1. SAEEDUZZAMAN SIDDIOUI, J--The petitioner has challenged in this petition the orders dated 12-10- 1985; 24-9-1986 and 29-3-1987 passed by respondents No.4, 3 and 2 respectively. The facts of the case in brief may be stated as follows:- The petitioners are carrying, on business of assembly-cum-manufacture of `Hitachi' brand Television receiving apparatus and sets in their factory situated in Federal `B' Area, Karachi. The Television sets manufactured by petitioner fall under Item N9.10:05(A) of the Ist Schedule to the, Central Excises and Salt. The Act, 1944, but the same is exempted from payment of excise duty - under SRO r4o.555(1)/79 dated 28-6-1979. It i5 ark admitte4 position in the case that on the Television sets produced by the petitioners until 16-6-1983 the Sales Tax was recovered by respondent No. 4 on the basis of sale price determined in accordance with Section 16(2)(ii) of the Sales Tax Act, 1951 (For the sake of convenience I will hereinafter refer the Sales Tax Act 1951 as. `the Act' only): It appears that respondent No. 4 in or about June, 1983, received reports from the Superintendent, Central Excise aid Land Customs, Karachi, in which it was disclosed that the petitioner s had allegedly evaded payment of correct amount of sales tax on the Television Sets produced by them during the period from 25-6-1981 to 30-6-1982 as they had paid the Sales Tax on the basis of sale price determined in accordance with Section 2(16)(ii) of the Act whereas they should have paid the Sales' Tax on the basis of wholesale cash price determined according to Section 2(16)(i) of the Act. Accordingly, a show-cause notice dated 16-6-1983 demanding a sum of Rs 9,20,419.63 being the alleged amount of sales tax short paid by the petitioner for the aforesaid period was served on- them. The petitioner contested the above demand and took the plea that they were liable to pay Sales Tax only on the bass of sale price determined according to Section 2(16)(ii) of the Act. Respondent No.4, however, did not accept the contention of petitioner and by order dated 19-10-1983, held the petitioner liable to pay the difference in the amount., of Sales Tax, amounting to Rs.9,26,419.63 on the basis of wholesale cash price of T.V. Sets. On appeal respondent No.3 set aside the above order of respondent No.4 by order dated 21-1-1984 and remanded the case back: to respondent No.4 for reconsideration in 'accordance with law. On remand, respondent No.4 again held by order, dated 12-10-1985 that the petitioner had, evaded payment of sales tax to the extent of Rs.9,26,419.63 and directed them to pay the same under Rule 10 of the Central Excise Rules 1944. The petitioner filed appeal-'against the above order of respondent No.4 which was dismissed by respondent No.3 on 24-9-1986. A revision filed against the order of respondent No.3 was also dismissed by respondent No.2 on29-3-1987.The petitioner has now challenged the above order:; passed by respondents in this petition.
2. Mr. J. H. Rahmitoola, the learned counsel for the petitioner has raised two-fold contentions before us. It is, firstly, contended by the learned counsel that in respect of T.V. Sets produced by the petitioner, during the period from 25-ti--1981 to 30-6-1982 the sale price was determinable under Section 2(16)(ii) of the Sales Tax Act and as such the demand made by the respondents for payment of differential amount of sales tax on the aforesaid goods on the basis of wholesale cash price determined according to Section 2(16)(i) of the Act was not in accordance with the law. The second contention-of Mr. Rahimtoola is that even if the sale price was to be determined in accordance with Section 2(16)(i) of the Sales Tax Act, the petitioner was exempted from payment of whole of the sales tax in accordance with Notificatioo'S.R.O.No:7(1)/83 dated 5-1-1983. Both the.
3. Above contentions were specifically raised before respondent No. 4 who repelled them as follows:- "The main contention of the party is that tales tax on their T.V. Sets should be assessed on the price determined under Secti6n 2(16)(ii) of the Sales Tax Act, 1951. During the course: .If arguments the learned counsel has also admitted that if the price is determined under Section 2(16)(i),. The industry is not liable, to pay arrears for the period commencing from 25-6-1981 to 24-12-1984 to terms of S.R.O.No.7(1)/83 s dated 5-1-1983. In this connection it is observed that, the sale price has been-defined in subsection, (16) of Section 2 of the Sales Tax Act 1951 as follows:- (i)in relation to goods in respect of which tax is, payable at the same time and in the same manner as the duty of excise under subsection (1) of Section 4 of the said Act plus the said duty if chargeable.
4. (ii)in other cases, the price before any amount payable in respect of tax is added, and includes any duty of provincial excise, whether or not paid by the assessee, and any charges for advertising, financing or any other charges of a similar nature contracted for at the time of sale whether charged separately or not.
5. It is quite clear from the above order of respondent N0.4that he reached the conclusion that the sale price of T.V. Sets was to be determined in accordance with Section 2(16)(i)' of the Act as the Central Board of Revenue vide Circular No.2 of-1982 dated 14-6-1982 had directed that the sales tax leviable on all the goods produced or manufactured in Pakistan shall be collected as it were duty of excise leviable under Section- 52 of- the Central Excises and Sale Tax Act, 1944.
6. It is also quite char from the above order of respondent No.4 that he repelled the second contention of petitioner regarding applicability of S.R.0.17(1.)/83 dated 5-1C)-1983 on the ground that all the conditions mentioned therein were not fulfilled. The above order of Respondent No.4 was upheld in appeal and in revision by Respondents 3 and 2 respectively. Mr. Rahimtoola, while challenging .The orders of respondents No.2 to 4 contended before us that the respondents while holding that the sale price of- Television Sets produced by the petitioners are to be determined in.
7. Accordance with Section 2(16)(i) of the Act failed to notice that this provision was applicable only in those cases where the goods produced by a manufacturer were subject to payment of Excise Duty under the provisions of Central Excises and Salt Act 1944, and as it is an admitted position in the present case that the Television Sets produced by the petitioner were excepted from payment of Excise Duty under S.R.0,555(1)/79 dated 28-6-1979, Section 2(j6)(i) of the Act was not applicable to the case.
8. Mr. Rashid Akhund, the learned counsel for the Department on the other hand contended that then sale price of T.V. Sets produced by the petitioner was rightly determined by the respondents in accordance with Section 2(16)(i) of the Act as the Television Sets are mentioned in the Schedule to the Central Excises and Salt Act as item No.10.05 (A) on which excise duty is payable although it has been exempted. Index notification NO.S.R.0.555(1)/79 dated 28-6-1979 from payment of Excise Duty. It is, accordingly, contended by Mr. Rashid Akhund that for the time being the excise duty may riot be recoverable on T.V. Sets on account of exemption having been granted by the Government but this fact did not affect the changeability of excise duty on it and as such provisions of Section 2(16)(i) of the Act were applicable .In the present case both for the reason that T.V. Sets are mentioned in the Schedule of Central Excises and Salt Act as an item on which excise duty is payable as well for the reason that Central Board of Revenue under the proviso to Section 3(4) of the Act had directed that Sales 'fax yvill be recoverable tin T.V. Sets at the same time and in the same manner as the duty of excise under the Central Excises and Salt Act- 1944. With regard to the other contention of Mr. Rahimtoola that even if -the price is' determined in accordance with Section 2(16)(i) 6f the Act the petitioner was entitled to exemption .From payment of sales tax under S.R.O.No.7(1)/83 dated 5-1-1983, Mr. Rashid Akhund contended that this Notification did not cover the case of petitioner as the tribunals below concurrently held that the four conditions mentioned in the Notification were not fulfilled. It is also urged. By the learned counsel that as this contention of petitioner required investigation into- factual aspect of the case which was decided against the petitioner .By the Tribunal,, the same, cannot be gone into by this Cot in its constitutional jurisdiction. In our view it is not necessary in this case to decide whether the petitioner was entitled to exemption under Circular No.7(1)/83 dated 5-1-1983 as the present case can be disposed of on the main contention in the case namely, whether the sale price of the Television Sets produced by the petitioner should have been fixed according, to Section 2(16)(i) or 2(16)(ii) of the Act. In order to decide this contention it is necessary to examine here in "some detail the amendments introduced in the Act by Finance Act of 1981. The existing sub-clause (1) of Clause (16) of Section 2 of the Act which reads as follows was substituted by the Finance Act of 1981:-- "(i) in relation to goods in respect of which tax is payable at the same time and in the same manner as the duty of excise under the Central Excises and Salt Act, 1944 (1 of 1944), the value determined under subsection (1) of Section 4 of the said Act plus the said duty, if chargeable: Provided that, in the case of any goods or class of goods, the Federal Government may direct that "sale price" shall mean the value determined under subsection (2) of Section 4 of the said Act", and--- Simultaneously, in Section 3 for the then existing first and second provisos to subsection. (4) the following proviso was substituted:- "Provided that, in case of goods mentioned in clause (b) of subsection (1), the tax shall, where the Board so directs, be payable at the same time and in the same manner as the duty of excise under the Central Excises and Salt Act, 1944 (1 of 1944) and the provisions of the said Act and the rules made thereunder shall, so far as may be. And with the necessary modification apply for the purposes of this Act as they apply for the purposes of the said Act; and"
9. The above proviso to subsection (4) of Section 3 of the Act provides that in respect of goods mentioned in clause (a) of Section 3 the Act when the Board so directs, the Sales Tax shall become payable at the same time and in the same manner as duty of the excise under Central Excises and Salt Tax Act, 1944, and provisions of -the said Act and the rules made thereunder were to become applicable with necessary modification if necessary for purposes of the sales tax. In the case before us the Central Board of Revenue vide Circular No.2 of 1982 dated 14-6-1982 directed in accordance with the above proviso to subsection (4) of Section 3 of the Act that the Sales Tax leviable on all goods produced or manufactured in Pakistan, shall be collected as if it were duty of excise leviable under Section 52 of Central Excises and Salt Act 1944. By reading the above proviso to Section 3 (4') in juxtaposition with Section 2(16) (i) of the Act it becomes quite clear that Section 2(16)(i) was to be applied for determining the sale price. Of the goods for the purposes of assessm ent of Sales Tax only upon issuance of the direction of Board under the proviso to Section 3(4) of the Act, which in the present case was issued vide Circular No.2 of 1982 dated 14-6-1982. In these circumstances, the determination of sale price of T.V. Sets by respondents under Section 2(16)(i) of the Act for the purposes of assessment of Sales Tax foe the period from 25-6-1980 to 14- 6-1981 was not in accordance with law. We accordingly declare that the demand of Sales Tax on T.V. Sets manufactured by the petitioner during the period from 25-6-1980 to 14-6-1981 by respondents on .The basis of sale price determined in accordance with Section 2(16)(i) of the Act is illegal and of no legal effect. We may state here, that while the above judgment was dictated in Court Mr. Rahimtoola the learned counsel for the petitioner, stated that the petitioner does accept the validity of Circular No.2 of 1982 issued by Central Board of Revenue but in view of the judgment of the Court, his client reserves- the right to challenge its validity, if necessary, in some appropriate proceedings in future. He accordingly prayed that it may be clarified that the above order did not confer any validity on Circular No.2 of 1982 dated 14-6-1982 issued by the Central Board of Revenue.
10. We have not gone into the question of validity of above Circular No.2 of 1982 dated 14-6-1982 as this question was not argued before us and as such mere reference to this circular in our order cannot amount to conferring any validity on the same. There will be no order as to costs.
11. S-399/L.