1980 PLP 309 (PTD)

S. A. NUSRAT, J.-The petitioner, which is a Company incorporated under the Companies Act, 1913, carries on the business of manufacture and sale of `Igloo' brand ice-cream. Formerly, ice-cream was manufactured and sold in East Pakistan by a sister concern of the petitioner when, allegedly no sales tax was charged thereon. The petitioner having commenced the same business in West Pakistan was called upon by the Sales tax Officer through a notice dated 16-3-1976 to show cause against the intended imposition of penalty for not having filed quarterly sales tax returns as required under section 10(1) of the Sales Tax Act, 1951 (hereinafter referred to as the Act). In its reply dated 16-10-1976 to the show-cause notice, the petitioner claimed that ice-cream was exempt from payment of sales tax by virtue of Notification S. R. O. No. 475(x)/65 dated 14-6-1965 as amended by Notification S. R. O. 823(1)/73 dated 9-6-1973. This plea was rejected by the. Sales Tax Officer as per his letter dated 30th October, 1976. The petitioner was informed that it had also been held by the Board of Revenue that ice-cream was not exempt from sales tax vide its Circular No. 2/ `2 dated 6-1-1972 and letter C. No. 7(15)/71 dated 19-3-1973. There was unfruitful exchange of correspondence between the petitioner and the Sales Tax Officer on the subject, and meanwhile the latter passed series of orders, for the months of July, 1975 to November, 1976, imposing penalty of Rs. 1,000 for each month for non-payment of sales tax without any reasonable cause. The appeals filed against the said orders were dismissed by the Assistant Appellate Commissioner by a common order dated 20th June, 1977. The petitioner thereupon filed Second Appeals before the Income-tax Appellate Tribunal which were allowed by a consolidated order dated 5-6-1978. The learned Tribunal held that for the purpose of imposition of penalty, it was necessary that tax payable should have been determined either by the tax-payer voluntarily or assessed by the Sales Tax Officer. The orders of imposition of penalty in the circumstances were set aside. It is disclosed from the counter-affidavit filed on behalf of the respondents that sales tax demand of Rs. 2,20,906 has since then been determined by the Sales Tax Officer by an order of assessment passed for the accounting period 1-7-1974 to 30th June, 1975. The said order, however, is not the s0iect-matter of this petition. 2. The short point involved in this petition is, as to whether `ice-cream' is exempt from payment of sales tax under Item No. 106 of the Notification No. 9 dated 27-6-1971 as amended by Notification No. S. R. O. 823(1)/73 dated 9-6-1973 issued under section 7(1) of the Act by the Federal Government. The relevant entries of the Notification, on which reliance has been placed are reproduced hereunder: "104. Fresh cream, fresh butter and ghee. 105. Dried fish, salted or unsalted (fish includes prawns). 106. Fresh meat, milk and cream preserved, concentrated or sweetened whether in liquid or in semi-solid form or dry such as blocks and powder." 3. It was contended by Mr. Khalid Anwar, learned counsel for the petitioner, that ice-cream consisted of sweetened milk and cream to which some flavouring was added. According to him, since no definition of ice-cream was given in the Act, the dictionary meaning of the word `cream' was to be preferred for the interpretation of Item No. 106 of the above Notification. Relying on Kazi Abdul Majid v. Province ref Sind (1) P L D 1976.Kar. 600, it was contended that the golden rule of interpretation of statutes was that in construing the meaning of any word, used in any Act, normally it must be construed according to its ordinary meaning as given in the dictionaries. 4. The learned counsel then referred to the meaning of the word `Cream' as given in three standard Dictionaries. The meaning of the word `cream' has been given in Shorter Oxford English Dictionary (Volume 1, 3rd Edn., p. 409) as under:-- "Cream. 1. The oily or butyraceous part of milk, which gathers on the top when the milk is left undisturbed; by churning it is converted into butter. 2. transf. A fancy dish or sweet made with cream, or so as to resemble cram." The meaning given in Webster's New International Dictionary (Vol 1, Second Edition, p. 620) is as under:-- "Cream. 1. The yellowish part of milk, rich in butter fat, which gradually rises and collects on the surface or is separated by centrifugal force. For commercial purposes it should contain not less than 18 percent fat." The meaning given in the Chambers 20th Century (Revised 1979 Edition) is as under;- "Cream. The oily substance that rises on milk, yielding butter when churned; that which rises to the top: any cream-like substance, as cold cream for the skin, etc. or any dish largely made of cream or like cream, as chocolate-cream, ice-cream, whipped cream, etc." 2. Further reliance was placed by the learned counsel for the petitioner on C. B. R's Circular No. 2/72 dated 6-1-1972 which is as under:- Milk & Milk Products.-A question has been raised as to whether" Ice Cream" is exempt from sales-tax by virtue of Item No. 22 of Noti fication No. 7 dated 27-6-1951 as amended by S. R. O. 435 (x)/65, dated 14th June, 1965 which reads as under:- "22. Fresh vegetables, fresh meat and milk and cream preserved concentrated or sweetened, whether in liquid or semi-solid form or dry such as blocks and powder." The question has been examined in the Board and it has been decided that besides fresh vegetables and fresh meat, the following items may be allowed exemption under the above-mentioned notification. 1. Fresh Milk. 2. Cheese. 3. Sweetened Milk. 4. Sterilised Milk 5. Standarised Milk. 6. Yogurt (Dahi) It has further been decided that the following items shall not be entitled to exemption under Item No. 22 of Notification No. 7 dated 2-5-1951:- 1. Flavoured Milk. 2. Ice-Cream Mix. 3. Ice-Cream." It was contended that, according to the above Circular, 'cheese' and `yoga ` were held exempt from payment of sales tax, although the said items did n, strictly fall within the category of 'milk' but were in fact products of mil. In the circumstances, it was asserted that there was no justification for not allowing exemption to 'ice-cream' under item 106 of the Notification as falling within the meaning of "cream preserved, concentrated or sweetened, whether in liquid 3r ire semi-solid form". 6. The petition was strongly opposed by Mr. Iqbal Kazi, learned counsel for the Revenue, who contended that the product 'ice cream' could not be given any implied meaning or interpreted on the basis of the dictionary meaning of the word 'cream'. 'Ice cream' was a well-known produce and was to be understood in its ordinary meaning as understood in the trade and by a common man. The term, according to the learned counsel, had a well-understood connotation of its own and was to be interpreted accordingly. It was further contended by him that 'cream' and 'ice-cream' had distinct meaning and connotation and the said two terms were not interchangeable. 7. The question of exemption of 'ice candy' and `ice cream' was consi dered by the Appellate Tribunal (Pakistan) Lahore in a case (1975) 31 Taxa tion 14 (Trib). In interpreting item No. 22 of Notification No. 7 dated 27th June, 1951, the wordings of which are pari materia With Item No. 106 of the Notification under consideration, it was held by the learned Tribunal that the 'ice-cream' was admittedly something different from milk and cream and it could not be contended that the product was milk or cream as the commodi ties are either generally known or the same are defined in the dictionary. Ice-cream is flavoured and sweetened milk, whereas milk and cream may or may not be sweetened. It was further observed that undoubtedly ice-cream contained at least 4 per cent of the powders and flavours and 60 percent sugar, and although 80 percent of the other ingredients comprised of milk and cream yet the resultant produce was neither `milk' nor `cream' nor sugar flavoured powder. At best the end product could be termed as a milk or cream product, but it could not be termed as milk or cream per se. In the circumstances, it was held that 'ice-cream' was not exempt within the meaning of the Notification in question 8. In Hirjina & Co. Ltd. v. Commissioner of Sales Tax (1) 1971 S C M R 128, the Supreme Court held that in interpreting the taxing statute the Courts must look to the words of the statute and interpret the same in the light of what is clearly expressed by them. It cannot imply anything which is not expressed, it cannot import provisions in the statute so as to support assumed deficiency: In Usmania Glass Sheet Factory v. Sales Tax Officer (2) P L D 1971 S C 205, it was held by the Supreme Court, by making reference to Craies on Statute Law, that for the construction of ordinary and technical terms and expressions one of the rule is that if the statute is one passed with reference to a particular trade, business or transaction and words are used therein which every body conversant with the particular trade, business or transaction knows and understands to have a particular meaning for it, then the words are to construed as having that particular meaning which may differ from the ordinary or popular meaning. The rule of interpretation adopted in the United States in construing Excise Acts, as stated, in Craies on Statute Law, A is that the particular words used by the Legislature in the denomination of articles are to be understood according to the common commercial under standing of the terms used and not in their essential or technical sense, for the Legislature does not suppose our merchants to be naturalists or geologists or botanists. In Attorney-General v. Bailee (1) (1847) 1 Ex. C. C 28, it was held that the word "spirits" being "a word of known import . . . . . is used in the Excise Acts in the sense in which it is ordinarily understood. At page 292 of the report it was held that '`eve do not think that, in common parlance the word 'spirits' would he comprehending a liquid like 'sweet spirits' of 'nitre' which itself is a known article of commerce not ordinarily passing under the name of 'spirits". In His Majesty the King v. Planters Nut & Chocolate Company Ltd. (2) 1951 Ex, C R 122, it was held that the object of the Excise Tax Act was to raise revenue, and for this purpose, to class substances according to the General usage and known denominations of trade. In that case exemption was claimed under Schedule III to the Excise Tax Act of Canada in respect of "salted pea-nuts" and "cashew-nuts" as falling within the class of `fruit' and 'vegetable'; and according to the export evidence of the Botanist it was indicated that both the items fell within the meaning of the words 'fruit' and 'vegetable'. Nonetheless it was held that the salted pea-nuts and cashew-nuts fell within the commonly understood category of 'nuts' and did not fall within the exemptions provided for 'fruit' and 'vegetal les' in Schedule III of the Excise Act. 8. Mr. Iqbal Kazi also invited our attention to Item No. 19 m Appendix 11 framed under rule 12 of the West Pakistan Pure Food Rules, 1965, laying down the "standards of nature, substance or quality of goods" for the purpose of marketability and sale under the West Pakistan Pure Food Ordinance (111) of 1960. According to the said Item No. 19 'ice-cream' by whatever name it is called, is required to contain not less than 100 percent by weight of milk fat, not less than 36 percent of total solids and not more than 0.5 per cent of stabiliser. On the basis of the above-mentioned provision contained in Item No. 19, it was contended by Mr. Iqbal Kazi, that the composition of 'ice-cream', of necessity, had to conform to the above standard and the same was distinct from the composition of 'milk' and 'cream' or 'malai', which were separately classified under Items Nos. 8 and 11 of the same Appendix 11 to the West Pakistan Pure Food Rules. The reference to the Pure Food Rules, in our opinion, is not relevant because we are of the opinion that the decisions referred to above with regard to the rule of interpretation are clear on the point and the Notification in question cannot be interpreted on the basis of the dictionary meaning referred to by the learned counsel for the petitioner. 9. As a result of the above discussion it is held that the product 'Ice. Cream' is not exempt from payment of sales tax within the meaning of the Notification under consideration. 10. The Petition, in the circumstances, has no merits and is dismissed with no order as to costs. Petition dismissed.