MAQBOOL BAQAR, J.---The question for determination before us in the instant case is, as to whether the retail price as described by subsection (27) of section 2 of the Sales Tax Act, 1990 ("STA, 1990 "), and subsection (4) of section 12 of the Federal Excise Act, 2005 ("FEA, 2005" ), respectively , (which two provisions describe the said term in similar language), includes the amount of excise duty leviable in terms of section 12 of FEA, 2005.
According o the appellants, who are manufacturers and suppliers of aerated water , excise duty, in the context of sections 3(2), STA, 1990 and 12(4) of FEA, 2005, cannot be counted towards "retail price", whereas the respondents claim the same to be an essential component thereof.
2. The resolution of the above has a financial implication for the parties, inasmuch as a higher retail price will fetch a larger amount of sales tax, and excise duty, the same, in terms of section 3(2) of the STA, 1990, and 12(4) of the FEA, 2005, being leviable on "'retail price" of the supply/product, (aerated water in the present case).
3. It is under and in terms of section 3 of the STA, 1990 that Sales tax is charged, levied and paid as a tax. Section 3(1) of the ST A, 1990, so far as relevant here, reads as under:- "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 percent of the value of--
(a) taxable supplies made in Pakistan by a registered person in the course or furtherance of any taxable activity carried on by him; and
(b) goods imported into Pakistan." Section 3(2) of STA, 1990 reads as:-"(2) Notwithstanding the provisions of subsection (1),
(a) taxable supplies and impact of goods specified in the Third Schedule shall be charged to tax at the rate of seventeen per cent of the retail price, or in case such supplies or imports are also specified in the eight Schedule, at the rate specified therein"...
4. Whereas "retail price" has been described by subsection (27) of section 2 of the STA, 1990, and subsection (4) of section 12 of FEA, 2005, respectively , as the price fixed by the manufacturer , or importer in case of imported goods, inclusive of all duties, charges and taxes, other than sales tax, at which any particular brand or variety of any article/or such goods should be sold to the general body of consumers.
5. So it is only on the taxable supplies, and the goods imported into Pakistan, that sale tax can be charged.
Whereas in term of sub-section (2)(a) of section 3 of STA, 1990, taxable supplies , which are specified in the third schedule shall be charged to tax at the rate of seventeen percent of the retail price and for those mentioned in the eighth schedule such charge shall be at the rate specified therein.
6. Earlier on, the legislative predecessor of FEA, 2005, being the Central Excise Act, 1944 ("CEA, 1944") through subsection (2) of its section 4 also had described "retail price" as was it described by section 12(4) of FEA, 2005, and section 2(27) of 'STA, 1990, and referred to in para 4 above. The question that then come before this Court in the judgment reported as Pakistan through Secretary Finance and others v. Messrs Lucky Cement and another (2007 PTD 1656 ), was, as to whether in view of the phrase "inclusive of all charges and taxes", employed in the above provisions, the retail price would include the excise duty leviable on the subject goods. The various High Courts had than upheld the contention of the registered persons, that the retail price in the context of subsection (2) of section 4 of CEA, 1944, does not include excise duty. It was so held mainly on the grounds, firstly , that such inclusion would result in double taxation, and secondly , it at the plain reading of the said provision does not allow for inclusion of excise duty in the word "taxes" as employed therein. This Court however , found the first ground to be misconceived and untenab le. It was noted that contrary to the finding of the High Court, duty is charged only once and not twice. However , the finding of the High Court that the retail price as described by subsection (2) of section 4 does not include excise duty, found favour with this Court, and the contention of the appellant department, that the term "taxes" as mentioned in the said provision as a component of retail price includes excise duty, was repelled. This Court then observed that "tax" and "duty" do not generally mean the same thing, and that where different words are used in a section, or a subsection of a statute, the intention of legislature is not to assign them the same meaning, and held that the inclusion of the term "duty" and taxes" in subsection (2) of section 4, manifests the intention of the legislature that one should not include the other . It was further observed that had the intention been to include the duty while computing the "retail price" the phrase "taxes and charges" would have read, "taxes, charges and duties". The department's appeal was thus dismissed through the Lucky Cement case.
7. By the time of this Court's decision in the Lucky Cement Case, the 1944 Act was replaced by FEA, 2005. Section 12(4) of which latter Act, was a provision equivalent to section 4(2) of the CEA, 1944. Section 12(4) of FEA, 2005 in describing "retail price" employed language similar to that as used in section 4(2) of CEA, 1944. However , after the judgment in the Lucky Cement Case, section 12(4) of FEA, 2005 was amended to include the word "duties".
Section 12(4) of the 2005 Act, now reads as under: "12. Determination of value for the purposes of duty .---(1) .........
(3) .......
(3) ........
(4) Where any goods is chargeable to a duty on the basis of retail price, duty thereon shall be paid on the retail price fixed by the manufacturer , inclusiv e of all duties, charges and taxes, other sales tax levied and collected under section 3 of the Sales Tax Act, 1990, at which any particular branch or variety of such goods should be sold to the general body of consumers, or if more than one such price is so fixed for the same brand or variety , the highest of such price and such retail price shall, unless otherwise directed by the Board, be legibly , prominently and indelibly indicated on each goods, packet, container , package, cover or label of such goods.
Provided that .......................
Provided further
8. On the basis of the above amendment, the department again started claiming that excise duty was to be factored in while computing "retail price". It is such claim that is now under scrutiny before us in the instant case.
9. The department having failed in its attempt to persuade this Court in the Lucky Cement case, that the phrase, "retail price inclusive of all charges and taxes" call for addition of the amount of excise duty (yet to be levied) to the retail price, is now, after incorporating the word "duties" in the said phrase, attempti ng to justify their adding the said amount to the "retail price", by placing reliance on an observation made by this Court in the very same judgment, as follows:- "11.... had the intention been to include duty in fixing the 'retail price', the phrase "taxes and charges" would have read "taxes, duties and charge".
10. Referring to the above observation, it is contended by the Department that this Court has allowed them to adopt this reverse charge mechanism so long the word "duties" finds place in the said phrase. However the above observation, as rightly submitted by Mr. Khalid Anwar , the learned Sr. ASC for the appellants, far from permitting the inclusion of the amount of Excise Duty in "retail price", and/or providing any justification for the same, was in fact a justification, amongst others, for rejecting the department's interpretation for its so doing. The above quoted observation simply highlights the fact that the language of law also did not support the department's case, and that its attempt to include Excise Duty in the definition of "retail price" was not even justified by the language of section 4(2), CEA, 1944. In fact, the Court has not examined as to whether the department's case could be made out if the language was different. It was not examined whether by adding the word "duties", duty, yet to be levied under the law, could be added to "retail price". The Court also did not examine whether the inclusion of said duty in "retail price" was permissible under the law or the Constitution, but simply concluded that it was not the intention of the legislature to include Excise Duty in the definition of "retail price". Indeed in the Lucky Cement case, this Court 'neither examined nor even had the occasion to examine or interpret the provision of section 12(4), FEA, 2005 in its present form, the word "duties" having been incorporated therein subsequent to the said case. It is only now that section 12(4) of FEA, 2005, with the addition of the word "duties" has been place d before us for expounding it in the context of the charging provisions of ST A, 1990 and FEA, 2005, respectively .
11. It is now well settled that a judgment is an authority only in respect to what it decides, and only with regard to the proposition of law raised, in that case, and therefore point not argued before the Court cannot be considered to have been dealt with by its judgment. This universal principle has been aptly reiterated in the following cases, cited by Mr . Khalid Anwar , Sr. ASC for the appellant: Quinn v . Leathern' (1901 Appeal Case 495 at 506)
"... Now before discussing the ease of Allen v. Flood and what was decided therein , there are two observations of a general character which I wish to make, and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decid es. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all."
In the case of Trustees of the Port of Karachi v. Muhammad Saleem (1994 SCMR 2213 at 2220), this Court observed and held as follows:- "18. It appears to have assumed in the High Court, and it may be said assumed wrongly , and that wrong assumption was also the basis of the arguments before us, that as this Court, in Abdul Ghani case, dismissed the appeal, the question that Abdul Ghani was worker must be logically taken to have been decided in the affirmative.
In that behalf, we can do no better than to cite and respectfully adopt, the following observations made in "Quinn v.
Leathern" (1901 AC 495, 506) to dispose of a similar argument: "... case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it."
19. So in order that a decision on a question of law is binding within the meaning of Articles 198 and 201 of the Constitution it is not enough that a legal proposition follows logically from it; that question must have been actually decided."
We also found reiteration of the above in the case of Mst. Muhammadi and others v. Ghulam Nabi (2007 SCMR 761 at 765) in the following words:- "4 It is a settled law that each and every case is to be decided on its own peculiar circumstances and facts as law laid down by this Court in Muhammad Saleem's case PLD 1994 SC 2213) . The relevant observation is as follows:- "Case is only authority for what factually decides."
The aforementioned observation in the Lucky Cement case is therefore of no avail to the Department in the present case.
12. The department is however reading the words "inclusive of duties, charges and taxes", to mean the excise duty has to be added back to the retail price before actually charging the excise duty thereon. It is however charging excise duty on notional excise duty (and not on any actual excise duty). Mr. Khalid Anwar , the learned counsel for the appellants submitted that the above reading is completely perverse and is not made out from the plain language of the provision. He maintained that the department is completely twistin g the words of the statute which is not permissible under the law. The learned counsel submitted that the prime consideration in the interpretation of a statute is to ascertain the intention of the legislature and such legislative intention is to be discerned from the language used. In support of his submission he referred to certain extracts from "Benion on statutory interpretation" and "Maxwell on the interpretation of statutes (12th Edn.)", as follows: A. Benion on statutory interpretation by Francis Benion (5th Edition) at 469 "Introduction to Part VIII. The sole object in statutory interpretation is to arrive at the legislative intention"...
Section 16: Legislative intention as the paramount criterion "...It is axiomatic that Parliament is to be taken to have an intention in everything it enacts; and that the function of the court is to find out and declare that intention.' This is the paramount, indeed only ultimate, criterion." .... "The paramount rule remains that every statute is to be expounded according to its manifest and expressed intention."
B. Maxwell on the interpretation of Statute (12th Edition) by P . St. J. Langan Chapter 2-General Principles of interpretation ...The rule of construction is "to intend that Legislature to have meant what they have actually expressed." The object of all interpretation is to discover the intention of Parliament, "but the intention of Parliament must be deducted from the language used..."
13. The learned counsel further submitted that the above principle is applied more strictly to the case of fiscal statute and that it is well settled law that there is no intendment or presumption about a tax. One can look at the language clearly employed by the legislature, which is to be strictly construed and that nothing can be implied or read in. He submitted that it is universally acclaimed principle that any ambiguity in fiscal statute must be resolved in favour of the tax payer and that the tax sought to be charged must fall strictly within the letter of law. In support of his contention the learned counsel relied upon the following judgments: 1993 SCMR 338 at Page 343, Para 7 "There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look at the language used."
2004 SCMR 1649 at Page 1653, Para 6 " ...There is no intendment or presumption about a tax. We have to go by the language clearly employed by the Legislature in the fiscal statute."
(1921) 1 KB 64 at Page 71 "...in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only, look fairly at the language used."
2002 CLC 1714 at Pages 1735 and 1736 "in fiscal statutes the Court cannot supply any omission or extra words and cannot change the expressions used in the statute on grounds that the Legislature would have used a different word had it thought about it i.e. there is no scope for any intendment.... Both in Pakistan and India now it is an establishment principle of taxing law that the yardstick to measure the tax must have nexus with the nature and character of the subject-matter of the tax."
1977 SCMR 371 at Page 388G "...in interpreting a penal or a taxing statute the Courts must look to the words of the statute and interpret them in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provisions in the statute so as to support assumed deficiency ... it is also well established that penal provisions of a statute should be strictly construed and in case of any, ambiguity or doubt arising from the construction the benefit must go to the accused person....
14. The department's interpretation defies even the common sense, to read the phrase "inclusive of all duties" as also including excise duty, would, in our opinion, be a sheer absurdity . How can a charge which is yet to be levied and realized on something (in the present case that B something being "retail price "), can possibly be included in/or counted towards that very thing. There is yet another practical difficulty , rather an impossibility in the way of including excise duty in the retail price, as ' in terms of section 3 of FEA, 2005 excise duty is charged on "retail price". The same can therefore only be charged after "retail price" has been finally calculated/determined and has, become known. Crystallization of "retail price" is therefore an essential prerequisite, and serves as a trigger for levying excise duty. "Retail price" can therefore not include the levy itself and only such duties, charges and taxes which are applicable and already levied on the "retail price" prior to the charge under the 2005 Act can be included in the "retail price" for the purpose of such a charge. The word "duties" as employed in section 12(4) cannot therefore be construed as referring to excise duty .
15. The department's case also suffers from certain serious legal and constitutional flaws and impediments. There is indeed absolutely no cavil to the preposition that .a tax, levy or a charge can only be imposed under a clear mandate and sanction of law. This Court's judgment reported as PLD 2017 SC 99, clearly reiterated this principle.
The FEA, 2005 and STA, 1990, under/and in terms whereof excise duty and sales tax are levied, are Federal laws.
In terms of Article 142 of the Constitution the Federation can legislate in respect only of the matter enumerated in the Federal Legislative List ("FLL"), given in the 4th schedule of the Constitution. It is entry 44 of the FLL which authorizes imposition of duties of excise whereas sales tax is levied under entry No. 49.
In terms of section 3 of FEA, 2005, duties excise are levied on: (a) Goods produced or manufactured in Pakistan (b). Goods imported into Pakistan (d)(sic.) Services provided in Pakistan.
16. Traditionally also, as can be seen from the following cases cited by Mr. Khalid Anwar , the duties of excise are duties on the manufacture of goods:- Governor-General in Council v . Province of Madras (AIR 1945 PC 98 at Page 101)
"...a duty of excise is primarily a duty levied upon a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax upon goods not upon sales or sale of goods."
Pakistan through Chairman FBR and others v . Hazrat Hussain and others ( 2018 SCMR 939 at Page 954)
"25.... The applied concept which requires consideration relates to duties on production or manufacture, These are covered by Entry 44 which deals with duties of excise. Excise duties have traditionally been duties which have been imposed on the act of manufacture or production. This has been true for a long period of time and reference may be made, by way of illustration, to the Central Excises and Salt Act, 1944, as well as its legislative predecessors. Thus the structure of the Constitution now becomes clear in relation to the all important fiscal entries. Entry 43 primarily relates to customs duty i.e. duties on importation. Entry 44 relates to excise duty or duties on manufacture or production and Entry 49 relates to duties on sales. Each entry has its own separate and clearly demarcated role and scope."
17. Neither is there any entry in the FLL other than the entry 44, nor is there any provision other than section 3 of FEA, 2005 which provides for levy of excise duty, duties of excise cannot therefore be levied and charged, but strictly as prescribed by the above two provisions. Whereas the plain reading of section 3 leaves no manner for doubt that duties of excise can only be levied and charged on (i) the manufacture of goods (ii) import of goods and
(iii) provision of services. There is no provision or entry which allows the Parliame nt to levy excise duty, on excise duty, or which may treat the fact of payment of excise duty itself, as a taxable incident that may in turn create a liability to make payment of excise duty . Here it may be beneficial to refer to the following judgments:- PLD 2017 SC 99 at Page 102-103 "4. Heard. It is settled principle of law that tax cannot be charged and levied unless it falls squarely within the purview of the charging provisions. Taxing laws are not to be extended by implication beyond the clear import of the language. To hold otherwise would violate another principle of interpretation of taxing statutes: that tax laws should be construed in favour of the taxpayer and any substantial doubt resolved in favour of the citizen and against the government. This principle is based on the fact that taxation is a process which interferes with the personal and property rights of the people, although it is a necessary interference. But because it does take from the people a portion of their property , the tax laws must be construed in favour of the taxpayers."
2007 PTD 1656 at Page 1664 "12. even if the interpretation placed upon the said statutory provision by the learned counsel for the appellants was equally possible, or any ambiguity existed therein, it is now settled that in such situation interpretation favourable to the tax payer is to be preferred."
18. Indeed, the law does not permit levy of excise duty on the amount of excise duty, yet to be charged, to be included in "retail E price". It is cyclic to argue that excise duty has to be added to "retail price" prior to charging the same on the said retail price, as such a method tends to repeat itself infinitely , and thus in case the Department's contention is accepted, that may result not only in the levy of duty on amount of excise duty, but such levy may continue infinitely .
19. The Department's interpretation of section 12(4) is also ultra vires of section 3 which is the charging section and which states that the goods and services specified in the First Schedule will be charged Excise Duty at the rates set forth therein. The first schedule states that the petitioner is liable to pay Excis e Duty at the rate of 6% of the Retail Price. However , by charging Excise Duty on Excise Duty or for that matter , on the amount of excise duty, the excise department is seeking to actually charge excise duty at a rate higher than 6%. It is submitted that it is a well settled principle of law that while interpreting a taxing statute, precedence is given to the charging section (i.e. section 3) rather than to a section which simply lays down the mechanism of collection (i.e. section 12(4)). The Court should try to accept a harmonious interpretation of a statute and to avert conflict between the different provisions thereof. The Department's interpretation of section 12(4) being manifestly in conflict with section 3, cannot be upheld.
20. It is inconceivable, that the legislature would have intended such a convoluted interpretation of section 12(4) as being proposed by the Department. If the legislature had wanted to increase the burden of tax, it could have simply increased the rate of excise duty. Similarly the Government also 'could have invoked its powers under section 3(4) to collect more tax without even having to go to the legislature. Why is there a need to resort to a twisted interpretation of the law . Section 3(4) of the 2005 Act reads as under:- "(4). Without prejudice to other provision s of this Act, the Federal Government may levy and collect any class or classes of goods or services by notification in the official gazette at such higher or lower rate or rates as may be specified in such notification."
21. It hardly needs to be emphasized that a measure of a tax must have a reaso nable nexus with it, the subject matter and that a tax cannot be levied on the basis of arbitrary valuation. The following passage from this Court's judgment reported as 2015 SCMR 595 at page 61 1 may be referred to in this regard:- "It should be borne in mind that the power of general fixation of import prices is akin to delegated legislation with far reaching ramifications. An arbitrary fixation of a price higher than or lower than the prevalent international price implies that the effective rate of duty has been modified. This is obvious since a rate of duty say of 10% on the import of vessels would effectively increa se to 20% if try price is arbitrarily fixed at double and similarly it would decline to 5% if the price is artificially reduced to half. This cannot be permissible because it would be not merely a violation of the statute but also of the constitutional mandate that taxes can only be imposed under the law ."
22. The Department's valuation and methodology is clearly arbitrary , as notional excise duty has no connection whatsoever with the subject matter of excise duty, which is the manufacture of goods. Therefore the charge of excise duty on notional excise duty is clearly G illegal and unconstitutional and is thus violative of the principle reiterated by our Courts as follows: PLD 2017 SC 99 at page 102-103 "4. Heard. It is settled principle of law that tax cannot be charged and levied unless it falls squarely within the purview of the charging provisions. Taxing laws are not to be extended by implication beyond the clear import of the language. To hold otherwise would violate another principle of interpreting of taxing statute: that tax laws should be construed in favour of the tax payer and any substantial doubt resolved in favour of the citizen and against the government. This principle is based on the fact that taxation is a process which interferes with the personal and property right of the people, although it is a necessary interference. But because it does take from the people a portion of their property , the tax laws, must be construed in favour of the taxpayers.
PLD 1976 Karachi 1238 at page 1246 "It is a well-established rule of interpretation of fiscal statutes that if a subject to be taxed is not within the letter of the law , he is free however apparent it may that he falls within the spirit of law ."
23. In view of the foregoing discussion, the -appeal is allowed and the impugned judgment is set aside.