1985 PLP 278 (PTD)

It is .not in dispute that in respect of the goods manufactured by the petitioners the Board has issued such a direction.

4. The expression "sale price" has been given a technical meaning in section 2(16) of the Act, it says: "Sale price means: (i) as respects goods chargeable with the duty of excise under the Central Excises and Salt Act, 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 which would have been determined if the said section had applied plus the said duty and.. , , , , , , , , . Section 4 of the Central Excises and Salt Act reads as follow:‑ "(i) where under this Act any article is chargeable with duty at a rate dependent on the value of the article, such value shall be deemed to be the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold to the general body of retail traders or if there is no general body of retail traders, the general body of consumers on the day on which the article which is being assessed to duty is removed from the factory or the warehouse, as the case may be, without any abatement or deduction whatever except the amounts of duty and sales tax then payable.

5. The contention of the petitioners is that since the sales tax is charged on the value of the goods it would become leviable only when the said value is determined under the provisions of the Act and not when they are manufactured or produced. As under section 4(i) of the Central Excises and Salt Act the value of the goods is to be determined with reference to the day of their removal from the factory or the warehouse it is the rate which is in force on that day which would be relevant for the purpose of ascertaining the tax liability of the manufacturer or producer.

6. On behalf of the respondents reliance has been placed on the proviso to section 3(4) of the Sales Tax Act, which has already been quoted above. It is contended that under this proviso sales tax can be collected at the same time and in the same manner as the duty of excise; as the rate of excise duty has to be determined with reference to the date of the production of goods and not with reference to the date they leave the factory or the were house it will also be so in the case of the sales tax for no tax can be collected unless its rate already stands determined. In support of the contention that the excise duty is to be determined with reference to the date of the production of the goods and not with reference to the date of their removal from the factory or warehouse reference has been made to a judgment of this Court reported as Colony Textile Mills Limited v. .assistant Collector 1980 C L C 1660.,

7. Before I proceed to examine the above contention I may mention that frequent amendments in the Sales Tax Act have widened the field of the levy created there under. This feature of the. Act was noticed by the Supreme Court in Noorani Cotton Corporation v. Sales Tax Officer P L D 1965 S C 161 where Kaikaus, J. observed:‑ "The sales tax by its name should be a tax on sales, but that is not quite in accord with the provisions of this section (that is section 3). It is a tax on goods produced or manufactured or imported or exported." The observations of his Lordship if my say so with respect are in accord with the long title of the Act which runs as follows:‑‑ "An Act to consolidate and amend the law relating to the levy of tax on the sale, importation, exportation, production, manufacture, or consumption of goods." If we compare the preambles of the Central Excises and Salt Act and the Sales Tax Act we find that the excise duty is a tax on goods manufactured or produced and the Sales Tax Act is a tax inter alia on the manufacture and production of goods. At first sight the distinction between the two levies appears to be somewhat blurred for both are chargeable ad valorem on the value of the goods manufactured or produced in Pakistan. But then we must not overlook the fact that the Legislature, by giving the two levies different nomenclatures, has clearly indicated that the two levies are entirely of different kinds. In this context I may refer to the case of Muhammad Younis v. Central Board of Revenue P L D 1964 S C 113 in which the Supreme Court observed:‑ "Nevertheless, since, the two categories of taxes are described by different nomenclatures, it may still be possible to urge that, in the absence of any specific provision in the statute indicating the stage at which a duty of excise is to be collected, it will be natural to presume that a duty of excise having regard to its primary nature would be collected at some stage which has some relation with production or manufacture." By parity of reasoning, the sales tax even though it may also be a tax on the manufacture and production of goods has to relate, as its name suggests, to some stage of their disposal, may be, by way of sale, self‑consumption or otherwise. This view finds support from the fact that in the Sales Tax Act the value of goods has been given a restricted meaning and by section 3(3)(i) thereof it has been equated with sale price. Further, the definition of 'the sale price' as given in section 2(16) of the Sales Tax Act, read with section 4 of the Central Excises and Salt Act, has two elements, firstly, the wholesale ‑cash price and secondly, point of time with reference to which the said price is to be determined. To ,me there appears to be no reason why the levy of sales tax be anterior to the day relevant for the purpose of determining the value of goods under the Act. I should, therefore, think that the rate at which the sales tax is to be levied is the day on which the goods leave the factory or warehouse. Since in these petitions the rate of sales tax was reduced while the goods were still lying in the factory or the warehouse of the petitioners, they were to be charged with the tax at the reduced rate.

8. I do not think that the proviso to section 3(4) in determining the point of time when the duty becomes leviable. This proviso is an enabling provision to facilitate the Board of Revenue in recovering the sales tax. It can hardly be pressed into service to recover sales tax even before the value of the goods stands determined in accordance with the provisions of the Act or to obliterate the distinction that exists between the excise duty and the sales tax.

9. The reliance upon the Colony Textile Mills Limited v. Assistant Collector is inapt for it related to the recovery of the excise duty. It is to be noticed that the excise duty becomes leviable as soon as excise able goods come into existence. It thus differs from the sales tax, which becomes leviable when the sale price is determined under the Act.

10. For the reasons stated above I would accept these writ petitions and declare that the action of the respondents in demanding duty at the old rate is illegal. The petitioners shall also have their costs in these, writ petitions. M.B.A. Petitions accepted.