2009 PLP 2096 (YLR)

MUHAMMAD ATHAR SAEED, J.

By this Sales Tax Reference Application the following question said to be arising from the order of the Sales Tax Appellate Tribunal dated 3-4-2007 passed in Sales Tax Appeal No. K-34 of 2005/15829. Whether under the facts and circumstances of the case the claim of input tax is allowed against goods destroyed and rot used for taxable supply in terms of section 8(1)(a) of the Sales Tax Act, 1990.

2. This case was fixed for hearing on 27-11-2008, the order sheet of this Court on that date reads as under:-- "Mr. Khalid Jawaid Khan learned counsel for the respondent had submitted that the proposed question stands covered by the judgment of Lahore High Court in the case of Messrs Mayfair Spinning Mills Ltd., Lahore v. Customs, Excise and Sales Tax Appellant Tribunal, Lahore and 2 others PTCL 2002 CL 115 and the unreported judgment of this Court in Special Sales Tax, Reference Applications Nos.140, 142 and 172 all of 2005 in the case of Collector of Sales Tax and Federal Excise, Large Taxpayers, Unit, Karachi v. Messrs Johnson and Johnson (Pak.) (Pvt.) Ltd. in which the judgment of Messrs Mayfair Spinning Mills Ltd. quoted supra was followed. At this stage, learned counsel for the applicant submitted that leave to appeal. has been granted by the Honourable Supreme Court against the said judgment of Lahore High Court in the case of Messrs Mayfair Spinning Mills Ltd. and the judgment has been suspended. When confronted with this position, Mr. Khalid Jawaid Khan argued that an order of suspension is binding only on the parties involved in that lis and in support of his contention he relied on the judgment of the Lahore High Court in the case of Mian Ghulam Jilani v. The Federal Government 1975 Lah. 65 and on a judgment of this Court in the case of Yousuf A. Mitha and 3 others v. Aboo Baker and 2 others PLD 1980 Kar. 492 and also unreported judgment of this Court in Constitutional Petition No.2155 of 2001 dated 17-10-2001." We have perused these judgments and found the contention of the learned counsel to be correct. However, Mr. Raja Muhammad Iqbal the learned counsel for the applicant seeks time to go through these judgments and try to rebut this contention.

3. Today Mr. Raja. Muhammad Iqbal relied on the judgment of the Honourable Supreme Court of Pakistan in the case of Messrs Flying Board and Paper Products (Pvt.) Ltd. v. Deputy Collector of Customs, Dry Port, Lahore reported in 2003 PTD 1316 and the judgment of a single Judge of the Lahore High Court in the case of Noor Muhammad v. District Judge, Bahawalpur reported in 1984 CLC 1446 in support of his contention that if leave to appeal is granted and the order is suspended it is binding on all the Courts under Article 189 of the Constitution of Islamic Republic of Pakistan. At the same time Mr. Raja Muhammad Iqbal has also conceded that leave granting order of the Honourable Supreme Court in CPLA No.450-L of 2002 dated 29-5-2002 in the case of Deputy Collector of Sales Tax v. Mayfair Spinning Mills is an order in personam and not an order in rem.

4. We have examined the case in the light of the arguments of the learned counsel and have perused the judgments relied on by the learned counsel.

5. To understand the controversy it will be relevant to point out that the case of the present respondent is fully covered by the judgment of Messrs Mayfair Spinning Mills Ltd, quoted supra and also the unreported judgment of this Court in case of Collector of Sales Tax and Federal Excise, Large Taxpayers Unit v. Messrs Johnson and Johnson quoted supra and relied on by the learned counsel and the only objection of the learned counsel for the applicant pertains to the applicability of Article 189 of the Constitution of Islamic Republic of Pakistan. It will therefore be relevant to reproduce Article 189 of the Constitution for the sake of convenience:-

189. Decisions of Supreme Court binding on other Courts.

Any decision of the Supreme Court shall, to the extent that it decides a question of law or is based upon or enunciates a principle of law, be binding on all other Courts in Pakistan.

6. We have examined the judgments relied on by the learned counsel for the respondents wherein it has been held by the Lahore High Court and by at least two judgments of this Court that even if leave to appeal is granted against a judgment on a particular point and even if, the impugned order of the High Court is also' suspended, the leave granting judgment of the Honourable Supreme Court does not have a binding effect because it does not decide a point of law and under Article 189 only such judgments of the Honouable Supreme Court are binding, which decides a question of law or enunciates a principle of law. This same point has been the subject matter of the judgment relied on by the learned counsel for applicant. In the case of Messrs Flying Board and Paper Products (Pvt.) Ltd, the Honourable Supreme Court has held as under:-- "We have gone through the leave Granting Orders to which reference has been made above. The august Supreme Court granted the leave but did not suspend the judgment passed in those Customs Appeals. That being so and in view of the well-settled principle laid down by the august Supreme Court that Leave Grant Order is not law declared, being consistent with the earlier view taken by this Court and for what has been discussed above we do not find any merit in this appeal which is hereby dismissed."

8. Whereas, in the case of Noor Muhammad v. District Judge quoted above the learned Single Judge of the Lahore High Court has held as under:

Articles 185(2), 189 and 191--Order of Supreme Court will be of binding nature even if same is not made on an "appeal"

Any order made by Supreme Court on petition for leave to appeal, would be very much within jurisdiction of Supreme Court conferred by Constitution

Such order, if deciding a question of law, not only binding on parties but also on all other Courts in the country by virtue of Art, 189, Constitution of Pakistan (1973)

Order of Supreme Court while deciding a petition for leave to appeal on question of fact also conclusive between parties.

9. From a perusal of the above two extracts it is clear that even in these judgments it has been held that leave granted order does not constitute an order which has a binding effect under Article 189 of the Constitution. The learned counsel, for the applicant wants us to read these extracts in the manner that only a leave granting order without a suspension of the order, which has been relied upon does not have a binding effect but if the order is suspended it has a binding effect.

10. We regret we cannot agree with this contention of the learned counsel because that is not the ratio-decidendi or the obiter-dicta, which arises from a bare reading of the above extracts of the judgment.

11. Even otherwise a perusal of the judgments of Honourable Supreme Court of granting leave to appeal and suspending the order of the Lahore High Court, reveals that leave to appeal has been granted to consider certain issue and no question of law has been decided and no principle of law has been enunciated. We are therefore, of the considered opinion that this judgment of the Honourable Supreme Court is not binding on this Court.

12. On the basis of the above discussion and following to own judgment in the case of Johnson and Johnson (Pvt.) Ltd. quoted supra, we answer the proposed question in affirmative in favour of the respondent and against the applicant.

13. This Special Sales Tax Application is disposed of in the above manner. H.B.T./C-18/K Order accordingly.