2007 PLP (Trib (PTD)

MUHAMMAD ANWAR ALI, (MEMBER TECHNICAL/CHAIRMAN).

This appeal has been filed by Messrs Awan CNG Re-filling Corporation (Pvt.) Limited, 441-Mehrabad, Peshawar Road, Rawalpindi against Order-in-Original No.22/2002, dated 27-2-2002 passed by the Additional Collector of Customs, Excise and Sales Tax (Adjudication), Rawalpindi.

2. Briefly speaking the facts of the case as reported in the records are that Sales Tax Department, got conducted an audit of Messrs Awan CNG Re-filling Corporation (Pvt.) Limited, Rawalpindi for the period from July to December, 2001 through Messrs Tahir Ayub, Anwar & Co., Chartered Accountants, Islamabad under section 32-A of the Sales Tax Act, 1990 and briefly the following discrepancies were found:- (i) That the said unit was suppressing their sales in an attempt to pay less sales tax on the basis of percentage wastages determined by Hydrocarbon Development Institute of Pakistan, Ministry of Petroleum, in violation of section 3(1) which attracted penalty under section 33(2)(cc) of the Sales Tax Act, 1990. (ii) That the said unit claimed an inadmissible input tax on gas and electricity bills in violation of section 7(1) and which attracted the penalty under section 33(2)(cc) of the Sales Tax Act, 1990. (iii) That they sold kits and cylinders during the taxable period but did not deposit the sales tax in violation of section 3 of the Sales Tax Act, 1990. (iv) That they did not submit their sales tax returns for August, 1998 and September, 1998 in violation of sections 6 and 26 of Sales Tax Act, 1990. Accordingly, a show-cause notice dated 11-8-2001 was issued to the said firm wherein they were called upon to show cause as to why the evaded amount of sales tax Rs.7,559,986 along with additional tax and penalties under sections 3, 6, 7, 26, 33, 34 and'36 of the Sales Tax Act, 1990-may not be recovered from them.. After fixing of dates of hearing and receiving replies from them, the case was decided by the Additional Collector of Customs, Excise and Sales Tax (Adjudication), Rawalpindi vide Order-in-Original No.22/2002, dated 27-2-2002 wherein charge No.4 of the show; cause notice was dropped but in rest of the three charges, the demand for payment of sales tax along with the additional tax was enforced. In addition a penalty equal to 3% of the evaded amount was also imposed under section 33 of the Sales Tax Act, 1990.

3. Dissatisfied with the above mentioned order-in-original, Messrs. Awan CNG filed appeal to this Tribunal on 26-4-2002 under section 46 of the Sales Tax Act, 1990 which was decided by this Tribunal in its consolidated judgment dated 29-6-2002 in Appeal No.240/2002 along with 3 other appeals as the facts of all appeals and question of laws were considered as almost the same. Aggrieved against the above mentioned judgment of this Tribunal, Messrs Awan CNG filed Appeal No.88/2002 before the Lahore High Court, Rawalpindi Bench under section 47 of the Sales Tax Act, 1990. The Division Bench of the Honourable Lahore High Court, Rawalpindi Bench, vide its judgment dated 26-3-2003 remanded the case back to the Appellate Tribunal with the directions that Messrs Awan CNG were not afforded proper opportunity of hearing and the case may be reconsidered of the issues involved after allowing the parties an adequate opportunity of being heard. On 8-1-2004, Messrs Awan CNG filed their further submissions as integral part of the earlier submissions made through the memo. of appeal before this Tribunal. The main grounds of appeal originally filed on 26-4-2002 were as under: (i) That the Auditors have erred in reporting that suppression of sale of gas has been effected by the appellants on the basis of SNGPL bills. The appellants are not filling gas in the cylinders directly from the SNGPL pipelines. The gas received SNGPL is further proceeded through filtration/processing plant. Thus the processed and refined gas with increased pressure from 5-7- PSI to 3600 is filled in the cylinders. In the process lot of gas is wasted. The actual quantity of gas, received from SNGPL is not sold to the consumers. This wastage of gas varies from case to case. In the case of the appellants, the machinery is second hand which was imported with permission of the Government. The wastage of gas is higher in the case of the appellants. The Adjudicating Officer has illegally, arbitrarily and without any logical/cogent reasons rejected the "Study of CNG Losses", conducted by the Hydrocarbon Development Institute of Pakistan, Islamabad. The percentage wastage formula which has been followed has no legal basis. (ii) That the auditors have illegally disallowed the input tax claim of the appellants in case of electricity and gas. The calculations are wrong. At both stations of the appellants the electricity and gas is used for the business therefore, contravention report is arbitrary and without legal basis. Because of the bona fides of the appellants, a lenient view is demanded in the case of input tax claim one month earlier. It is not a wilful act of the appellants. (iii) That the figures arrived at in the case of kits and cylinders by the auditors are not admissible. The conclusions of the auditors are based on no record. There is a great ambiguity in the working of the auditors. They have wilfully and arbitrarily fixed liability of the appellants in this case which is seriously disputed." After remanding the case by the Honourable Lahore High Court, Rawalpindi Bench, the appellants filed the following arguments on 8-1-2004:

Issue No. I: This issue has been settled with the Collector of Sales Tax, Rawalpindi who under the C.B.R.'s instructions has allowed 13% wastage and recovered the remaining payable amount of Rs.1,

754. Issue No. II (a) Now, it is well-settled that gas or electricity, used in administrative office situated within business premises, are held to be used for the purpose of taxable activity therefore, the sales tax paid thereon is adjustable as input and the impugned order in this regard is against the law. Reliance is placed on the judgment passed by the august Sales Tax Appellate Tribunal, Special Bench, Camp Faisalabad in a judgment reported as GST 2002 CL. 106 in which it is held "there is no justification for prescribing such extra legal conditions for disallowing adjustment of input tax paid on electricity and gas bills if the administrative office is located on the same plot or premises of a registered person where taxable production is also carried on". (b) This issue pertains to claiming of input tax a little prior to actual tax period. The learned Adjudicating Officer burdened the appellants with additional tax and 3% penalty. The appellants however deposited an amount of Rs.70,630 adjudged as additional tax and request the waiver of 3% penalty. This being a criminal liability cannot be imposed unless the criminal intent is established. In the present case there is no criminal intent, even no loss caused to the Government revenue. Issue No. III: This issue contains two allegations one pertains to supply of CNG kits for the period 1-1-1999 to 30-6-1999 valuing Rs.11,803,560 and the other for supply of CNG cylinders for the period 1-9-1999 to 30-6-2000 valuing Rs.10,917,

447. For both the allegations the respondents demanded the amount of sales tax of Rs.3,408,151 (sub-para III of para. 2 of the impugned order). Addressing to this issue the appellants submit as under:

(a) The amount of values taken by the respondents are baseless, hypothetical and presumed one, the appellants totally deny tile correctness of amounts of value of supply of kits and cylinders taken by the respondents for calculation of the tax liability of the appellants. The appellants request this Honourable Tribunal to ask the respondents to establish the correctness of the value of kits and cylinders taken by him as base value for calculation of tax liability of Rs.3,408,151. (b) Without prejudice to the foregoing, so far as the allegation pertaining to the CNG kits are concerned, the appellants do not dispute the liability of CNG kits for the period from 1-1-1999 to 30-6-1999, however, the appellants are entitled for the benefit of the exemption available under section 65 of the Sales Tax Act, 1990, for which the appellants have already applied to the Federal Government to grant exemption under section 65 to the appellants as the appellants met all the conditions annexed with this section for exemption. (c) So far as the second allegation pertaining to the supply of the cylinders for the period 1999-2000 is concerned, the CNG kit remained exempted from the payment of sales tax under item 57 of the Sixth Schedule to the Sales Tax Act, 1990, the cylinders, being an integral part of the CNG kit also remained exempted from the payment of sales tax,. This matter has now been settled by the Order-in-Original Nos.71/2003 and 80/2003 passed by the learned Adjudicating Officer has vacated the show-cause notice in 7 other similar cases. Therefore, under the rule of consistency the appellants are entitled for the same treatment." On 26-4-2005, the appellants further filed the following arguments: (i) That the appellants made supplies of CNG kits and cylinders as under: CNG kits and cylinders Sales tax involved Rs.1,770,

534. Period involved 1-1-1999 to 30-6-1999. And under misconception of law could not recover the sales tax from its customers with the legitimate understanding that the kits and cylinders are exempted from the sales tax because none of the registered person in the country supplying the same goods was paying the sales tax. Therefore, under circumstances the appellants are entitled for exemption under section 65 ibid for which the appellants have already applied to the competent authority as per prescribed procedure. This Honourable Tribunal is prayed to determine the question whether the show-cause notice was legal and if legal the question whether the appellants evaded any amount of tax and such evasion was with deliberate act or with collusion? (ii) That this case based on following particulars was made on the basis of the clarification C. No.1/63-STT/99, dated 8-12-2000 made by the C.B.R. in which it was stated that the CNG cylinders are not part of the CNG kit being of multipurpose use and classifiable in a different PCT heading. (iii) The demand of sales tax on account of CNG cylinder' on the basis of impugned clarification made by C.B.R. with retrospective effect, is against the principle laid down by the Supreme Court of Pakistan in a case of Muhammad Hanif v. C.B.R. reported as PLD 1971 SC 252 and also PTCL 2001 266."

4. As against the above arguments put forth by the appellants in their favour the department submitted the following points on 17-6-2005 through the learned Departmental Representative in favour of the Sales Tax Department:-- (i) The registered person has admitted that under misconception of law he did not charge and deposit the amount of sales tax on the sales of kits and cylinders. The appellants have submitted that they had filed an application for exemption under section 65 of the Sales Tax Act, 1990, which means that they accept that they had failed to collect and deposit the sales tax on the supply of the kits and cylinders. The Federal Government may issue exemption under section 65 of the Act as per merits of the case. Presently Federal Government has not issued any exemption in this regard. To claim exemption under section 65, the Tribunal is not proper forum. Regarding show-cause notice it has already been mentioned that respective provisions were quoted in the show-cause notice. (ii) The demand of sales tax is made on sale of cylinder not on CNG kits during the period of 1-7-1.999 to 30-6-2000 CNG kits were exempt from the payment of sales tax vide Item 57 of the 6th Schedule to the Sales Tax Act, 1990. (iii) The exemption from payment of sales tax was available only for CNG kits vide Item 57 of the Sixth Schedule to the Sales Tax Act, 1990 and not for cylinders. This has also been clarified vide Central Board of Revenue Clarification No.1/63-STT-99, dated 8-12-2000. (iv) S.R.O. 714(I)/2000, dated 30-9-2000 clearly mentions that the exemption is only available for supply of CNG kits. C.B.R.'s Clarification No.1/63-STT-99, dated 8-12-2000 only clarifies that CNG kits does not include cylinders. The Central Board of Revenue's clarification did not interpret the law but only clarify misconception on the part of registered person that CNG kits include cylinders. (v) The Sales Tax Department was never of the view that CNG kits include cylinders. Sales Tax Return-cum-Payment challan includes column of value of exempt supplies but does not contain detail of exempt goods and such fact could only be found during the audit. The demand of sales tax is based upon the relevant provisions of the Sales Tax Act, 1990. The clarification of Central Board of Revenue only strengthens the viewpoint of the Collectorate."

5. Many hearings in this case were conducted but no substantial arguments could be made by both the parties except on, 13-1-2005, 26-4-2005 and 15-12-2005 on which dates Mr. Shaukat Ali, Advocate appeared on behalf of the appellant whereas Mr. Tahir Ahad Nawaz and Dr. Naeem Khan, Additional Collectors/Departmental Representatives and Mr. Sheraz Ahmad, Deputy Collector of Sales Tax along with Mr. Tahir Kiani, Auditor appeared. At the very outset Mr. Shaukat Ali, the learned counsel for the appellants objected to the amount of revenue demanded by the Department in the show-cause notice. On this it was decided on 13-1-2005 that both the parties should sit together and reconcile the disputed amount of revenue figures. On 30-3-2005 both the parties submitted that the figures had been reconciled but the learned Departmental Representative wanted to get the same confirmed from the higher authorities of the Department. On 26-4-2005, the learned counsel for the appellants verbally admitted that the figures were correct but he wanted to argue the case on merits. He verbally reiterated the arguments already submitted at three different times before this Tribunal i.e. in the original memo. of appeal submitted on 26-6-2002, then on 8-1-2004 after remanding of the case by the Honourable Lahore High Court, Rawalpindi Bench and finally on 26-4-2005 before the actual hearing of the case. All these points have been narrated in brief in para. 3 above.

6. We have gone through the records of the case including the Auditor's Report dated 2-12-2000, show-cause notice dated 11-8-2001, order-in-original dated 27-7-2002, verbal and written arguments of both the parties, our findings on this appeal on the basis of the operative para.2 of the impugned order are as under:

Para-2(i) The Department had made out a case of suppression of quantities of sales in an attempt to paying less sales tax by comparing the quantities of natural gas received by the appellants from Messrs SNGPL on their gas bills and quantities supplied by the appellants on their supply invoices. The appellants were claiming that after the receipt of natural gas from SNGPL, they were further processing and refining the gas which led to wastages and leakage and were quoting the loss of 22.88% determined in the study conducted by the Hydrocarbon Development Institute of Pakistan (HDIP). The stance of the Department was that this report as based on two days study only and the appellants were claiming over 25% wastage against 22.88% determined by HDIP. The Adjudicating Officer in the impugned order did not accept such losses in the absence of any authority or notification in this regard and directed Messrs Awan CNG Refilling Station (Pvt.) Limited to pay up the sales tax on the entire quantities shown in the gas bills for the period for July, 1999 to December, 2001 received by them and in addition had adjudged 3% penalty of the evaded amount. Now the learned counsel for the appellants in his written arguments submitted on 8-1-2004 had mentioned that they have settled this issue with the Collector Sales Tax, Rawalpindi on the basis C.B.R.'s instructions contained in its Letter C. No.2(1)-M(Audit)/2002, dated 8-7-2002 wherein 13% wastage has been allowed. In view of this written assertion on this issue, neither any interference by this Tribunal has been prayed nor any judgment is being passed. Para-2(ii) (a) The Adjudicating Officer in the impugned order had upheld the charge of the show-cause notice that Messrs Awan CNG Refilling Station (Pvt.) Limited had claimed inadmissible input tax on gas and electricity bills as they were using the same in their office premises situated at CNG station which and this kind of use is other than the `taxable activity' defined in. the Act they were ordered to pay up the demanded tax along with additional tax 3% penalty. The learned counsel for the appellants in his written arguments dated 8-1-2004 has quoted a judgment dated 7-6-2002 passed by the Special Bench Camp, Faisalabad of this Tribunal reported as GST 2002 CL

106. We have gone through the above quoted judgment where it has been held as under: "That there is no justification for prescribing such extra legal condition for disallowing adjustment of input tax paid on electricity and gas bills if the administration office is located on the same plot or premises of the registered person where the taxable production is also carried on such offices, in the production premises are needed to enhance the efficiency of production of taxable goods by providing location proximity for production planning, production supervision, emergency handling of production problems, security, accountability of taxable goods making taxable supplies and issuance of taxable invoices and also satisfying periodical regulatory requirements e.g. sales tax audit. If such an administrative office is not there, it may hinder or retard the natural expectation of optimum production in the registered unit with the aforesaid findings and observations, we direct that the appellants be allowed input tax credit/adjustment on account of consumption of electricity in their administrative offices located on the plot/premises of the 'appellants producing taxable cement." When the Departmental Representative was asked to quote any judgment of the superior forum to upset the above judgment of the Appellate Tribunal, he expressed his inability in this regard. In view of the above, it is observed that this judgment has attained finality and accordingly the appeal on this issue is accepted and the order passed by the Adjudicating Officer in para.2(ii)(a) of the impugned order is set aside. Para. 2(ii)(b): This issue pertains to claiming of input tax one month prior to actual payment of gas and electricity bills in contravention of provision of section 7(1) of the Sales Tax Act, 1990. The Adjudicating Officer directed to pay additional tax to the tune of Rs.70630 under section 34 and further imposed 3% penalty under section 33 of the Act. The learned counsel for the appellants in his written arguments submitted on 8-1-2004 has mentioned that they have deposited the amount of the additional tax of Rs.70,630 as ordered by the Adjudicating Officer but have not paid 3% penalty as there being no criminal intent hence they have no criminal liability. He, however, submitted no other arguments in his favour. We observe that since they have paid up the additional tax under section 34 of the Act, they have, in other words accepted the untimely adjustment of input tax i.e. prior to the "tax period" which then becomes a clear-cut contravention of provision of section 7(1) of the Act, 1990. In view of the above, the order passed by the Adjudicating Officer on this issue is upheld. Para. 2(iii) According to the third charge of the show-cause notice the appellant supplied CNG, kits and cylinders during the period of audit from 1-7-1998 to 31-12-2001 but did not pay sales tax in violation of section 3 of the Act. The Adjudicating Officer in para.2(iii) of the impugned order-in-original concluded that period from 1-1-1998 to 31-12-1998 against this unit is covered by another show-cause notice C. No.ST/Adj/20/99/12496, dated 21-5-1999 issued by another officer and subsequently decided vide Order-in-Original No.80 of 1999. However, it was adjudged that except for the period 1-1-998 to 31-12-1998, for the rest of the period i.e. 1-1-1999 to 31-12-2001 sales tax was chargable on CNG kits and cylinders. The learned Advocate of the appellants has submitted in his memo. of appeal that CNG kits including cylinders remained exempt since 1-7-1999 as follows:-- Period Vide Description of exemption 1-7-1999 to30-6-2000 Serial Number 57 of the Sixth Schedule to the Sales Tax Act, numbers 1990 CNG kits for automotive Vehicles

respective 1-7-2000 to 29-9-2000 No exemption was available 30-9-2000 till date S.R.O. 714(I)/2000, dated 30-9-2000 CNG kits for automotive vehicles. His main contention was that CNG kits for automotive vehicles also include CNG cylinders and the Ministry of Petroleum and Natural Resources being the regulatory authority under S.R.O. 14(I)/992, dated 13-5-1992 issued under Regulation of Mines and Oil Fields and Mineral Development (Government Control) Act, 1948, vide their letter CNG 7(8)/01-Misc. dated 30-4-2002 has ruled that CNG cylinders are integral part of CNG Kits. Similarly he also produced a copy of letter dated 15-1-2001 from one manufacturer of CNG kits in Argentina addressed to C.B.R. saying that CNG cylinders are integral part of CNG kits. The learned Advocate also produced copies of two Orders-in-Original No.71/2003, dated 12-3-2003 and No. 80/2003, dated 30-4-2003 both issued by the Deputy Collector of Sales Tax (Adjudication), Rawalpindi ruling that the CNG cylinders are part of CNG kits hence no sales tax was chargeable on CNG cylinders for the period when exemption was available of CNG kits. As against the above, the learned Departmental Representative argued that granting of exemption of supply of taxable goods is the prerogative either of the legislature through the Sixth Schedule or of the Federal Government through the delegated powers of section 13 of the Sales Tax Act, 1990. The intention of the legislature as well as of the Federal Government is known from the words used in the exemption. The goods are classifiable under various sections, headings and sub-headings of the First Schedule to the Customs Act, 1969 and the C.B.R. being responsible to carry out the purposes of the Act, vide its Letter C. No.1-1/63-ST-99, dated 8-12-2000 has given its ruling declaring that CNG cylinders being a multiple use are not part of CNG kits hence cannot be treated as exempt along with CNG kits. He further argued that when the Federal Government intended to grant exemption to CNG cylinders along with valves for CNG kits, it did so by issuing S.R.O. 232(I)/2001, dated 19-4-2001. He further mentioned that the decision given by the Deputy Collector of Sales Tax (Adjudication), Rawalpindi quoted by the learned counsel for the appellants is not correct and Collector of Sales Tax, Rawalpindi must have taken the remedial measures.

7. We have examined the arguments of both the sides and have gone through the legal position of exemption of sales tax on CNG cylinders during the audit period of this case. Section 3 of the Sales Tax Act, 1990 was the charging section whereas under section 13(1) thereof exemption of sales tax on supply or import of goods as specified in the Sixth Schedule could be granted subject to such conditions as may be specified by the Board. In addition to the above, by virtue of the then existing clause (a) of subsection (2) of section 13, the Federal Government by notification in the official Gazette was empowered to exempt any taxable supplies made in Pakistan subject to any conditions and limitations specified therein. Sixth Schedule was substituted vide Finance Act, 1998, according to which, inter aliea, the following entries in columns (2) and (3) against Serial No.57 were added:

(1) (2) (3) Sr. No. Description Heading Nos. of the First Schedule of the Customs Act, 1969 (IV of 1969). 57 Supply of CNG kits for automotive vehicles Respective headings According to the scheme of things in Sixth Schedule, the goods are described in the description Column No. (2) and falling in heading numbers of the First Schedule to the Customs Act, 1969 (IV of 1969). First Schedule to the ,Customs Act, 1969 is a comprehensive document which according to Rule 7 of the General Rules for Interpretation of the Schedule, was made an essential part of the Schedule by the Legislature, is based on the internationally accepted "Explanatory Notes to the Harmonized Commodity Description and Coding System (H.S.)" published by Customs. Cooperative Council (World Customs Organization), Burssels as amended from time to time Pakistan is signatory to the relevant convention of this international organization. The Explanatory Notes to this H.S. are governed by a specific scheme of classification enunciated in the General Rules for interpretation which are peculiar, to this scheme and have been made part of this customs Tariff technically known as the First Schedule to the Customs Act, 1969 by virtue of section 18(1) thereof. This classification is based on titles of sections, chapters and sub-chapters which have been provided for ease of reference only. For legal purposes classification shall have not to be determined 'according to the terms of the headings and any relative section or Chapter Notes and provided such headings or Notes do not otherwise require' according to the other provisions given in the Rules. According to Rule 3(a) of these Rules the heading which provides most specific description shall be preferred to headings providing a more general description. Based on this Rule containers or cylinders for compressed or liquefied gas of iron or steel are specifically described in Heading 7311.0000 of the First Schedule to the Customs Act, 1969. CNG kits or its parts are machinery or mechanical appliances or electro mechanical appliance of appropriate heading of Chapter 84 or 85 of this Schedule. With effect' from 1-7-1998, the legislature granted exemption to the CNG kits for automotive vehicles as written in the description in column (a) of Serial Number 57 of Sixth Schedule to the Sales Tax Act, 1990 reproduced earlier in this paragraph. In column (3) of this serial number the words "Respective Headings" were written. These CNG kits for automotive vehicles could be of any heading of the two possible Chapters i.e. 84 or 85 being an electro-mechanical appliance. The learned Advocate of the appellants had relied on Note 4 of Chapter XIV mentioned to Chapters 84 and 85 of these Explanatory Notes which says that where a machine (including combination of machines) consists of individual components (whether separate or inter-connected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or Chapter 85 then the whole falls to be classified in the heading appropriate to that function. In other words, the learned counsel for the appellants has argued that the CNG kits together with CNG cylinder are to be classified as one electro-mechanical appliance and according to him should be treated as exempt by virtue of the Note 4 of Chapter XVI as quoted above. This argument is not tenable as CNG cylinder is specifically classifiable under Chapter 74 against Heading 7311.0000. The above-quoted Note incidentally lays down combination of two machines falling under Chapter 84 or 85 and not of other chapters. CNG cylinders thus can be called articles of iron or steel as per heading of Chapter 74 and not machinery of Chapter 84 or

85. Thus it is clear that no exemption of sales tax was available to supply of CNG cylinders against Serial No.57 of the then Sixth Schedule.

8. The exemption on supply of CNG kits was withdrawn during the period 1-7-2000 to 29-9-2000. The exemption on supply of CNG kits for automotive vehicles was again granted by the Federal Government vide Notification S.R.O. No.714(I)/2000, dated 30-9-2000 as under:

"Notification No.S.R.O. 714(I)/2000, dated 30th September, 2000.

In exercise of the powers conferred by clause (a) of subsection (2) of section 13 of the Sales Tax Act, 1990, the Federal Government is pleased to exempt the supplies of CNG kits for automotive vehicles from the payment of sales tax leviable thereon." The above notification was amended vide S.R.O. 232(I)/2001, dated 19-4-2001 as under:

"Notification No.S.R.O. 232(I)/2001, dated 19th April, 2001.

In exercise of the powers conferred by clause (a) of sub-section (2) of section 13 of the Sales Tax Act, 1990, the Federal Government is pleased to direct that the following amendment shall be made in its Notification No. S.R.O. 714(I)/2000, dated the 30th September, 2000, namely;

In the aforesaid Notification, after the word "kits", the comma, words and letters, "cylinders and valves for CNG kits" shall be inserted.

2. This notification shall be deemed to have taken effect from the 30th September, 2000 but shall not entitle any person to claim refund of any amount of sales tax already paid on cylinders and valves for CNG kits. From the perusal of the above two notifications it is clear that the supply of CNG kits for automotive vehicles were granted exemption from 30-9-2000 onwards and by virtue of Notification 232(I)/2001, dated 19-4-2001, the cylinders and valves for CNG kits were granted exemption on 19-4-2001 with retrospective effect i.e. 30-9-2000 by virtue of para.2 of this notification but entitlement of refund of the already paid sales tax was disallowed. The provisions of para. 2 of Notification 232(I)/2001, dated 19-4-2001 were neither quoted by the learned Advocate for the appellants nor the original Adjudicating Officer of this case. From the above two notifications it is clear that the supply of CNG kits, for automotive vehicle as well as cylinders and valves for CNG kits are exempt from the levy of sales tax w.e.f. 30-9-2000 to date. The intention of the legislature as well as under delegated powers of the Federal Government is clear that the three items namely `CNG kits for automotive vehicles' CNG cylinders and valves have treated as separate items. As a general rule, grant of exemptions are given a rigid interpretation against the assertion of the taxpayer and in favour of taxing power 1993 PTD

306. No wording in the taxing statute, rules or notification issued under statutes, could be treated as surplus or redundant. The Honourable Supreme Court of Pakistan in its reported case Muhammad Nasim Ahmad v. Azra Feroz PLD 1968 SC 37 has supported this principle that no words used in the statute should be treated as surplus or redundant is also applicable to interpretation of rules (subordinate legislation). In view of the above, it is clear that the supply of CNG cylinders were not exempt from the levy of sales tax against Serial No. 57 of the then Sixth Schedule from 1-7-2000 to 29-9-2000 but sales tax exemption is available to CNG kits for automotive vehicles, cylinders and valves for CNG kits for the period 30-9-2000 till date vide S.R.O. 714(I)/2000 dated 30-9-2000 as amended by S.R.O. 232(I)/2001, dated 19-4-2001 with specific reference to para.2 of the later notification. In view of the above, the orders passed in para.2(iii) of the impugned order of the Adjudicating Officer are modified to the above extent. The appeal is partially accepted and the demand of the principal amount of sales tax is ordered to be recalculated accordingly. Additional tax and penalty adjudged by the Adjudicating Officer are also upheld.

9. Order accordingly. C.M.A./182/Tax(Trib.) Appeal partly accepted.