COLLECTOR OF SALES TAX, COLLECTORATE OF SALES TAX, CUSTOM HOUSE, LAHORE VS AVARI HOTEL LIMITED, LAHORE
2002 P T D 1912
[Supreme Court of Pakistan]
Present: Nazim Hussain Siddiqui and Abdul Hameed Dogar, JJ
COLLECTOR OF SALES TAX, COLLECTORATE OF SALES TAX, CUSTOM HOUSE, LAHORE
versus
AVARI HOTEL LIMITED, LAHORE and others
Civil Appeal No. 1587 of 1999 alongwith Civil Petition No.2564/L of 2000. decided on 15/04/2002.
(On appeal from the judgments, dated 18-9-1999 and 12-9-2000 of Lahore High Court, Lahore passed in Writ Petition No.8154 of 1999 and Writ Petition No.8362 of 1999 respectively).
(a) Sales Tax Act (VII of 1990)---
----Ss.2(28), 3AA & 14---Constitution of Pakistan (1973), Arts. 185(3) & 199---Supreme Court granted leave to appeal to consider, whether High Court, under its Constitutional jurisdiction under Art. 199 of the Constitution had correctly interpreted the provisions of, Ss.2(28), 3AA & 14 of Sales Tax Act, 1990.
(b) Sales Tax Act (VII of 1990)--
---S.2(28)--Term "general public"--Meaning and scope.
Words and phrases, Permanent Edn. Vol. 18, by Gabardine 'Gondola; Goalundo Ice Association Ltd. v. Commissioners of the Rajabari Muncality PLD 1952 Dacca 12 and Chamber's English Dictionary ref.
(c) Sales Tax Act (VII of 1990)---
----Ss.2(28)(33)(35)(41), 3AA & 14---Prohibition (Enforcement of Hadd) Order (4 of 1979), Art .17---Punjab Prohibition (Enforcement Hadd) Rules, 1979, R.12---Constitution of Pakistan (1973), Arts.185(3) & 199---Constitutional petition before High Court---Retailer of liquor-- Requirement of registration---Respondents being retailers of liquor were holding licences under Art.17 of Prohibition (Enforcement of Hadd) Order, 1979 read with R.12 of Punjab Prohibition (Enforcement of Hadd) Rules, 1979 to sell liquor to permit holders---Respondents challenged validity of notices issued to them for "sales tax registration of wine shops" in Constitutional petition---High Court allowed Constitutional petition on the ground that respondents were not supplying liquor to' general public within meaning of S.2(28) of Sales Tax Act, 1990, as the said supply was limited in number and could not be termed' as supply to general public---Appellants' contention was that supply of alcoholic liquor from "permit room' was a "supply" in terms of S.2(33) of Sales Tax Act, 1990, and as such was a taxable activity under S.2(35) of the Sales Tax Act, thus respondents being engaged in retail business of taxable supply were liable to be registered as retailers---Respondents' plea was that they having been already registered on account of their engagements in making sales tax supplies and services as hotel, were not required to be registered for second time as retailers ---Validity---"Making taxable supply as a hotel" and "supply of liquor" were distinct and were to be treated as such---Respondents could not substantiate their plea that once having been registered for making taxable supply as a hotel, they could not be required to be registered for second time as retailers of liquor---Spirit of term "general public" as used in S.2(28) in Sales Tax Act, 1990, was not to limit its scope, but to enhance the same---Construction placed by High Court on said term holding that customers of respondents did not fall within its scope was incorrect, as there was no legal justification for such a narrow construction of said term---Customers of respondents for said purpose were a section of general public, as such were fully covered by said term, and their exclusion was neither logical nor legally justified---Impugned notices were according to law, to which no exception could be taken---Supreme Court accepted the appeal/petition and set aside the judgment passed by High Court.
A. Karim Malik, Senior Advocate Supreme Court and Syed A. A. Jafari, Advocate-on-Record (absent) for Appellants (in C.A. No. 1587 of 1999).
K.M. Virk, Advocate Supreme Court and Muhammad Aslam Chaudhry, Advocate-on-Record (absent) for Appellants (in C.P. No.2564/L of 2000).
Ali Sibtain, Advocate Supreme Court for Respondents Nos.l and 2 (in C.A. No.1587 of 1999) and Tariq Mahmood Khokhar, Addl. A.-G. for Respondent No.3 (in C. A. No. 1587 of 1999).
Nemo for Respondent (in C.P. No.2564/L of 2000).
Date of hearing: 8th November, 2001.
JUDGMENT
NAZIM HUSSAIN SIDDIQUI, J.---Above-titled appeal and petition are directed against the judgments dated 18-9-1999 and 12-9-2000 passed by two different learned Single Judges in Chamber, Lahore High Court, Lahore in Writ Petition No.8154 of 1999 and Writ Petition No.8362 of .1999 respectively. In Writ Petition No.8362 of 1999, the judgment delivered in Writ Petition No.8154 of 1999, was followed.
2. According to the appellants, the respondents are retailers of liquor, as defined under section 2(28) of the Sales Tax Act, 1990, hereinafter referred to as "the Act of 1990". They are also holder of licences under Article. 17 of the Prohibition (Enforcement of Hadd) Order, 1979 read with Rule 12 of the Punjab Prohibition (Enforcement of Hadd) Rules, 1979 to sell liquor to the permit holders, as such, are liable to get themselves registered as retailers under section 14 read with section 3AA of the Act of 1990.
3. The case of the respondents is that they are only acting as licensees under the Government of Punjab and sell goods to the Permit Holders and they do not sell to general public, but their sales are Restricted to non-Muslim foreigners and resident non-Muslims.
4. According to the para. 2 of the impugned judgment, during pendency of the matter fife respondents started collecting sales tax as "retailers" to avoid any personal liability in case of any adverse decision. if delivered keeping in view the provisions of sections 3AA and 14 of the Act of 1990. Having taken into consideration the case-law cited before it learned High Court, reached the following conclusion:--
"11. The aforesaid facts when judged on these principles of interpretation there appears no reason to hold that the petitioners are making a taxable supply to `general public'. Holding otherwise would amount to restrict general words and to make them fit in a moulder wished and prepared by the Revenue. The customers of the petitioners,' the permit holders with the conditional ties attending to the permits and to their own class as such by no imagination are `general public'. No finding favourable to the. Revenue can be made without doing unnecessary violence to the language of the statute. The customers of the petitioners or the recipients of the taxable supply are so limited in number and so specific in nature that holding them to be general public or public simpliciter is not possible. That will simply be stretching the meaning for the benefit of the Revenue to rope in the petitioners. Such-like approach as observed above, would not be in consonance with the above-stated settled rules of interpretation.
12. Accordingly, this petition is accepted. It is held that petitioners are not `retailers' as defined in section 2(28) of the Act. Therefore, the arrears created against them since 1-7-1998 are declared to be of no legal effect. Further that the provisions of section 3B of the Act shall take care of the retail tax already collected by them and passed on to the national exchequer during the pendency of these petitions."
5. Vide order, dated 1-12-1999, leave to appeal was granted to consider whether High Court has correctly interpreted the provisions of sections 2(28), 3AA and section 14 of the Act of 1990.
6. In order to appreciate the points raised in this appeal, it would be advantageous to reproduce below the relevant sections of the Act of 1990:---
"2(28) 'retailer' means a person not being a manufacturer or producer or an importer supplying goods to general public for the .purpose of consumption; ' .
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2(33) 'supply'. includes sale; lease (excluding financial lease) or other disposition of goods in furtherance of business carried out for consideration and also includes-.-
(a) putting to private, business or non-business use of goods acquired, produced or manufactured in the course of business;
(b) auction or disposal of goods to satisfy a debt owed by a person;
(c) possession of taxable goods held immediately before a person ceases to be a registered person; and,
(d) such other transaction as the Federal Government may, by notification in the official Gazette, specify;
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2(35) 'taxable activity' means any activity which is carried on by any person, whether or not for a pecuniary profit, and involves in whole or in part, the supply of goods to any other person, whether for any consideration or otherwise, and includes any activity carried on in the form of a business, trade or manufacture;
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2(41) `taxable supply' means a supply of taxable goods made in Pakistan by an, importer, manufacturer, wholesaler (including dealer), distributor or retailer other than a supply of goods which is exempt under section 13 and includes a supply of goods chargeable to tax at the rate of zero per cent. under section 4;
3AA. Retail tax.---(1) Subject to the provisions of this section and such conditions and procedures regarding the mode, manner, and time of payment, and from such date as may be specified by the Federal Government, there shall be charged, levied and paid retail tax at the rate specified in section 3, by a retailer who is making taxable supplies in the course or furtherance of any taxable activity carried by him."
7. It is contended on behalf of the appellants that the respondents are engaged in retail business of a taxable supply, as such, are liable to be registered as retailers. It is also urged that supply of alcoholic liquor from the "permit room" is a "supply" in terms of section 2(33) and it is a taxable activity-under section 2(35).
8. As against above, learned counsel for the respondents supported the impugned judgment.
9. Learned High Court allowed the writ petition mainly on the ground that the respondents were not supplying liquor to the general public within the meaning of section 2(28) of the Act of 1990 and that supply made by them was so limited in numbers and so specific in nature that it could not be termed, as supply to general public. It was, however, not disputed by the respondents seriously before High Court that they were engaged in making a taxable supply. Their case was covered by the provisions of section 2(41).
10. Section 14 of the Act of 1990 speaks about requirement of registration. According to it, every person, who makes a taxable supply in Pakistan (including zero-rated supply) in the course or furtherance of any taxable activity carried on by him and whose total turn over from taxable supplies made in any period during the last twelve months ending any tax period exceeds rupees one million, if not already registered is required to be registered under the Act of 1990. It is significant to note that applicability of this section on the basis of its contents was not disputed before High Court. In other words, it was never challenged that taxable supply made by them did not fall within the ambit of this section. On the contrary, it was urged that the respondents were already registered with the sales tax department on account of their engagements in making sales tax supplies and services as hotel, as such, they were not required to be registered for the second time as retailers.
11. Plea raised on behalf of the respondents has no substance for the simple reason that making taxable supply as & hotel and supply of liquor are distinct and are to be treated as such. Nothing has been brought to our notice to substantiate the plea that once they were H registered for making taxable supply as a hotel, they were not required to be registered for second time as retailers of liquor. So, is permissible and can be done.
12. This brings us to the main plea relating to the term "General Public" appearing in section 2(28). Term "General Public" has been defined in Words and Phrases, Permanent Edition, Volume' 18, Gabardine Gondola. It is as follows:
"General public.---The 'general public' is not confined to citizens of a municipality but embraces all the people and is represented by the Legislature. 'Rayor v. City of Cheyenne, 178 p.2d 115, 116. 63, Wyo 72."
13. The spirit of above term is not to limit its scow, but to enhance -it. There was no legal justification for a narrow construction of said term, as has been done by High Court. In the case reported as Goalundo Ice Association Ltd. v. Commissioner of the Rajabari Muncpality (PLD 1952 Dacca 12), the word "public" as used in section 125(1)(b) of the D Bengal Municipal Act was defined as "including every member of the public in general". In Chamber's English Dictionary, the word "General" means "relating a genus or whole class including various species: not special" pot restrict or specialized: relating to the whole of to all or most".
14. The construction placed by High Court on the term "General Public" saying that the customers of the respondents do not fall within its scope, is incorrect. We are of the view that the customers of the respondents for above purpose are a section of general public, as such, are fully covered by said term. Their exclusion is neither logical nor legally justified. The word "includes" is used as a word of enlargement as has been used in the dictionary meaning of word "General". Under the circumstances, the notices issued by the appellants/petitioners to the respondents for "sales tax registration of wine shops" were according to law and no exception could be taken.
15. Inconsequence, Civil Appeal No. 1587 of 1999 is allowed. Civil, Petition No.2564/L of 2000 is converted into, appeal and the same is also allowed. The impugned judgments of High Court are set aside with no order as to costs.
S.A.K./C-53/S
Order accordingly.