SHAMSHAD AHMED KHAN Versus AIJAZ AHMED
These two petitions have been tiled by Sterling Plywood Industries and Messrs Pakistan Woodcrafts who are manufacturers of batten boards and strip boards which is made from waste, wood.
2. The petitioners have felt aggrieved against the demand made by Central Excise and Land Customs, sales tax Wing, Karachi, to, the effect that all other sizes of batten boards except size 8'x4' would be treated as specific sizes and be subjected to sales tax. Sales tax has been demanded from these two petitioners with effect from .1‑3‑1984 on I 11 batten boards of different sizes except size 8' x 4.
3. In Petition No. 224/84 oil 25‑1‑1984 the Superintendent of Central Excise and Land Customs had made a demand by his letter on the ground that the batten board if cut into specific sizes becomes a manufactured item liable to sales tax and the same Super intendent oil 4‑3‑1984 informed the petitioner Sterring Plywood Industries that only batten board of standard size i. e. 8' x 4' would be exempt from sales tax under Serial No. 35 of SRO‑666 (1)/n I, dated 26‑6‑1981 and all other sizes would be treated as specific sizes and leviable to sales tax.
4. In respect of petition No. 278/84 on 27‑3‑1984 the Central Excise and Land Customs (Sales Tax) Authorities had seized some of the batten boards of the petitioner Pakistan Wood Crafts front their factory and by a letter of Z9‑3‑1984 had told them that in view of letter of C. B. R. No. 16 (31)‑S. T./80 dated I‑3‑1984 all sizes of batten Boards except of standard size 8''x4' were liable to sales tax, and' therefore, oil the stock found oil 27‑3‑198‑1 and also oil the goods cleared front 1st March, 1984 they should pay the sales tax.
5. Both the petitions were heard together which were argued by Mr. Abdul Khair, Advocate, for the petitioners and reply from tile side of Sales Tax Authorities" was made by Mr. Wajahuddin Ahmed.
6. There is no dispute oil the pint that the relevant notification which is applicable in the case is S. R. O. No. 666(1)/81 dated 25th June, 1981 issued by the Federal Government. The same provides as under: ‑
"GENERAL EXEMPTION FROM SALES TAX ON GOODS, PRODUCED OR MANUFACTURED IN PAKISTAN
In exercise of the powers conferred by subsections (1) and (2) of section 7 of the Sales Tax Act, 1951 (111 of 1951), and in supersession of its S. R. O. 659 (I)!80, dated the 28th June, 1980, the Federal Govern ment is pleased to exempt goods produced or manufactured in Pakistan and falling under heading numbers of first Schedule to the Customs Act, 1969 (IV of 1969) specified in column (2) of the table below from the whole of the sales tax leviable thereon: ‑
TABLE
S. No. ^Description of goods ‑ Rate
I to 34. Not applicable.
35. ... ...
Strip‑board or batten board, other than wooden flooring manufactured from waste wooden strip; lathes or battens obtained front used packing crates or packing crates or packing cases or chests falling under heading 44.15 provided that: ---
(i) plywood is not affixed to such board
(ii) any wooden veneer affixed to such board does not exceed three millimetre in thickness, and
(iii) such board is not laminated or further processed
This notification clearly proves that the batten board is completely exempt from any sales tax except the one where any plywood is affixed to such board or wooden veneer of more than three millimetres thick is affixed to such board or that the board is laminated for further process.
7. It is an admitted position in the case that the product of the petitioner which is being sought to be subjected to sales tax does not have any plywood affixed to it nor wooden veneer of more than three milimetre thickness nor it is laminated.
The Sales Tax Authorities are raying upon a letter of Central Board of Revenue dated 1‑3‑198.3 where it is explained that standard size of batten board is 8' x 4' and therefore batten board of any other size should be treated as 4 specific size arid should be subjected to sales tax.
8. We have not been able to rind arty justification for the view of the Central Board of Revenue, Government of Pakistan, or that of any; other respondent in this case. The exemption provided under S.R.O. 666 is complete exemption for any batten board arid therefore there is no justification to restrict the exemption to any particular‑ size by a mere letters of tire Central Board of Revenue. If the Government of Pakistan wanted, to change the exemption they could do so by issuing a proper S. R. O. for the same belt certainly not lay a mere letter or instructions by the C. B. R.
9. Mr. Wajihuddin had submitted that in November, 1984 a proper notification under S R.O. has been issued by the Federal Government by which the strip board or bitten board ha; been omitted froth Serial No.35 of S. R. O. 666. However, that notification is not before us under challenge and, therefore, we do nut have to comment upon the sane but in any case: the two petitioners before, us cannot be asked to pay any sales tax on the batten board: produced by them of different sizes till the time that the relevant item No. 35 of S. Cc. O. 666 was intact.
10. The respondents' counsel wanted to argue that the standard size of batten board produced in the country was only 8'x4' and there fore, if any other size was produced than the same amounted to a further process. We do not agree with this submission. S. R. O. No. of 666 of 25-6-1981 is quite clear in its impact and it has exempted every batten board from sales tax it is produced far manufactured in Pakistan without any reference to any size. It is, therefore, clear to us that by a mere letter or explanation the C.B.R could not change the effect of the S.R.O. No. 666 and could not restrict the exemption from sales tax to size 8 x 4 only.
It is the convenience and expediency of the producer or manufacturer to produce the batten board of any size and as long as he can produce a batten board within the description of S. R. O. No. 666 of 25‑6‑1981 he cannot be subjected to any sales tax.
11. We are, therefore, clear in our mind that in the two petitions before us the letter of C. B. R. dated 1‑3‑1984 subjecting the batten board of sizes other than 8' x 4' to sales tax was without any authority and the seizure of batten board by respondents Nos. 2 to 4 batten board of Pakistan Wood Crafts on 29‑3‑1984 for subjecting it to sales tax was also without lawful authority. Similarly the letter of 29‑3‑1984 issued by Superintendent of Central Excise Land Customs Sales Tax Wing, Karachi, to Pakistan Wood Crafts was without any lawful authority.
Again the letters of 25‑1‑1984 and 4‑3‑1984 issued by respondent No. 4 to Messrs Sterling Plywood Industries was without lawful authority and of no effect.
12. As a result of the above declaration we direct the respondents Nos. 2 to 4 to return the batten board seized by them from Pakistan Wood Crafts to them and desist from charging any sales tax from them till S. R. O. 666 dated 25‑6‑1981 had remained in force in its original form in respect of item No. 35 till it was duly amended by a S. R. O. No. 1018 (1) 81 issued by the Federal Government on 25th November, 1984.
We also direct the respondents Nos. 2 to 4 to desist from charging an sales tax from Sterling Plywood Industries for their batten board for the period that S. R. O. No. 666 dated 25‑6‑1981 has remained in its original g form in respect of item No. 35 thereof or till it was duly amended by S. R. O. No. 1018 (1)/81 issued by the Federal Government in November, 1984.
M. Y. H. Petition accepted.