S. T. AS. NOS. 162/KB AND 163/KB OF 1980.81, DECIDED ON 14TH DECEMBER, 1981. Versus S. T. AS. NOS. 162/KB AND 163/KB OF 1980.81, DECIDED ON 14TH DECEMBER, 1981.
ORDER
MUHAMMAD MAZHAR ALI (CHAIRMAN) .‑The facts giving rise to these two sales tax appeals, at the instance of Sales Tax Officer Circle, pertaining to charge years 1976‑77 and 1977‑78, against the order of the learned Appellate Assistant Commissioner, B‑Range, ate these. The assessee‑respondent is a licensed manufactured of chemicals like sodium‑bi‑chromide, sulphuric acid and pigment used in tanning industries. The assessee claimed refund of sales‑tax under section 27 of the Sales Tax Act relating to sales tax allegedly paid on purchase of raw materials consumed in the manufacture of its taxable finished products. The soda‑ash was granted exemption vide Notification No. 9, Entry No. 53 (SRO. 113 (R)/66), dated 1‑7‑1966. Admittedly, the levy of sales tax on soda‑ash was done away with by Finance Act, 1976 and a new duty at the rate of Rs. 150 per ton was levied which as per Budget speech by the Finance Minister, was inclusive of S. T., Defence surcharge, Rehabilitation tax. This duty was to be collected on the basis c,r production capacity of factories producing soda‑ash. The Sales Tax Officer did not admit the assessee's claim for refund as he was of the view that in the event of abolition of S. T. on soda‑ash, there was no question of payment of S. T. on this item and hence no refund of sales tax could be claimed. The assessee's stand before him was that S. T. was indirectly paid in the form of "capacity duty", which was substituted for sales tax. Defence surcharge and Rehabilitation tax. The assessee sought to support his contention by the Finance Minister's Budget speech. The Sales Tax Officer, however, relying upon the authority of the Lahore High Court, in the case of `S. Muhammad Din & Sons Ltd. v. S. T. O. ((1977) 36 Taxation 74) repelled he assessee's contention. The assessee went in appeal before the learned Appellate Assistant Commissioner who, by his impugned order, allowed the appeals for both the years. The learned Appellate Assistant Commissioner sought succour from the order of the Income Tax Appellate Tribunal, reported as '(1974) 29 Tax. 7 (Trib.), as well as upon an unreported decision of the Trib?unal in I. T. A. No. 1184‑K B of 1978‑79, dated 22nd May, 1979. (We have perused the later order and we find that it has obviously no relevancy to the issue, involved herein). Hence these second appeal.
2. The learned Departmental Representative assailed the impugned order, by adopting the same line of argument which prevailed with the assessing officer. He emphasised that consequent upon the passing of in Finance Act, 1976 there was no levy of sales tax, such on the goods manu?factured by the assessee and hence no sales tax was assessed or paid by the assessee on and in respect of its end‑products and hence it was not entitled to claim refund. He submitted that the Sales Tax Officer has acted rightly in placing reliance on the authority of the Lahore High Court in the case of M/s. S. Muhammad Din & Sons Ltd. The contention on behalf of the assessee in the case too was "that although the electric fans were exempted from sales tax by Notification dated 14th June, 1965, the S. T. continues nevertheless to be levied in the garb of excise duty". Reliance was placed in support of this contention on the speech of the Finance Minister, wherein it was said that intention was to merge the S. T: and the rehabilitation tax with the excise‑duty. It was thus urged by the assessee's counsel that the S. T. has not been abolished but it is still being recovered in the form of excise duty. The High Court repelled this contention and it seems appro?priate to reproduce the relevant excerpt from the judgment of the High Court, which appears at page 77 of the report as under :‑
"In my opinion, however, such speeches are meant for the consumption of the lay public but cannot have effect on the legal consequences of the relevant enactment, the rules made thereunder or the Notification issued in pursuance thereof, Excise‑duty is levied under different Act altogether. The Sales Tax Act is independent of it. If sales tax is abolished under the Sales Tax Act", then it will react on all the relevant provisions of that Act. even though the excise‑duty may have been enhanced, under tire relevant Act, by exactly the same amount as the tax previously recoverable under the Sales Tax Act.
(Italics for emphasis).
It was in appreciation of this factual and legal aspect of the case (as laid down by the Lahore High Court) that the Sales Tax Officer in the instant case, disallowed the entire claim of refund of sales tax paid on soda‑ash, in both the years. When the matter came up before the learned Appellate Assistant commissioner, in appeal, he preferred to rely upon the decision of the appellate Tribunal. already referred to in the preceding pararaph, and expressed the view that the case of S. Muhammad Din & Sons" Ltd., was distinguishable on its own facts. Here we find that the learned Appellate Assistant Commissioner fell in error. The Lahore High Court's decision in the case of S. Mohammad Din & Sons Ltd., clearly, lucidly and dally enunciates the proposition as to what extent the speech of the Finance Minister made while piloting the Finance Bill, is relevant and whether it can have any effect on the legal consequences of the relevant statement. The view taken by the Appellate Tribunal in this behalf, in the case ported as (1974) 29 Taxation 7 (Trib.) thus stands shattered. Even otherwise, the Tribunal in its order has held that the speech of the Finance Minister serves only as a helpful guide for finding out the intention of the Legislature. It cannot, however, control the provisions of law as enunciated by the Finance Act itself. It is a golden rule of interpretation of statutes that the intention the Legislature is only to be elucidated from she actual words of the statute. 'Maxwell' on Interpretation of Statutes, 12th Edition, Page 1, states : ?if language is clear and explicit, the Court must give effect to it, for in at case, the words of statute speak the intention of the Legislature.
Now reverting to the provisions of the Sales Tax Act, we find that the word "tax" defined in section 2 (18) to mean the tax payable under the Sales Tax Act, 1951. No amendment whatsoever was introduced in the above quoted definition of the word "tax" through the Finance Act, 1976 so as to enlarge its scope and bring with in its fold the new "duty which emerge from the inclusion of sales tax with other taxes. At any rate, the sales to upon its amalgamation with rehabilitation tax and Defence surcharge was undisputedly not payable under Sales Tax Act. Consequently, n tax was levied and collected on the value of the goods in question produced or manufactured by the appellant is Pakistan within the meaning of section 2 (18) of the Sales Tax Act. Hence as a necessary corollary thereto t tax was paid by the appellant on the purchases of the "partly manufactured goods". And unless the tax has been paid on purchase of "partly manufactured goods, no refund of tax can be claimed or allowed under section 27 of the Sales Tax Act. Here it may be mentioned that the expression 'tartly manufactured goods", as per definition contained in section 2 (12) the Act, "means only goods which are to be incorporated into and form constituent or component part of an article which is subject to tax." However since the goods manufactured by the assessee respondent were not subject tax payable under the Act, no refund could be claimed or allowed under section 27 of the Act. The Sales Tax Officer was, therefore, right in holding "S. T. thus having been said by the assesse?s under the Sales Tax Act and no refund is due to him under this Act". The contention of Mr. Muhammad Hashmay, as make before the first appellate authority and reiterated before us that, the conversion of sales tax into capacity duty, did not change the nature of levy of the tax because this was the precise reason chooses by the Central Government to compensate the Provincial Govt. for the appellant's loss of their share of sales tax on its conversion into capacity‑duty, as devoid of force. We are satisfied that the Sales Tax Officer has rightly decided this issue against the assessee and the relief allowed by the learned Appellate Assistant Commissioner is therefore, unsustainable in law,
3. For the foregoing reason, both the appeals succeed and are hereby allowed with the result that the impugned order of the Appellate Assistant Commissioner is vacated and those of the Sales Tax Officer in this behalf stand restored. ? ?????????????
Appeals allowed.