MUHAMMAD ZAHOORUL HAQ, J.--1. These two petitions have been filed by Sterling Plywood Industries and M/s. Pakistan Wood Crafts who are manufacturers of batten boards and strip boards which is made from waste wood.
2. The petitioners have felt aggrieved against the demand made by Central Excise & Land Customs, Sales Tax Wing, Karachi, to the effect that all other sizes of batten board except size 8" x 4" would be treated as specific sizes and be subjected to sales tax. Sales tax has been demanded from these two petitioners with effect from 1-3-1984 on 111 batten boards of different sizes except size 8" x 4".
3. In Petition No. 224/84, on 25-1-1984 the Superintendent of Central Excise and Land Customs had made a demand by his letter on the ground that the batten board if cut into specific sizes becomes a manufactured item liable to sales tax and the same Superintendent on 4-3-1984 informed the petitioner Sterling Plywood Industries that only batten board of standard size i.e. 8" x 4" would be exempt from sales tax under serial No. 35 of S.R.O. 666(I)/81, dated 26-6-81 and all other sizes would be treated as specific sizes and leviable to sales tax.
4. In respect of Petition No. 278/84, on 27-3-1984 the Central Excise and Land Customs (Sales tax)
Authorities had seized some of the batten boards of the petitioner Pakistan Wood Crafts from their factory and by a letter of 29-3-1984 had told them that in view of letter of CBR No. 16(31)-S.T./80, dated 1-3-1980, all sizes of batten boards except of standard size 8" x 4" were liable to sales tax, and therefore on the stock found on 27-3-1984 and also on the goods cleared from 1st March 1984 they should pay the sales tax.
5. Both the petitions were heard together which were argued by Mr. Abul Khair, Advocate, for the petitioners and reply from the side of Sales Tax Authorities was made by Mr. Wajeehuddin Ahmed.
6. There is no dispute on the point that the relevant Notification which is applicable in the case is SRO No. 666CD/81, dated 25th June, 1981 issued by the Federal Government. The same provides as under:- "GENERAL EXEMPTION FROM SALES TAX ON GOODS PRODUCED OR MANUFACTURED IN PAKISTAN In exercise of the powers conferred by sub-sections (1) and (2) of section 7 of the Sales Tax Act, 1951 (III of 1951), and in supersession of its S.R.O. 659(I)/80, dated the 28th June, 1980, the Federal Government is pleased to exempt goods produced or manufactured in Pakistan and falling under heading numbers of First Schedule to the Customs Act, 1969 (IV of 1969) specified in column (2) of the Table below from the whole of the sales tax leviable thereon:- TABLE S. No. Description of goods (1) (2) 1.
To 34. Not applicable.
Strip-board or batten board, other than wooden flooring manufactured from waste wooden strips lathes or battens obtained from used packing crates or packing cases or chests falling under Heading 44.15 provided that-
(i) * plywood is not affixed to such board; <0 (2) (ii) any wooden veneer affixed to such board does not exceed three millimetre in thickness; and (iii) such board is not laminated or further processed." 4 * {{WORDS MISARRANGED}} This Notification clearly proves that the batten board is completely exempt from any sales tax except the one where any plywood is affixed to such board or wooden veneer of more than three millimetre thick is affixed to such board or that the board is laminated for further process.
7. It is an admitted position in the case that the product of the petitioner which is being sought to be subjected to sales tax does not have any plywood affixed to it nor wooden veneer of more than three millimetre thickness nor it is laminated.
The Sales Tax Authorities are relying upon a letter of Central Board of Revenue dated 1 -3-1 984 where it is explained that standard size of batten board is 8" x A" and therefore batten board of any other size should be treated as a specific size and should be subjected to sales tax.
8. We have not been able to find any justification for the view of the Central Board of Revenue, Government of Pakistan, or that of any other respondent in this case. The exemption provided under S.R.O. 666(1)/81, is complete exemption for any batten board and therefore there is no justification to restrict the exemption to any particular size by a mere letter of the Central Board of Revenue. If the Government of Pakistan wanted to change the exemption they could do so by issuing a proper S.R.O, for the same but certainly not by a mere letter or instructions by the Central Board of Revenue.
9. Mr. Wajeeuddin had submitted that in November, 198A a proper notification under S.R.O, has been issued by the Federal Government by which the strip board or batten board has been omitted from serial No. 35 of S.R.O. 666(I)/81. However, that Notification is not before us under challenge and therefore we do not have to comment upon the same but in any case the two petitioners before us cannot be asked to pay any sales tax on the batten boards produced by them of different sizes till the time that the relevant item No. 35 of S.R.O. 666(I)/81 was intact.
10. The respondents' counsel wanted to argue that the standard size of batten board produced in the country was only 8" x A" and therefore if any other size was produced then the same amounted to a further process. We do not agree with this submission. S.R.O. 666(I)/81 of 25-6-1981 is quite clear in its impact and it has exempted every batten board from sales tax if it is produced or manufactured in Pakistan without ary reference to any size. It is, therefore, clear to us that by a mere letter or explanation the Central Board of Revenue could not change the effect of the S.R.O, No. 666(0/81 and could not restrict the exemption from sales tax to size 8" x A" only.
It is the convenience and expediency of the producer or manufacturer to produce the batten board of any size and as long as he can produce a batten board within the description of S.R.O. No. 666(I)/81 of 25-6-1981 he cannot be subjected to ary sales tax.
11. We are, therefore, clear in our mind that in the two petitions before us the letter of Central Board of Revenue dated 1-3-1984 subjecting the batten board of sizes other than 8" x 4" to sales tax was without any authority and the seizure of batten board by respondents Nos. 2 to 4 of Pakistan Wood Crafts on 29-3-1984 for subjecting it to sales tax was also without lawful authority. Similarly the letter of 29-3-1984 issued by Superintendent of Central Excise and Land Customs, Sales Tax Wing, Karachi, to Pakistan Wood Crafts was without any lawful authority.
Again the letters of 25-1-1984 and 4-3-1984 issued by respondent No. 4 to M/s. Sterling Plywood Industries was without lawful authority and of no effect.
12. As a result of the above declaration we direct the respondents Nos. 2 to 4 to return the batten board seized by them from Pakistan Wood Crafts, to them and desist from charging any sales tax from them till S.R.O. 666(I)/81, dated 25-6-1981 had remained in force in its original form in respect of item No. 3 5 till it was duly amended by a S.R.O. No. 1018(1)/84 issued by the Federal Government on 25th November, 1984.
13. We also direct the respondents Nos. 2 to 4 to desist from charging any sales tax from Sterling Plywood Industries for their batten board for the period the S.R.O. 666(I)/81, dated 25-6-1981 has remained in its original form in respect of item No. 35 thereof or till it was duly amended by S.R.O.
No. 1018(I)/84, issued by the Federal Government in November, 1984. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.