Sales Tax Act (VII of 1990)‑‑‑

‑‑‑Ss.3, 2(16) & 45‑‑‑Constitution of Pakistan (1973), Fourth Sched., Federal Legislative List, Part I, Item No. 49‑‑‑Taxable supply ‑‑‑Assessee Company was involved in the business of production of cement‑‑ Limestone and clay being the essential raw material, leaseholders for mining limestone and clay had been obtained by the assessee and those were excavated by the assessee Company and then utilized in the process of :manufacture of cement‑‑‑Show‑cause notice for levy ‑of sales tax on the said self‑excavated and self‑consumed items to be used in the manufacturing of cement ‑‑‑Assessee contested the notice but the Department directed the assessee to pay sales tax alongwith additional tax and penalty‑‑‑Appellate Tribunal dismissed the appeal of the assessee against the Department‑‑‑Validity‑‑Once a taxable goods had been supplied by a person even to itself it would fall within definition of "taxable supply" notwithstanding the fact whether the sale had taken place or not between two persons‑‑‑Process of excavation of limestone ‑and clay was a process of manufacture and consequently 'a process in furtherance of taxable activity‑‑‑Limestone and clay were identifiable/ marketable goods on which the tax could, be levied and as such even if the taxable goods had been supplied by a person to itself the same would fall within the definition of taxable supply.

Messrs Vishnu Agencies (Pvt.) Ltd. v. Commercial Tax Officer and others AIR 1978 SC 449; Deputy Commercial Tax Officer, Saidapet, Madras and another v. Enfield. India Ltd., Cooperative Canteen Ltd. AIR 1968 SC 838; Bhopal Stigar Industries Ltd. M.P. and another v. D.P. Dube, Sales Tax Officer, Bhopal Region, Bhopal and another AIR 1964 SC 1037; Fauji Cement Company Ltd. through Secretary v. Additional Collector, Customs, Central Excise and Sales Tax. Islamabad and another 2002 PTD 609; Sheikou Sugar Mills Limited v. Government of Pakistan 2001 SCMR 1376 and Messrs Service Industries Ltd. v. Federation of Pakistan and 5 others 2002 PTD 2845 ref.

Mian Gul Hassan Aurangzeb for Appellant,

Ms. Farhat Zafar for Respondents

Date of hearing: 4th December, 2003.

JUDGMENT

MAULVI ANWARUL HAQ, J.‑‑‑This judgment shall decide Sales Tax Appeal No. 87 of 2002 and Sales Tax Appeal No. 105 of 2002 as common questions are involved.

2. The appellant‑Company is involved in the business of production of cement. Limesstone and clay being the essential raw material, leaseholds for mining limesstone and clay had been obtained. These are excavated by the appellant‑Company and then utilized in the process of manufacture of cement. Notices were issued to the appellant by the respondent No.3 to show cause against an evasion of sales tax on the said self‑excavated and self‑consumed items to be used in the manufacturing of cement. According to the respondent No.3, notwithstanding the fact that cement itself was exempted from payment of sales tax, the said taxable inputs are not exempted and constituted the taxable supply. A reply was given contesting the said averments of the Department. However vide order‑in‑original, dated 18‑3‑1999 the appellant was directed to pay sales ‑tax alongwith additional tax and penalty. An appeal filed by the appellant before the Collector (Appeals) was dismissed on 15‑2‑2000. A learned Customs, Excise and Sales Tax Appellate Tribunal, Islamabad Bench‑II, dismissed the appeal of the appellant alongwith some other appeals vide a consolidated judgment, dated 30‑4‑2002. While upholding the levy of sales tax, the additional tax and penalty was remitted. In somewhat similar circumstances, in the matter of Sales Tax Appeal No. 105 of 2002, the said learned Tribunal dismissed the appeal of the appellant vide judgment,' dated 4‑10‑2(N02 with reference to the said earlier judgment, dated 30‑4‑2002 challenged in Sales Tax Appeal No. 87 of 2002.

3. Mian Gul Hassan Aurangzeb, Advocate/learned counsel of the appellant contends that the process of the said self‑excavation and self- user by the appellant of the said linestone and clay in the manufacture process undertaken by it is neither a sale nor is it a supply within the meaning of Item No.49 of the Federal Legislative List or the Sales Tax Act,, 1990. He cited the cases, of Messrs Vishnu Agencies (Pvt.) Ltd. v. Commercial Tax Officer and others (AIR 1978 SC 449), Deputy Commercial Tax Officer, Saidapet, Madras and another v. Enfield India Ltd. Co‑operative Canteen Ltd. (AIR 1968 SC 838)' and Bhopal Stigar Industries Ltd. M.P. and another v. D.P. Dube Sales Tax Officer, Bhopal Region, Bhopal and another (AIR 1964 SC 1037) and has tried to distinguish the judgment of this Court in the case of Fauji Cement Company Ltd. through Secretary v. Additional Collector, Customs, Central Excise and Sales Tax, Islamabad and another (2002 PTD 609) which has been relied upon by the learned Tribunal by drawing attention to the facts noted in the said judgment that the excavated items were then supplied or sold to some 3rd party. Similarly, the learned counsel has tried to distinguish the judgment of the Hon'ble Supreme Court of Pakistan in the case of Sheikou Sugar Mills Limited v. Government, of Pakistan (2001 SCMR 1376).

4. Learned counsel for the respondents supports the impugned judgment of the learned Tribunal heavily relying upon the said judgment in the case of Sheikou Sugar Mills Limited and a judgment of this Court in the case of Messrs Service Industries Ltd. v. Federation of Pakistan and 5 others 2002 PTD 2845.

5. We have given some thought to the respective contentions of the learned counsel for the parties. We find that in the said case of Sheikou Sugar Mills Limited, the Hon'ble Supreme Court took note of the judgments from the Supreme Court of India, cited by the learned counsel for the appellant wherein it has been held that in case the element of transfer of property from one person to another is lacking in any transaction, there is no sale and the Legislature cannot by treating it as a sale by a deeming clause bring it within the ambit of the said Constitutional provisions authorizing the Federal Legislature to enact laws imposing tax on sales and purchase of goods. However, the dictum laid down by their Lordships in the said case of Sheikou Sugar Mills Limited is that once a taxable good has been supplied by a person even to itself it would fall within definition of taxable supply and notwithstanding the fact whether the sale has taken place or not between two persons. Now so far as the said judgment of this Court in the case of Fauji Cement Company Ltd. (2002 PTD 609) is concerned, to our mind what is relevant is that the process of excavation of limestone and clay was held to be a process of manufacture and consequently a process in furtherance of taxable activity. It was further held that limestone and clay were identifiable/marketable goods on which the tax could be levied and as such even if the taxable goods have been supplied by a person to itself the same would fall within the definition of taxable supply. Nowl the said judgment given by a learned Judge in Chambers of this Court is in consonance with the rule laid down by the Hon'ble Supreme Court of Pakistan in the said case of Sheikou Sugar Mills Limited.

6. For the reasons stated above, we do not find any force in both these Sales Tax Appeals which are accordingly dismissed with no order as to costs.

C.M.A./F‑3/L Appeals dismissed.