MIAN SAQIB NISAR, CJ. --- This appeal with the leave of the Court entails the following facts: respondent No. 1 (respondent) is an exporter who during the months of May, June and July, 2000 and March and April, 2001 made taxable supplies to Afghanistan. A show-cause notice was issued to the respondent that on account of such export it was liable to pay sales tax in terms of the Sales Tax Act, 1990 (the Act), which had not been paid. The Department claimed that SRO No. 751(1)/1999, dated 15.06.1999 (SRO) [whereby it was specified that the provisions of Section 4 of the Act, which envisaged zero % sales tax on taxable supplies (goods) exported from Pakistan] was not applicable to goods exported via route to Afghanistan and that such supplies made by the respondent were subject to tax. The Additional Collector vide order-in-original dated 10.02.2003 levied sales tax amounting to Rs. 9,625,290/- under Section 36 of the Act, additional sales tax to the tune of Rs. 3,836,725/- under Section 34 of the Act and a penalty under Section 33 of the Act to the extent of 3% of the tax payable, upon the respondent. The learned Customs Excise & Sales Tax Appellate Tribunal (the Tribunth), set aside this order primarily on the ground that exported supplies are not taxable within the mandate of the charging provisions of Section 3 of the Act. This view was endorsed by the learned High Court when the appellant filed a reference against the learned Tribunal's decision. Leave was granted on 19.04.2010 to consider the following questions:-- "(1) Whether the provisions of Section 3 of the Sales Tax Act, which is the charging provision, necessarily excludes the levy of sales tax on goods exported to any country outside Pakistan?"
(2) Whether the provisions of Section 4 and inparticular clause 3 of the proviso thereunder, are sufficient to enable the government to withdraw the concession of zero rating in respect of goods which, in the present case, were exported to Afghanistan?
(3) Whether there is any inherent conflict between the provisions of Sections 3 and 4 respectively, of the Sales Tax Act and if so with what consequences?"
2. Learned counsel for the appellant argued that Sections 3 and 4 of the Act are independent, the former deals with levy of tax for taxable supplies made in Pakistan while the latter deals with exported taxable supplies. The taxable supplies covered by the mandate of Section 4 of the Act are to be zero rated but once the SRO issued by the Sales Tax Department withdrew the benefit of zero rated tax on supplies made to Afghanistan, they (supplies) became subject to tax.
3.For the sake of convenience, the relevant provisions of Sections 3 and 4 of the Act as they existed at the relevant time (the years 2000-01) are reproduced below:-- 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 as 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 taxable activity carried out by him; and
(b) goods imported into Pakistan.
(1-A) Subject to the provision of sub-section (6) of Section 8 or any notification issued thereunder, where taxable supplies are made in Pakistan to a person who has not obtained registration number, there shall be charged, levied and paid a further tax at, the rate of three per cent of the value in addition to the rate specified in sub-section(1).
4 Zero rating.-- NotWithstanding the provisions of Section 3, a supply of the following goods shall be charged to tax at the rate of zero per cent-7-
(a) goods exported, or the goods specified, in the Fifth Schedule;
(b) supply of stores and provisions for consumption abroad a conveyance proceeding to a destination outside Pakistan as specified in Section 24 of the Customs Act, 1964 (IV of 1969); Provided that nothing in this section shall apply in respect of a supply,of goods .which:--,-
(i) are exported;' but 47ave been or are intended, to be re-imported into Pakistan; or
(ii) have been entered for export under Section 131 of the Customs, Act, 1969 (IV of 1969), but are not exported; or
(iii) have been exported to a country, specified by the Federal Government, by Notification in the official Gazette: Provided further, that the 'Federal.. Government may, by a notification in the official Gazette, restrict the amount of credit for input tax actually paid and claimed by a person making a zero- rated supply of goods otherwise chargeable to sales tax."
4. Heard. In order to, resolve the 'controversy we need to discuss the scope Of the charging section, i.e. Section 3 of the Act, No tax can be levied against a person beyond the scope, of a charging section and it has to be construed and applied strictly. The rule of construction is that before taxing any person, it must be shown that he falls within the ambit of the charging section by dear words used therein. If the case does not fall within the four corners of the charging section, no tax can be imposed by inference, analogy, or trying to probe into the intentions, of the legislature. Reference in this regard may be made to the judgment reported as Zila Council Jhelum v. M/s. Pakistan Tobacco Company Ltd. (PLD 201,6, SC 398) in which this Court held:--- "It may be pertinent to mention here that according to the settled rules of 'interpretation of a fiscal part of a statute, the charging section is the key and pivotal provision which imposes a fiscal liability upon a taxpayer/person, thus it should be strictly construed and applied. If a person does not clearly fail within the four corners of the charging section of such a statute he cannot be saddled with a tax liability."
The cases reported as Gursahai Saigal v. Commissioner of Income Tax (AIR 1963 SC 1062), State of Punjab v. M/s. Jullunder Vegetables' (AIR 1966 SC 1295), Lakshmanah Rao Yadavalli & another v. State of AP. and others [(2013)1NSC 1075] and CIT v. Vatika Township P. Ltd. [(2015) 1 ,SCC 1] are in. a similar vein.
5. Section 3 of the Act reproduced above clearly stipulates that "Mere 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 ofany taxable activity carried on by him" [Emphasis supplied]. The provision is clear and there is no ambiguity thattax is leviable only on the supplies made in Pakistan. As far as Section 4 of the Act is concerned, it, provides that regardless of Section 3 of the Act, certainsoods shall be charged at the rate of zero per cent, which according to Clause (a) thereof includes "goods exported" or "goods which are specified in the Fifth Schedule. This provision in 6ict fortified Section 3 of the Act in that it did riot take any goods or class of goods out of the purview of Section 3 supra but instead declares that certain goods/supplies shall be charged at the rate of zero percent. However, clause (iii) of the first proviso to Section 4 supra, empowers the Federal Government to declare that such section shall not be applicable to a supply of goods which have been exported to a specified country. In such an eventuality, the benefit of Section 4 ibid would not be available to such supply of goods and the same would be charged at the rate specified in Section 3 supra. The Federal Government, in exercise of-the powers conferred by clause (iii) of the first proviso to Section 4 supra, vide S.R.O. 751(1)/99, dated 15.06.1999 specified that the provisions of Section 4 of the Act would not apply to goods exported via route to Afghanistan and through Afghanistan to the Central Asian Republics. Thus, the said SRO implicitly expanded the scope of the charging section i.e. Section 3 supra, by bringing into the tax net an item/supply which otherwise was not liable to tax. Learned counsel for the appellant argued that because the benefit of zero % tax was withdrawn through the SRO sales tax at the rate of 17% as stipulated in Section 3 of the Act automatically became payable on goods exported to Afghanistan; suffice it to say that, no tax can be levied "automatically" through an SRO until and unless such tax is otherwise leviable under the charging section of a fiscal statute. The taxable supplies in this case were made in the years 2000 and 2001 when the expression "in Pakistan" was present in Section 3(1)(a) of the Act and sales tax could only be charged upon taxable supplies made in Pakistan and not on exported goods. Thus, the first proviso to Section 4 of the Act, notwithstanding its non-obstante clause, had no application to the taxable supplies made' by the respondent at that point of time and resultantly sales tax could not be levied on such goods.
Perhaps in recognition of this, the legislature omitted the words "in Pakistan" from Section 3(a) vide Finance Act, 2003, to bring into the tax net supplies of goods made outside Pakistan. This subsequent amendment also negates the argument of learned counsel of the appellant.
6. In the light of the above, this appeal has no merit and is dismissed. However, the scope and applicability of the first proviso to Section 4 of the Act after the omission of the expression "in Pakistan" shall be considered in some other appropriate matter.