' NAIMUDDIN, J.--This constitution petition under Article 9 of the Provisional Constitution Order, 1981, calls in question the orders dated 28-6-1982, 30-12-1983 and 8-1-1984, passed by the Excise and Taxation Officers 'P' Division and 'B & C' Divisions, and the Director Excise and Taxation, respondents Nos. 1, 2 and 3, respectively.
2. The case of the petitioner is that they are commercial establishment approved by the International Air Transport Association (IATA), holding Travel Agents Licence of Government of Pakistan. The petitioners act as agents of various Airlines which are also members of the Inter - national Air Transport Association (IATA). They sell passengers tickets and handle cargo bookings for the Airlines. The price of the tickets and freight charges recovered by them from the passengers/customers are paid to the Airlines carrying passengers/cargo and for the services performed by the petitioners for the benefit of Airlines, the petitioners and other travel agents are paid commission and agency fee at the rate prescribed by the International Air Transport Association.
3. It is claimed that the petitioners are not a contractor who supplies goods or professional services to any person.
4. It is further the case of the petitioners that in October, 1980 the petitioners had received a challan from respondent No.1 for payment of Rs.1,000 towards Professional Tax under Category No.4 of the Schedule to the Sind Finance Ordinance, 1980 (hereinafter called the Ordinance), as the petitioners are a commercial establishment employing more than 10 persons. The demand was satisfied by making payment. However, in June 1982, the petitioners received another challan for Rs.9,400 on account of Professional Tax (Rs.4,000 being the balance amount of Professional Tax for the year 1980-81 and Rs.5,000 being the Professional Tax for the year 1981-82. However, on 21-6-1982, the petitioners made a representation to respondent No.1 that they were a commercial establishment falling under Category 4 and not contractors falling under Category 6 of the Schedule to the Ordinance, and, therefore, they claimed that they were liable to pay only Rs.1,400 for the firm and their employees and not Rs.9.400. Respondent No.1 however, required the petitioners to first deposit the amount and then prefer an appeal to the Director Excise and Taxation, respondent No.3.
Accordingly, on 30-6-1982, the petitioners paid the tax and on 18-7-1982, filed an appeal with respondent No.3, against the assessment under Category 6-C.
5. On or about 20-6-1983, the petitioners received another challan from respondent No.1 for payment of Rs.1,000 towards Professional Tax. According to the petitioners no order has been passed on the appeal and their representatives have been visiting the office of the respondents but they were informed that the relevant file has been sent to Tuglaq House and orders would be communicated as soon as they were received from the respondents.
6. The petitioners on 20-3-1983, again received a notice for filing another declaration with respondent No.1, which the petitioners did. Thereafter, the petitioners received another challan from respondent No.2 to pay Rs.1,000 towards Professional. Tax which they paid. On or about 9-8-1983, they were again by a notice required to file a declaration which they again did.
7. However, on or about 4-10-1983, they received a notice from respondent No.1 to show cause why Professional Tax and penalty thereon be not recovered from them for failure to pay the Tax. The petitioners submitted their reply but again on or about 12-10-1983, they received notice to file declaration which they did. The respondent No.1 again demanded Rs.4,000, on account of arrears for the year 1982-83, and Rs.5,000 towards the Professional Tax for the year 1983-84.
8. This demand has, therefore, led the petitioners to file the present petition. It may be mentioned that no counter-affidavit to the petition has been filed. The averments made in the petition have, therefore, remained uncontroverted.
9. We have heard Mr. S.A. Sarwana for the petitioners and Mr.Abdul Sattar Shaikh, Additional Advocte-General, Sind for the respondents.
10. Mr. S.A. Sarwana has submitted that the petitioners come under Category 4 of the Second Schedule to Ordinance, and not under Category 6 of the Finance Act, 1983, as the petitioners are a commercial establish ment and not a contractor. On the other hand Mr. Abdul Sattar Shaikh has submitted that the petitioners are a contractor and, therefore, fall in category 6 as per their turnover.
11. Therefore, the question that requires consideration in order to determine the legality or otherwise of the demand is in which of the two categories the petitioners fall.
12. While considering the question it would be convenient if the provisions of two categories in question are set out hereinbelow for ready reference:
13. {{DATA MISARRANGED}} "Category 4. Owners of factories and commercial establishments other than those referred to at Serial Nos. (2) and (3) employing 10 or more persons.................. Rs.1,000.
5.
Category 6. Contractors who during the preceding financial year supplied goods or services.--
(a) Upto Rs. one million.
(b) exceeding Rs. one million but not exceeding Rs.2.5 million........... Rs.1,000.
(c) exceeding Rs.2.5 million................ Rs.5,000."
13. The terms "commercial establishment" and "contractors" have not been defined in the Ordinance, therefore, they are to be understood in the sense in which they are generally understood in the commerce and trade. We may first refer to their dictionary meaning.
14. According to Shorter Oxford English Dictionary, 3rd Edition, Vol-I, page 383, 'contractor' means: One who contracts; a contracting party; One who contracts to furnish supplies or to perform any work or service at a certain price or rate; one who undertakes work by contract.
15. According to Black's Law Dictionary, 4th Edition, page 397, this term is strictly applicable to any person who enters into a contract Kent v. Railroad Co. (12 N Y 628) but it is commonly reserved to designate one who, for a fixed price, undertakes to procure the performance of works on a large scale, or the furnishing of goods in large quantities, whether for public or a company or individual.
McCarther v. Second Parish 36 Am. Rep.
320.
' One who in pursuit of independent business undertakes to perform a job or piece of work, retaining in himself control of means, method and manner of accomplishing the desired result.
Marion Malleable Iron Works v. Baldwin 82 Ind. App.
206.
16. In Category (6) the term "contractor" has not been used simplici tor but is qualified by the adjective clause "who...supplied goods or services (emphasis supplied). It is, therefore, clear that every contractor has not to be taxed in this category but only those contractors are to be taxed who during the preceding year supplied goods or services and then they are to be taxed on the basis of the value of goods or services supplied. Therefore, the term seems to have been used in the restricted sense.
17. Admittedly, the petitioners do not supply any goods. They sell passengers tickets and book freight as agents. The price and charges thereof are paid to the Airlines on whose behalf they sell tickets and/or book cargo. They also do not for a fixed price undertake to procure the performance of any work on a large scale. They while selling tickets or booking freight submit to the control of Airlines and IATA as members thereof. They sell tickets, book freight not on their own terms but on those of Airlines and IATA. They, therefore, cannot be considered carrying on any business of supplying any services in pursuit of independent business.
18. The respondents have not placed on our record any material to show that the petitioners are contractors according to the above-stated restricted meaning, for, the burden to show that the petitioners were liable as contractors was on them. In this regard the learned Additional Advocate- General, Sind, pointed out the title of letterhead of the petitioners annexed to the petition wherein below their name is printed "Friently Travel Service." From this the learned Additional Advocate- General, Sind wanted us to infer that they are carrying the independent business supplying services. We regret no such inference could be drawn.
19. As already stated above we are of the view that the term 'contrac tors' could not be understood to have been used in the broader sense of one who contracts. In any case price of the tickets or freight charged by the petitioners could not be considered the price or the value of the services rendered by the petitioners as services are rendered by the Airlines to the passengers or persons booking the cargo. For services rendered by the petitioners to the Airlines the petitioners are paid commission or fee.
20. The restricted and distinctive meaning of the word "contractor" as given in Black's Law Dictionary that a "contractor" is a person who in pursuit of independent business undertakes to perform a specific job of work for other person without submitting himself to their control in respect of the details of the work, was accepted by Karam Elahee Chauhan, J., in Taj Din and 44 others v.
Punjab Labour Court No.3, Lyallpur and another PLD 1976 Lah. 1169, where the question was whether the petitioners were employees of the company or the contractor. It was observed at page 1172 of the report as follows: "The employment is the contract of service between the employer and the employee whereunder the employee agrees to serve the employer subject to his control and supervision. Employment brings in the contract of service between the employer and the employee. The control of the Management, which is a necessary element of the relationship of master and servant, is not directed towards providing or dictating the nature of the article to be produced or the work to be done, but refers to the other incidents having a bearing on the process of work the person carries out in the execution of the work. The manner of work is to be distinguished from the type of work to be performed. A contractor is a person who in the pursuit of an independent business undertakes to do specific jobs of work for other persons without submitting himself to their control in respect to the details of the work. There is, therefore, a clear-cut distinction between a contractor and a workman. The identifying mark of the latter is that he should be under the control and supervision of the employer in respect of the details of the work. The prima facie test for the determination of the relationship between the employer to supervise and control the work done by the employee not only in the matter of directing what work the employee is to do but also the manner in which he shall do his work. The words "either directly or through a contractor" in section 2 (xvii) of the Act indicate that the employment is by the Management directly or through some kind of employment agency and in either case there is a contract of employment between the Management and the persons employed. There should be a privity of contract between them and Management. Where for example coolies are not employed by the Management directly nor they are employed by the Management through the agency of an independent contractor it follows that coolies employed by the said contractor are not workers within the meaning of the definition in the Act. The various provisions contained in different sections of the Act give a clear indication that a worker under the definition of the Act is a person who enters into a contract of service under the Management and does not include an inde pendent contractor or his coolies or servants who are not under the control and supervision of the employer."
21. Reference may also be made to a decision from Indian jurisdiction in Chintaman Rao and another v. State of Madhya Pradesh AIR 1958 C 388, wherein the distinction between a contractor and a worker came up for consideration with reference to the provisions of section 2(1) of the Factories Act.K.Subba Rao, J. discussed the same as follows: n(9) This takes us to the consideration of the definition of the term 'worker' under the Act. 'Worker' is defined to mean a person employed, directly or through any agency, whether for wages or not, in any manufacturing process. It is and it cannot be disputed that the making of bidis is a manufacturing process. But is a Satterdar a person 'employed', directly or through agency, within the meaning of the definition "employed". The concept of employment involves three ingredients:
(1) employer (2) employee and (3) the contract of employment. The employer is one who employs, i.e. one who engages the services of other persons. The employee is one who works for another for hire. The employment is the contract of service between the employer and the employee whereunder the employee agrees to serve the employer subject to his control and supervision. Can it be said that a Sattedar is employed by the management of the factory to serve under it? There is a well understood distinction between a contractor and a workman and between contract for service and contract of service. In Stroud's Judicial Dictionary (Third Edition, Volume I, page 616) the distinction between a contractor and a workman is brought out in bold relief in the following manner: "Of course, every person who makes an agreement with another for the doing of work is a contractor, in a general sense, but as used in Workmen's Compensation Act, 1897 (60 & 61 Vict., c.37), S.4 "contractor" and "WORKMAN" have come to have a more restricted and distinctive meaning", and "contractor" means 'one who makes an agreement to carry out certain work specified, but not on a contract of service."
"(1) The same idea is repeated in a different terminology thus: A 'contractor' is a person who, in the pursuit of an inde pendent business, undertakes to do specific jobs of work for other persons, without submitting himself to their control in respect to the details of the work."
There is, therefore, a clear cut distinction between a contractor and a workman. The identifying mark of the latter is that he should be under the control and supervision of the employer in respect of the details of the work.
(11) Elaborating the point further, Bhagwati, J., who delivered the judgment on behalf of the Court proceeded to state: ' The test which is uniformly applied in order to determine the relationship is the existence of a right of control in respect of the manner in which the work is to be done."
22. The expression "Commercial establishment" is not defined as such in the Shorter Oxford Dictionary. We, therefore, consider the meaning of two words separately. According to this dictionary "commercial" means
(1) Engaged in commerce; trading. (2) Of or relating to commerce or trade 1744. (3) Such as passed current in the transactions of commerce 17152. (4) Viewed as a matter of profit and loss.
' According to this dictionary, word "establishment" means (1) The action of establishing; the fact of being established; (2) Established or stable condition; (3) organization, footing; (4) Settlement in life; (formerly often) marriage, setteled income or provision.
(2) That which is established; a settled construction or government. The ecclesiastical system established by law; the Church. 3(a) A permanent military naval, or civil organization (b) The quota of officers and men in a regiment, ship, etc. (4) An organized staff of employees or servants, including, or occas, limited to, the building in which they are located. (b) A household family residence."
23. "Commercial establishment" is however, defined in the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, as follows: "Commercial establishment" means an establishment in which the business of advertising, commission or forwarding is conducted or which is a commercial agency (emphasis supplied) and includes a clerical department of a factory or of any industrial or commer cial undetaking, the office establishment of a person who for the purpose of fulfilling a contract with the owner of any commer cial establishment or industrial establishment, employs workmen, a unit of a joint stock company, an insurance company, a banking company or a bank, a broker's office or stock- exchange, a club, a hotel, a restaurant or an eating house, a cinema or theatre, and such other establishments or class thereof, as Government may by notification in the official Gazette, declare to be a commercial establishment for the purposes of this Ordinance."
24. The word "establishment" is defined in the West Pakistan Shops and Establishments Ordinance, 1969, as follows: "establishment" means a shop, commercial establishment (emphasis supplied) industrial establishment, private dispensary, maternity home, residential hotel, restaurant, eating house, cafe, cinema, theatre, circus, or other place of public amusement or entertain ment, and such other establishment or class thereof as Government may, by notification in the official Gazette, declare to be establish ments for the purposes of this Ordinance;".
25. It would, therefore, be seen whether we take the ordinary dictionary meaning or draw help from the meaning of the word" commer cial establishment" given in the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968; it seems that the petitioners appear to be a Commercial Establishment rather than a contractor.
26. Assuming for the sake of argument that the petitioners fall in both the categories then it is well- settled principle that they have to be assessed under the category which is beneficial to them. In support we may here quote a passage from the opinion of Krishanaswami, J. of Madras High Court in Commissioner of Income-tax Madras v. Bosotto Brothers Limited Madras 8 1 T R 41 which appears at page 48 of the report. It reads: "The question is whether the proper section to be applied to the case is section 9 as claimed by the department or section 10 of the Indian Income-tax Act, 1922 as claimed by the assessee. On behalf of the department a suggestion was made but not persisted in, that section 9 must first be resorted to before considering the applicability of section 10. It seems to me that if a case properly comes within Section 10 there is no question of having to choose between that section and some other section in the Act. Being a taxing statute the Income-tax Act should receive a strict construction, that is, a construction in favour of the subject, and not in favour of the Crown. If a case appears to be governed by either of two provisions it is clearly the right of the assessee to claim that he should be taxed under that one which leaves him with a lighter burden."
27. We, therefore, declare that the demand for amount in excess of Rs.1,000, for any of the years in question is without lawful authority and, therefore, of no legal effect. However, in the circumstances of the case, we leave the parties to bear their own costs.