1981 PLP (Trib (PTD)

4. On the assessee's third grievance, the learned A. M. has held as under :‑--‑ "His next objection was that the S. T. O. was not competent to adopt the figure of sales beyond the amount determined for levy of Central Excise Duty. The Department's case was that even if it was accepted that the sales determined by the Central Excise Duty is to be sales for purposes of levy of sales‑tax there was nothing to show that the assessee bad not charged sales tax on the goods sold. We do not know whether the assessee charged sales tax separately or included the said tax in the sale price. If the assessee has not charged sales tax separately the duty was clearly on him to prove that no sales‑tax was charged on sales made. It is the duty of the assessee to pay to the Government the sales tax charged on the goods sold. Therefore, the S. T. O. will be perfectly justified in demanding the sales tax on the sales declared by him. We direct that S. T. O. will look into the facts and see if sales tax was charged separately. If it was not, his order will stand." Respectfully, I disagree with the facts and findings recorded by the learned A. M. on this issue. I opt to record my own reasons for dissenting on this issue.

5. The brief facts giving rise to this issue are that hoard is liable to levy of sales tax and Excise Duty is collected by the Excise Authorities. In the assessment year 1971‑72 value of excisable goods was assessed exclusive of the duty on which sales‑tax was paid by the appellant on the duty paid value at the time of clearance of goods at the factory. However, the goods were sold at a higher price due to appreciation in sale price. The S. T. O. subjected to tax the additional sale price realized in excess of the value assessed by the Excise Authorities. The reason assigned by the S. T. O. was that sales tax was chargeable under the Sales Tax Act on the sale value. However, this finding was arrived at without bringing on record any evidence to suggest that sales tax was recovered by the assessee on the additional price differential. The A. A. C. rejected the assessee's plea of exemption for the simple reason that when accounts were rejected, the sale pride could be adopted for charging sales tax. The A. A. C. too did not give any categorical finding that sales tax was collected by the appellant on price differential. The plea of the appellant's A. R. was that no sales tax was charged on price differential and in support thereof photostat copy of debit note dated 30‑6‑1972 was placed on our record. On perusal of this document, I find that no sales tax was recovered by the assessee oil price differential.

6. The issue involved is purely a question of law depending entirely on the interpretation of section 2(16)(i) and (ii) of the Sales Tax Act, 1951 (here inafter referred to as the "Act"). The charge for sales tax is created by section 3 of the Act and according to clause (a) of subsection (1) of the said section all the goods produced or manufactured in Pakistan are liable to sales tax on the "sale price" within the meaning of sub‑clause (i) and clause(3) of section 3 of the Act. The decision of the issue hinges on the definition of term `sale price' as defined in subsection (16) of section 2 of the Act which before its amendment in 1957 stood as under : ‑-- "2(16).‑-"Sale price" means price before any amount payable in respect of tax is added and includes any charges for advertising, financing servicing or any other charge of similar nature contracted for the time of sale whether charged separately or not. In 1957 the term `sale price' was amended and the amended provisions of section 2(16) which is applicable to the assessee's case of the years under consideration stands as under :‑ (i) "Sales price" means as respects goods chargeable with the duty of excise under the Central Excise and Salt Act, 1944 (1 of 1944) the value determined under section 4 of the said Act plus the said duty and, where the provisions of the said section 4 do not apply, the value would have been determined if the said section 4 bad applied the said duty; and (ii) in other cases the price before any amount payable in respect of tax is added and includes any duty of Provincial Excises, whether not paid by the assessee, and any charges for advertising, financing any other charges of a similar nature contracted for at the time of sales whether charged separately or not." The appellant's A. R. contended that in view of manufacturing of excisable goods company was liable to pay sales tax under clause (1) of subsection; (16) of section 2 of the Act. The amended subsection consists of two clauses of which clause (i) deals with the playability of sales tax on the goods liable to excise duty while clause (ii) deals with other cases. A comparison of old add amended provisions of law clearly shows that sales tax on excisable goods after amendment of section 2 (16) is payable on the duty paid value irrespec tive of the fact whether such goods were sold at a higher or lower price thin that assessed by the Excise Authorities at the time of clearance of the goods from the factory. The language employed by the Legislature in clause (i) reproduced above provides sufficient clarity and it is expressly laid down that sales tax on goods chargeable with tile excise duty is payable on the duty pair: value determined by the Excise Authorities. Scope of sub‑clause (i) by no canons of interpretation of law can be enlarged to replace the words "duty paid value" with the "sale proceeds" actually realized so as to convey any other meaning, It is quite clear that if the sale price reduces, the S. T, O. would not refund the excess sales tax levied by the excise authorities and conversely he is not authorised by enactment to collect extra amount of sales tax if the sale price goes up. There is a long line of judicial pronouncements that if a person sought to be taxed comes within the letter of law, he must be taxed however great the hardship may appear to the judicial mind. On the other hand, if the taxing authority seeking to recover tax amount cannot bring the subject‑matter within the letter of law, the subject is free and no tax can be charged. Recent authority on this proposition is the case of Hamdard Dawakhana (PLD 1980 SC 80). Therein, their Lordships of the Supreme Court have adjudicated that Courts cannot depart from plain meanings of the words employed in a statute because of its historical background. The Court remains under an obligation to adhere to the plain meaning of the words employed in it. It is equally well established principle of interpretation that when there is a specific provision and a general provision in the Statute, the former would override the latter and general enactment would prevail on the other parts of the Statute. The same issue was also examined by the Tribunal in the case reported as 1966 P T D (Trib.)54 wherein additional sale price was also subjected to sales tax but on appeal the A. A. C. deleted the addition so made. The depart mental appeal was rejecte4 by the Tribunal holding that in case of goods liable to excise duty, the duty paid value assessed by the excise authorities was final and not revisable subsequently merely because of the fact that the goods were sold at the reduced or higher price than determined at the time of their removal from the factory. It is pertinent to, reproduce the conclud ing Paragraph No. 4 of the Tribunal's decision which runs as under :‑ "We have considered the factual position of this case as also the legal implications. We find that the A. A. C.'s order in this case is correct because the sales tax in respect of the goods subjected to' excise duty has to be levied on the sale price. The real issue in this case, there fore, is the determination of the sale price for the purpose of sales Tax Act, 1951. This has been made clear by the Circular letter of the CER letter referred to above which clearly lays down that the value of the goods as determined before the clearance of the goods from the factory is final and will not be revised subsequent to the release of the; goods merely because in actual fact the goods in question have been sold at a reduced or higher price than that determined at the time of the removal of the goods from the factory. Thus the manner in which the sale price of goods subjected to excise duty has to be determined has been made clear by the instructions of the Board and leaves no scope either to the manufacturer the excess Sales Tax Authorities to change the valuation one way or the other. It is patent that if the sale price due to any reason falls down, the S.T.O would not refund to the manufacturer the excess sales tax levied by the Excise Authori ties and, therefore, conversely if the sale price goes up, the S. T. O. has been debarred from collection of any extra sales tax. This being our interpretation of the factual and legal position in this case, we find no flaw with the order of the A. A. C. The departmental appeals accordingly must fail and are hereby dismissed."

7. After going through the reported decisions (supra) as well as the principles laid down by the Supreme Court, I have no liesitation in holding that amendment made in the enactment in 1957, by the Finance Act, 1957, by insertion of clause (i) is rendered meaningless and becomes inoperative if sales tax is allowed to be charged on sale price fetched. The amendments in the fiscal statute are not made without purpose and are liable to be coached in favour of such a consideration which will render every word operative rather than one which may make some words idle and nugatory. If the sales tax was to be charged on the sales alone, there was no necessity of amending section 2(16) by inserting clause (i). On this interpretation, I am fortified by a decision of Sind High Court reported as (1975) 48 Taxation 116, wherein their Lordships while considering the carry‑forward losses under the amended provisions of section 24 of the Income‑tax Act, 1922, observed that due consideration should be given to the amendment made in the enactment and the language employed therein to arrive at the correct conclusion whether the Statute intended to alter the law or to leave it where it stood before. The relevant portion of the observations of their Lordships of the High Court runs as under:‑- "If the loss sustained in a non‑speculative business can be set off only against the profits and gains of same business or such business in which the loss was sustained, the amendment would be meaningless because the law was the same prior to the amendment, vie that the losses could be set off only against the profits of the same business. It is well established that in the interpretation of Statutes, the meaning of the words should be considered in the light of the history of the legislation and the state of the law at the time the Statute was passed to order to consider whether the statute was intended to alter the law or to leave it exactly where it stood before. As observed by Maxwell on Interpretation of Statutes (12th Edition, page 47), the Court is not to be oblivious of the history of law and legislation and the Court has to say what is the object of amending the law. Craies on "Statute Law" 7th Edition, page 126 observed that the cause and necessity of the Act may be discovered by considering the state of the law at the time when the Act was passed and in innumerable cases the Courts with a view to construing an Act have. considered the existing law and reviewed the history of legislation upon the subject." Lastly, I have to observe that the Central Board of Revenue in their Circular No.5(13)ST/60 dated 27‑1‑1968 also accepted the same position as I have concluded. The Circular issued by the C. B. R. runs as under:‑‑ "Determination of `sale price' as explained by the C. B. R.‑I am directed to invite a reference to, your ; Letter No. GAS‑HYD,/4/812 dated the 19th January, 1960, on the subject noted above. On the facts stated in your above‑quoted letter the Central Board of Revenue is of the view that `sale price' of goods which are chargeable with the duty of excise will be the value determined under section 4 of the Central Excises and Salt Act, 1944, as laid down in section 2(16)(i) of the Sales Tax Act, 1951. The value of the goods as determined before the clearance of goods from factory is final and will not be revised subsequent to the release of the goods in question have been sold at a reduced or higher price than that determined at the time of removal of the goods from the factory. This, however, cannot enable the manufacturer to include freight or octroi charges in the sale price to realise sales tax on the `gross sales'. Nor can it enable the manu facturer to realize an increased amount of sales tax on such goods whose value has been determined under section 4 of the Central Excises and Salt Act, 1944. If any extra sales tax is realized, the same is payable to the Government." By virtue of this Circular, the S. T. O. was not competent to charge tax on the additional sale price for which he was neither authorised by law nor by the Circular issued by the Central Board of Revenue. It is needless to add that it is well‑established rule of interpretation of statutes that the intention of the Legis lature primarily is to be ascertained from the words used in the Statute and the Surrounding circumstances. The Circular issued by the Central Board of Revenue unambiguously shows the intention of the Legislature that sales to sin the excisable goods had to be collected on the duty paid value determined Authorities. The Circular issued by the Central Board of Revenue is in harmony with the decision of the Tribunal reported as (1966) P T D (Trib.) 54:

8. Before parting, I would like to mention that in a recent decision reported as 1980 P T D (Trib.) 102 the Tribunal on the same issue has held as under:‑ "Now there can be no quarrel to the proposition that it is the function or duty of the Central Excise Authority to determine the value of any article which is chargeable with duty and it is the obligation, of the S. T. O. to accept the declared value of excisable goods if it is based on the value determined under section 4 of the 1944 Act plus the excise duty. The S. T. O. can under no circumstances determine or revise the value of excisable goods. And if he does even at the instance of the learned Central Excise Authority, he definitely exceeds his jurisdiction and it, consequently, renders his order invalid."

9. The learned A. M. has omitted to take into consideration the delicacy of legal issue involved in this case. The matter has been brushed aside in a slipshod manner without realizing that the Tribunal being the highest forum, an authoritative pronouncement was expected on the questions of interpretation.

10. The upshot of the above discussion is that, I hold that the Officers below were debarred from charging sales tax on the price differential since the appellant in the terms of enactment was liable to pay sales tax on the duty paid value under clause (i) of subsection (16) of section 2 of the Act. The appeals succeed to the extent indicated above. ABRAR HUSSAIN NAQVI (MEMBER).‑--In these two sales tax appeals a difference of opinion has arisen between the learned J. M. and learned A. M. and following two questions have been referred to me for my opinion: (1) Whether additional sale price realised by the assessee in excess of the value assessed by the Excise Authorities was chargeable to sales tax? (2) Whether the price differential was not exempt from levy of sales tax under amended provisions of sub‑clause (i) of subsection (16) of section 2 of the Sales Tax Act?

2. The brief facts of the case are that the assessee is a manufacturer of corrugated board and paper, ocean kraft printing paper and gun tape, etc. The assessee claimed before the Officers below as well as before the Tribunal that sales tax was leviable on the `sale price' as defined by section 2(16) of the Sales Tax Act. According to this provision, which has already been reproduced by the learned J. M. in his dissenting note, the sale price for the purposes of sales tax in the case of goods chargeable to central excise duty, is the value determined under section 4 of the Central Excises and Salt Act, 1944, plus the excise duty paid on that value. The Officers below as well as the learned A. M. did not agree with the contention of the assessee. The learned A. M. dealing with this issue observed as under:‑ "It is the duty of the assessee to pay to the Government the sales tax charged on the goods sold. Therefore the S. T. O. will be perfectly justified in demanding the sales tax on the sales declared by him." Consequently learned A. M.'s view was that the S. T. O. should look into the facts and if sales tax was charged separately and if not his order should stand. The learned J. M. on the other hand held the view that the sales tax authorities are not competent to go beyond the sale price as defined in the Sales Tax Act. Admittedly the assessee sold the goods for the price which was more than the sale price as defined in the Sales Tax Act. The question is whether this price differential is chargeable to sales tax or not. Mr. Zia H. Rizvi, Advocate very lucidly placed the facts and submitted that sales tax is chargeable only on the sate price which has been defined by the Sales Tax Act. The sales tax authorities have travelled beyond their jurisdiction to extend the definition of sale price in including the amounts charged over and above the said sale price. He has relied upon cases reported as 1980 P T D (Trib.) 102 decided by the Tribunal and the case of Commissioner of Income‑tax v. Pakistan Beverage Ltd. ((1977) 15 Taxation 54).

3. After hearing the arguments of both the parties, I have no hesitation in saying that law has defined the sale price and for the purposes of sales tax the `sale price' as defined by the Sales Tax Act should be adopted. According to this definition, as stated above, the sale price is the value determined under section 4 of the Central Excises Act plus the excise duty paid on that b value. Therefore, the sales tax authorities are not competent to go into the question as to what was in fact the sale price. The law has bound down the sales tax authorities and they have to adopt value determined by the Central Excise Authorities. Both the questions referred to above can therefore be answered in the affirmative as such. However, the learned D. R. has relied upon section 30‑A of the Sales Tax Act which is reproduced below:‑‑ "30‑A. Collection of excess tax, etc.‑(1) Every person who has collected at any time before commencement of this section or collected at any time thereafter any amount by way of tax, whether for misapprehension of the provisions of this Act, or otherwise which is not payable as tax or which is in excess of the tax shall pay the amount so collected to the Federal Government within such time and in such manner as may be prescribed and in default of such payment shall also pay an additional amount calculated at the rate of fifty rupees for every day after the date before which he is required to pay the amount so calculated." This section says that if sales tax in fact has been collected for whatever reasons the same has to be paid to the Federal Government Therefore, notwithstanding the definition of the sale price given by the Sales Tax Act if factually the sales tax has been collected over and above the sale price, which was not otherwise payable, it is the duty of the assessee to pay the same to the Federal Government. Therefore, both these questions hinge on the point as to whether in fact the assessee had collected any sales tax which was not otherwise chargeable on the goods sold. The' learned J. M. has found on the basis of a debit note dated 30‑6‑1972 that no sales tax was recovered by the assessee on price differential. This clinches the matter. If the assessee has not collected any sales tax on the price differential between the actual sale and sale price the sales tax authorities had no valid authority to burden the assessee for the charge of sales tax. Answer to question No. I is therefore in the affirmative. Answer to question No. 2 is also in the affirmative if the assessee as a matter of fact has not collected the sales tax within the meaning of section 30‑A, of the Sales Tax Act. In view of the majority decision both the appeals succeed in the manner indicated above. Appeals accepted.