HUFFAZ SEAMLESS PIPE IND. LTD. VS COLLECTOR OF SALES TAX, HYDERABAD
2010 P T D 287
[Supreme Court of Pakistan]
Present: Javed Iqbal, Sayed Zahid Hussain and Muhammad Sair Ali, JJ
Messrs HUFFAZ SEAMLESS PIPE IND. LTD.
Versus
COLLECTOR OF SALES TAX, HYDERABAD
Civil Appeals Nos. 1576 and 1577 of 2007, decided on 01/10/2009.
(On appeal against the order, dated 9-5-2007 passed by High Court of Sindh at Karachi in ITR. No. 100 of 2006).
(a) Sales Tax Act (VII of 1990)---
----S.13---S.R.O.533(I)/94, dated 9-6-1994---Exemption---Burden of proof would lie on person claiming exemption under the S.R.O.
(b) Sales Tax Act (VII of 1990)---
----S.13---S.R.O. 533(I)/94, dated 9-6-1994---Qanun-e-Shahadat (10 of 1984), Art. 86---Exemption from tax---Self-serving certificate issued in favour of assessee by private companies---Evidentiary value---Such certificates would not enjoy any legal presumption or evidentiary veracity to be ipso facto admitted as proof for contents therein.
(c) Constitution of Pakistan (1973)---
----Art. 185(3)---Sales Tax Act (VII of 1990), Ss. 13 & 46---S.R.O. 533(I)/94, dated.9-6-1994---Exemption from tax---Question of fact duly settled by Tribunal of fact--- Re-decision of such question could not be sought in appeal before Supreme Court.
Mansoorul Arfeen, Advocate Supreme Court for Appellant.
Syed Arshad Hussain, Advocate Supreme Court and A.S.K. Ghori, Advocate-on-Record for Respondents.
Date of hearing: 1st October, 2009.
JUDGMENT
MUHAMMAD SAIR ALI, J.---This appeal through leave questions judgment, dated 9-5-2007 passed by High Court of Sindh at Karachi in appellant's Sales Tax Reference Application No.100 of 2006.
Appellant's grievance is that under quoted questions Nos. 1 and 3 referred to the High Court for its opinion, were incorrectly decided.
"(1) Whether the exemption of sales tax granted under Serial No.17 of S.R.O. 553(I)/94 read with schedule to S.R.O.600(I)/83 was available to the supplies of applicant made to renowned industrial units?
(2) Whether the learned Appellate Tribunal has not erred in law by holding that the supplies of goods made by the applicant to industrial units were not the type of supplies made to manufacturers or assemblers of capital goods and machinery and were as such outside the purview of the conditional exemption available under S.R.O.553(1)/92?"
On above questions, a learned Division Bench of High Court held that appellant was not entitled to the claimed exemption from sales tax under the said S.R.Os. and that the Sales Tax Appellate Tribunal had correctly decided that supplies of seamless pipes made by the appellant to the manufactures or assemblers of capital goods and machinery were outside the exemption regime of S.R.O. No.533(I)/94, dated 9-6-1994. Question No.1 was thus answered by the High Court in the negative and question No.3 in affirmative. Appellant filed Civil Petition for Leave to Appeal Nos. 468 and 469-K of 2007. Leave was granted on 29-8-2007, hence the present Civil Appeals Nos. 1576 and 1577 of 2007.
2. Because of identity of the subject-matter and the parties, both appeals are decided through this judgment.
3. Show-cause notice, dated 1-10-1994 was issued to the appellant alleging supply of seamless pipes and tubes without payment of the sales tax during the July, 1994 and August, 1994 claiming exemption under Serial No.17 of Ministry of Finance, Revenue and Economics Affairs (Revenue Division) Islamabad's Notification S.R.O.553(I)/94 read with the Ministry of Finance and Economic Coordination Notification S.R.O. No.600(I)/83, dated 11-6-1983. The appellant made taxable supplies of seamless pipes and tubes of the parties who were neither manufacturers nor assemblers of capital goods. In Order-in-Original the supplies were not found to comply with the mandatory requirements of the said S.R.O.'s. In appeal the Order-in-Original was upheld but the Adjudicating Officer was directed to re-determine the additional tax. Against the above order the appellant filed constitutional petition No.2390 of 1995. The High Court remanded the case to the Adjudicating Officer to decide the case afresh. On remand the Additional Collector re decided the case and upheld the liability of Rs.7,26,320.
The appeal before the Collector failed. The appeal before the Customs, Excise and Sales Taxes. Appellate Tribunal was also dismissed observing that:--
" ..S.R.O. (533(I)/1994, dated 9-6-1994 provides exemption of sales tax on the supply of parts and components of respective headings vide S. No.17 of the table of the equipment in the manufacture or assembly of capital goods and machinery specified in the schedule to the Ministry of Finance and Economic Coordination of Notification of S.R.O. 600(I)/83, dated 11-6-1983. Thus, the goods supplied to those units which do not manufacture capital goods and were not enlisted as manufacturer of capital' goods and machinery were not entitled to exemption of sales tax. The parts and components supplied to those units which are manufacturer of sugar and cement are not entitled to exemption of sales tax because those are not manufacturers or producers of cement and sugar. The appellant supplied the parts and components for maintenance purposes as replacement parties and not as original equipments because the buyers were not the manufacturer of capital goods of machinery as specified in S.R.0.600(I)/83, dated 11-6-1983".
4. Against the order of the Tribunal, Reference Application No.100 of 2006 was filed by the appellant before the High Court of Sindh, Karachi. A learned Division Bench of the High Court of Sindh, Karachi through impugned judgment, dated 9-5-2007, on examination of S.R.O. No.553(I)/94, dated 9-6-1994 and S.R.O.No. 600(I)/83, dated 11-6-1983, observed as under:--
"(4) it will be relevant to reproduce Item No.17 of S.R.O. No.553 so far as Schedule to S.R.O. No.600 is concerned it will be relevant to mention that in the schedule under the head of capital goods and machinery at Serial No.4 cement plants have been mentioned and at Serial No.27 sugar plants have been mentioned.
Item No. 17 of S.R.O. No.533(I)/94.
| 17 | Parts and components | Respective headings | If used as original equipment in the manufacture or assembly of capital goods and machinery specified in the schedule to the Ministry of Finance and Economic Coordination's Notification No.S.R.O. 600(I)/83, dated the 11th June, 1983. |
(5) From a bare perusal of Item No.17 of S.R.O. No.553 read with the Schedule to S.R.O. No.600, dated 11th June, 1983, it is clear that there is only one interpretation of the above statute that the exemption is available to supplies if the same is used as original equipment in the manufacture or assembly of capital goods and machinery specified in the 6th Schedule, which in the relevant case means that if the same was being used as an original equipment in the manufacture or assembly of cement plants or sugar plants whereas the admitted fact is that it was used as a component of the machinery used in the production of sugar and cement and therefore, we are of the considered opinion that the supplies made by the applicant to the manufacturers of sugar and cement does not qualify for exemption under the above S.R.Os. and, therefore, the Tribunal has correctly interpreted the above S.R.Os. and no exception can be taken to this interpretation. The answer to the proposed questions raised by the applicant is so obvious that the same can be disposed of at this katcha peshi stage. In the light of the above, we will answer question No.1 in negative. Question No.2 does not arise out of the order of the Tribunal as it is an admitted fact that the supplies made by the applicant were not being used as original equipment of plant manufacturing capital goods or machinery. Question No.3 is answered in affirmative. Question No.4 does not arise out of the order of the Tribunal as there is no finding on this point by the Tribunal".
5. Mr. Mansoorul Arfeen, Advocate Supreme Court for the appellants stated that the appellants supplied seamless pipes only for the assembly of capital goods and machinery while the High Court and Sales Tax Tribunal only considered employment of the supplied goods for manufacture. Item No. 17 of 1994 S.R.O. allowed exemption from payment of sales tax on parts and components if used as original equipment in the manufacture or assembly of capital goods and machinery specified in the Schedule to S.R.O. No.600(I)/83, dated 11-6-1983. And that the appellant was denied exemption because the purchasers of supplies were manufacturers of cement and sugar though without the seamless pipes assembly of plant and machinery at the site was not possible. And that the certificate (s) issued by the purchasers were not even considered wherefor the questions referred to the High Court were incorrectly answered.
In the contrary arguments impugned judgment were supported.
6. Heard.
7. S.R.O. No.533(I)/94, dated 9-6-1994 allowed exemption from payment of sales tax on supply of parts and components, if used as original equipment in the manufacture or assembly of capital goods and machinery specified in the Schedule of S.R.O. No.600(I)/83, dated 11-6-1983. There cannot thus be a dispute on the legal issue that the supplied goods if used either in the manufacture or the assembly of capital goods and machinery entitled a supplier to avail of the exemption provided same were used as the original equipment. The plea of Mr. Mansoorul Arfeen, Advocate Supreme Court for the appellant was that the supplied seamless pipes were used as original equipment in the assembly (not manufacture) of the capital goods and machinery hence wherefor exemption from the sales tax available on such supplies.
The questions that needed answer for a decision in the present eases, were that:
(i) Whether the supplied seamless pipes were used?
(ii) Whether the supplied seamless pipes were used in the assembly of the capital goods and machinery?
(iii) Whether the supplied seamless pipe were used as original equipment in the process of said assembly?
(iv) Whether the supplied seamless pipes were used on the date and stage of assembly of capital goods and machinery or subsequent thereto?
(v) When was the assembly of capital goods and machinery completed (to commence production of the cement and sugar plants)?
8. All the above questions were vital to determine the entitlement of appellant supplier for exemption from Sales Tax under 1994 S.R.O. These were essentially and innately questions of fact needing indisputable proof and evidence. The onus was on the appellant who claimed benefit of exemption from sales tax under the S.R.O. The case record does not show that the appellant discharged its onus. Mr. Mansoorul Arfeen, Advocate Supreme Court for the appellant referred to some certificates from the purchasing companies allegedly certifying use of the supplied goods in the process of assembly. It has not been shown that these self-serving certificates enjoyed any legal presumption or evidentiary veracity to be ipso facto admitted as proof for the contents therein. In our considered view, the same were rightly rejected by the learned Tribunal. Even otherwise, appellant cannot seek re-decision of the questions of fact in appeal before this Court particularly when the same stood duly settled by the relevant Tribunals of fact.
9. In view of the above we do not find any merit in these appeals which are therefore dismissed. We have been informed that the appellant availed indemnity from payment of the additional tax under the respondent-Department's Indemnity Scheme, on payment of the demanded sales tax. As such dismissal of these appeals shall be without an order as to the costs.
S.A.K./H-10/KAppeals dismissed.