S. T. AS. NOS. 18 OF 1972-73 AND 35 OF 1975-76, DECIDED ON 20TH JANUARY, 1977. Versus S. T. AS. NOS. 18 OF 1972-73 AND 35 OF 1975-76, DECIDED ON 20TH JANUARY, 1977.
ORDER
1. MUHAMMAD MAZHAR ALI (MEMBER).‑-- We propose to dispose of these two appeals relating to the assessment years 1966‑67 and 1968‑69 against the assessment framed .under section 10(3) of the S. T. "Act. The appeal for the charge year 1966‑67 is a direct appeal whereas the other one is against the order of the Appellate Assistant Commis sioner, Range . . . .
2. The assessee‑appellant is a manufacturer of laundry and toilet soaps. The first common objection agitated on behalf of the appellant relates to the levy of Defence Surcharge amounting to Rs. 86,693 and Rs. 1,07,239 in the assessment years 1966‑67 and 1968‑69, respectively. The Defence Surcharge on sees tax was made liveable vide section 4 of the Finance (Supplementary) Act, 1965 (Act XXII of 1965) (hereinafter called the 1965 Act). Before proceeding further; we deem it proper to reproduce the long title preamable and section 4 of the 1965 Act, which are as under:‑
2. Act XXII of 1965 Finance (Supplementary) Act, 1965‑--
3. "An Act to give effect to the supplementary financial proposals of the Central Government for the year ending on the thirtieth day of June, 1966."
4. The following Act of the National Assembly received the assent of the President on the 3rd December, 1965, and is published for general infor mation :‑
5. Whereas it is necessary to levy certain additional duties and taxes as defence surcharge to raise revenue for meeting expenditure on defence ;
6. It is hereby anacted as follows :‑
1. Short title, extent and commencement.‑(1) This Act may be called the Finance (Supplementary) Act, 1965.
2. Defence surcharge on sales tax.‑There shall be levied and collected an additional tax on defence surcharge on the goods liable to the pay ment of tax under the Sale Tax Act, 1951 (111 of 1951), at the rate of twenty‑five per cent of such tax payable thereon.
7. Later on the Legislature amended the long title of the 1965 Act, vide section 13 of Finance Act, 1965 which reads as under :‑‑
13. Amendment of Act XXII of 1965,‑In the Finance (Supplementary) Act, 1965 (XXII of 1965), for the long title the following shall be substituted, namely:‑-
8. "An Act to levy certain additional duties and taxes as defence surcharge to raise revenue for meeting expenditure on defence."
9. The Sales Taxes Officer levied defence surcharge in both the years under appeal. The assessee challenged the levy of defence surcharge only in the assessment year 1968‑69 before the Appellate Assistant Commissioner. The precise objection as taken in the grounds of appeal was, that the imposing of defence and sales tax is not covered by valid and constitutional legislation and is, as such and illegal assessment which merits to be deleted. The order is not sustainable in law being contrary to a specific provision of Notification referred to above and being in observance of piece of Legislature which is constitutional. The learned Appellate Assistant Commissioner, we feel sorry to observe, instead of expressing a well‑considered opinion, brushed aside the appellant's contention with the following passing remarks :‑‑
10. "The defence surcharge was for the first time levied by Supplementary Finance Act. 1965 and was renewed from year to year by the respec tive Finance Acts. The appellant's contention as to the illegality of the charge is untenable. The appeal is rejected on this point."
11. Mr. Mohammad Ali Khan, the learned counsel for the appellant con tended that a Finance Act is a temporary Act and expires on the close of the year to which it relates. In support of his contention he placed reli ance on a passage appearing at page 31 of the Interpretation of Statutes by Swarup, the relevant portion of which reads as under :‑-
12. "Temporary Acts are those on the duration of which some limitation is put by the Legislature. They continue in force unless sooner repealed, until the expiration of the time fixed for its duration. An instance of such an Act is the Finance Act which is passed annually continues only for a year. The prepetual Act is one on which there is no limitation as to its duration. It continues in force until it is repeated."
13. But in the instant case, it was so contended, by amending the long title of the 1965 Act vide section 13 of the Finance Act, 1966, the Legislature has made it a perpetual statute to be effective for all the subsequent years. Then relying upon the Halsbury's Laws of England, Vol. 36, third Edn., pages 421/122 which says:-
14. "A statute, or a particular provision thereof may however, be merely temporary, that is to say may be expressed to continue in force for a limited period only in which case it will expire automatically at the end of that period unless earlier repealed."
15. The learned counsel contended that since the 1965 Act was expressed to continue in force for a limited period only it was to expire automatically at the end of that period and its life should not be extended in this manner. The learned counsel then strenuously argued that it is clearly a deceptive manner of Legislation and is opposed to the usual Parliamentary practice. He characterized it as a Blind `amendment' and hence unconstitutional. He then relied on para. 121, Crawford's Statutory Construction, 1940 Edn. to say that amendment with reference to title alone leads to the enactment to deceptive Laws, since it is extremely difficult for the members of the Legis lation without having the text before them, to understand what was intended.
16. Lastly, in this behalf he drew our attention to Maxwells' Interpretation of Statutes, Edn. page 256 (4), which runs as under :‑
17. "Statutes which impose pecuniary burdens are subject to the same rule of strict construction. It is a well‑settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language, because m some degree they operate as penalties the subject is not to be taxed unless the language of the statute clearly imposes the obligation, and language must not be strained in order to tax a transaction which had the legislature thought of it, would have been covered by appropriate words." In a taxing Act" said Rawalt, J. "one has to look merely at what is clearly said. There is not presump tion as to a tax. Nothing is to be read in nothing is to be implied. One car only look fairly at the language used". But this strictness of interpretation may not always enure to the subject's benefit, for `If the person sought to be taxed common within the letter of the law I must be taxed, however great the hardship may appear to the judicial mind to be.
18. The next principal contention of the learned counsel was that the consti tution of the Islamic Republic of Pakistan, 1962 (hereinafter referred to as the 1962, Constitution does not authorise the levey of additional duties and surcharge for defence inasmuch as Item 43(f) of the Third Schedule, which enumerates matters with respect to which the Central Legislature has exclu sive power to make laws, speaks of only taxes on sales and purchase and item 49 of the said Schedule of the 1962 Constitution speaks of the matters incidental or anciliary to any matter enumerated in that Schedule. He, therefore, vociferously argued that in contradiction to proviso (b) to section 138(I) of Government of India Act, 1935, which speaks, "that the Federal Legislature may, at any time, increase the said taxes by a surcharge for Federal purposes and then while proceeds of any surcharge shall form part of the revenue of the Federal; and the Constitution of India 1949, where there is a residuary clause in Item 97 of list of Schedule VII to the effect, "Any other matter not enumerated in List II. List III including any taxes not mentioned in either of these lists there is nothing in the 1962 Constitution under which the Legislature could make an Act for the levy of additional duties and surcharge for defence. Thus, according to the learned counsel, the levy of defence surcharge is beyond the competence of the Legislature and hence the 1965 Act (both original and amended) is wholly ultra vires of the 1962 Constitution.
19. The learned counsel for the appellant challenged the validity of the amendment introduced by section 13 of the Finance, Act, 1966 also from another angle. According to him, it was a case of revival of repealed enactment, but the requirement of section 7 of the General Clauses Act, 1897, namely, that the intention to revival would be expressly made, has not been complied with. This omission on the part of Legislature has rendered the amending provision bad in law.
20. Mr. Sheikh Abdul Haq, learned counsel for the department, on the other hand, contended that by the 1965 Act, the defence surcharge was leviable only for one year. The Legislature which is supreme in its domain decided to make it permanent. According to him for doing so, it could have recourse to any one of the two methods namely either to legislate a new Act or to remove the restricting clause from the 1965 Act. In his submission, it adopted the second method and that too before the 1965 Act had expired, that is, the amendment by Finance Act, 1966, was effected when the 1965 Act was still in force. Besides, the counsel maintained That Section 7 of the General Clauses Act, which deals with the revival of repealed enactments, has not relevancy to the case in hand. He also maintained that the defence surcharge is nothing but a tax and the Central Legislature, therefore acted well within its constitutional powers in enacting the 1965 Act and making a perpetual Act by introducting the amendment through the Finance Act, 1966.
21. We have given our earnest consideration to the submissions made at the Bar and we regret we do not find any merit in the submission of the learned counsel of the appellant. No doubt the 1965 Act was a temporary Act. It was expressed to continue in force till the 30th June, 1966 and it would have expir ed at the end of the said period had the Legislature remained silent and not extended its life through any subsequent piece of Legislature either in the form of amendment or fresh enactment. Therefore, what one has to see is whether the Legislature a competent to convert a temporary statute into permanent one and in the manner it has done in the instant case. This immediately takes us to next contention of the learned counsel to the effect that in the absence of any omni‑bus laws in the III Schedule to 1962 constitution as it was reliable in the Government of India Act, 1935 or is found in the Constitution of India, 1949, the legislation in question is unconstitutional. It is further to be observed that notwithstanding the absence of any such clause from the III Schedule on the Constitution, the Legislature in our opinion, was fully compe tent to legislate upon the matter of Defence Surcharge. Sub‑Article (2) of Article 131 in clear terms provides that Central Legislature has power to make laws with respect to any matters not enumerated in the III Schedule where the national Interest of` Pakistan in relation to scurity of Pakistan including the economical and financial stability of Pakistan. In the presence of this specific provision in the Constitution there remains no manner of doubt to hold that the legislature was competent to make laws providing for the levy of Central Additional duty and taxes as Defence Surcharge to raise revenues for meeting expenditure on Defence. Having reached this conclusion the only other aspect that needs consideration is whether the legislature was under any constitutional bar not to amend any statute simply by reference to title alone. If one finds that there is no such prohibition in the Constitution then there would obviously be no course open but to hold that amendment made by reference to title alone was proper and valid piece of legislation. It would in that case be beyond the competence of Courts to hold the amending Act void on account of its being allegedly a blind amend ment or that it was opposed to the usual parliamentary practice. Here also the contention of the learned counsel is fallacious and he in our opinion, doe not get support from the passage 121 of Interpretation of Laws by Crawford, upon by him. It is clearly laid down therein :--‑
22. "Some statutes prohibit by means of constitutional provision amendment of statute simply 'by reference to title alone and required new statute to be set‑forth and published in its entirety. This provision is also regarded mandatory."
23. The learned author then proceeded to observe :‑-
24. However, in the absence of such constitutional provisions, amendments may be made by inserting certain words sentences or provision and by striking out certain words, sentences, or provisions, or by both by reference to title alone. This method naturally resulted in consi derable confusion and led to the enactment of deceptive laws, since it was extremely difficult for the members of the legislature, without having the text before them, to understand what was intended. In order to remedy this situation and prevent `blind' amendments, and the consequent deceiving of the legislature and the public, the constitutional provisions above discussed were adopted."
25. In the absence of such constitutional requirements as already stated, we would hold that it is beyond our competence to question the power of Legis lature to enact any particular statutory provision. The contention of the learned counsel of the appellant that the war had come to an end in 1965 and hence there was obviously no good reason to make the 1965 Act per manent by introducing the amendment in question is wholly devoid of force. Here we would like to quote from Halsbury's Laws of England, Volume 36, Third Edition, page 382 which is as under .
26. "The making of law is a matter for the Legislature, and not for the Courts, and the Courts are not entitled to canvas the power of Parlia ment to making it and Tray not base the construction of a Statute on their view of what Parliament ought to have done."
27. Before parting with this issue, we would also like to add that the arguments advanced by the learned counsel for the appellant on the basis of clause 7 of the General Clauses Act is obviously misconceived inasmuch as the 1965 Act had neither expired nor was repealed at the time when it was made perpetual.
28. The next objection which is also common to both the years under appeal, relates to the levy of sales tax on crude glycerine. In his order for the first year under appeal, the Income‑tax Officer has not given any reasons for sub jecting to sales tax the sales of crude glycerine. However, in the year 1968‑69, lie observed : "as regards claim for exemption in suspect of crude glycerine, the assessee's authorised representative could not establish the availability of exemption. It has been taxed throughout in the past, Hence no exemption allowable in this regard'". On appeal before the Appellate Assistant Commissioner, it was contended on behalf of the assessee that the treatment meted out by the Sales Tax Officer was illegal and contrary to the provisions of sales Tax. And the Sales Tax Officer had himself examined the turnover of B.P Glycer ine in the subsequent assessments. It was claimed that bulk of the sales were in respect of refined I. F. B. P. Glycerine and only fraction of sales amounting to Rs. 1,24,857 was of crude glycerine. It was, however; urged on behalf of the assessee on appeal before the Appellate Assistant Commissioner that glycerine whether cryde or purified is prominently a drug and as such exempt from sales tax tide item No. 35 of Notification No. 7. dated 27‑6‑1951. The learned Appellate Assistant Commissioner, however, held that there was no question of general exemption of B. P. Glycerine, exemption was available to drugs and medicines and Glycerine if consumed or utilised in the manufac ture of drugs or medicines would be exempt. He directed that Sale Taxi Officer to look into the appellant's claimed for exemption in detail and to allow exemption on such sales as have been made for the preparation of drugs and medicines. The learned counsel for the appellant attempted to reiterate the same contentions before us which were adverted before the learned Appellate Assistant Commissioner. However, upon a perusal of the impugned order of the Appellate Assistant Commissioner it is observed that the assessee had agreed to the chargeability to sales tax of the crude glycerine. Faced with this situation, the learned counsel for the appellant did not press this objection. A perusal of the grounds of appeal. relating to the first year under appeal further revealed that the assessee had not agitated against the levy of sales tax on the sales of crude glycerine in the year end, as much, we declined permission to the appellant's counsel to urge this additional ground. Consequently, the orders of the lower authorities in this behalf shall stand good.
29. The next objection addressed before us which is restricted to the charge year 1966‑67 relates to the levy of sales tax on sales packing material of Rs. 3,06141. The learned counsel fur the appellant contended that the value of packing material used was recovered by the assessee from its customers and as such, its was not include able in the sale price of the goods. He also contended that separate accounts were maintained for the packing materials. All the purchases and sales are duly recorded and they do not form part of the prise of the soap. The sales tax officer had, the learned counsel submitted, allowed exemption in respect of sales of packing material in the assess ment year 1968‑69. At this stage, the learned Departmental Representative submitted that the in the bills produced by the assessee for that year the value of the paking material wax separately shown as it is clearly mentioned by the Sales Tax Officer in his order. He agreed that if the assessee had charged the rice of packing material separately in the year 1966‑67 then the Department would have no objection to record the same treatment to this claim of the 'assessee as it has been met in the assessment year 1968‑69. In this view of the matter, we would direct the Sales Tax Officer to re‑examine the claim of she appellant and if it is found that the price of packing material is separately, charged as it has been done in the year 1968‑69 then he should allow exemption to the assessee in respect of the sales of packing material.
30. The only other objection agitated before us, which was also confined to the assessment year 1966‑67, was that the Sales Tax Officer has erred is not 'lowing set off of the tax paid by the assessee on partly manufactured goods to the extent of Rs. 1,02,448. According to the counsel, all the invices of the local purchases amounting to Rs.37,444 disclose the payment of sales tax separately so also according to him the bills of lading on imported goods of Rs. 58,429 showed the payment of sales tax. Thus, in his submission on the purchases of raw material to the extent of Rs. 95,869, the sales tax had been duly paid. And since these partly manufactured goods had, in fact gone into the manufacture of the soap which is an excisable item, the payment of sales tax thus made should have been set off against the demand of sales tax raised against the assessee. The Sales Tax Officer is directed to scrutinise the claim of the assessee afresh and pass appropriate orders as the circumstances of the case may demand.
31. In the result, both the appeals stand disposed of in the manner and to the extent indicated above.
32. Order accordingly.