FILTERS PAKISTAN (PRIVATE) LIMITED VS FEDERAL BOARD OF REVENUE through Member Customs, 2010 PTD-KARACHI-HIGH-COURT-SINDH 2036 (2010)

(a) Customs Act (IV of 1969)---

---S.4---Constitution of Pakistan (1973), Art. 199--- Constitutional petition---Maintainability---Demand of tax by authority on ground of non-applicability of exemption notification to goods imported by petitioner---Validity---Authority had not issued show cause to petitioner before raising such demand, thus, he had no occasion to avail remedy of appeal before Tribunal---Petitioner had sought determination of fiscal rights on substantial question of law to be arrived at upon interpretation of impugned notification---Constitutional petition was maintainable in circumstances.

Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle XVIII South Zone, Karachi and others 1992 PTD 1; Messrs Usmania Glass Sheet Factory Limited, Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205 and Messrs Kamran Industries v. The Collector of Customs (Exports) and 4 others PLD 1996 Kar. 68 rel.

(b) Customs Act (IV of 1969)---

----S.4(c)---S. R. O. 509(I)/2007, dated 9-6-2007---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Import of Artificial Filament Cellulose Acetate Tow (AFCAT) for manufacturing of cigarette filter rods---Importer claimed exemption from tax on basis of S.R.O. 509(1)/2007 for such goods to be falling in PCT Heading. 5502.0090---Refusal of authority to accept such claim on ground that such exemption applied to textile and articles thereof and not to AFCAT to be used exclusive in manufacturing of cigarette filter rods---Validity---Terms "Textile and articles thereof" used in such Notification were not conditioned by purpose of its use or use by any sector or industry, but only condition placed for application thereof was that same should be falling under PCT heading provided in Chaps. 50 to 63 and other respective headings---Factum of importing AFCAT by petitioner for last ten years by without demand and payment of tax and AFCAT being a textile and falling in PCT Heading 5502-0090 was not disputed by authority---Petitioner could not be deprived of benefit of such notification merely on imagining or reading words, which were not written therein---Interpretation given to such notification by C.B.R. and authority seemed to be based upon purpose and use of AFACT than its nature as basis of its classification---AFCAT being clearly textile and falling PCT heading, thus, was covered by such notification and petitioner was entitled to its benefit---High Court accepted constitutional petition in circumstances.

Commissioner of Income Tax, Companies-II and another v. Hamdard Dawakhana (Waqf), Karachi PLD 1992 SC 847; Assistant Collector, Central Excise and Sales Tax, Mardan v. Al Razad Synthetic (Pvt.) Ltd 1998 SCMR 2514;, Noor Elahi and others v. Member Board of Revenue and others 2003 SCMR 1045; Collector of Customs, Lahore and others v. Universal Gateway Trading Corporation and another 2005 SCMR 37; Khan Trading Company, Gujranwala v. Collector of Customs, Excise and Sales Tax (Adjudication), Lahore 2002 CLC 705; Messrs Sargodha Jute Mills Limited through Director v. Additional Collector-II, (Adjudication), Collectorate of Customs, Sales Tax and Central Excise (Adjudication), Lahore and another 2006 PTD 515; Muhammad Iqbal Siddiqui v. Province of Sindh, Ministry of Food and Cooperation through Secretary and others 2007 YLR 1457; Messrs Sui Southern Gas Company v. Federation of Pakistan and others 2002 PTD 150; Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle-XVIII South Zone, Karachi and others 1992 PTD 1; Messrs Usmania Glass Sheet Factory Limited, Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205; Pakistan Tobacoo Co. Ltd. v. Pakistan through the Secretary, Ministry of Finance, Islamabad and 4 others 1991 PTD 359; Messrs Ahmed Abdul Ghani Textile Mills v. Chairman, Central Board of Revenue and 2 others 1990 CLC 493; Messrs Razzak Industries Employees Union (C.B.A.) v. Second Sindh Labour Court, Karachi and another (1986 PLC 109); Messrs Kamran Industries v. The Collector of Customs (Exports) 11th Floor, Customs House, Karachi and 4 others PLD 1996 Kar. 68; Nazir Ahmad v. Pakistan and 11 others PLD 1970 SC 453; Messrs Radaka Corporation and others v. Collector of Customs and another 1989 SCMR 353; Messrs Nizamuddin Faridul Haq v. The Collector of Customs, (Appraisement), Karachi and 2 others PLD 1994 Kar. 480; Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mills Limited, Lahore and others 1999 SCMR 1442; Messrs Ihsan Sons (Pvt.) Ltd., Karachi v. Federation of Pakistan through Secretary Revenue Division, Ministry of Finance, Islamabad and 2 others 2006 PTD 2209; Ghandhara Nissan Diesel Ltd., Karachi v. Collector of Customs Appraisement, Karachi and another 2006 PTD 2030; Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232; Messrs Swadeshi Ploytex Ltd. v. Collector of Central Excise (1990) 2 SC 358; Messrs Bombay Chemical Private Ltd. v. The Collector of Central Excise, Bombay-1, Bombay AIR 1995 SC 1469; Hansraj Gordhandas v. H. H. Dave, Assistant Collector of Central Excise and Customs, Surat and others AIR 1970 SC 755 and Messrs Gujarat State Fertilizers Co. v. Collector of Central Excise AIR 1997 SC 3620 ref.

(c) Interpretation of statutes---

----Taxing statute---Words used in a statute including taxing statute---Meanings to be assigned to such words---Principles.

The words are to be taken in -their literal meaning, and plain, ordinary and natural meanings are to be assigned to them, and same principle will also be applicable to the taxing statute, unless the plain, ordinary and natural meaning does not make sense, then resort has to be made to discover the intent and meaning of the word used in the statute.

Messrs Bisvil Spinners Ltd. v. Superintendent, Central Excise and Land Customs, Circle Sheikhupura and another PLD 1988 SC 370 and Government of Pakistan and others v. Messrs Hashwani Hotel Ltd. PLD 1990 S 68 rel.

(d) Interpretation of statutes---

----Fiscal statute---Language of such statute must not be stained to tax a transaction not allowed by legislature to be taxed---Principles.

The language of the statute must not be stained to tax the transaction, which otherwise the legislature has not allowed to be taxed as there is no room for any intendment, there is no equity about a tax, there is no presumption as to tax, nothing is to be read and nothing is to be implied, but one can only look fairly at the language used.

Messrs Bisvil Spinners Ltd. v. Superintendent, Central Excise and Land Customs, Circle Sheikhupura and another PLD 1988 SC 370 and Government of Pakistan and others v. Messrs Hashwani Hotel Ltd. PLD 1090 S 68 rel.

(e) Interpretation of statutes---

----Fiscal statute---Exemption notification would be construed strictly at point of entry, but liberally once goods found to be falling in any category thereof.

Yousuf Sayeed for Petitioner.

Zain A. Jatoi for Respondent No.1.

Raja Muhammad Iqbal for Respondent No.2.

Date of hearing: 9th March, 2010.

JUDGMENT

GULZAR AHMED, J.---The petitioner has made the following prayer:---

(i) Declare that Artificial Filament Cellulose Acetate Tow, classified under PCT Heading 5502.0090, falls within the scope of S.R.O. 509(I)/2007, dated 9-6-2007 and that the petitioner has a vested right and is entitled to the benefit of the said S.R.O. while the same remains in force and cannot be deprived thereof vide a restrictive interpretation accorded to the same by the respondents on the basis of the Subject Clarification;

(ii) Direct the respondents to release the subject consignment of the petitioner under the benefit of S.R.O. 509(I)2007 dated 9-6-2007 subject to payment of levies otherwise applicable.

(iii) Restrain the respondents from taking any coercive action against the petitioner and/or withholding customs clearance in respect of further consignments of the subject item against a demand for payment of sales lax on grounds of non-applicability of the S.R.O.

(iv) Grant any further relief that this honourable Court deems appropriate.

Brief facts of the matter are that petitioner is engaged in business of manufacture and export and in the process has imported a consignment of 19425.90 kg. of Artificial Filament Cellulose Acetate Tow (to be called AFCAT) which arrived at Karachi Port on 12-1-2009, on which it claimed charge of zero per cent sales tax on the basis of S.R.O. 509(I)/2007 dated 9-6-2007 (to be called the said Notification) said to be falling under PCT Heading 5502.0090. The Customs Authority did not accept the claim of the petitioner and demanded sales tax in the sum of Rs. 1,243,226.86. It is alleged that the petitioner has imported AFCAT previously and subsequent to this consignment on which no sales tax was claimed by the Customs Authority. Petitioner claims that over 80 bills of entry had been filed on which assessment was made without any demand of sales tax at the time of import and that four consignments have subsequently been cleared on 22-1-2009, 26-1-2009, 29-1-2009 and 8-2-2009 without demand or payment of sales tax.

It is further alleged that show-cause notice dated 2-1-1009 has been issued to the petitioner by the Additional Collector, Model Customs Collectorate of PaCCs under section 32(1) and (2) of the Customs Act, 1969 (the Act) for alleged evasion of sales tax and income tax in relation to 82 consignments imported between July, 2006 to August, 2008, claiming that AFCAT does not qualify for exemption to sales tax under the said notification as the exemption applies to textile ad articles thereof and not to AFCAT which is exclusively used in manufacturing of cigarette filters rods and in this respect relied upon two clarification letters of Central Board of Revenue dated 15-6-2006 and 11-4-2007. The fact that AFCAT falls under PCT Heading 5502.0090 was not disputed. Petitioner contested the said show-cause notice, submitted its reply on which hearing took place but the order is still awaited. It is further alleged that previously also show-cause notices, dated 21-2-2008 and nil. 11.2008 on similar ground were issued to the petitioner but on filing of replies by the petitioner no action was taken by the respondent and petitioner's said goods were cleared without demand or payment of sales tax under the framework of the said notification. Petitioner has further alleged that on letter dated 23-6-2005 of Pakistan Jute Mills Association interpretation of earlier S.R.O. No.621(I)/2005 dated 17-6-2005 (which is now S.R.O. 509(I)/2007 dated 9-6-2007), the Secretary Federal Board of Revenue made a note that "All the items falling under PCT Heading Chapters 50 to 63, whether or not imported by the textile manufacturer is zero rated for sales tax purpose."

The petitioner has filed this petition and sought relief as noted above. Respondents have filed parawise comments to which rejoinder has been filed by the petitioner.

We have heard learned counsel for the parties and have gone through the record.

Mr. Zain A. Jatoi, learned counsel for respondent No.1, at the outset, has challenged the maintainability of the petition on the ground that pursuant to show-cause notice dated 2-1-2009 order-in-original has been passed, against which appeal in the Tribunal is pending and in this regard relied upon the case of Commissioner of Income Tax, Companies-II and another v. Hamdard Dawakhana (Waqf), Karachi (PLD 1992 SC 847).

Mr. Raja Muhammad Iqbal, learned counsel for the respondent No.2 has also contested the maintainability of this Constitutional Petition and has relied upon the cases of Assistant Collector, Central Excise and Sales Tax, Mardan v. Al Razad Synthetic (Pvt.) Ltd. 1998 SCMR 2514, Noor Elahi and others v. Member Board of Revenue and others (2003 SCMR 1045 and Collector of Customs, Lahore and others v. Universal Gatway Trading Corporation and another (2005 SCMR 37).

Mr. Yousaf Sayeed, learned counsel for the petitioner contended that no show-cause notice was issued to the petitioner by the respondent in respect of consignment in issue and therefore there has been no adjudication on it nor any appeal in this respect is pending in the Tribunal. He further contended that the petition is otherwise also maintainable for it involves question of fiscal rights and interpretation of law. In this respect he has relied upon the cases of Khan Trading Company, Gujranwala v. Collector of Customs, Excise and Sales Tax (Adjudication), Lahore (2002 CLC 705), Messrs Sargodha Jute Mills Limited through Director v. Additional Collector-II, (Adjudication), Collectorate of Customs, Sales Tax and Central Excise (Adjudication), Lahore and another (2006 PTD 515), Muhammad Iqbal Siddiqui v. Province of Sindh, Ministry of Food and Cooperation through Secretary and others (2007 YLR 1457), Messrs Sui Southern Gas Company v. Federation of Pakistan and others (2002 PTD 150), Messrs Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circle-XVIII South Zone, Karachi and others (1992 PTD 1), Messrs Usmania Glass Sheet Factory Limited, Chittagong v. Sales Tax Officer, Chittagong (PLD 1971 SC 205), Pakistan Tobacoo Co. Ltd. v. Pakistan through the Secretary, Ministry of Finance, Islamabad and 4 others (1.991 PTD 359), Messrs Ahmed Abdul Ghani Textile Mills v. Chairman, Central Board of Revenue and 2 others (1990 CLC 493), Messrs Razzak Industries Employees Union (C.B.A.) v. Second Sindh Labour Court, Karachi and another (1986 PLC 109) and Messrs Kamran Industries v. The Collector of Customs (Exports) 11th Floor, Customs House, Karachi and 4 others (PLD 1996 Karachi 68).

In the case relied upon by the learned counsel for the respondent No.1 the honourable Supreme Court of Pakistan has observed that in case where any party resorts to statutory remedy against an order he cannot abandon or bypass it without any valid or reasonable cause and file Constitutional Petition challenging the same order.

In the case of Noor Ilahi (supra) the matter related to the title and possession of land which had been finally settled by the judgment of Hon'ble Supreme Court which was tired to be reopened by filing Constitutional petition in the High Court by seeking demarcation of land. The honourable Supreme Court held that the High Court could not proceed in the matter in conflict to the judgment of Supreme Court and permit reopening of past and closed transactions.

In the case of Collector of Customs Lahore (supra) the facts of the matter were that the importer has made misdeclaration on import of goods. The Customs Intelligence Authorities conducted raid without warrant intercepted the goods and seized them on the ground of misdeclaration and registered criminal case against the importer. The importer assailed order of Customs Authority in constitutional petition before the High Court, who directed the authorities to release the goods on furnishing surety bond. The honourable Supreme Court gave judgment that the registration of case against the importer did not warrant interference by High Court in its constitutional jurisdiction and set aside the judgment of High Court and directed the importer to approach the forum available in the hierarchy of customs law for redressal of its grievance.

In the case of Assistant Collector Excise and Sales Tax, Mardan (supra) the Hon'ble Supreme Court held that it was not proper on the part of learned Judges of Division Bench of High Court to have decided the technical question of fact without first getting the decision of Central Board of Revenue on the basis of material which the parties may have produced before it in support of their claims regarding exemption from customs duty and sales tax under the S.R.O. No.517(I)/2009.

The reading of three cited judgments will amply show that facts and circumstances and points involved in them are altogether different from the present one as there is no factual controversy involved nor any technical question is involved' as none has been suggested by the respondent's counsel during the course of arguments and also the case is not that where search warrants may have been issued against petitioner or any criminal case registered.

As a matter of fact, it was not disputed by the counsel for respondents that no show-cause notice is issued to the petitioner in respect of consignment in issue and that there has been no occasion available to the petitioner to avail remedy before the Tribunal by way of an appeal. Even otherwise, the petitioner basically seeks determination of its fiscal rights on substantial question of law to be arrived at upon interpretation of the said notification and the superior courts of Pakistan have been generally entertaining Constitutional Petitions and holding them to be maintainable on these grounds. Reference in this respect is made to the case of Messrs Usmania Glass Sheet Factory Limited, Chittagong (supra), Messrs Julian Hoshang Dinshawn Trust and others (supra), Pakistan Tobacoo Co. Ltd. (supra) and Messrs Kamran Industries (supra).

We, therefore, overrule the objection of maintainability of petition raised by learned counsel for the respondents and hold the Constitutional Petition to be maintainable.

On merits, the learned counsel for the petitioner has contended that the petitioner has been importing AFCAT since last ten years with zero rated sales tax and for the first time the Customs Authority demanded sales tax on the consignment in issue. He further contended that petitioner has imported four further consignments of AFCAT subsequent to the consignment in issue but those were also released without there being demands for sales tax. He contended that there being consistent practice over the period of time of non-charging of sales tax on import of AFCAT, the Customs Authority cannot all of sudden turn around and depart from such practice and make demand of payment of sales tax. In support of this submission he relied upon the case of Nazir Ahmad v. Pakistan and 11 others (PLD 1970 SC 453), Messrs Radaka Corporation and others v. Collector of Customs and another (1989 SCMR 353) and Messrs Nizamuddin Faridul Haq v. the Collector of Customs, (Appraisement), Karachi and 2 others (PLD 1994 Karachi 480).

Learned counsel further contended that Central Board of Revenue's instructions, which are not consistent with law, are not binding on the Customs Authority as those are merely of administrative nature and not adjudicatory and in support relied upon the cases of the Central Board of Revenue, Islamabad and others v. Sheikh Spinning Mill. Limited, Lahore and others (1999 SCMR 1442), Messrs Ihsan Sons (Pvt.) Ltd., Karachi v. Federation of Pakistan through Secretary Revenue Division, Ministry of Finance, Islamabad and 2 others (2006 PTD 2209), Ghandhara Nissan Diesel Ltd., Karachi v. Collector of Customs Appraisement, Karachi and another (2006 PTD 2030) and Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others (1993 SCMR 1232).

Learned counsel finally contended that AFCAT is an artificial fiber belonging to family of textile and thus is covered by the said notification, on which sales tax is to be charged at the rate of zero per cent to its supply and import and interpretation being placed by Customs Authority that term textile in the said notification refers to textile industry and textile cloths only is altogether irrelevant and inconsistent with the said notification and thus not in accordance with law. He has relied upon certain literatures on AFCAT and on the cases of Messrs Swadeshi Ploytex Ltd. v. Collector or Central Excise (1990) 2 Supreme Court cases 358), M/s. Bombay Chemical Private Ltd. v. The Collector of Central Excise, Bombay-1, Bombay (AIR 1995 Supreme Court 1469), Hansraj Gordhandas v. H. H. Dave, Assistant Collector of Central Excise and Customs, Surat and others (AIR 1970 Supreme Court 755) and Messrs Gujarat State Fertilizers Co. v. Collector of Central Excise (AIR 1997 Supreme Court 3620.)

On the other hand, Mr. Zain A. Jatoi, learned counsel for the respondent No. 1 contended that exemption granted by the said notification only relates to textile industry and none else. He referred to word carpet appearing in the said notification and contended that if argument of petitioner is accepted then the entry of carpet becomes superfluous Mr. Raja Muhammad Iqbal, learned counsel for the respondent No.2 contended that the word textile used in the said notification is only meant for cloths and not cigarette filter and that no other meaning to the term textile is possible in the said notification.

Learned counsel for the petitioner contended that merely using of AFCAT for the purpose of making of cigarette filter rods will not change its character of it being a textile and in this respect also referred to hand written note of Dr. Muhammad Zubair, Secretary Central Board of Revenue on the letter dated 23-6-2005 of Pakistan Jute Association which note reads as follows:--

"All the items falling under PCT heading Chapter-50 to Chapter-63, whether or not imported by textile manufacturer, is zero-rated for sales tax purposes."

So far the first submission of learned counsel for the petitioner that as a matter of fact, petitioner has been importing AFCAT for the last then years without demand and payment of sales tax on the basis of it being a textile by the Customs Authority was not disputed by the counsel for the respondents nor the counsel for the respondents disputed the argument of the petitioner's counsel that Central Board of Revenue's administrative interpretation of law is not binding on Customs Authority.

We have, however, examined the case law on these points. In the case of Messrs Radaka Corporation and others (supra) the Hon'ble Supreme Court was dealing with interpretation of PCT Heading 73.03 of waste and scrap metal of iron and steel in respect of which Central Board of Revenue has ruled that articles imported fcr re-rolling which are not melted or forged as a whole for recovery of the metal will not be classifiable under the PCT Heading No.73.03. This ruling of customs was challenged by the importers, inter alia, on the ground that scrap and waste of iron and steel imported for re-rolling purpose has always been classified under the general classification of waste and scrap metal of iron and steel for a long period of time. The Hon'ble Supreme Court dealt with the question as follows:

(7) The above interpretation of the recovery was always acted upon by the Department and Mr. S.K. Rahim, Collector of Customs, in his letter described it as its "long-standing practice". Now it is settled law that where the departmental practice has followed a particular course in the implementation of some rule, whether right or wrong, it will be extremely unfair to make a departure from it after a lapse of many years and thereby disturb rights that have been settled by a long and consistent course of practice; see Nazir Ahmed v. Pakistan and others (PLD 1970 SC 453).

(8) This interpretation having been consistently followed by the department and it having become a long-standing practice had almost acquired the force of law. The practice could not, therefore, be lightly departed from moreso because on its faith the appellants and other manufacturers of the re-rolling material had imported goods under specific licences granted by the Government of Pakistan for that purpose. The directive of the Central Board of Revenue in its Circular letter, dated 21st March, 1969, had the effect of making the purpose for which the goods were imported rather than the nature of goods as the basis for classification for the goods. This was not the practice when the goods were imported. Until then such imported goods came within the heading 7.03. No. sufficient grounds existed for not treating the goods which were imported in these cases according to the past practice."

As regard the argument as to whether Central Board of Revenue's interpretation is binding on the Customs Authority, in the case of The Central Board of Revenue, Islamabad and others (supra) the Hon'ble Supreme Court has observed as follows:

(6) It seems to be well-settled proposition of law that the Central Board of Revenue, or for that matter even the Federal Government, cannot control or curtail judicial adjudication power vested in the forums provided under the relevant law by giving a particular interpretation to a particular provision of the relevant law or by issuing notification/S.R.O. for that purpose. In this behalf it may be pertinent to refer to the following portion of the judgment in the case of Messrs Central Insurance Co. and others v. The Central Board of Revenue, Islamabad and others 1993 SCMR 1232, wherein the power of the Central Board of Revenue with reference to the income tax has been dilated upon which reads as follows:

"It is evident from the above provisions that though the Central Board of Revenue has administrative -control over the functionaries discharging their functions under the Ordinance, but it does not figure in the hierarchy of the forums provided for adjudication of assessee's liability as to the tax. In this view of the matter, any interpretation placed by the Central Board of Revenue, on a statutory provision cannot be treated as a pronouncement by a forum competent to adjudicate upon such a question judicially or quasi judicially. We may point out that the Central Board of Revenue cannot issue any administrative direction of the nature which may interfere with the judicial or quasi-judicial functions entrusted to the various functionaries under a statute. The instructions and directions of the Central Board of Revenue are binding on the functionaries discharging their functions under the Ordinance in view of section 8 so long as they are confined to the administrative matter. The interpretation of any provision of the Ordinance can be rendered judicially by the hierarchy of the forums provided for under the above provisions of the Ordinance, namely the Income-tax officer, Appellate Assistant Commissioner, Appellate Tribunal, the High Court and this Court and not by the Central Board of Revenue. In this view of the matter, the interpretation placed by the Central Board of Revenue on the relevant provisions of the Ordinance in the circular, can be treated as administrative interpretation and not judicial interpretation."

In taking up the final submission of the counsel for the petitioner about applicability of said notification to the consignment of AFCAT imported by the petitioner, which is being disputed by the Customs Authority it will be advantageous to reproduce the relevant portion of said notification which is as follows:

"Government of Pakistan

Ministry of Finance, Economic Affairs,

Statistics and Revenue

(Revenue Division)

Islamabad, the 9th June, 2007

NOTIFICATION

(SALES TAX)

S.R.O. 509(I)/2007.---In exercise of the powers conferred by clause (c) of section 4 of the Sales Tax Act, 1990, and in supersession of the Notification No. S.R.O. 525(I)/2006, dated the 5th June, 2006, the Federal Government is pleased to notify the goods specified in column (2) of the Table below, falling under the PCT Heading No. mentioned in column (3) of the said Table, to be the goods on which sales tax shall be charged at the rate of zero per cent on the supply and import thereof, namely:--

TABLE

[C.No.4/1-STB/2007]

(Sd.)

(Musarrat Jabeen)

Additional Secretary

Chapter 55 of Pakistan Customs Tariff deals with man-made staple fibers and relevant portion of its is as follows:

The counsel for the petitioner has relied upon the certain literature regarding acetate fiber and its use. Though, we have examined such literature but it is not essential to go into such literature for the reasons that it is not disputed by the counsel for the respondents that AFCAT is not a textile and does not fall in PCT Heading 5502.0090 of Chapter 55 of Pakistan Customs Tariff. The objection of learned counsel for the respondents is that the AFCAT imported by the petitioner is not meant for use in textile industry nor is meant for use in making of textile cloths but is used for making of cigarette filter and, therefore, the said notification is not applicable as it applies only to the textile industry for making of textile cloths.

Bare perusal of the said notification overwhelmingly shows that it applies to textile and articles thereof falling under PCT heading given in Chapter 50 to 63 and other respective headings. The term textile and articles thereof in the said notification are not conditioned by the purpose of its use or use by any sector or industry rather only condition that seems to have been placed for application on these terms is that they should be falling under PCT heading provided in Chapter 50 to 63 and other respective headings. It is not disputed by the counsel for respondents that AFCAT imported by the petitioner does fall within PCT Heading 5502.0090 of Chapter 55 of Pakistan Customs Tariff.

The general principle of interpretation is that the words are to be taken in their literal meaning and plain, ordinary and natural meaning are to be assigned to them and same principle will also be applicable to the taxing statute unless the plain, ordinary and natural meaning does not make sense then resort has to be made to discover the intent and meaning of the word used in the statute. In the case of Messrs Bisvil Spinners Ltd. v. Superintendent, Central Excise and Land Customs Circle Sheikhupura and another (PLD 1988 SC 370) the Hon'ble Supreme Court of Pakistan has made the following observations:

"There are three principles of interpretation of statutes which have to be kept in view in resolving the controversy raised in this appeal. The first of these has been expressed in Maxwell in the Interpretation of Statutes, 12th Edition, p. 256 in the following words:-

"Statutes which impose pecuniary burdens are subject to the same rule of strict constructions. It is a well-settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language, because in some degree they operate as penalties: the subject is not to be taxed unless the language of the statute clearly imposes the obligation, and language must not be strained in order to tax a transaction which, had the legislature thought of it, would have been covered by appropriate words. "In a taxing Act," said Rowlatt J., "one has .to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing in to be implied. One can only look fairly at the language used." But this strictness of interpretation may not always enure to the subject's benefit, for "if the person sought to be taxed conies within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be.

In the case of Government of Pakistan and others v. Messrs Hashwani Hotel Ltd. (PLD 1990 SC 68) the Hon'ble Supreme Court of Pakistan has observed as follows:

"In the very sequence it is important to refer to the following paragraph from the Statutory Construction (Crawford Edition page 270):---

"Where the statute's meaning is clear and explicit, words cannot be interpolated. In the first place, in such a case, they are not needed. If they should be interpolated, the statute would more than likely fail to express the legislative intent, as the thought intended to be conveyed might be altered by the addition of new words. They should not be interpolated even though the remedy of the statute would thereby be advanced, or a more desirable or just result would occur. Even where the meaning of the statute is clear and sensible, either with or without the omitted word, interpolation is improper, since the primary source of the legislative intent is in the language of the statute."

The above principle of interpretation clearly shows that the language of the statute must not be stained to tax the transaction which otherwise the legislature has not allowed to be taxed as there is no room for any intendment, there is no equity about a tax, there is no presumption as to tax, nothing is to be read in nothing is to be implied but one can only look fairly at the language used.

On these well-recognized and established principles of interpretation of statute, we are unable to read in the said notification the conditions canvassed by counsel for the respondents to be applying for the purpose of extending benefit of said notification to the petitioner that textile and articles thereof is only for use of textile industry for making of textile cloths and not for cigarette filter rod. Such argument advanced by respondents counsel is not consistent with the contents of said notification and amounts to reading in the said notification conditions and things which are not written in it. In the case of Bombay Chemical (Pvt.) Ltd. (Supra) relied upon by the counsel for the petitioner, their lordships of the Supreme Court of India has observed as follows:

"The test of strict construction of exemption notification applies at the entry, that is, whether a particular goods is capable of falling in one or the other category but once it falls then the exemption notification has to be construed broadly and widely. Each of the words insecticides, pesticides, fungicides or weedicides are understood both in the technical and common parlance as having broad meaning. Therefore, if any goods or items satisfy the test of being covered in either of the expression, then it is entitled to exemption."

Now the test of strict construction of exemption notification is at the point of entry and once it is found to be falling in one category, then exemption notification is to be construed liberally. In the present case, as a matter of fact AFCAT is textile and falls within PCT Heading No.5502.0090 under Chapter 55 of the Pakistan Customs Tariff is not in dispute. Thus there is nothing in the said notification on the basis of which Central Board of Revenue/Customs Authority can legally deprive the petitioner of benefit of the said notification merely on imagining or reading words which are not written in the said notification. The interpretation being given to said notification by the Central Board of Revenue/Customs Authority seems to be based upon purpose and use of the consignment in issue rather than the nature of goods as the basis for its classification. The nature of imported consignment in issue that is AFCAT being clearly textile and falling under PCT Heading No.5502.0090 of Chapter 55 of Pakistan Customs Tariff, thus seems to be fully covered by the said notification and entitled to zero-rated charge of sales tax on import and supply.

The zero-rated sales tax is charged under section 4 of the Sales Tax Act under which the said notification has been made and therefore note No. 1 to Sixth Schedule of the said Act has no application for the reason that it has been made under section 13(1) of the Act. Even otherwise, reading of said note does not help the cause of respondents.

For the foregoing reasons, we admit this Constitutional Petition to regular hearing and allow the same with declaration that goods imported by the petitioner that is AFCAT does fall within said notification being S.R.O. No.509(I)/2007 dated 9-6-2007 and petitioner is entitled to benefit of same. Listed application is also disposed of.

S.A.K./F-14/KPetition accepte