EXCISE AND TAXATION OFFICER, KARACHI Versus BURMAH SHELL STORAGE AND DISTRIBUTION COMPANY OF PAKISTAN LTD.

AJMAL MIAN, J: ‑‑By this common judgment, we intend to dispose of the above six appeals as they involve the common question of facts and law. The above appeals are with the leave of this Court against the judgment dated 18‑6‑1976 passed by a Division Bench of the erstwhile High Court of Sindh and Balochistan in Constitutional Petitions Nos. 667/66, 743/66, 15, 16, 18 and 75/67, filed by the respondents against the levy and demand of tax on goods imported by them under section 10 and section 8 of the West Pakistan Finance Acts, 1962 and 1963, hereinafter referred to as the Acts, allowing the same. Leave to appeal was granted to consider, whether the Third Schedules to the Acts, which prescribe the mode for realisation of tax, should have been liberally construed in a manner to harmonize the apparent inconsistency with the charging sections in order to fulfil the aim and object of the same.

2. The facts to be noted are that under sections 10 and 8 of the Acts, which were couched in more or less identical language, a tax called "Tax on Trades, Import and Export Licences" was levied on every person engaged in the import and export trade, who held a licence issued under the Imports and Exports (Control) Act, 1950, on the value of the goods imported against such licence, according to the scale set out in the Third Schedules to the Acts. Pursuant to the above Acts, appellant No.1. (The Excise and Taxation Officer, L‑Division, Karachi) after obtaining the requisite information from the respondents regarding detail of the import licences issued to them and the extent of which they had been utilized, issued demand notices accompanied by Treasury Challans calling upon the respondents to deposit in the State Bank of Pakistan, the amount of tax in some cases and the amount of penalty mentioned therein, the detail of which is given inter alia in paras. 5, 6 and 7 of the judgment under appeal. As appellant No.1 held out threats to recover the above tax as arrears of land, the respondents filed aforesaid Constitutional petitions inter alia on the ground that there was irreconcilable conflict between the charging sections of the Acts and the Third Schedules and, therefore, the levy could not have been made pursuant thereof. The above petitions were contested by the appellants but a Division Bench of the erstwhile High Court of Sindh and Balochistan inter alia held as follows:‑‑

"In the instant case, it cannot be said that the Third Schedule prescribing a sliding scale of tax is a machinery section relating to collection of the tax. In fact, the machinery for its collection was created later, by the West Pakistan Tax on Import and Export Licences Rules, 1964, and the West Pakistan Tax on Holders of Import and Export Licences Rules published on 30‑6‑1965. We, therefore, find no force in the submission of Mr. Muhammad Sharif. In the absence of a scale for the assessment of tax on the value of the goods imported, the levy of the tax on the value of the goods imported cannot be validly made. Accordingly, we would declare that the demands of tax in question made by the respondents including the penalty, are illegal, without lawful authority and of no legal effect."

Since the above petitions were allowed, the appellants filed petitions for leave to appeal in this Court, which were granted to consider the above question.

3. In support of the above appeals, Mr. Rashid Akhtar Qurcshi, learned A.S.C. appearing for the appellants, has contended that the High Court erred in not construing section 3 of the Acts and the Third Schedules to the same as to harmonize and to achieve the object of levy even by omitting certain words or supplying certain words in the sections or the Third Schedules.

On the other hand, M/s. Noor Muhammad and Makhdoom Ali Khan, learned A.S.C. appearing for some of the respondents, have urged that the inconsistencies between section 3 and the Third Schedules to the Acts, were such that the same could not have been resolved by applying any principle of construction of statutes. M/s. Muhammad Naeem and Syed Iqbal Ahmed, learned A.S.C. appearing for the respondents in some of the appeals, adopted the arguments of the former.

4. In order to appreciate the above contentions of the learned counsel for the parties, it may be pertinent to reproduce section 10 and the Third Schedule to Finance Act, 1962, which read as follows:‑‑

Section 10 of the West Pakistan Finance Act,1962:‑‑

"(10). Tax on Trades. Import and Export Licences.‑‑(1) For the financial year 1962‑63, there shall be levied and collected from every person engaged in the import and export trade who holds a licence issued under the Imports and Exports (Control) Act, 1950 (Act XXXIX of 1950), a tax on the value of the goods imported or, as the case may be, exported against such licence, according to the scale set out in the Third Schedule to this Act.

(2) Government may, by a notification in the official Gazette, exclude any class of licence issued as aforesaid from the purview of subsection (1), or, by a general or a special order in writing, exempt a person holding such licence from the payment of the whole or a part of the tax payable by him in respect of the goods imported or exported against such licence."

Third Schedule to the West Pakistan Finance Act, 1962:

"THIRD SCHEDULE (See section 10)

Amount of tax

When the licence is for an Nil amount not exceeding Rs.4,999.

When the licence is for an Rupees ten. amount exceeding Rs.4,999 but not exceeding Rs.9,999.

When the licence is for an Rupees fifty. amount exceeding Rs.9,999 but not exceeding Rs.19,999.

When the licence is for an Rupees one hundred and amount exceeding Rs.19,999 but fifty. not exceeding Rs.49,999.

When the licence is for an Rupees five hundred. amount exceeding Rs.49,999 but not exceeding Rs.99,999.

When the licence is for an Rupees one thousand." amount exceeding Rs.99,999.

5. A perusal of the above‑quoted section 10 indicates that the above section, which was the charging section contemplated a tax on the value of the goods imported or, as the case may be, exported against licence issued under the Imports and Exports (Control) Act, 1950 according to the scale set out in the Third Schedule to the Act. It may further be noticed that the Third Schedule instead of providing a scale for levying tax on the value of the goods imported or exported, has provided amount of tax on the amount of licence, and the maximum amount payable under the Schedule was Rs.1,000. The appellants purported to levy and recover tax not as per Schedule but on the value of the goods imported or exported and worked out the amount of tax in some cases into lacs. The question, therefore, which requires consideration is, as to whether this Court can construe the above two inconsistent provisions of the Act as to make them workable by applying any principle of construction. At this juncture, it may be pertinent to point out that one of the rules of construction of statutes is that in case of irreconcilable inconsistency between a charging section and the Schedule, the former is to prevail and the Schedule is to yield to the Act. In this behalf, reference may be made to Craies on Statute Law, Seventh Edition, 1971 at page 225 and N.S. Bindra's The Interpretation of Statutes, Seventh Edition at page 92, which read as follows:‑‑

Craies on Statute Law, Seventh Edition 1971 p.225.‑‑‑"If the enacting part of the Statute cannot be made to correspond with the schedule, the latter must yield to the former".

N.S. Bindra's The Interpretation of Statutes Seventh Edition at page 92 ‑‑‑"Conflict: ‑In case of a conflict between the body of the Act and its Schedule, the former prevails".

6. However, Mr. Rashid Akhtar Qureshi has relied upon the two judgments referred to in the Leave Granting Order, namely, the case of Khan Bahadur Amir‑ud‑Din and others v. West Punjab Province PLD 1956 Federal Court 220 and the case of Lt.‑Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty and others PLD 1961 SC 119.

In the above first case, the Federal Court of Pakistan, while dismissing an appeal filed against the judgment of the erstwhile High Court of West Pakistan, held that while interpreting a provision of a statute, where more than one interpretation is possible, that construction should be preferred which carries into effect the object of the statute. In the above case, the question for consideration was, whether the valuation list prepared under the Punjab Urban Immovable Property Tax Act, 1940 could be drawn up earlier than before the expiry of five years period from the publication as contemplated under the relevant provisions of the Act. A supplementary list was prepared as the earlier list inadvertently omitted the valuation of the agricultural lands. The Federal Court upheld the preparation of the supplementary list in spite of the above prohibition as to the preparation of revised list by construing the relevant provisions of the Act in a manner which was to advance the object of the Act and not to frustrate it. Whereas, in the second case, the question before this Court was, whether this Court could construe the words "Controller of Estate Duty" in place of the word "Board" in the relevant provisions of the Estate Duty Act, 1950. The above question was answered as follows:‑‑

"There being no doubt in the present case that the duty which the legislature intended to be realized was that which was to be determined in accordance with the provisions of the Act, we find we have jurisdiction to modify section 57 so as to rectify the draftsman's mistake and to read in it references to the Controller and the Appellate Tribunal, etc., and we would hold that the proper duty could be realized in spite of the defective wording of section 57."

7. On the other hand, Mr. Noor Muhammad has relied upon the following passages from Craies on Statute Law, Seventh Edition, page 113 and the case of Inland Revenue Commissioners v. Ross and Coulter and others (Bladnoch Distillery Co. Ltd.) (1948 All England Law Reports, Vol. 1, page 616 relevant at page 625), which read as follows:‑‑

Extract from Craies on Statute Law, Seventh Edition, page 113: ‑"There is no room for any intendment. There is no equity about a tax There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." In 1948 in the House of Lords (I.R.C. v. Ross and Coulter (1948) All E.R. 616, 625), Lord Thankerton said: "Counsel are apt to use the adjective, `penal' in describing the harsh consequences of a taxing provision, but if the meaning of the provision is reasonably clear, the Courts have no jurisdiction to mitigate such harshness. On the other hand, if the provision is capable of two alternative meanings the Courts will prefer that meaning more favourable to the subject. If the provision is so wanting in clarity that no meaning is reasonably clear, the Courts will be unable to regard it as of any effect."

Extract from the case of 1948 All England Law Reports Vol, 1 vase 616 at page 625: ‑"I cannot think that there can be much doubt as to the proper canons of construction of this taxing section. It is not a penal provision; counsel are apt to use the adjective "penal" in describing the harsh consequences of a taxing provision but, if the meaning of the provision is reasonably clear, the Courts have no jurisdiction to mitigate such harshness. On the other hand, if the provision is reasonably capable of two alternative meanings the Courts will prefer the meaning more favourable to the subject. If the provision is so wanting in clarity that no meaning is reasonably clear the Courts will be unable to regard it as of any effect."

8. Mr. Makhdoom Ali Khan has referred to the following cases:‑‑

(i) Messrs Hirjina & Co. (Pakistan) Ltd., Karachi v. Commissioner of Sales Tax Central, Karachi (1971 SCMR 128): in which this Court, while construing sections 2(16) and 3(3) of the Sales Tax Act, held that "In interpreting the taxing statute, the Court must look to the words of the statutes 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."

(ii) The Commissioner of Agricultural Income Tax, East Bengal v. B.W.M. Abdur Rahman, Manager Taki Bara Taraf Wars Estate (1973 SCMR 445):

In the above case, this Court, while construing the provisions of Bengal Agricultural Income Tax Act, 1944, inter alia held as follows:‑‑

"But indeed, in determining whether or not a particular matter comes within a taxing statute, it is only the letter of the law which must be looked to. There is ample authority for the proposition that in a fiscal case, form is of primary importance, the principle being that if the person sought to be taxed comes within the letter of the law, he must be taxed, however great a hardship may, thereby be involved but on the other hand if the Crown cannot bring the subject within the letter of the law he is free however apparent it may be that his case is within what might be called the spirit of the Law. As was said by Rowlatt, J., in Cap Brandy Syndicate v. Inland Revenue Commissioner (1921) 1 K.B. 64):

`In a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.'"

(iii) Collector of Customs (Appraisement), Karachi and others v. Messrs Abdul Majeed Khan and others 1977 SCMR 371: in which this Court, while construing the provisions of the Customs Act and the Imports and Exports (Control) Act, 1950, held while construing a penal or taxing statute, Courts to look to words of statutes and interpret them in light of what is clearly expressed to support assumed deficiency. It was also held that in case of an ambiguity or doubt arising from construction, benefit must go to accused.

(iv) Messrs Yousuf Rerolling Mills v. The Collector of Customs and another PLD 1989 SC 232:

In the above case, this Court, whit‑‑ construing the provisions of the Customs Act, inter alia held, that while construing taxing statute, the language used is not to be either stretched in favour of the State or narrowed in favour of the tax‑payer and that collision in the langauge of section is to be avoided.

(v) Government of Pakistan and others v. Messrs Hashwani Hotel Ltd. PLD 1990 SC 68: in which this Court while construing section 4(3)(a) of the Central Excises and Salt Act, 1944, inter alia held as follows:‑‑

"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 import provisions in the statute so as to support assumed deficiency--------------------------------------------------------------------------------------------------------------------------------------------------------

In taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."

9. The judgments relied upon by Mr. Rashid Akhtar Qureshi in fact do not advance the case of the appellants. There cannot be any cavil to the proposition that the Court can supply an obvious omission in a particular provision of a statute or omit some word which is apparently redundant in the context of the provision, but the Court cannot legislate in place of the legislature. In the instant case in view of section 10 and section 8 of the Acts, the Third Schedule were to provide scale as to the amount of tax which was to be levied and recovered on the value of the goods imported or exported. The Third Schedules, instead of providing the scale in terms of the above sections, purported to levy tax on the value of the licences. In our view, the High Court has rightly held that the inconsistency is such, which cannot be reconciled by applying any rule of construction. The effect of the above inconsistency is that the Third Schedules are not in terms of section 3 and, therefore, cannot be enforced.

The above appeals have, therefore, no merits and hence are dismissed with no order as to costs.

M.BA./E‑34/S Appeals dismissed