COMMISSIONER OF SALES TAX, CENTRAL ZONE 'A', KARACHI Versus ALAMGIR ROYAN MILLS LTD.
AJMAL MIAN, J .-- This is an application under section 17(2) of the Sales-tax Act, 1951 (hereinafter referred to as the Act) filed by the Commissioner of Sales-tax, Central Zone 'A' Karachi seeking the opinion of this Court on the following question:
"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that no Sales-tax is leviable under the Sales-tax Act in respect of raw material which after having been imported without payment of sales-tax on the strength of manufacturing licence under section 8 of Sales Tax Act, was used for the manufacture of finished goods exempt from the sales-tax."
2. The brief facts leading to the filing of the above reference are that the income-tax Officer levied sales-tax on the reyon, which was imported on the strength of the manufacturing licence under section 8 of the Act without payment of any sales-tax for the assessment year 1962-63. The assessee went in appeal before the Appellate Assistant Commissioner who by his order, dated 26-10-1967 remanded the case to the Income-tax Officer. The assessee filed appeal before the learned Income-tax Tribunal which appeal was allowed by an order, dated 23-7-1974 and it was held on the basis of the Lahore High Court cases, namely, Commissioner of Sales-tax North Zone (West Pakistan) Lahore v. H. Muhammad Hussain & Co. 1974 P T D 20 = PLD 1974 Note 21 at p.57 and Commissioner of Sales-tax, Rawalpindi Zonra, Rawalpindi v. Shafiq Corporation Ltd., Gujrat 1974 P T D 15 = PLD 1974 Note 25 at p. 64 that the sales-tax could not have been validly levied on either on the stock of unconsumed yarn or element of yarn in finished goods, stocks whereof were lying with the appellant A on 30th June, 1962. Thereupon the department filed an application under section 17(1) of the Act to get a reference made to the High Court but the said application was dismissed by the learned Income-tax Tribunal, dated 18-1-1977. The department has, therefore, filed the above application.
3. After the filing of the above reference application the Hon'ble Supreme Court of Pakistan has confirmed the judgment of the Lahore High Court in the above case of Commissioner of Sales-tax, Rawalpindi Zone v. Shafiq Corporation Ltd., Gujrat 1974 P T D 15 = PLD 1974 Note 25 at p.64 (which is reported in P L D 1986 SC 731 in which the following observations were made:
"Now coming to the facts of the case, the assessee was a licensed manufacturer of electric fans and was exempt from the payment of tax on partly manufactured goods imported being incorporated into the end product under section 4(b) of the Act. The partly manufactured goods in the normal course were leviable to charge under section 3(1)(b) and the stage at which the sales-tax was payable was after import but before clearance by the Customs Authorities under section 5(1)(b) of the Act. That stage had passed away. The partly manufactured goods had been assimilated in the production of fans, and the critical date on which these were sought to be assessed for payment of tax was the closing date, that is 14th June, 1965. On that date they had lost their original shape and could not' be subjected to any event as prescribed under section 4(1)(a) and (b) of the Act. That being so they were not liable to the payment of the tax. In this context the High Court rightly declared the case on the basis of the two judgments cited! above while distinguishing Noorani Corporation's case."
4. Mr. Nasrullah Awan, learned counsel for the appellant in view) of the above new pronouncement of the Hon'ble Supreme Court has candidly submitted that it is not possible to distinguish the present case with the above Supreme Court case.
5.We, therefore, answer the above-quoted question in the affirmative. However, there will be no order as to costs.
M.B.A./C-41/K Question answered in the affirmative.