RUSTAM S. SIDHWA, This judgment will dispose of seven constitutional petitions W.P. No. 5319 of 1988, W.P. No. 522 of 1989, W.P. No. 524 of 1989, W.P. No. 523 of 1989, W.P. No. 528 of 1989, W.P. No. 526 of 1989 and W.P. No. 527 of 1989, filed by M/s Friends Sons, Time Publishers, Koh-i- Noor Printing Press, National Sales Agency, Barques Diary and Calendar Company, Rizwan Paper Products, and Islamic Publications Ltd., petitioners, against the hierarchy of Officers of the Central Excise and Sales Tax, for a declaration that no sales tax is payable on the diaries printed and manufactured by the petitioners and to declare that all proceedings taken and orders passed by them are null and void and without jurisdiction and to restrain the respondents and their subordinate staff from recovering any sales tax from the petitioners or from taking any action against them under the Sales Tax Act or the Central Excises & Salt Act.
2. 'The brief facts of the case are that the petitioners are makers of diaries of various descriptions, which contain a variety of information having considerable informative and educative value. All the petitioners belong to the printing industry and some Of them are members of the Pakistan Association of Printing and Graphic Arts Industry, briefly also known as PAPAGAI.
3. The petitioners are not manufacturers of paper and paper board, or mere cutters of paper and paper board to different sizes or shapes. They buy paper, cut it to size, print material thereon and bind them into books called diaries. These diaries not only contain information as to the dates of the different months of the year in question, but a wealth of other information and data, both educative and informative.
4. It is the case of the petitioners that initially in 1951 the diaries manufactured by them were not treated as exempt from liability to sales tax, whereupon in 1956 the Pakistan Association of Printing and Graphic Art Industries made a representation to the Federal Government, which. Issued circular C. No. 9-15-ST/56 dated 25th July, 1956, whereby it treated printing jobs, such as forms, diaries, calendars, posters, invitations and visiting cards, etc., etc., as falling within Item No. 15 of the Sales Tax Notification No. 7 dated 27th June, 1951 as a result of which diaries and other articles were exempted from sales tax. It. Is the case of the petitioners that by the said Circular C. No. 9(15)-ST/56 dated 25th July, 1956 the Central Government extended the scope of goods contained in Item No. 15 of the Sales Tax Notification No. 7 dated 27th June, 1951 which covered "printed books, maps, charts, periodicals arid newspapers", to include also diaries, calendars, etc., with the result that even when the said sales tax notification was superseded by Sales Tax Notification SRC 569(I)/80 dated 26th June, 1980, which also in turn was superseded by Sales Tax Notification SRO 666(I)/81 dated 25th June, 1981, the scope of goods enumerated in item No. 11.11 of the notification dated 26th June, 1980 and that in item No. 37 of the notification dated 25th June, 1981, stood extended to also cover diaries, calendars, etc.
5. The petitioners contend that in 1987 the Deputy Collector, Central Excise, Lahore, issued notices annexures "F" to the petitions of the petitioners alleging that they were printing diaries falling under PCT Heading No.-48.18 without obtaining central excise manufacturing licence and without payment of sales tax chargeable thereon in contravention of rules 7, 9, 174 and 226 of the Central Excise Rules, 1944, read with section 3(4) of the Sales Tax Act, 1951, that during the period It July, 1982 to 1986/1987 they had produced a large number of diaries valuing large amounts which they had cleared without payment of sales tax amounting to lacs of rupees and that they should show cause within ten days as to why penal action should not be taken against them under Rules 7, 210 and 226 of the Central Excise Rules, 1944, read with section 3(4) of the Sales Tax Act, 1951, besides recoveries of the stated sums (running into lacs of rupees) by way of sales tax under Rules 7 and 10 of the Central Excise Rules, 1944, read with section 3(4) of the Sales Tax Act, 1951. The petitioners submitted their replies to the said show cause notices. However, the learned Deputy Collector of Central Excise, Lahore, by his orders annexures 'G' to the "writ petitions' rejected the submissions of the petitioners, and ordered them to pay the undernoted amounts as arrears of sales tax and penalty for the periods shown next to their names:-- Name of the petitioner Sales tax imposed Period for which tax was due Penalty imposed Friends Sons Rs. 5,68,206/- 1.7.82 to 30.4.87 Rs. 94,700/- Time Publishers Rs. 3,37,500/- 1.7.82 to 30.4.87 Rs. 56, 000/- Koh-i-Noor Printing Press Rs. 1,80,875/- 1.1.82 to 31.12.86 Rs. 30,000/- National Sales Agency Rs. 23,750/- 1.1.83 to 30.4.87 Rs. 4,000/- Barques Diary and Calendar Company Rs. 3,57,944/- 1.7.82 to 30.4.87 Rs. 59,500/- Rizwan Paper Products Rs. 19,600/- 1.1.82 to 31.12.86 Rs. 3,200/- Islamic Publications Limited Rs. 30,721/- 1.7.82 to 30.6.87 Rs.5,000/- {{ TABLE }}
6. All the petitioners preferred appeals against the above orders to the Collector, Central Excise and Sales Tax (Appeals), Northern Zone, Lahore, who rejected the appeals of petitioners Nos. 1 to 5, whereas the appeals of petitioners Nos. 6 and 7 are still pending. Petitioners Nos. 1 to 5 preferred revision petitions against the appellate orders before the Central Board of Revenue, which are still pending.
7. It is the case of the petitioners that they would have completed the full circle of the remedies right up to the Central Board of Revenue, but in view of the Central Board of Revenue's letter C. No. 16(52)/ST/87 dated 25th November, 1987 addressed to all the Collectors of Central Excise and Sales Tax and other officials which stated that SRO 666(I)/81 dated 25th June, 1981 did not provide for sales tax exemption on locally produced diaries which, fell under PCT heading 48.18 and that the Excise officer should ensure that a uniform policy was followed and sales tax was realised from all manufacturers of diaries, it is contended that no useful purpose can be served by pursuing the matter any further in the legal forums provided, as the Central Board of Revenue having expressed its mind about the interpretation of the law on the subject, any attempt before the Central Boarc of Revenue would only be an exercise in futility. Faced with this prospect, the petitioners preferred a joint writ petition W.P. No. 5319 of 1988, which came up before me for disposal.
8. On '5th October, 1988, pre-admission notices were issued to respondents Nos. 1 to 4 for the next date of hearing, on which date they were directed to i.e their written statements and to also appear through their legal counsel, who were directed to be prepared to argue the main case, in case the petition was admitted on the said date. On 12th January, 1989 the learned counsel for the respondents filed the report and para wise comments on behalf of the Collectorate of Central Excise and Sales Tax, Lahore. The case was argued at length on 16th January, 1989 and 17th January, 1989. On 16th January, 1989, writ petition WP No. 5319 of 1988 was admitted and the case was adjourned1 to 17th January, 1989 for the balance arguments. On the next date, arguments were heard. Due to an objection raised on behalf of the respondents, all the petitioners were directed to i.e separate writ petitions. The case was then adjourned to It February, 1989 for the filing of the fresh petitions and for the remaining arguments. Qn It February, 1989 fresh petitions were filed. The learned Standing Counsel for the Federal Government accepted notices on behalf of the respondents and waived his right to i.e fresh written statements, on the ground that report and para wise comments had already been filed earlier. Both the learned counsel for the petitioners and the learned Standing Counsel for the Federal Government, appearing for the respondents, waived their rights to address any further arguments, on the ground that the case had been fully argued at the last hearing. Accordingly, the cases were reserved for judgment.
9. On behalf of the petitioners a number of submissions have been made. First, that the scope of the goods referred to as "printed books, maps, charts, periodicals and newspapers" as appearing in item No. 11 of the Sales Tax Exemption Notification No. 7 dated 27th June, 1951 and in item No. 11.11 of the Sales Tax Exemption Notification No. SRO 659(I)/80 dated 26th June, 1980 stood enlarged by the Central Government's Circular C. No. 9 (15)-ST/56 to also include diaries and that the scope of the goods referred to as "printing process all sorts falling under Chapter 49", as appearing in item No. 37 of Sales Tax Exemption Notification No. SRO 666(I)/81 dated 25th June, 1981, also stood extended by the same Central Government's Circular C. No. 9(15)-ST/56 dated 25th July, 1956 to include diaries and that since the said Circular has not been withdrawn, the petitioners were not liable for the payment of any sales tax. Second, that the goods covered under PCT heading 48.18. Which includes diaries, only covers diaries which have some minimal printing, which is merely casual or incidental to the primary use of the article as a diary. In this connection Note 8 under Chapter 48 of section X of the Pakistan Customs Tariff, which states "Paper, paper- board and cellulose wadding, and articles thereof, printed with characters or pictures, which are not merely incidental to the primary use of the goods, are regarded as printed matter falling within Chapter 49", is referred. It is thus contended that where a small note book with blank or lined pages is prepared or made, it would fall under PCT heading 48.18, as it would Constitute an article of paper, printed with some minimal words which are merely casual or incidental to the primary use of the note-book as a diary. But where a diary is printed, which contains a host of information and material, both informative and educative, the same would fall under PCT heading 49.01 and the same would, therefore, not be liable to any sales tax. Third, that since 1956, the scope of the goods referred to as printed books, maps, charts, periodicals and newspapers, which were entitled to exemption from sales tax, was extended to include diaries, so that the same was also exempt and since printed books, maps, charts, periodicals, and newspapers all stand included in PCT headings 49.01, 49.05, 49.11, 49.02 and 49.02 respectively, by virtue of the Federal Government's Circular, C. No. 9(15)-ST/56 dated 25th July, 1956, the said goods should get the extended scope so as to cover diaries as well.
In this connection, it is submitted that an interpretation given by the Department on a particular subject over a period of years should not be permitted to be departed from, as it creates a vested right in favour of the person who is entitled thereto. In this connection Nazir Ahmad v. Pakistan (PLD 1970 SC 453), Commissioner of Sales Tax, Karachi (East), Karachi v. Chaudhary Farzand Ali (PTCL 1984 CL. 20) and Commissioner of Sales Tax, Karachi (Central), Karachi v. Pakistan Fisheries Ltd., Karachi, (PTCL 1985 CL 270) are referred. Fourth, it is submitted that the assessment Orders annexures 'G' to the petitions were passed by the Deputy Collector of Central Excise and Sales Tax, instead of by the Assistant Collector of Central Excise and Sales Tax, and since powers of the first were equivalent to that of the Inspecting Assistant Commissioner of Sales Tax and that of the second were that of a Sales Tax Officer, the Deputy Collector of Central Excise and Sales Tax, Lahore, had no jurisdiction to pass the assessment orders. In this Connection the Federal Government's Sales Tax Circular C. No. 7 of 1981, date It July, 1981 is referred. Fifth, it is submitted that all the seven assessm ent orders annexures 'G' to the petitions relate to past assessments, which could not have been made without statutory notices issued to the petitioners in Form SS.T. 15 under section 28 of the Sales Tax Act, in which a clear period of thirty-i.e days sould have been given to answer the notices, and since the assessments were made without issue of the said notices, the assessm ents are illegal and deserve to be set aside. In this connection, Commissioner of Sales Tax, Karachi v. Pakistan Fisheries Ltd. PTCL 1985 CL 270 and Commissioner of Sales Tax, Karachi v.
Chaudhary Farzand Ali (PTCL 1984 CL 20) are referred. Sixth, it is urged that since under section 28(1) of the Sales Tax Act no assessme nt can be made after the expiry of the periods of limitation therein specifically stated, whereas in most of the assessment orders assessments beyond the periods of limitations have been made, the same to that extent are illegal.
10. On behalf of the Central Excise and Sales Tax Authorities, the following submissions have been made. First, that since "diaries" are specifically referred to in PCT heading 48.18, which states that sales tax is leviable thereon at 12-1/2% ad valorem, diaries are liable to the payment of sales tax. As regards the Central Government's Circular C . No. 9(15)- ST/56 dated 25th July, 1956, it is submitted that the same was only applicable to Sales Tax Exemption Notifies Non No. 7 dated 27th June, 1951 and Sales Tax Exemption Notification No. SRO 659(I)/89, dated 26th June, 1980, but not to the last Sales Tax Exemption Notification No. SRO 666(I)/81 dated 25th June, 1981, as the same is based on the Pakistan Customs Tariff, whilst the earlier two sales tax exemption notifications were not so based. Second, that the word "diaries" appearing under PCT heading 48.18 is intended to cover all types of diaries, irrespective of the fact whether they have some minimal printing, or detailed printing containing a host of information and material of an informative or educative nature. It is submitted that the object of including the word "diaries" in PCT heading 48.18 was to make diaries liable to sales tax. Third, that Central Government's Circular C. No. 9(15)-ST/56 dated 25th July, 1956 does not apply to Sales Tax Exemption Notification No. SRO 666(I)/81 dated 25th June, 1981 and, therefore, the extension of the scope of the goods "printed books", "maps", "charts", "periodicals" or "newspapers", does not arise. Fourth, that the show cause notices issued by the Deputy Collector of Central Excise and Sales Tax on the petitioners and the assessment orders passed by him are legal and valid. In this connection it is submitted that under the first proviso to sub-section (4) of section 3 of the Sales Tax Act, the sales tax, where the Central Board of Revenue so directs, can be levied and collected as if it is a duty of Central excise leviable under section 3 of the Central Excises & Salt Act, 1944, and all the provisions of the said Central Excises and Salt Act and the Rules made thereunder, so far as may be and with the necessary modifications, apply, notwithstanding the provisions of the Sales Tax Act. In this connection it is submitted that under the Sales Tax Circular No. 2 of 1982 dated 14th June, 1982, the Central Board of Revenue, in exercise of the powers conferred by the proviso to sub-section (4) of section 3 of the Sales Tax Act, has directed. That sales tax leviable on all goods produced or manufactured in Pakistan shall be collected as if it were a duty of excise leviable under section 3 of the Central Excises and Salt Act and all the provisions of the said Act and the rules made thereunder shall, so far as may be and with the necessary modifications, apply, notwithstanding the provisions of the Sales Tax Act. It is further submitted that since action was to be taken for breach of rules 7, 9, 174 and 226 of the Central Excise Rules, which attracted penalties under rules, 7, 210 and 226 of the said rules, and since the value of the goods on which sales tax was due exceeded Rs. 50,000, action was validly taken under section 33(b) of the Central Excises and Salt Act by the Deputy Collector of Central Excise and Sales Tax, who under SRO 18(I)/79 dated 6th January, 1979 could deal with cases where the value of the goods was above Rs.
50,000. Fifth, that show cause notices were not required to be issued to the petitioners in Form SS.T.15 and that it was not necessary to give thirty-i.e days' notice to the petitioners to submit their replies, as required by section 28 of the Sales Tax Act. In this connection it is submitted that the collection of sales tax is undertaken as collection of excise duty under section 3(4) proviso of the Sales Tax Act and all the provisions of the Central Excises and Salt Act and the rules made thereunder apply to the exclusion of .The provisions of the Sales Tax Act. In this connection para 3 of Central Board of Revenue's Circular C. No. 2 (20)ST/81 dated 14th June, 1982 is also referred. In the light*of these provisions, it is submitted that show cause notices in form SS.T.15 under section 28 of the Sales Tax Act did not have to be given to the petitioners and show cause notices under rule 10 of the Central Excises Rules, which were given to the petitioners, were sufficient. Sixth, it is submitted that rule 10 of the Central Excise Rules permits the Excise authorities to recover duties not paid up to a period of i.e years and, therefore, the recovery of duties by the Department up to a period of i.e years was legal and valid. Seventh and last, that the petitioners having themselves resorted to appeals and revisions, cannot be permitted to seek constitutional remedy through the present writ petitions without first securing final orders from the appellate and/or revisional Court and since the present petitions are premature, they should be dismissed.
11. I have given my anxious consideration to this case. The first question that arises is whether PCT heading 48.18 has any relevancy to this case. This heading appears in Pakistan Customs Tariff, which was in force prior to 26th June, 1988, as presently the Pakistan ''Customs Tariff is based on the Harmonized Commodity Description and Coding System. Thus all references in this para and the judgment should, therefore, be treated as references to the old Pakistan Customs Tariff. PCT heading 48.18 appears in sub-chapter II of Chapter 48 in Section X of the said Tariff. Chapter 48 deals with "Paper and paperboard; articles of paper pulp, of paper or of paperboard".
Under this Chapter appear Notes 1 to 8. Note 8 reads as follows :- "Paper, paperboard and cellulose wadding, and articles thereof, printed with characters or pictures, which are not merely incidental to the primary use of the goods, are regarded the printed matter falling within Chapter 49."
Sub-chapter I of Chapter 48 deals with "Paper and paperboard, in rolls or in sheets" and sub- chapter II deals with "Paper and paperboard cut to size or shape and articles of paper or paperboard". PCT heading 48.18 which falls in sub-chapter II of Chapter 48 reads as follows:- "Registers, exercise books, note books, memorandum blocks, order books receipt books, diaries, blotting-pads, binders (loose-leaf or other), i.e covers and other stationery of paper or paperboard; sample and other albums and book covers, of paper or paperboard."
Chapter 49 deals with "Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans". Under this Chapter appear Notes 1 to 7. Note 1(a) reads:- "This chapter does not cover: Paper, paperboard, or cellulose wadding or articles thereof, in which printing is merely incidental to their primary use (Chapter 48);"
PCT heading 49.01 falls under this Chapter, which reads; "Printed books, brochures,, leaflets and similar printed matter, whether or not in single sheets.
A. Printed books and booklets.
B. Other."
Note 8 under Chapter 48 gives the impression that where the printing on articles of paper or paperboard are not merely casual to the primary use of the goods8, such goods would be treated as printed matter falling within Chapter 49. Likewise, Note 1(a) under Chapter 49 gives the impression that where the printing on articles of paper or paperboard are merely casual to their primary use, they would be treated as printed matter falling within Chapter 48. In short, if the printing is minimal and merely casual and not substantive to the primary use of the goods, it falls under Chapter 48; otherwise it should fall under PCT heading 49. It is the case of the petitioners that as "diaries" fall under PCT heading 48.18, only such diaries as have minimal printing, which is merely casual to the primary use of the goods, would fall under this sub-heading and since the diaries being produced/manufactured by the petitioners contain a wealth of information, both educative and informative, their diaries fall under Chapter 49, particularly under PCT heading 49.01. On behalf of the Customs it is submitted that once "diaries" fall under PCT heading 48.18, the case would be covered by this sub-heading, irrespective of the fact whether the printing is minimal or casual or otherwise. In this respect it is submitted that the object of framing a tariff is to make it easy for the Customs to classify goods on their import and where in the classification all goods stand clearly identified, its position does not shift by the notes contained under the Chapter in which they fall, unless the goods cannot be properly identified, in which case resort can be had to the notes. Now what does the word "diary" means? It means a book or register, whether small or large, in which daily events, transactions or engagements are recorded. It includes a book for personal notes or memoranda or for details of experience or observations of the writer. A calendar diary is very much a "diary" if it has blank spaces next to the dates of each month where a person can record his engagements, transactions or personal events. However, books containing the printed account of travellers, scientists, social figures, etc., from the diaries maintained by them, would not fall within the category of "diaries as mentioned in PCT heading 48.18, but would fall in Chapter 49. The word "diaries" in PCT heading 48.18 is used in the plural. It is thus intended to cover all sorts of diaries, not only little books with blank or ruled pages with a modicum of printing thereon, but also calendar diaries containing dates and months of a particular year, with a wealth of other information, both educative and informative, provided that they contain blank pages or spaces wherein events, transactions, engagements, etc., can be recorded. Rule 3(a) of the Rules for the Interpretation of the First Schedule printed in the Pakistan Customs Tariff clearly provides that the heading which provides the most specific description shall be preferred to headings providing a more general description. P.C.T. Heading 48.18 therefore, clearly applies to diaries. Under Explanatory Notes to Brussel's Nomenclature relating to PCT heading 48.18, the following explanation regarding "diaries" appears:-- "These articles (e.g. Diaries) sometimes contain a considerable amount of printed matter but remain in this heading (and not in Chapter 49) provided that the articles are essentially for completion in manuscript or typescript. Similarly exercise books may have handwriting copy printed on each page.
The goods of this heading may be bound with materials other than paper (e.g. Leather, plastic or textile) and have reinforcements or fittings of metal, plastic etc."
It is, therefore, clear that calendar diaries of the nature manufactured or produced by the petitioners fall under PCT heading 48.18 and not under Chapter 49. By necessary implication, Chapter 49 must, therefore, be taken as completely excluding diaries. "Printed books" falling under PCT heading 49.01 cannot, therefore, be treated as covering diaries.
12. The next question that arises is what are the goods which are chargeable under the Sales Tax Act, 1951, and what are the goods which stand exempted therefrom. Under section 3(1) of the Sales Tax Act, 1951, the undernoted goods are liable to sales tax:-- "(a) all goods produced or manufactured in Pakistan, payable by the manufacturer or producer;
(b) all goods imported into Pakistan, payable by the importer;
(c) all goods sold by a licensed wholesaler, payable by the licensed wholesaler;
(d) such goods or classes of goods as the Board may, by notification in the official Gazette, specify in this behalf which are exported from Pakistan, payable by the exporter;
(e) .. And
(f) such goods or classes of goods purchased without payment of sales tax by a licensed exporter as are not exported outside Pakistan, payable by such exporter".
It is, therefore, clear that the goods listed under any of the chapters of the Pakistan Customs Tariff are not ipso facto chargeable to sales tax, merely because they happen to be listed under any of the headings or sub-headings thereunder. Goods are chargeable only if they fall under any of the clauses (a) to (f) of sub-section (1) of section 3 of the Sales Tax Act. Goods produced or manufactured in Pakistan are thus not chargeable to sales tax merely because they happen to be listed under any of the headings of the Pakistan Customs Tariff, but they are chargeable because they are goods produced or manufactured in Pakistan under clause (a) of sub-section (1) of section 3 of the Sales Tax Act. Likewise, goods imported into Pakistan are not chargeable to sales tax merely because they happen to be listed under any of the headings of the Pakistan Customs Tariff, but they are chargeable because they are goods imported into Pakistan under clause (b) of sub-section (1) of section 3 of the Sales Tax Act. The Pakistan Customs Tariff incorporates the First and Second Schedules of the Customs Act, 1969. There are seven columns under each Chapter of the First Schedule. The first three columns are statutory. Columns 4 to 7 are non-statutory and material printed thereunder is merely for public information. In the fourth column of the First Schedule, statutory rate of sales tax on the goods referred to in the second column are mentioned.
Sometimes rates based on sales tax notifications applicable to the goods are mentioned, if they differ from the statutory rate. Where there is an exemption, no rate of sales tax is given. Since all goods imported into Pakistan are leviable to sales tax under section 3(l)(b) of the Sales Tax Act, it is obvious that all goods listed in the First Schedule of the Pakistan Customs Tariff have the statutory rate of sales tax listed in column four, unless varied or exempted. Diaries produced or made by the petitioners, therefore, are not chargeable to sales tax because they happen to be listed under PCT heading 48.18, but are chargeable because they are goods produced or manufactured in Pakistan under clause (a) of sub-section (1) of section 3 of the Sales Tax Act.
13. Exemption of goods from liability to sales tax is provided by section 7 of the Sales Tax Act, 1951.
Under sales tax exemption notifications issued from time to time, goods are exempted, wholly or partially, from the payment of sales tax. Likewise, under Central Board of Revenue's circulars issued from time to time, enlarged scope and meanings are sometimes given to some of the goods exempted from sales tax under the various sales tax exemption notifications.
14. It is admitted that diaries in Pakistan were initially chargeable to sales tax, by virtue of section 3(l)(a) of the Sales Tax Act, and that by the Sales Tax Exemption Notification No. 7 dated 27th June, 1951, "printed books, maps, charts, periodicals and newspapers" were exempted from sales tax, vide Item 15 of the said notification. It appears that in 1956 the Pakistan Association of Printing and Graphic Arts Industry made a representation to the Federal Government for exempting printing jobs, such as forms, calendars, diaries, posters, invitation and visiting cards, etc., from liability to sales tax, whereupon the Central Government, vide its Circular C. No. 9-15-ST/56 dated 25th July, 1956, treated forms, diaries, calendars, posters invitation and visiting cards, etc., as falling within item No. 15 of the Sales Tax Exemption Notification No. 7 dated 27th June, 1951. It is thus clear that diaries were treated as falling within the enlarged scope of "printed books" appearing in item No. 15 of the said notification, which conferred exemption from sales tax on the said goods. In 1980 the Sales Tax Exemption Notification No. 7 dated 27th June, 1951 was superseded by the Sales Tax Exemption Notification No. SRO 569(I)/80 dated 26th June, 1980, which granted exemption to certain goods manufactured or produced in Pakistan. Under item No. 11.11 of the said notification, "printed books, maps, charts, periodicals and newspapers", were granted exemption from payment of sales tax. Since the Central Government's Circular dated 25th July, 1956 was still in force and had not been rescinded, it is obvious that diaries again fell within the enlarged scope given to the goods referred to as "printed books" in item No. 11.11 of the said notification. The fact that the Sales Tax authorities did not charge sales tax from the manufacturers and producers of diaries even after the issue of the said notification dated 26th June, 1980, also shows that they treated the said circular as applicable to diaries.
15. In 1981 the Sales Tax Exemption Notification No. SRO 569(I)/80 dated 26th June, 1980 stood superseded by Sales Tax Notification No. SRO 666(I)/81 dated 25th June, 1981, which exempted certain goods produced or manufactured in Pakistan from payment of sales tax. The goods exempted were listed according to the headings to be found in the Pakistan Customs Tariff. This was a new innovation brought about by the Central Board of Revenue in the exemption notification.
Under Item No. 37 of the said notification, goods covered by the exemption "Printing process all sorts falling under Chapter 49" of the Pakistan Customs Tariff, were made exempt from payment of sales tax. It is the case of the petitioner that the Central Government's Circular dated 25th July, 1956 also applies to this exemption notification, as "printed books" appear in Chapter 49 of the Pakistan Customs Tariff, whereas it is the case of the Department that the said circular does not apply, as the new exemption notification is based on the headings given in the Pakistan Customs Tariff and since PCT heading 48.18 clearly lists "diaries" as an item on which sales tax is payable, the circular does not apply. The words "printing process all sorts" in Item No. 37 of the Sales Tax Exemption Notification dated 25th June, 1981 gives the impression that the exemption is only applicable to that part of the manufacturing or printing process which relates to printing. "Printing process" is different from "printed goods". But even assuming, for the sake of argument, that the words "printing process all sorts" falling under Chapter 49, appearing in Item No. 37, are intended to refer to printed goods falling under the said chapter, the fact remains, as explained in para 11 above, that "diaries" do not fall under PCT heading 49.01, much less under any other heading of Chapter 49. In fact, "diaries" specifically fall under PCT heading 48.18. Any semblance of the same falling in any of the PCT headings of Chapter 49 should, therefore, be excluded. In these circumstances, the Central Government's Circular dated 25th July, 1956, which previously enlarged the scope of printed books as appearing in item No. 11 of the Sales Tax Exemption Notification dated 27th June, 1951 and item No. 11.11 of the Sales Tax Exemption Notification dated 26th June, 1980 to include diaries, cannot be applied to the Sales Tax Exemption Notification dated 25th June, 1981 to enlarge the scope of "printed books" as appearing in PCT heading No. 49.01 to include diaries.
16. At this stage it may be stated that the Sales Tax authorities right from 1956 till June, 1981 did not levy sales tax on diaries. This appears to be the result of the interpretation placed by the Department on the Central Government's Circular dated 25th July, 1956, which, by virtue of section 5(2) of the Sales Tax Act, was binding on them. Luckily for the petitioners, the department is not claiming short levies for this period (i.e. July 1956 to June 1981).
This, therefore, ends this aspect of the matter.
17. Before the other questions are answered, it is necessary to reproduce certain provisions of the Sales Tax Act and some of the circulars that have issued, which are relevant in this respect:- SALES TAX ACT, 1951 "3(1).- There shall be levied and collected a tax on the value of~
(a) all goods produced or manufactured in Pakistan, payable by the manufacturer or producer;
(aa) ................................................................
(b) all goods imported into Pakistan, payable by the importer;
(c) all goods sold by a licensed wholesaler, payable by the licensed wholesaler;
(d) such goods or classes of goods as the Board may, by notification in the official Gazette, specify in this-behalf which are exported from Pakistan, payable by the exporter;
(e) ...............
(f) such goods or classes of goods purchased without payment of sales tax by a licensed exporter as are not exported outside Pakistan, payable by such exporter.
(2) The tax shall be at the rate of twelve and a-half per cent on the value of the goods as aforesaid: Provided that, in the case of any goods or class of goods, the Federal Government may, by notification in the Official Gazette, direct that the tax shall be at such other rate or rates as may oe specified in the notification.
(3) The value of the goods shall be- (0 in the case of goods falling under clause
(a) . . . . Sub-section (l)-the sale price;
(ii) in the case of goods falling under clause (b) or clause (d) of the said sub-section- the duty- paid value;
(iii) in the case of goods falling under clause (c) of the said subsection being imported goods-the duty-paid value;
(iv) in the case of goods falling under clause (c) of the said subsection being goods manufactured or produced in Pakistan- the price for which the goods were purchased' by the licensed wholesaler.
(4) The tax in respect of the goods mentioned in clauses (a} ... . . (c), (d) ... And (f) of the sub- section (1) and clause (d) of subsection (6) shall be payable on the occurrence of the first of the following events:-
(i) when the goods are delivered to the purchaser, or
(ii) when the property in the goods passes to the purchaser, or
(iii) when the goods are sent, consigned or exported to any place outside Pakistan, and for the purposes of this clause the goods shall be deemed to have been sold when they are sent, consigned or exported to any such place as aforesaid, or
(iv) when the goods are actually used by the manufacturer or producer ... For exporter: Provided that, in case of goods mentioned in clause (a) of sub-section (1), the tax shall, where the Board so direct, be levied and collected as if it were a duty of excise leviable under section 3 of the Central Excises and Salt Act, 1944 (1 of 1944), and all the provisions of the said Act and the rules made thereunder shall, so far as may be and with the necessary modifications, apply notwithstanding, the provisions of this Act.
(5) The tax in respect of goods mentioned in clauses (b) and (d) of sub-section (1) shall be payable at the same time and in the same manner as the customs duties under the Customs Act, 1969 (IV of 1969), and the provisions of the said Act and the rules made thereunder shall, so far as may be and with the necessary modifications, apply for the purposes of this Act as they apply for the purposes of the said Act.
(6) Where goods are produced or manufactured in Pakistan under such circumstances or conditions as render it difficult to determine the value thereof for the tax because-
(a) a lease of such goods or the right of using the same but not the right of property therein is sold or given; or
(b) such goods having a royalty imposed thereon, the royalty is uncertain, or is not from other causes a reliable means of estimating the value of the goods; or
(c) such goods are manufactured by contract for labour only and not including the value of the goods that enter into the same, or under any other unusual or peculiar manner or conditions; or
(d) such goods are for use by the manufacturer or producer the Sales Tax Officer may determine the value for the tax under this Act and all such transactions shall, for the purposes of this Act, be regarded as sales.
(7) If any person other than the manufacturer or producer or importer or licensed wholesaler or exporter hereinbefore mentioned acquires from or against any one of these persons the right to sell any goods, whether as a result of the operation of law or of any transaction not taxable under Section 4, the sale of such goods by him shall be taxable as if made by the manufacturer or producer or importer or licensed wholesaler or exporter, as the case may be, and the person so selling shall be liable to pay the tax."
SALES TAX CIRCULARS Sales Tax Circular No. 2 of 1982: "In exercise of the powers conferred by the proviso to sub-section (4) of section 3 of the Sales Tax Act, 1951 (III of 1951), and in supersession of Sales Tax Circular No. 6 of 1981, dated the 25th June, 1981, the Central Board of Revenue is pleased to direct that sales tax leviable on all goods produced or manufactured in Pakistan shall be collected as if it were a duty of excise leviable under section 3 of the Cer al Excises and Salt Act, 1944 (1 of 1944), and all the provisions of the said Act and the rules made thereunder shall, so far as may be and with the necessary modifications, apply, notwithstanding the provisions of the Sales Tax Act, 1951."
Para 3 of CBR's C. No. 2(20)ST/81 dated 14th June; 1982: "With the present amendment the difference between central excise duty and sales tax has, for all practical purposes, ceased to exist. Matters relating to collections of sales tax, etc., will henceforth the exclusively governed by the provisions of the Central Excises and Salt Act, 1944, and the Rules made thereunder. In particular payment of duty, short levy of duty, accounting of production, storage and removal of goods, warehousing, licensing, recovery of arrears, powers, and duties of officers and land-holders, rectification of mistakes, offences and penalties, adjudication and confiscation, appeals and revisions relating thereto etc., shall be governed under the relevant provisions of the Central Excises and Salt Act, 1944 and the Rules made thereunder."
18. There are three distinct types of provisions generally in every fiscal enactment. The charging provisions, which relates to the levy or charge of the tax, which usually state that tax is to be levied and on what matter, or goods or income and in which manner and at what rate and matters relevant thereto. The assessm ent provisions, which deal with the assessment, calculation or quantification of the tax for the purposes of determining the amount of tax due and payable or which has escaped collection or has been under assessed or assessed at a lower rate or on which excessive relief or refund has been allowed. The collection provisions, which relate to the mode and manner of receipt or collection of the tax. The charging sections have to be strictly construed and any benefit found therein has to be given to the tax payer. However, the assessment and collection provisions are merely the machinery sections and they can be liberally construed.
19. The words "levied", "charged", "paid and collected" generally used in charging sections do not indicate that assessm ent provisions or collection provisions are included in the charging sections.
These words are only used in a general sense to indicate that the duty or tax would be demanded or collected at the rate or in the manner as provided by the charging section. The procedures as regards assessm ent and collection are separately provided for. The words "Where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year", as appearing in section 3 of the Income Tax Act, 1922, do not mean that the word "charged" gives any indication that the provisions of assessment are included in that section. Likewise, the words "there shall be charged, levied and paid............................... Income tax in respect of the total income", as appearing in section 9 of the Income Tax Ordinance, 1979, also do not mean that the provisions with regard to levy, assessment and collection are provided in this section. They are rather provided separately in Chapters III, VII and IX. Similarly, the words "there shall be levied and collected tax................. ", in section 3 of the Sales Tax Act, 1951, and the words "there shall be levied and collected in such manner as may be prescribed duties of excise ........................ ", in section 3 of the Central Excises and Salt Act, 1944, do not mean that the assessment and the collection provisions all stand included in the said charging sections. The assessment; provisions in the Sales Tax Act are to be found in Chapter VI of the said Act and in the Central Excises and Salt Act under ' rules 53 and 226 and Chapter XV of the Central Excise Rules read with Central Board of Revenue's letter C. No. 667-C (CE)/81 dated 25th April, 1981 and the recovery provisions in the Sales Tax Act are to be found in Chapter VII of the said Act and in the Central Excises and Salt Act under section 11 of that Act and rules 238 to 240 and Chapter III of the Central Excise Rules. It is, therefore, clear that if the word "levied" or "collected" is not to be found in the charging section, just as in section 3 of the old Income Tax Act, 1962, it does not mean that assessment and collection provisions stand excluded, or that separate provisions of assessment and collection cannot be provided elsewhere in the fiscal enactment.
20. However, it is possible to conceive of cases where the word "levied" or "collected" in the charging sections of certain enactments have perforce to be construed as covering assessment proceedings also, ?f no separate provisions are found in the enactments to cover assessment proceedings. In such cases the word "levied" or "charged" could validly be construed as including assessment or the entire process of collecting the tax. But this would be on the principle of implied construction or necessity. However, since the present case does not fall in this category, I need not dwell on it any further.
21. The words "levied", "charged", "collected", "paid" and "payable" are generally found connected with charging sections in fiscal enactments. In charging sections the word "levied" generally means to raise, impose or collect tax or duty. In Abdul Rashid v. Central Board of Revenue and others (PLD 1965 Peshawar 249) the word "levied", as used in Articles 48 and 237 of the Constitution of 1962, was held to relate to the charging provision i.e. Fixation of a rate of duty. By itself the word "levied", "charged" and "collected" does not impose the charge. The charge or imposition arises by virtue of the language of the charging section itself. These words only point or give indication to the element of demand, namely, that it will be demanded, claimed or collected at the rate and/or in the manner provided in the charging section. However, apart from charging sections, the word "levy" or "levied" in other parts of fiscal enactments could indicate not only the power to impose or raise a tax or duty, but also to assess or collect the same, depending upon how, where and in what context the word is used and whether such extended meaning is possible. There is no cardinal rule that wherever the word "levy" or "levied" occurs, the element of assessment or collection must be deemed included. Sections 3 and 4 of the Sales Tax Act fall in Chapter II headed "CHARGE OF TAX", Sections 10 and 11 fall in Chapter VI headed "ASSESSMENTS". Since Chapter VI in the Sales Tax Act exists to cover assessm ent proceedings, I do not think that the word "levied" in sub-section (1) of section 3 and in the proviso to sub-section (4) of the same section of the Act is intended to cover the process of assessm ent or quantification of the tax. What this word means is nothing more than that tax will be raised or collected. The word "levied" in sub-section (1) of section 3 and in the proviso to sub-section (4) of section 3 of the Sales Tax Act does not warrant the larger meaning to include the power to assess the tax.
22. Under the proviso to sub-section (4) of section 3 of the Sales Tax Act, 1951, sales tax in respect of goods produced or manufactured in Pakistan can be levied and collected, where the Central Board of Revenue so directs, as if it were a duty of excise leviable under section 3 of the Central Excises and Salt Act, 1944, and in which case all the provisions of the said Act and the rules made thereunder are to apply, so far as may be and with necessary modifications, notwithstanding the provisions of the Sales Tax Act. Sub-section (4) of section 3 deals with the element of "payment" of the sales tax in respect of the goods mentioned in clauses (a), (c), (d) and (f) of subsection (1) and clause (d) of sub-section (6), on the occurrence of the first of the four events mentioned therein.
However, the words of the proviso are so large that it not only carves out an exception to sub- section (4), but also assumes the form of an independent enactment denuding the scope of the Sales Tax Act. It is a cardinal rule of interpretation that a proviso normally limits or restrains the general language of a provision and that it only embraces the field which is covered by the main provision. It is even said that the proviso should not deal with an entirely different topic or subject, for it is not supposed to be by way of an amendment or addition for dealing with a subject which is foreign to the main provision. But then the legislative draftsmen are not bound by conventional practices or perhaps they may not be particularly careful in observation ring technical propriety. In such cases it is the duty of the Court to ascertain the legislative intent and to give it effect, where resort to the conventional rules of construction may lead to an impasse. 'The Construction of Statutes' by Earl T. Crawford, 1940 Eddition, illustrates this in para 297 as under:-- "Even though the primary purpose of the proviso is to limit or restrain the general language of a statute, the legislature, unfortunately, does not always use it with technical correctness.
Consequently where its use creates an ambiguity, it is the duty of the court to ascertain the legislative intention, through resort to the usual rules of construction applicable to statutes generally, and give it effect even though the statute is thereby enlarged, or the proviso made to assume the force of an independent enactment, and although a proviso as such has no existence apart from the provision which it is designed to limit or to qualify. It should also be construed in harmony with the- rest of the statute, or, as the court stated in Foster v. United States (47 Fed. (2)
892):- 'It may be said in general that every part of the act must be given effect where it is possible so to do, and that a proviso should, in general be construed as a limitation or qualification upon the otherwise general application of the statute. Whether in a given case the proviso does in fact limit or qualify, and, if so, to what extent, depends primarily n the proviso itself.'"
The cardinal rule is, therefore, not always applicable. If the meaning and purpose of the proviso is plain and deals with other portions of the Act, apart from that portion of the statute which directly precedes it and which is normally expected to be effect he larger meaning should be given and any inference from its position should be disregarded. The proviso to subsection (4) of section 3 not only affects sub-section (4) of section 3 that precedes it, but assumes the form of an independent provision, almost denuding the applicability of the Sales Tax Act in respect of assessm ent and collection of sales tax and by some form of legal subrogation makes the sales tax leviable and receivable as if it were a duty of excise leviable under section 3 of the Central Excises and Salt Act, 1944. It is . In this context that the proviso to sub-section (4) of section 3 of the Sales Tax Act will have to be assessed.
23. The basis of assessm ent and collection of income tax and sales tax (as it was prior to 25th April, 1981) are somewhat different from the assessment and collection of excise duty. Under the Income Tax Act, annual returns are filed by the assessee, which are assessed, whereas under the Sales Tax Act, as it was operative before 25th April, 1981, quarterly returns were filed, which were assessed. The assessm ent provisions under the Central Excises and Salt Act, 1944 are not clearly to be found in the Act, but are prescribed by Rules made under that Act. Different assessment procedures are prescribed, such as: (i) supervised clearance procedure (ii) self clearance procedure (iii) installed capacity procedure (iv) production capacity procedure, etc. The procedures are interlinked with realisation and collection of duties. For instance, in the case of self clearance procedure, which is the procedure followed by the petitioners, daily returns are filed and registers maintained simultaneously both by the manufacturer/producer and the Officers of the Central Excise, where daily entries are made and sales tax is paid daily on goods produced or manufactured, which is credited to the account of the Central Excise. So inter-twined are the procedures of assessment and collection, that other than cases where assessments are made regarding escaped, short levied or short paid duty, it is almost difficult to set them apart. It is in this background that Sales Tax Circular C. No. 2 of 1982 will have to be judged, in order to determine whether the general direction given for the collection of the sales tax on goods produced and manufactured in Pakistan include both the procedures with regard to assessment and collection, or the procedure relating to collection above.
24. The proviso to sub-section'(4) of section 3 of the Sales Tax Act, 1951, provides that the Central Board of Revenue shall decide whether the sales tax is to be "levied and collected" as duty of excise leviable under section 3 of the Central Excises and Salt Act, 1944. However, the Central Board of Revenue's directions in this respect uses the word "collected" and not "levied and collected". The Sales Tax Circular C. No. 2 of 1982 by which the Central Board of Revenue has directed that sales tax leviable on all goods produced and manufactured in Pakistan shall be collected as if it were a duty of excise leviable under section 3 of the Central Excises and Salt Act, 1944 and all the provisions of the said Act and the rules made thereunder shall, so far as may be and with the necessary modifications, apply, notwithstanding the provisions of the Sales Tax Act, 1951, raises the question as to whether the omission of the word "levied" from the said Circular has the effect of only allowing the sales tax to be collected as duty of excise and that powers of assessm ent etc., are excluded, or whether the sales tax can both be assessed and collected as if it were a duty of excise.
25. Sales Tax Circular C. No. 2 of 1982 can be broken down into two parts, namely:-- First, that tax leviable under the Sales Tax Act, 1951 on all goods produced or manufactured in Pakistan shall be collected as if it were duty of excise leviable under section 3 of the Central Excises and Salt Act, 1944, and Second, that all the provisions of the Central Excises and Salt Act and the rules made thereunder shall, so far as may be and with necessary modifications, apply notwithstanding the provisions of the Sales Tax Act, 1951.
The first part, by fictional substitution, declares that whatever is the tax leviable under the Sales Tax Act on goods produced or manufactured in Pakistan shall be treated as if it were a duty of excise leviable under section 3 of the Central Excises ad Salt Act, 1944, and collected as excise duty. Since the sales tax is to be treated as if it were a duty of excise "leviable under section 3 of the Central Excises and Salt Act" the further addition of the word "levied" in the Sales Tax Circular would not supply any omission, as the levy under section 3 of the Central Excises and Salt Act already stands established. Under section 2(18) of the Sales Tax Act, "tax means the tax payable under (the said)
Act". Regulatory tax and additional sales tax under sections 3- A and 12-A of the Sales Tax Act would also, therefore, fall under the definition of "tax". However, the legal substitution provided by the Sales Tax Circular C. No. 2 of 1982 is only with regard to tax leviable under the Sales Tax Act on goods produced or manufactured in Pakistan; so unless the regulatory tax or the additional sales tax is one specifically levied on goods produced or manufactured in Pakistan, its collection as if it were a duty of excise leviable under section 3 of the Central Excises and Salt Act, 1944, would not be permissible. By the second part, all the provisions of the Central Excises and Salt Act, 1944, and the rules made thereunder are made applicable, as they are and with the necessary modifications, notwithstanding the provisions of the Sales Tax Act, 1951. The conjunction "and" clearly shows that the whole of the Act and the rules made thereunder are applicable as an addition and not that any part relating to the collection procedure alone is intended. The words "notwithstanding the provisions of this Act", which mean notwithstanding the provisions of the Sales Tax Act, 1951, are intended to show that no part of the said Act is applicable, once the Central Excises and Salt Act, 1944, and the rules made thereunder are attracted. The words "ani with the necessary modifications" appear to be included ex abundant cautela, to meet perhaps those stray cases who^ certain provisions of the Sales Tax Act or the rules framed thereunder confer a vested right, which perforce may require to be carried over, but not so as to indicate that the excise provisions have to be read in a general way mutatis mutandis. The words "as far as may be and with the necessary modifications" give the impression that it is a case of legislation by incorporation, to be read mutatis mutandis, but the words "notwithstanding the provisions of this Act" i.e. The Sales Tax Act, strongly negative this intent. Instead of legislation by incorporation with necessary modifications, mutatis mutandis, which is intended is the grafting of the charge of one legislation into another legislation and adoption of that legislation wholly, with limited scope of modification to meet some stray cases where certain vested rights of the assessee perforce may have to be carried over. It is, therefore, clear that assessment and collection provisions under the Central Excises and Salt Act, 1944, and the rules made thereunder stand attracted. The contention of the learned counsel for the petitioners that assessment provisions stand excluded by the Circular and those contained in the Sales Tax Act, 1951, have to be applied, cannot be accepted.
26. The only question that remains is whether the impugned orders of the Deputy Collector of Central Excise and Sales Tax can be sustained. The impugned orders cover both short levy of excise duty under Rule 10 and penalties for violation of Rules 7, 210 and 226 of the Central Excise Rules.
Under Rule 10; a Central Excise Officer not below the rank of Superintendent of Central Excise can deal with the case. Under section 33 of the Central Excises and Salt Act, 1944, where by the rules made under the Act in any case anything is liable to confiscation or any person is liable to a penalty, such case can be adjudged (a) without limit, by the Collector of Central Excise; or (b) subject to such limitations and conditions as may be determined by the Central Board of Revenue from time to time, by the Deputy Collector, Assistant Collector or Superintendent of Central Excise.
By virtue of SRO No. 18(I)/79 dated 6th January, 1979, the Deputy Collector of Central Excise has been granted power to dispose of cases without limit. In these circumstances, the impugned orders passed by the Deputy Collector of Central Excise and Sales Tax both with regard to short levy of duty and penalty do not suffer from any illegality.
27. Since the Central Excises and Salt Act, 1944, and the Rules framed thereunder apply to the case both with regard to assessm ent and collection, the question of issuing notices to the petitioners in Form SS.T.15 under section 28 of the Sales Tax Act does not arise. A period of thirty-i.e days is laid down in Form SS.T. 15 within which the assessee can i.e his answer to a notice issued to him under section 28 of the Sales Tax Act, 1951. The said period of thirty-i.e days is not prescribed by the Sales Tax Act, 1951, or the Sales Tax Rules, 1951. Since no vested right to the thirty-i.e days' notice can be spelt out from the Sales Tax Act or the rules framed thereunder, it is not possible to carry over the said period to any notice to be issued to an assessee under Rule 10 of the Central Excises Rules, If a vested right had accrued to/the petitioners to the thirty-i.e days' notice by virtue of the Sales Tax Act or its rules, I would have attempted to explore the possibility whether the same should have been carried Over to the notices issued under Rule 10 of the Central Excise Rules. Since no such period is prescribed in the Act or the rules, the said thirty-i.e days' period could not be carried over to the notices issued under Rule 10 of the Central Excise Rules. The two Sind cases submitted by the petitioners in this respect relate to the levy of sales tax in earlier years, when the assessment and collection were in the hands of the Income Tax Department and the Sales Tax Act was applicable.
Since the collection of sales tax has now come into the hands of the Central Excise from 25th April, 1981, these cases do not apply to the present case.
28. It is also submitted that by virtue of section 28(1) of the Sales Tax Act, 1951, no assessment of escaped tax can be made after the expiry of the period of limitation as prescribed in that sub- section. It is true that section 28(1) of the Sales Tax Act falls in Chapter XV dealing with 'TAX NOT ASSESSED AND RECTIFICATION OF MISTAKE" and since assessment procedures under Chapters VI and XV of the Sales Tax Act have not been carried over, it can be suggested that the Central Excise can assess escaped sales tax under Rule 10 of the Central Excise Rules up to a period of i.e years from the date on which the duty became due. Section 28(l)(a) does not provide any period of limitation beyond which notice to realise escaped sales tax cannot be given. Section 28 (l)(b) however, provides such a limitation. Since sections 10(7) and 28(l)(b) provide a period of limitation, as a result of which a vested right would accrue to an assessee after the lapse of time, which would prevent the tax collector to make any assessments, the said provisions can be treated as conferring vested rights on the assessee. By making provisions of assessment and collection provided in the Central Excises and Salt Act, 1944, and the rules thereunder applicable in respect of sales tax, the inherent advantages accruing to an assessee under sections 10(7) and 28 (l)(b) of the Sales Tax Act, 1951, cannot be destroyed. Where a statutory right exists in favour of the assessee as regards a substantive matter, the same cannot be destroyed through a process of legal subrogation. Basically, the charge under section 3 of the Sales Tax Act must be deemed grafted into the Central Excises and Salt Act, 1944, subject to the limitations of sections 10(7) and 28(l)(b) and exemptions, if any available, under section 7 of the Sales Tax Act. Rule 10 of the Central Excise Rules must, therefore, be read subject to this modification, namely, that no assessments can be made after the expiry of the period of limitation as provided in sections 10(7) and 28(l)(b) of the Sales Tax Act. Assuming that the assessments made in the instant cases to realize escaped Sales Tax were made under the Sales Tax Act, the cases would not fall under section 28(l)(b) thereof. In these circumstances, the present orders that are being impugned before me are legal and in order.
29. The next question that arises is whether the petitioners are entitled to the benefit of SRO 7(I)/83 dated 5th January, 1983 which reads as follows:- "In exercise of the powers conferred by sub-sections (1) and (2) of section 7 of the Sales Tax Act, 1951 (III of 1951), the Federal Government is pleased to exempt goods manufactured or produced on or after It July, 1980, from whole of the sales tax leviable thereon subject to the following conditions namely:--
(i) the manufacturer or producer did not recover sales tax chargeable on the goods prior to the date on which the sales tax;
(ii) no action to recover sales tax on the goods had been initiated against the manufacturer or producer to collect sales tax up to the said date;
(iii) no other manufacturer of the same goods was paying sales tax up to the said date; and
(iv) the manufacturer or producer has been discharging his tax liability regularly as from the said date."
It is admitted between the parties that conditions (i), (ii) and (iii) stand fulfilled. However, condition
(iv) does not stand fulfilled, for the petitioners have not been discharging their liability regularly as from the date of detection. As clarified by the Central Board of Revenue vide it's 2[letter C. No. 2(4)- ST/81 addressed to the Collector, Central Excise and Land Customs, Karachi,] the words "from the said date" appearing in conditions (ii), (iii) and (iv) of the above notification, refer to the date of discovery of the manufacturer's liability. Since the petitioners have not been discharging their sales tax liability as from the date of detection, they are not entitled to the benefit of the above notification, as all four conditions do not stand fulfilled.
30. As regards the submission of the learned Standing Counsel for the Federal Government that the present writ See PTCL 1989 St. l(i). Petitions should not be entertained, as the petitioners should be directed to complete their full circle of remedies from the appellate and revisional forums provided by the Central Excises and Sales Tax Act, I am afraid I cannot accept the said position, for the Central Board of Revenue by it's letter C. No. 16(52)/ST/87 dated 25th November, 1987 addressed to all the Collectors of Central Excise, and Sales Tax and other officials categorically called their attention to the fact that SRO 666(I)/81 dated 25th June, 1981 did not provide for sales tax exemption on locally produced diaries, which fell under PCT heading 48.18, and that the officers of Central Excise were called upon to ensure that a uniform policy was followed and sales tax was realised from all manufacturers of diaries. In view of this letter, it is obvious that no useful purpose would be served if I were to direct the petitioners to complete their full circle of remedies provided to them by the Central Excises and Salt Act. As the Central Board of Revenue has interpreted the law Qn the subject, any attempt before the appellate or revisional forum would be an exercise in futility.
31. The upshot of the above discussion is that during the period from 1956 to June 1981 the Department consciously treated diaries as entitled to the exemption granted by virtue of the Central Government's circular dated 25th July, 1956 and if any demand for short levy relating to the said period had been made by the respondents, I would have set the same aside. However, it appears that the respondents are only claiming short law from 1982 onwards. As regards the position after June, 1981, the manufacturers of diaries are liable to pay sales tax. Since the impugned orders of the respondents do not violate section 28(l)(b) of the Sales Tax Act, 1951, they are legal and in order. There is, therefore, no merit in these writ petitions, which deserve to be dismissed.
32. For the foregoing reasons, all the seven writ petitions are dismissed. There shall be no order as to costs.