' This judgment shall also dispose of W.Ps. Nos. 1155, 1156 and 1157 of 1991 as common questions arise therein.
2. In response to the public notice dated 1st April, 1990, the petitioner in all these three petitions submitted its tenders for supply of white printing paper of the specifications mentioned in the tender documents which were accepted by the respondents and three formal contracts were executed between the parties on 5-5-1990. According to the terms of the contracts, the goods were to be supplied by the petitioner to the respondents before 31st October, 1990. At the time when the contracts were entered into between the parties namely 5-5-1990, no sales tax was payable on the sale of printing paper, but by Finance Act, 1990, the sales tax at the rate of 12/1-2 per metric ton was levied by the Federal Government. The petitioner claimed to have paid sum of Rs,5,67,290.05, Rs,5,24,576 and Rs,5,83,154 as sales tax in respect of the goods supplied under the three contracts.
Subsequently, the petitioner represented to respondent No, 2 that in view of Section 64-A of the Sale of Goods Act, 1930, the liability for payment of sales tax was that of the respondents and as such the amounts paid by the petitioner in this behalf be paid to him. This representation was rejected on 23rd January, 1991. Hence these petitions.
2. In the reports and parawise comments filed by the respondents, almost all the facts have been admitted. The liability to pay the sales tax, has however been disputed on the ground that in accordance with the terms and conditions of the contracts between the parties, it was the liability of the petitioner and not that of the respondents to pay sales tax.
3. The learned counsel for the petitioner has relied upon section 64-A of the Sale of Goods Act, 1930 to contend that as the sales tax on the supply of printing paper was levied after execution of contracts between the parties, the liability to pay the same is that of the purchaser namely respondent No,2. In support of this contention, Army Welfare Sugar Mills Ltd. and others v.
Federation of Pakistan 1992 SCM R 1652 has been cited. It has further been argued by the learned counsel that the petitioner has unfairly been discriminated against inasmuch as in a similar case, respondents themselves had accepted the claims of the supplier for payment of sales tax.
4. Mr. Irfan Qadir, learned Additional Advocate-General, apart from arguing the case on merit, has raised a preliminary objection as to the maintainability of this petition contending that as relationship between the parties was contractual in nature, this petition is not maintainable. As regards the merits, learned Additional Advocate-General submitted that according to the terms of purchase manual which forms part of the contract between the parties, respondents have no liability.
5. Section 64-A of the Sale of Goods Act, 1930 on which reliance has been placed by the learned counsel for the petitioner, reads as under:-- "In the event of any duty of customs or excise (or tax) on any goods being imposed, increased, decreased or remitted after the making of any contract for the sale of such goods without stipulation (as to the payment of duty or tax where duty or tax) was not chargeable at the time of the making of the contract, or for the sale of such goods (duty-paid for tax-paid where duty or tax) was chargeable at that time:---
(a) if such imposition or increase so takes effect that (the duty or tax or increased duty or tax) as the case may be, or any part thereof, is paid, the seller may add so much to the contract prices as well be equivalent to the amount paid (in respect of such duty or tax or increase of duty or tax) and he shall be entitled to be paid and to sue for and recover such addition, and
(b) if such decrease or remission so takes effect that the decreased duty (or tax) only or no duty (or tax) as the case may be, is paid, the buyer may deduct so much from the contract price as will be equivalent to the decrease of duty (or tax) or remitted duty (or tax) and he shall not be liable to pay or be sued for or in respect of, such deduction.
(Explanation.---The word 'tax' in this section means the tax payable under the Sales Tax Act, 1951).
6. There is no dispute that according to this provision, if any duty or customs or excise, or tax under the Sales Tax Act, 1951 is imposed or increased or decreased, the liability falls upon the purchaser and seller is entitled to recover the amount of tax paid by him from the purchaser. Similarly, if the tax aforesaid is decreased or remitted, the benefit accrues to the buyer.
7. In the present case, it is not disputed in the parawise comments or the learned Additional Advocate-General that at the time of execution of the contracts when no sales tax was payable on the goods in question and by Finance Act, 1991, sales tax at the rate of 12-1/2 per metric ton was levied. There is no denial in the parawise comments that the petitioner has paid the amounts claimed by it as Sales Tax. The stand taken by the respondents, however, is that as the contracts between the parties contain stipulation to the contrary, petitioner is not entitled to recover the amounts so paid by it.
8. In this respect, learned Additional Advocate-General has referred to the condition No,II of the terms of Tender in the Invitation of Tender (Annexure A) which reads as follows:--- "In the case of offers for supply of stores both imported and indigenous from within the country price quoted shall be inclusive of all taxes, duties and charges for packing, marking, handling etc., where sales tax is leviable and is included in the price quoted it shall be indicated separately."
' On the basis of this clause, it was argued that the liability to pay sales tax lies on the petitioner.
9. This contention of the Additional Advocate-General is wholly misconceived. The aforesaid clause merely requires the seller to separately indicate the amount of sales tax, if any leviable on the goods while quoting the price. There is nothing in this clause which shifts the responsibility to pay sales tax subsequently levied to the seller. On the other hand this provision appears to have been incorporated keeping section 64-A of the Sale of Goods Act, 1930 in view so that in the event of tax being subsequently enhanced or decreased, it can be found out as to amount of tax was included in the price. If as suggested by the Additional Advocate-General, the reason for prescribing such a condition was that notwithstanding increase or decrease in the sales tax, the burden or the benefit would accrue to the purchaser, there was no need of requiring that it be separately indicated as to what was the sales tax payable at the time of submission of tenders, I am, therefore, unable to agree with the learned Additional Advocate-General that the clause II of the Invitation of the Tender be construed so as to deprive the petitioner of its right to recover the amount of sales tax paid by it in respect of the goods supplied to the respondents.
' 9-A. From the above, it is apparent that there is no stipulation in the contract between the parties dealing with the situation arising out of increase, remission or decrease of the customs or excise duty or sales tax. Consequently, the case will have to be decided according to section 64-A of the Sale of Goods Act, which provides that any tax levied subsequent to the contract can be recovered by the seller from the purchaser. As there is no dispute that sales tax in question was levied after the execution of the contract, the petitioner is clearly entitled to receive this amount from the respondents.
10. As regards the preliminary objection raised by the learned Additional Advocate-General, it is to be seen that although relationship between the parties is contractual in nature but right with the petitioner seeks to enforce does not flow out of the contract but has conferred by section 64-A of the Sale of Goods Act, 1930. In Arsallan Khan v. Bashir Ahmad Blour and others PLD 1976 SC 581, the Supreme Court was pleased to rule in one of cases of contract if Constitutional petition is founded upon provisions of statutes or rules, it would be competent.
' In view of what has been stated above, these petitions are allowed and cases are remanded to the respondent No,2 for determination as to what amount, if any, has been paid by the petitioner as sales tax which shall be refunded by the respondents to the petitioner. No order as to costs.