ASIM HAFEEZ, J. Through this consolidated judgment, we intend to decide titled appeal, appeal bearing ICA No.2928/2021 - both of which impugn judgment dated 19.11.2020 by learned Single Judge in Chambers, whereby constitutional petitions bearing W.P. No.313209 of 2020 and W.P. 30703/2020 were dismissed - including various constitutional petitions, initially filed before iearned Single Judge in Chambers and thereafter referred to this Division Bench, in wake of commonality of questions of law involved. Petitions are listed in Annexure-A, enclosed herewith.
2. Fundamentally , the validity of imposi tion / levy of extra tax is subject of challenge in instant proceedings.
Amount(s) of extra tax is charged / levied through the electricity and natural gas monthly bills, issued to the persons liable to pay, subject to the conditions prescribed. Series of challenges were thrown to question the legitimacy of charge of extra tax, once SRO No.694(l)/2019 of 29.06.2019 (in short 'SRO-694' ) was issued, as a consequence whereof SRO No.480(l)/2007 dated 09.07.2007 is (in short 'SRO-480' ) stood rescinded. Primary objection is that extra tax was charged and collected in terms of Sales Tax Special Procedure Rules, 2007 (in short 'Rules, 2007' ) - implemented and enforced through SRO-480 - and now after termination of SRO-480, the Rules, 2007 were not applicable, consequently rendering claim of extra tax unlawful. Petitions filed, came up for hearing before various learned Single Judge(s) in chambers, wherein extra tax was declared as illegal - details of the decisions shortly follow . The judgment, subject matter of appeals, upheld the validity of extra tax. At present, two set of decisions are available. Primary ground for declaring extra tax illegal was that with the rescission of SRO-480 - through SRO-694 - Rules, 2007 also lost their applicability and efficacy , therefore, there is no legal basis to claim extra tax. Decisions, whereby extra tax was declared as illegal, were passed in the cases of "Dewon Faroogue Spinning Mills Ltd v.
Federation of Pakistan & Others" [W.P No. 31824/2020], "A.G Textiles Mills v. Federation of Pakistan & others" [W.P.No.33920/2020], and "Granada Textile Mills ltd etc. v. Federation of Pakistan etc."
[W.P.No.47839/2020] (in the context of levy of extra tax above-noted decisions are termed as 'divergent decisions' , differing from the decision subject matter of the lis at hand).
Submissions of appellants / petitioners.
3. Learned counsels emphasized that since levy of extra tax was claimed / charged and collected under Rules, 2007, which statutory procedure was provided by SRO-480, and now once SRO-480 was rescinded through SRO- 694, the chargeability of extra tax, thereafter , becomes unlawful and unauthorized. Much emphasis was laid on the reasoning and ratio laid in the divergent decisions. Adds that effectively the SRO 509(1)/13 of 12.06.2013 (in short 'SRO-509') and SRO 510(1)/2013 of 12.06.2013 (in short 'SRO-510' ) were also rendered ineffective, as a consequence of rescission of SRO-480. In the alternative, it is argued that supplier of electricity is charging extra tax without ensuring that requisite conditions required for imposing liability are conspicuous by their absence.
Submissions of respondent department
4. Conversely , the learned counsels submit that, in pith and substance, levy of extra tax draws roots from sub- section (5) of section 3 of Sales Tax Act, 1990 (in short "Act, 1990" ), therefore, termination of SRO-480 was inconsequential. Adds that SRO-509, which was notified in exercise of powers conferred under subsection (5) of section 3, ibid, survived the introduction of SRO-694. Adds that SRO-509, being a machinery provision, provided complete procedural mechanism for the collection of the levy of extra tax. And effectiveness of SRO-509 was not dependent upon continuing existence of the SRO-480 or Rules, 2007.
5. Arguments heard. Record perused.
6. An obvious disagreement is regarding the effect and implications of rescission of SRO-480, and undoing of Rules, 2007. Opposers of extra tax pleaded that issuance of SRO-694 had rescinded SRO-480, consequently Rules, 2007 stood annulled, hence claim of extra tax has no legitimate basis. Conversely , the proponents of extra tax insisted on the independent existence of the levy, drawing strength from sub-section (5) of section 3 of the Act, read with SRO-509. The question calling for determination is whether extra tax ipso facto ceased to be effective, simplicitor , upon issuance of SRO-694 - and cancellation of Rules, 2007, prescribing procedure for collection of extra tax. Relevant section of the Act and SRO's, needed for appreciation of determinable questions, are reproduced hereunder as; Sub-Section (5) of Section 3 of Sales T ax Act 1990.
"*(5) - The Federal Government may, in addition to the tax levied under sub-section (1) sub-section (2) and sub- section (4), levy and collect tax at such extra rate or amount not exceeding sevente en per cent of the value of such goods or class of goods and on such persons or class of persons, in such mode, manner and at time, and subject to such conditions and limitations as it may , by rules, prescribed+".
SRO 509(1)/2013 "GOVERNMENT OF PAKIST AN MINISTR Y OF FINANCE, ECONOMIC AFFAIRS, ST AISTICS AND REVENUE (REVENUE DIVISION)
Islamabad, the 12th June, 2013 NOTIFICA TION (SALES T AX)
S.R.O. 509 (I)/2013.- In exercise of the powers conferred by sub-section (5) of Section 3 of the Sales Tax Act, 1990, the Federal Government is pleased to levy extra tax at the rate of five percent of the total build amount excluding the amount of federal taxes, in addition to the tax payable under sub-s ection(1) of section 3 of the Act, on supplies of electric power and natural gas to persons having industrial or commercial connections, and whose bill in any month exceeds rupees fifteen thousand, but who have either not obtained sales tax registration number or are not on the Active Taxpayers List maintained by the Federal Board of Revenue, subject to the mode, manner , conditions and limitations prescribed in the rules".
SRO-694 (1)/2019 "GOVERNMENT OF PAKIST AN MINISTR Y OF FINANCE, ECONOMIC AFFAIRS, ST AISTICS AND REVENUE (REVENUE DIVISION)
Islamabad, the 29th June, 2019 NOTIFICA TION (SALES T AX)
"S.R.O. 694 (I)/2019.--In exercise of the powers conferred by clause (9) and (46) of section 2, sub-section (1) clause (b) of sub-section (2), sub-section (6) and sub-section (7) of section 3, clause (c) and (d) of section 4, sub- section (2) of section 6, sub-section (3) and (4) of section 7, section 7A, clause (a) and (b) of sub-section (1) of section 8, clause (a) of sub-section (2), sub-section (3) of section 13, sub-section (2A) and (3) of section 22, section 23, 60, 64 and 71 of the Sales Tax Act, 1990, the Federal Government is pleased to rescind its Notifications No. SRO. 68(I)/2006, dated the 28th January , 2006, SRO 480(I)/2007, dated the 9th June, 2007 , SRO 660(I)/2007, dated the 30th June, 2007, SRO 769(I)/2009, dated the 4th September , 2009, SRO 1125(I)/201 1, dated the 31st December , 201 1 and SRO 398(I)/2015, dated the 8th May , 2015.
2. This Notification shall take effect on and from the 1st day of July , 2019."
[Emphasis supplied]
7. There is no cavil that SRO-694 has not rescinded the SRO 509. Appellants / Petitioner's claim that since Rules, 2007 were no more available, therefore levy under reference lost its applicability and enforceability , is flawed, undermining the significance and effect of sub-section (5) of section 3 of the Act. Sub-section (5) of section 3, ibid, serves as umbilical cord, nurturing the existence and continued sustainability of SRO-509. At the expense of stating an obvious, declaration of liability / chargeability of extra tax proceeds from sub-section (5) of section 3 of the Act.
And SRO-509 fully provides for the collection / recovery mechanism of the levy. It is misconceived to assume that extra tax was imposed in terms of Rules, 2007 or same owed its survival to erstw hile SRO-480. In fact and law, Rules, 2007 had merely provided a procedure for collection of extra tax, which requirement is otherwise fully met by SRO-509 - providing all requisite requirements / mechanisms for the assessment and collection of levy. Perusal of SRO- 509 indicated that levy of extra tax is charged / payable at the rate of 5% of the total billed amount - issued by the supplier of electricity and / or Natural Gas provider company - to the persons having industrial or commercial consumers, provided whose bill in any month exceeds rupees fifteen thousand, but who have either not obtained Sales Tax registration number or are not on the Active Taxpayer's list maintained by the Federal Board of Revenue - subject to fulfillment of conditions prescribed the liability to pay extra tax accrues upon issuance of bill, for each month. Hence, rescission of SRO-480 and abandonment of Rules, 2007 has not affected the legality and chargeability of extra tax. We have examined SRO-510 - whereby changes were introduced to Sales Tax Special Procedure Rules 2007 - and find it irrelevant for the purposes of determination of challenge qua the legitimacy of the levy of extra tax.
8. Now coming to the ratio of divergent decisions - examined in the context of the law and judgment subject matter of instant appeals. The divergent decisions were decided on the premise that SRO-694 has per se rescinded the SRO-480, consequently aborting the applicability of Rules, 2007, hence, extra tax is not claimable or chargeable. It appears that scope, extent of sub-section (5) of section 3 of the Act, being the charging provision of law, ambit of SRO-480 and effect of the Rules, 2007 was not appreciated. Learned Single Judge(s) in Chambers were not properly assisted, largely , on two points; firstly , it was not brought to the attention that sub-section (5) of section 3 of Act, 1990 is actually the fountainhead of the levy of extra tax; and secondly , that rescission of SRO-480 has no implications qua the effect and applicability of SRO-509. In the case of "Dewan Faroogue Spinning Mills Ltd"
(supra) observations that upon rescission of SRO- 480, by virtue of SRO-694, imposition of extra tax, per se, becomes illegal are not legally sustaina ble. In the case of "A.G Textiles Mills v. Federation of Pakistan & others" scope of SRO-509 was not appreciated, while appreciating that in fact SRO-510 had introduced changes to Rules, 2007, which SRO-510 became ineffective upon abandonment of Rules, 2007. In the case of "Granada Textile Mills ltd etc. v. Federation of Pakistan etc." ratio of the decision in the case of A.G Textiles Mills (supra) was followed. Likewise, ratio of decision in the case of "A.G Textiles Mills' (supra) was followed in the case of "Crescent Cotton Mills Ltd v . FOP etc." [W.P.NO.45806 OF 2020].
9. In view of the above, we hold that charging provision - sub section (5) of section 3 of the Act - is clear , unambiguous and unequivocally impose s a levy, and the machinery provision - SRO-509 provided rate(s), identified persons liable to pay and prescribe collection mechanism in extenso. The principle governing rule of construction of charging and machinery provision(s) was elaborated in the case of "West Punjab Province v. K.B.
Amir-ud-Din and Others" ( PLD 1953 Lahore 433 ), relevant portion whereof is reproduced hereunder as; "The provisions of a taxing Act may be broadly divided into two categories those that determine the liability to be taxed and those that provide the machinery for it assessment and realization. With respect to the first category the rule of interpretation is that the charge must be imposed by clear and unambiguous language and in cases of doubt a construction beneficial to the subject should be adopted. With respect to the second category , however , the rule of construction is entirely different. If the liability to be taxed be clear the machinery sections ought to be interpreted so as to enable the Crown to realize the tax unless there be compelling reasons to the contrary . In Drummonds v.
Collins (6 T C 525) Lord Parker of Waddington, dealing with a machinery section said, "This section is a collecting section and not a taxing section and there is no reason in principle why it should not receive a liberal interpretation." In Commissioner of Income-tax, Bengal v. Messrs Mahaliram Ramjidas (AIR 1940 PC 124) their Lord ships were dealing with section 34 of the Income Tax Act, which relate s to a case where income had escaped assessment and they said, "Section 34, although it is part of a taxing Act, imposes no charge on the subject, and deals merely with the machinery of assessment. In interpreting provis ions of this kind the rule is that that construction should be preferred which makes the machinery workable, ut res valeat potius quam pereat". In M. S. Gapalaswami V. Chettiar v. Secretary of State (AIR 1933 Mad. 748) there was an apparent difficulty in the realization of the tax if the relevant sectio n was literally construed. Curgenven, J. said, "I think that the liability to duty being clear , it would be improper to conclude that no means exist of realizing it unless the language of the Act compelled such a view". Even if a case arose which in fact was not in the contemplation of Legislature, if the words used in the Act be capable of covering the case the provision should be so interpre ted as to include that case. For this we may refer to Scott v. Legg (1876 2 Ex. D 39) relied upon by Curgenven, J, in the above-mentioned case where Cleasby B. said, "It seldom happens that the framer of an Act of Parliament or the Legislature has in contemplation all the cases which are likely to arise, and the language, therefore, seldom fits every possible case.
Whenever the case is clearly within the mischief, the words must be read so as to cover the case, if by any reasonable construction they can be read so as to cover it, though the words may point more exactly to another case; this must be done rather than make such a case causus omissus under the statute". The object of a taxing statute must always be to provide a machinery for realization of tax in all cases in which a liability in fact exists and to say that though liability exists the means of enforcing the liability are inadequate is to create a causus omissus which ought; as far as it is reason ably possible, be avoided."
10. Aforementioned observations were reaffirmed by their Lordships in the case of "Pearl Continental Hotel and another v. Government of N.W.F.P and others" (2010 PTD 2018 ), relevant portion whereof is reproduced hereunder as; "We are in no doubt that the machinery provisions, where provided, have to be construed liberally and in the manner aiding the realization of proper tax and to prevent avoidance of tax. And where not provided for but the tax recovery is made as per law, the omission of machinery may not be considered as fatal to the tax recovery but where law is disregarded of breached or violated in assessing and recovering tax, non-existence of recovery provisions cannot be ignored".
11. No law is disregarded or breached or violated while claiming / charging or collecting extra tax from the persons, as far as conditions prescribed therein are adhered to in letter and spirit. The challenge to the alleged illegality of the levy fails.
12. The objections, alternatively pleaded, regarding erroneous charging of extra tax without ascertainment that whether requisite conditionalities, for charging extra tax, are available can effectively be raised before the concerned Officer Inland Revenue and appellants / petitioners may procure requisite certificates/documents affirming effective sales tax registration and appearance on the Active Taxpayers list. The appellants / petitioners may also approach the supplier of electric power or natural gas, as the case may be, to verify factum of effective sales tax registration and name on Active Taxpayers list, in terms of SRO 777(l)/2020 dated 25.08.2020, by virtue whereof Chapter XVII-B was inserted in the Sales Tax Rules 2006.
13. We hold that, no illegality or error of law is found in the judgment dated 19.11.2020, ratio and reasoning thereof expounded the law correctly , calling for no interference. And respectfully submitted , the ratio of divergent decisions is not endorsed / upheld.
14. In view of the aforesaid, instant appeals and constitutional petitions, listed in Annexure-A, are devoid of merits and same are, hereby , dismissed. No order as to the costs.
ANNEXURE 'A '
Intra-Court Appeal No.63674 OF 2020.
Sr.
NoCase No. Title 01 I.C.A. # 2928/2021 H.A. Haq Spinning Mills (Pvt.) Ltd. V . Federation of Pakistan, etc. 02 W.P. # 55732/2019 Jamshed Ayub Butt v . Federation of Pakistan, etc. 03 W.P. # 55820/2019 M/s W aqas Steel Furnace v . Federation of Pakistan, etc. 04 W.P. 55729/2019 M/s Bismillah Industries v . Federation of Pakistan, etc. 05 W.P. # 52025/2020 M/s Haq Bahu Steel Mills v . Federation of Pakistan etc. 06 W.P. # 52032/2020 M/s Ibrahim Steel Casting v . Federation of Pakistan, etc. 07 W.P. # 52065/2020 M/s Nazir Industry , etc. v . Federation of Pakistan, etc. 08 W.P. # 52465/2020 M/s M-A Engineering Industry v . Federation of Pakistan, etc. 09 W.P. #60373/2020 M/s Ghulam Rasool Steel Furnace & Rerolling Mills, etc. v .
Federation of Pakistan, etc. 10 W.P. # 52068/2020 M/s Asif Steel Industries etc. v . Federation of Pakistan, etc. 11 W.P. # 52015/2020 M/s Bismillah Steel Furnace v . Federation of Pakistan, etc. 12 W.P. # 52019/2020 M/s M.M. Steel mills v . Federation of Pakistan etc. 13 W.P. # 52039/2020 M/s Shaheen Steel Mills Furnace Industry v . Federation of Pakistan, etc. 14 W.P. # 52725/2020 M/s Pak Steel Furnace v . Federation of Pakistan, etc. 15 W.P. # 53636 of 2020M/s Black Gold Industry etc. v . Federation of Pakistan, etc. 16 W.P. # 54428/2020 MR Steel Furnace v . Federation of Pakistan, etc. 17 W.P. # 54497/2020 M/s Beco Steel Re-rolling Mills v . Federation of Pakistan, etc. 18 W.P. # 60052/2020 M/s Bismillah Steel Furnace v . Federation of Pakistan, etc. 19 W.P. # 60056/2020 M/s Shaheen Steel Mills v . Federation of Pakistan etc. 20 W.P. #60059/2020 M/s Haq Bahu Steel Mills v . Federation of Pakistan, etc. 21 W.P. # 60309/2020 M/s Ibrahim Steeel Casting, etc. v . Federation of Pakistan, etc. 22 W.P. # 60379/2020 M/s Reshma T ex Ltd. V . Federation of Pakistan, etc. 23 W.P. # 60450/2020 M/s Muhammad Younas v . Federation of Pakistan, etc. 24 W.P. # 60868/2020 M/s M.N. Enterprises Nawa Foundry v . Federation of Pakistan, etc. 25 W.P. # 63207/2020 M/s Flying Cement Co. Ltd. V . Federation of Pakistan, etc. 26 W.P. # 68983/2020 M/s Ibrahim Steel Casting etc. v . Federation of Pakistan, etc. 27 W.P. #55206/2020 M/s Farooq Steel Casting v . Federation of Pakistan, etc. 28 W.P. # 66240/2020 M/s Ahmed Noor Steel Furnace v . Federation of Pakistan, etc. 29 W.P. # 67981/2020 M/s Haji Siddique Gujjar v . Federation of Pakistan, etc.