retail traders, the general body of consumers on the day on which the article which is being assessed to duty is removed from the factory or the warehouse, as the case may be, without any abetment or, deduction whatever except the amounts of duty and sales tax then payable.
6. Learned Member Board of Revenue, having taken into consideration all the pleas raised before him, reached the conclusion that .ex-factory price is irrelevant to section 4(1) (ibid) and that wholesale price as per above-quoted section is -to be determined for the purpose of sales tax. He concluded that assessment value, therefore, is to include all charges up to the stage of sale to the general body of retail traders in the nearest wholesale market, regardless of the, fact that certain amounts were being charged to the retail traders on account of transport, loading, unloading, octroi etc. He held that even if these, were incurred by traders, stockists or dealers, these had to be included in the wholesale cash price, as envisaged under section 4(I) (ibid). He concluded for levy of sales tax, the value determined under section 4(1) plus Excise Duty becomes the assessable value.
7. Learned Single Judge in the impugned judgment relying upon the various cases of Indian jurisdiction, held that the responsibility for further charges like transportation, loading, unloading and octroi duty and export tax was the responsibility of the purchasers and not of the respondents. Referring to this Court judgment reported as Itehad. Chemicals v. Islamic Republic of Pakistan (PLD 1993 SC 136), he observed that this Court did not decide the question as to what would be the value of the goods for the purpose of assessment of duty under section 4 of the Act of 1944 if there was factual dispute between the parties in that regard. Having taken into consideration all .the pleas raised before him, he held as follows:---
"It is clear from the above that where the goods are sold at the factory gate at a uniform price which does not include the transportation charges etc. there is no justification for including those charges while assessing the value of the goods for assessment of the sale tax. It is also to be noticed that the sale price received by the petitioners is uniform and the same for all the dealers irrespective of the destination to which the goods are clearly taken by them."
8. Vide order dated 11-7-1995, leave to appeal was granted by this Court to determine the scope of "wholesale cash price" within the meaning of said section 4(1).
9. It is contended on behalf of the appellants that the respondents are under duty to pay sales tax on the value of cement by including all incidental charges like loading, unloading, transportation and similar other charges, but the respondents were paying sales tax on the value of cement sold by excluding all incidental charges. Above point first came under consideration in the case of Itehad Chemical's (supra) wherein it was held that freight and octroi charges were to be included for the purpose of computing the price under section 4(1) for assessment of Excise Duty and Sales Tax. Although the point as agitated in these matters is a bit different than Itehad Chemicals case, but the principle laid down in said reported case is that freight and octroi charges, as such, are to be included. Learned High Court declined to follow above principle on the plea that the question was not addressed with reference to the factual dispute between the parties. Admittedly, there is no factual dispute in these matters, therefore, it ought to have been followed by learned High Court.
10. Above point again came up under discussion before a .larger Bench of this Court comprising of 3 Judges in the case reported as Pakistan through Secretary Finance and another v. Kohat Cement Company and others (PLD 1995 SC 659). The matter was decided by a majority of 2 to 1. Inter alia, leave to appeal was granted in this case to examine the effect of decision of this Court in Itehad Chemical's case. Extensive reference was made in this matter to the cases of Indian jurisdiction and after in depth examining the import of these cases as well as the relevant provisions of section 4(1), it was held that there were the distinguishing features in the Indian Law, and the Pakistani law with reference to said section 4(1). Having done above exercise, finally it was concluded:---
"However, the law applicable in Pakistan is clearly distinguishable because although the value of an article is to be determined on the basis of the whole sale cash price for which such article is sold or is capable of being sold to the general body of retail- traders or, as the case may be, consumers but no such provision exists in section 4(1) as the same is applicable in Pakistan, whereby sale of articles for the purpose of computation their wholesale cash price is contemplated outside the factory premises of the manufacture, as is the case in India. The expression general body of retail traders of consumers although, has not been defined either in the said Act or under the rules framed hereunder but reference to the same in section 4(1) would generally mean reference to traders or persons to whom articles chargeable with duty are sold in the wholesale market. Consequently, before the goods reach in the hands of any retail traders or consumers from the premises of the manufacture, payment of octroi duty or transportation charges would also be involved. Further, the language employed by the Legislature in section 4(1) of the said Act to the effect: `without any abatement or deduction whatever except the amounts of duty and sales tax then payable' represent emphasis on only such deductions which have been expressly made permissible by the statute itself. Therefore, the subsection only contemplates deductions on account of any amount of duty and sales tax payable on such articles, for the purpose of computation of their value under the said section but no provision exists therein from which the legislative intent qua further deductions on account of octroi or transportation charges can be spelt out. By a legal fiction, value of such articles is to be determined no alone on the basis of the actual price for which such article may be sold but such value may be determined even on the basis of the price of which an article of like kind andquality is capable of being sold on the 'day when it is removed from the factory, to the general body of retail traders or consumers, as the case may be. The provisions of the law in Pakistan on the subject are, therefore, clearly distinct from those of the Indian Law where the value is to be assessed on the basis of the wholesale price outside the manufacturer's premises. The amendments made in section 4(1) clearly signify an intention on the part of the Legislature to include the element of post manufacture, charges for the purpose of , computation of wholesale cash price, barring only what has been expressly provided for by the legislation itself, notwithstanding the fact that by some understanding between the manufacturer of articles and their retail trader octroi or transportation or any other such charges are to be borne by the latter. Therefore, even if the contention raised on behalf of respondent No. l that the octroi.or transportation charges were not borne by it but the same were borne by its stockists is believed, the same would be of little consequence to it. Consequently, we are of the opinion that the view taken by the learned Judges of the High Court is not correct as octroi and transportation charges could be included by respondent No.3 while determining wholesale cash price of the cement manufactured by respondent No. l since the same was permissible under section 4(1) of the Central Excises and Salt Act, 1944."
11. Following the dictum laid down in above case, we hold the same view that-post manufacture charges for the purpose of computation of wholesale cash price are permissible under section 4(1) of the Act of 1944 and are to be included as such.
12. In consequence, these appeals are allowed, the judgment of High Court is set aside and that of Member (C.E. & S.T.) Central Board off Revenue is resorted.
Q.M.H./M.A.K./C-54/SC
Appeal allowed.