MR. JUSTICE MUNIR A. SHEIKH.-(l). By this common judgment, we propose to decide the titled appeals involving identical questions of law and facts.
2. Civil Appeals Nos. 1262/1999, 1293, 1294, 1296 and 1306 of 2001 by leave of the Court are directed against the judgments dated 08.04.1999, 01.03.2000, 12.04.2000 of the Lahore High Court through which constitutional petitions filed by the respondents have been accepted whereas Civil Appeal Nos. 1866/1996 and 1288/2000 by leave of the Court are directed against the judgments dated 18.02.1999 and 30.05.1995 of the Peshawar High Court through which constitutional petitions filed by the appellants in these appeals have been dismissed.
3. The question which arises for consideration in these appeals is whether the sale tax is payable from the date of receipt in advance of the amount of consideration for taxable supply on the date of delivery of goods to the purchaser.
4. The facts giving rise to these appeals are that on 22.09.1994, the Directorate Central Intelligence and Investigation sought instructions from the Board of Revenue as to the interpretation of section 2(30) of the Sales Tax Act, 1990 as to when sale tax under the said provisions of the Act would become due in the case of Cement Industries when the advances were received earlier and the goods were supplied subsequently. It was indicated in the said letter that the Directorate Intelligence held the view that in the cases where the payment for certain supplies are received in advance, the sale tax for such supplies should be paid to the Govemment by 20th of the following month. It was further stated that the department had observed that the manufacturers of cement though used to receive payment qua supplies well in advance of their actual delivery who instead of making payments of the sales tax by 20th of the month following thereof postponed the same till actual delivery of the goods. It was pointed out that usually the supply of goods used to be made 2-4 months after the receipt of advance payment, therefore, the manufacturers had been wrongly retaining with them the amount of sales tax which had become due on the 20th of the succeeding month of the receipt of the advance payment i. e. The time fixed by the Statute.
5. The Board of Revenue through letter dated 04.11.1994 informed that the matter had been examined by it and it was of the view that language of section 2(30)(1) was quite clear and devoid of any ambiguity. The payment of sales tax was to be made up to 20th of the succeeding month of the date of receipt of the advance payment and not from the date of actual supply of the goods.
The Directorate was, therefore, permitted to take action accordingly.
6. A show cause notice was issued to the manufacturers and subsequently an assessment order was made under section 11 of the Act on 18.06.1995. The respondents feeling aggrieved from the interpretation made by the Board of Revenue in its letter dated 14.11.1994 filed constitutional petitions seeking declaration that the same was without lawful authority and of no legal effect with further prayer that the writ petitioners were liable to pay tax on the completed transaction of sale and not when mere agreement of sale was made. Their case was that receipt of any amount of consideration in advance did not bring into existence transaction of complete sale but merely an agreement of sale which would become sale when property in goods would pass to the buyer.
7. The Lahore High Court in judgments impugned in Civil Appeals Nos. 1262/1999, 1293, 1294, 1296 and 1306 of 2001 was of the view that the sale tax was payable on the incident of sale of goods as envisaged by the Sale of Goods Act under which no sale of any goods could be completed till the stage the property in goods sold had passed to the buyer and it is with reference to the said date that the sales tax was payable on the 20th of the succeeding month thereof which would be the tax period, therefore, the interpretation made by the Board of Revenue in the said letter was declared to be without lawful authority and of no legal effect and constitutional petitions accepted against which the said civil appeals by leave are directed.
8. So far as Peshawar High Court is concerned, it was of the view that in view of the relevant provisions of the Act, the taxable supply shall be deemed to have been made on the date when advance payment of the consideration was received and sales tax was liable to be paid till the 20th of the succeeding month of the said payment. This was through judgments dated 18.02.1999 and 30.05.1995 against which Civil Appeals Nos. 1288/2000 and 1866 of 1996 by leave of the Court are directed.
9. Learned counsel for the appellants in Civil Appeals Nos. 1866 of 1996 and 1288/2000 submitted that in these appeals, there was no dispute about the payment of the sale tax as the said appellants had already deposited the same in time as such, no question of recovery of additional tax is involved but since the High Court had declared that sales tax was payable from the date of receipt of advance payment from which appellants felt aggrieved, therefore, appeals have, been filed. The case of the appellants in these appeals is at par with the case of the appellants in the other appeals, therefore, according to him, these may be disposed of in terms of the decision in the above mentioned other appeals arising from the judgments of the Lahore High Court.
10. During the arguments, learned counsel for the appellants supported the arguments advanced on behalf of the leamed counsel for the respondents in the other appeals with additional argument which shall be dealt with.
11. Before dealing with the submission of the parties on merits, we feel it necessary to reproduce in extenso the relevant provisions of the Sales Tax Act, 1990 for facility of ready reference. Section 3 is the charging section which reads as under (before amendment):- "3. Scope of Tax.- (1) Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of (fifteen) per cent of the value of-
(a) taxable supplies made in Pakistan by a registered person in the course or furtherance of any business carried on by him; and (b) goods imported into Pakistan.".
12. Section 2(22) defines the term "supply" which is as follows:- "2(22) "supply" means sale, transfer, lease or other disposition of goods in the course of furtherance of business carried out for consideration and includes:-
(a) putting to private, business or non-business use of goods acquired, produced or manufactured in the course of business;
(b) auction or disposal of goods to satisfy a debt owned by a person;
(c) possession of taxable goods held immediately before a person ceases to be a registered person;
(d) removal of goods from the manufacturing premises.".
13. Section 2(28) before amendment defines "taxable supply" which reads as under:- "2(28) "taxable supply" means a supply of taxable goods made in Pakistan other than a supply of goods which is exempt under section 13, and includes a supply of goods chargeable to tax at the rate of zero per cent under section 4".
14. Section 2(30) before amendment defines "time of supply" which is as follows:- "2(30) "time of supply" [(1)] A supply made in Pakistan shall be ' deemed to take place at the earlier of the time of delivery of goods or the time when any payment is received by the supplier in respect of that supply".
15. It is clear from the arguments raised by the leamed counsel for the appellants before the High Court and reiterated here that the word "supply" in these provisions of law has been construed to be delivery of goods under the sale which had further been treated to be the date when the property in goods shall be deemed to have passed to the buyer under Sale of Goods Act.
16. Leamed counsel for the appellants submitted that in view of the definition of the expression "time of supply" and supply used in sections 2(22) and (30) respectively, the date on which the amount of consideration in advance was received would be the date ntion to evade the tax, the imposition of penalty of additional tax and surcharge was not justified. It was held by the Sales Tax Tribunal in the case of PTCL 2001 CL 627 that where the controversy between the department and the appellants related to interpretation of different legal provisions, the imposition of additional tax and penalty had no justification. In other case, the appellant's own Tribunal held that additional tax was punitive in nature as such unless default was wilful or mala fide, the recovery of the same was unwarranted.
27. In view of these decisions, it could not be argued by the appellants that imposition of penalty or additional tax under section 34 was mandatory and there was no discretion left with the authorities to allow any concession.
28. Each and every case has to be decided on its own merits as to whether the evasion of payment of tax was wilful or mala fide, decision on which would depend upon the question of recovery of additional tax. In the facts and circumstances of this case, we find that non-payment of the sae above mentioned relevant provisions of the Sales Tax Act in particular section 2(30) is construed as learned counsel for the respondents/manufacturers want, it would give free hand to the manufacturers to invent a device in order to withhold the amount of sale tax payable to the Govemment beyond the tax period under the Act at their own whims by showing a transaction to be a mere agreement of sale though payment in advance of the consideration is received much earlier than the delivery of goods.
18. The contention has considerable force. According to the well established principles of interpretation and constmction of the Statutes laid down by the superior courts, harmonious constmction is to be made keeping in view the different provisions of the Statute after fully understanding the intention with which the same had been made and the object which was intended to be achieved. The intention behind the promulgation of relevant provisions of the Sales Tax Act as reproduced above is clearly manifest that the sales tax should go to the Govemment treasury within the tax period after the same having become due and should not be retained by the manufacturers. There is no hard and fast rule as to when and at what stage, the transaction shall be deemed to be the transaction of sale of the goods. Each case has to be decided according to the facts and circumstances of the case in particular the practice, usage of a particular nature of business or trade. In the case in hand, the manufacturers used to receive amount of consideration in advance for the supply of cement to be made later. It is clear from the provisions of sections 2(22) and (30) of the Sales Tax Act, that time of supply was deemed to be the date on which advance payment was received or the supply made which ever was earlier. There is no difficulty in holding that in such a case, the amount of consideration received in advance shall be deemed to be the price on that date of the proportionate quaame shall be treated as a separate supply and an invoice will be issued covering the remaining payment". t 21. In our view, it is complete answer to the argument advanced by the learned counsel for the manufacturers. In our view, there is no such difficulty in adopting the construction of the relevant provisions as to date of sale of goods for the purpose of payment of sales tax.
22. For what has been discussed and held before, the interpretation made by the Lahore High Court is not sustainable.
23. We have been informed that the sales tax in full has all along been deposited by the respondents-manufacturers but the same having not been paid within the tax period, the next question which arise^ is whether they were liable to pay additional tax by way of penalty under section 34 of the Act.
24. Leamed counsel for the appellants submitted that under the said provision of the Act, the additional tax is liable to be paid and there is no provision wherein the authorities could waive the same.
25. Learned counsel for the respondents-manufacturers argued that the said provisions of the Act have been consistently construed that additional tax is payable only where non-payment of the tax was either wilful or was evaded mala fide. He has referred to the following reported judgments:-
1. PTCL 1992 CL 23 (Supreme Court).
2. PTCL 1995 CL 415 (Lahore High Court).
3. PTCL 2002 CL 495 (Tribunal).
4. PTCL 2001 CL 315 (Tribunal).
5. PTCL 2001 CL 62 7 (Tribunal).
6. GST 2002 CL 280 (Tribunal).
1. PTCL 2000 CL 195 (Maple Leaf Cement) High Court.
26. In the case reported as PTCL 1992 CL 23, this Court held that imposition of penalty was illegal where the evasion of duty was not wilful. The Lahore High Court in the case reported as PTCL 1995 CL 415 held that where the petitioner did not act mala fide with the intele tax within tax period was neither wilful nor it could be construed to be mala fide evasion of payment of duty, therefore, the recovery of additional tax as penalty or otherwise was not justified in law.
29. For the foregoing reasons, ^Civil Appeals Nos. 1293, 1294, 1296 and 1306 of 2001 are partly accepted and it is hereby CL. 238 Vo/. XXIJ, P. T. C.L, 2004 (Case Laws) declared that the payment of sale tax was due within the tax period under the Act from the date of receipt of the amount of consideration in advance and not from the date of delivery of goods and declaration made by the High Court to the contrary is hereby set aside. The appeals as regards acceptance of the constitutional petitions of the respondents against the recovery of additional tax for the foregoing reasons are hereby dismissed.
The connected Civil Appeals Nos. 1866/1996 and 1288/2000 stand disposed of in the above terms.
30. No order as to costs.