1. SALEEM AKHTAR. J. ---The following question has been referred under section 17(l) of the Sales Tax Act: - "Whether on facts and in the circumstances the Income-tax Appellate Tribunal was justified in holding that rule 32 of the Sales Tax Rule was applicable in the case and that the Sales Tax Refund should allowed if the requirements of that rule were satisfied."
2. The respondent Company imports gases in returnable cylinder. These cylinders belong to Imperial Chemical Industries Limited, London and are used as containers of gases imported into Pakistan by the respondent. After using the gases the empty cylinders are returned to London Company. At the time of import of gases the respondent paid sales tax at the custom stage on the imports including the value of cylinders for the period prior to July, 1962. The respondent after the return of 'the cylinders claimed the refund of sales tax amounting to Rs. 38,053 paid on the cylinders as they had been re-exported to London. The Sales Tax Officer relying on the instructions of the Board of Revenue refused to entertain this claim as according to him these cylinders were to bear sales tax once on their import for the first time though no sales tax was payable on their re-import. The respondent filed an appeal and the learned Appellate Assistant Commissioner allowed it holding that no sales tax wars payable on the returnable packages, if they are actually, returned under rule 32 of the Sales. Tax Rule. It was further held that the instructions in contravention of rule 32 were inoperative. The Department filed appeal before the learned Appellate Tribunal, which was rejected and the Sales Tax Officer was directed to check whether the refund was actually paid to the Government as Sales Tax on the cylinders and if these have been actually re-exported out of country. The respondent on the satisfaction of rule 32 was held to be entitled to the refund.
3. The Department has mainly relied on the instructions of Central Board of Revenue contained in circular Letter C. No. 9 (16) STJ52, dated 23rd May, 1952 and letter C. No. 21(4) and 51/61, darted 10th February, 1960. These letters are reproduced as follows: - "From: The Secretary.
4. Central Board of Revenue.
5. To The all Collectors of Custom The all Collectors of Central Excise and Land Customs; Subject: Re-import of containers exemption from Sales tax: I am directed to say that the Board have- decided that the (drums and other containers of a durable nature when re-imported full in the provinces of Pakistan or the Capital of the Federation shall be exempt from the sales tax to the extent of value of such container: provided the conditions laid down in item 63 of the Sea Customs Manual are satisfied via.
(a) That the containers so imported or as equal number of precisely similar containers have not more than one year previously been exported empty by or on behalf of the importer:
(b) That an importer applying for the benc8t of the exemption conferred hereby with reference to any exportation of empty containers has not already obtained the befit of the exemption with reference to such importation.
6. (Sd.) Muhammad Hussain Secretary, for Central Hoard of Revenue."
7. "From Zafar Hussain, Esq, M A.
8. Section Officer to the Government, of Pakistan.
9. The Commissioner of Sales Tax South Zone, West Pakistan, Karachi.
10. Subject: Refund of sales tax at the time of export of empty cylinders.
11. With reference to your Letter No. STM. 1/59-60 dated 26th January, 1960 on the subject noted above I am directed to say that the case of Messrs Imperial Chemical Industries (Pate.) Ltd., Karachi regarding their claim for refund of sales tax on export or empty cylinders which they had earlier imported filled with gala would be covered by the instructions contained in Board's Letter C. No, 9(16)-ST/52 dated the 23rd May, 1952 and refund may be allowed accordingly.
12. It is, however, made clew lest there remain any doubt that the containers would bear sales tax once, when they were imported for the first time but thereafter on their re-import no sales tax would be char.
13. (Sd.) (Zafar Hussain), Section Officer to the Government of Pakistan."
14. Rule 32 of the Sales Tax Rules reads as follows "If goods subjected to tax are sold in returnable packages for which a charge is made at the time of delivery the tax is payable on the packages without deduction of any discount subject to credit or refund in no case to exceed the amount of tax which was actually paid. The tax is payable op the charge made for the container, provided, however, thin if such charge is less than the cost of the container to the manufacturer or producer or wholesaler, the tax shall be payable on the cost value of the container."
15. This rule provides for refund of sales tax paid on the returnable package for which a charge is made at the time of delivery. The pre-conditions for the refund are that the goods subjected to sake less should be contained in returnable packages, charge has been made at the time of delivery of goods and the packages have been returned. If these conditions are satisfied the assessee is entitled to claim refund under this rule.
16. The first letter was issued by the Central Board of Revenue an the fond was issued by a Section Officer of the Government of Pakistan. These two letters can neither amend the rules framed under the Sales Tax Act, nor can they impose any additional condition for claiming refund which an assessee is entitled under the Act or Rules. It has not been contended that rule 32 is ultra vices the Act or that it has not been framed by the proper authority. Section 39 of the Sales Tax Act provided that the Central Government may make rules to carry out the purpose of this Act. By Tax Laws Amendment Ordinance, 1962 the words "Central Government" has been substituted by the word "Board" However, at the relevant time when the case was under consideration the Central Government was the proper authority to frame the Rules. The instructions contained its these two letters are in conflict with rule 32. These instructions contained in these letters can not override, repeal, amend or nullify the Rule validly framed under the law The departmental instruction or interpretation can only show the views of the Department but neither it is binding nor it has the force of law. In United Nether Lands Navigation Co. Ltd. v. Commissioner of Income-tax (PLD 1965 SC 412), while referring to the instructions issued by the Central Board of Revenue it was observed that "it is true that the instruction has no legal force, but it does tell the interpretation which the Department has itself been accepting".
17. Similar view was expressed in Altaf Hussain v. Shabbir Hussain and others (PLD 1961 Lah. 449.)
18. On the facts and circumstances and for the aforestated reasons we answer the reference in the affirmative.