HIRJINA & CO. (PAKISTAN) LTD. Versus COMMISSIONER OF SALES TAX

1. FAZL-E‑AKBAR, J.‑ This is a certificated appeal from an order of the High Court of West Pakistan, Karachi Bench passed in a reference under section 17 (1) of the Sales Tax Act, 1951. The question referred was in the following terms.

2. "Whether the Tribunal, in respect o the three relevant assessment years, rightly construed the amendment effected by section 15 (2) of the Finance Act, 1957 by holding that prior to 16th March 1956 the Provincial Excise Duty could not be included in the sale price of manufacture and sale of liquors for the purposes of commuting the sales tax.

3. The relevant facts may be shortly stated

4. The appellants Messrs Hirjina & Company (Pakistan) Limited, hereinafter referred to as `the assessee', are manu facturers and producers of foreign liquors which is subject to taxation on the `sale price' under section 3 of the Sales Tax Act, 1951. As the assessee entertained some doubts as to whether Provincial Excise Duty payable in respect of the goods manufactured by them, was to be included in the `sale price' for the purposes of sales tax, they wrote to the Central Board of Revenue to clarify the position. The Board however, asked them to refer the matter to the Assessing Authority. To their query the Commissioner of Income‑tax and Sales Tax, Karachi wrote to them that :

5. "Since the Excise Duty is payable by a purchaser at the time of issue of liquor, it cannot form part of sale price."

6. The Income‑tax Officer therefore, assessed the Sales Tax for the year 1952‑53 by excluding the Provincial Excise Duty:

7. After amendment of the definition of `sale price' by the Finance Act of 1957, proceedings under section 28 of the Sales Tax Act were initiated to re‑open the assessment for the year 1952‑53, and thereafter the Sales Tax Officer, by his order dated 30th March 1957 included the Provincial Excise Duty in the `sale price' of the liquor sold by the assessee in the said year. He also passed similar orders on 12th June 1957 in respect of the assessment years 1953‑54 and 1954‑55.

8. The above orders of the Sales Tax Officer were confirmed in appeal by the Appellate Assistant Commissioner. In a further appeal by the assessee the Appellate Tribunal however, held that the Provincial Excise Duty could not be included in the `sale price' of the manufactured goods for the relevant years.

9. The Appellate Tribunal then at the instance of the Com missioner of Sales Tax (Central) Karachi referred the afore said question to the High Court. The High Court answered the said reference in the negative.

10. In order to appreciate the points raised in this appeal it will be convenient at this stage to set out the relevant provisions of the Sales Tax Act, 1951.

11. Prior to amendment of 1957, section 2(16) and section 3 (3) of the Act were as follows

12. "2 (16) : `sale price' means the price before any amount payable in respect of tax is added and includes any charges for advertising, financing, servicing or any other charges of a similar nature contracted for at the time of sale whether charged separately or not"

13. "3.‑(3) The value of the goods shall be‑

(i) in the case of goods falling under clause (a) of sub section (1)‑ the sale price ;

14. By Finance Act of 1956 section 3 (3) was amended in the follow ing manner

15. "3.‑(3) The value of the goods shall be‑

(i) in the case of goods falling under clause (a) of sub section (1)‑the sale price or where the goods are charge able with the duty of excise under the Central Excise and Salt Act, 1944 (I of 1944), the value determined for the levy of the said duty plus the said duty.

16. Sections 2 (16) and 3 (3) (i) were then again thus amended by Finance Act of 1957 :

17. "In section 2, for clause (16), the following clause shall be substituted and shall be deemed to have been substituted on and from the sixteenth day of March 1956, namely :‑

(16) `sale price' means‑

(i) 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 sec tion 4 do not apply, the value which would have been determined if the said section 4 had applied plus 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 Excise, whether or not paid by the assessee, and any charges for advertising, financing or any other charges of a similar nature contracted for at the time of sale whether charged separately or not."

18. "3.‑(3) (i) In clause (i) of subsection (3), the words, brackets, figures and commas or, where the goods are chargeable with a duty of excise under the Central Excise and Salt Act, 1944 (1 of 1944), the value determined for the levy of the said duty, plus the said duty" shall be omitted and shall be deemed to have been omitted on and from the 16th day of March 1956."

19. From the amendment of the definition of `sale price' it is clear that from 16th March 1956 Excise Duty could be included in the sale price of manufactured goods for the purposes of Sales Tax.

20. Sole question for determination therefore, is :

21. Whether the department was justified in including Excise Duty in the `sale price' in respect of the assessment years prior to 16th March 1956. In other words, did the unamended definition of `sale price' include Excise Duty.

22. The contention of the assessee before the High Court was that the amended definition of the `sale price' was given .4 retrospective effect only from 16th March 1956 and hence the Provincial Excise Duty could not be included in the `sale price' for the assessment years 1952‑53, 1953‑54 and 1954‑55.

23. The contentions of the Department which found favour with the High Court were that the amended definition of `sale price' had only clarified the position and that the duty of excise was one imposed on a manufactured article and it was in the nature of an expense incidental to the manufacture of liquor and so might be legitimately included in the sale price.

24. From the judgment of the High Court it appears that due weight was not given to the words "the following clause shall be substituted and shall be deemed to have been substitu ted on and from the sixteenth day of March 1956" occurring in the Finance Act of 1957. If the intention of the Legislature was to clarify the existing definition, there would have been no necessity of saying that the amended definition would be applicable only from 16th March 1956. The true scope of the amendment must be determined on a fair reading of the words used in their natural and ordinary meaning and in the present case there is not much room for doubt on this point. The words quoted above clearly indicate that it was designed to apply from a certain date. The High Court has however, not considered the full implication of these words.

25. Apart from this, we are unable to read the earlier definition in the manner suggested by the Department. It was said in the course of argument that notwithstanding the amendment it must be assumed that the previous definition of `sale price' included Provincial Excise Duty. The previous definition however, does not expressly say so. We may here observe that interpreting the taxing statute the Courts must look to the words of the statute and interpret it in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provisions in the statute so as to support assumed deficiency. On the other, hand the fact that the Legislature made an express provision for including the excise duty indicates that the unamended definition of the `sale price' did not include the provincial excise duty.

26. For the reasons stated above we hold that the Appellate Tribunal rightly came to the conclusion that the amend ment of 1957 was not merely declaratory of the existing right and that it could not have greater retrospective effect than what was expressly granted to it. For the reasons stated above the answer under reference should be in the affirmative.

27. We accordingly allow this appeal and set aside the order of the High Court. The appellants will be entitled to their costs here and in the High Court.

28. Appeal accepted.