2003 PLP (Trib (PTD)

4. The learned counsel for the respondent cement factory argued that despite the use of dumper in the business of construction, such truck is also a machinery for production of cement and,. therefore, this should be treated as a machinery for input tax credit under section 10(1) of the Sales Tax Act, 1990. As regards application of notification No.S.R.O. 556(I)/96, dated 1-7-1996, he argued that the notification does not disallow input tax credit on vehicles of all of the P.C.T. Headings of Chapter 87 and rather restricts the ineligibility to vehicles of respective headings of Chapter 87". He emphasized that the word "respective" in relation to vehicle should be construed to restrict it to ordinary vehicles meant for transportation of person and goods and should not apply to specialized vehicles like dumpers used as machinery. He also argued that the Collector (Appeals) has correctly interpreted the provision of S.R.O. 556(I)/96, dated 1-7-1996 as these dumper trucks are neither used in the registered office nor used in the business premises of the registered person (respondent No.1). He pointed out that the term "registered office" is defined-in section 2(23) of the Sales Tax Act, 1990, to mean "the office or the place of business specified by the registered person in the application made by him for registration under this Act or through any subsequent application to the Collector.". He stated that although the terminology "business premises" is not defined in the Sales Tax Act, 1990, it should be read within the purview of section 2(35) which specifies it as distinct from trade and manufacture. The learned counsel prayed for confirmation of the impugned Order-in-Appeal and for dismissal of the appeal of the Collector of Sales Tax. and Central Excise, as the said appeal is devoid of legal understanding of provisions of law.

5. Having heard the parties and on perusal of record of the case, we find that it will be worthwhile to study the then relevant provisions of section 8(1) of the Sales Tax Act, 1990, and of S.R.O. 556(I)/96, dated 1-7-1996 which are. reproduced as hereunder:-- "(8) Tax Credit not allowed.-(1) Notwithstanding anything contained in this Act, a registered person shall not be entitled to reclaim or deduct input tax on- (a) the goods used or to be used for any purpose other than for taxable supplies made or to be made by him; and (b) any other goods which the Federal Government may, by a notification in the official Gazette, specify.". "Notification No.S.R.O. 556(I)/96, dated the 1st July, 1996.-- In exercise of the powers conferred by clause (b) of sub section (1) of section 8 of the Sales Tax Act, 1990, the Federal Government is pleased to specify the goods detailed in column (2) of the table below on which a registered person shall be entitled to claim input tax credit if such goods are purchased by him for use in his registered office or the business premises. Sr. No. Description Heading of the First Schedule to the Customs Act, 1969 (IV of 1969) (1) (2) (3) 1 Vehicles Respective headings of Chapter 87 2 Consumer durables of household type such as air-conditioners (window type or split), refrigerators, micro-wave oven, deep freezers and other household appliances. Respective headings.

6. We find that section 8(1)(b) of the Act, uses the word "goods" and the Table to S.R.O. 556(I)/96. dated 1-7-1996, specifies "vehicles of respective headings of Chapter 87" of the Pakistan Customs Tariff to be one such "goods" on which the entitlement of a registered person to claim input tax credit shall be disallowed. We do not find ourselves in agreement with the learned counsel for respondent No. 1 that the word "respective-headings" will imply exclusion of dumper trucks classifiable under PCT Heading 87.04. Chapter 87 of the PCT contains 16 main headings from No.87.01 to 87.16 and "Motor vehicles for the transportation of goods" (including Dumpers) are classified under heading 87.04 of the First Schedule to the Customs Act, 1969 (popularly known as Pakistan Customs Tariff or the PCT). Therefore, when we say "dumper of leading 87.04", this stands included in terminology vehicles of respective heading of Chapter 87.". No other interpretation is possible. As regards the counsel's plea that the Dumper should be treated as a machinery, we find that this is a far-fetched idea. Even under the First Schedule to the Customs Act, 1969. Dumpers are classified under Chapter 87 (Vehicles other than Railway or Tramway Rolling Stock) under section XXII (Vehicles, Aircraft, Vessels and Associated Transport Equipments) and not under section XVI (Machinery and Mechanical Appliances) Covering Chapter 84 (Nuclear Reactors, Boilers, Machinery and Mechanical Appliances). or Chapter 85 (Electrical Machinery arid Equipment). There is no- evidence to show that Federal Government included such dumper trucks in the definition of "plant and machinery" in terms of Sr. No.39 of the then Sixth Schedule to the Act. Whether treated by the respondent No.1 to be a machinery or to be a vehicle the fact remains that the dumper trucks are vehicles classified under Chapter 87 of the First Schedule to the Customs Act, 1969, and has to be viewed and treated as such for the purposes of Notification No.S.R.O. 556(I)/96, dated 1-7-1996 the word "business" of a registered person includes all his activity whether in the office building or in the mine or quarry or in the manufacturing premises or in the storage or marketing premises of that registered person, The transportation of limestone etc. from the quarry (owned by or leased to or authorized to registered person engaged in the business of manufacture and supply of cement) to the manufacturing premises of that registered person in a part of business activity of that person. Even otherwise, it has been held that supply of limestone and gypsum (minerals) in a taxable activity for sales tax purposes. However, producers of taxable cement can enjoy exemption on such minerals excavated by them and consumed in-house under Sr. No.43 (previous Sr. No.34) of the Sixth Schedule to the Sales Tax Act, 1990. We have no doubt that the dumper trucks are owned by cement factories for use in their business premises. For reasons given above, we find that provisions of section 8(1)(b) of the Sales Tax Act, 1990, read with Sr. No. 1 of the Table to S.R.O. 556(I)/96, dated 1-7-1996 are very clear and the dumper trucks (of Chapter 87) imported by respondent cement factory are not entitled to input tax credit. We; accordingly, set aside the impugned consolidated Order-in-Appeal No.240-41/99, dated nil (dispatched on 1-1-2000) in so far as it relates to the case of the respondent No.1 Messrs Mustehkam Cement Company Ltd. The order passed by the Additional Collector of Sales Tax, Peshawar, vide Order-in-Appeal No.19 of 1998, dated 30-4-1998 (dispatched on 29-6-1998) is hereby confirmed and restored. The appeal filed by the Collector of Sales Tax and Central Excise, Peshawar, stands disposed of as accepted accordingly.

7. Inform all concerned.

8. Announced. C.M.A./624/Tax (Trib.) Appeal accepted.