' I. MAMMUD, 3.-The petitioners in the following six Constitutional Petitions under Article 98 of the Constitution of Pakistan (1962), viz. Nos. 667/66, 743/66, 15/67, 16/67; 18/67 and 75/67, have challenged the levy and demand of tax on goods imported by them against licences, under sections 10 and 8 of the West Pakistan Finance Acts, 1962 and 1963, respectively as being illegal, without lawful authority and of no legal effect. As these petitions raise common questions of law, they have been heard together and will be disposed of by this judgment.
2. The petitioners in Petitions Nos. 667/66 and 75/67 are Burmah-Shell Oil Storage & Distributing Company of Pakistan Ltd., and Caltex Oil Company Ltd., respectively. As Importers and Distributors of Petroleum products of various description, they imported during the two relevant financial years 1-7-1962 to 30-6-1963 and 1-7-1963 to 30-6-1964, petroleum, lubricants, brake fluids, mineral oils, kerosine, tinplates, etc. Against Commercial and Bonus Voucher Licences issued to them on various dates by the Government of Pakistan. Most of the import licences were utilized in full. A statement of the particulars of the licences, their face value, the items and the value of the goods imported, are mentioned in the Annexures to the respective petitions.
3. In the remaining for Petitions Nos. 743/66, 15/67, 16/67 and 18/67, the petitioners are National Motors Ltd. (formerly Chandra Industries Ltd.), International Auto-Mobiles, Rizvi Traders Ltd., and Pakistan Garage Ltd., respectively. During the said two relevant financial years, they carried on business as Importers of autombiles, motor cars and trucks for re-sale to their customers, which they imported against the Commercial and Bonus Voucher Import Licences issued to them by the Government of Pakistan.
4. For the financial years 1962-63, and 1963-64, there was levied under sections 10 and 8 of the West Pakistan Finance Acts, 1962 and 1963 respectively, a tax called "Tax on Trades, Import and Export Licences," which was to be collected from every person engaged in the import and export trade who held a licence issued under the Import and Export (Control) Act, 1950, on the value of the goods imported against such licence, according to the scale set out in the Third Schedules of the said Acts. After obtaining the relevant information from the petitioners regarding details of the import licences issued to them and the extent to which they had been utilized, the respondent No. 1, the Excise and Taxation Officer, L-Division, Karachi, issued Demand Notices accompanied by treasury caallans, calling upon the petitioners to deposit in the State Bank of Pakistan, the amount of tax and in some cases, the amount of penalty mentioned therein. As the respondent threatened to recover the taxes as arrears of land revenue, the petitioners filed the present Constitutional Petitions challenging the legality and validity of the demands of the tax and penalty.
5. In Constiutional Petition No, 667/66, the amount of tax demanded from Burmah-Shell Oil Storage Company of Pakistan Ltd., was Rs. 1,13,430 and Rs. 37,800 as penalty, which sums were ordered by the Court on 30-11-1966 to be deposited in the State Bank of Pakistan on the undertaking given by the Assistant Advocate-General to refund the same to the petitioner in case the petition succeeds.
6. In Constitutional Petittion No, 743/66, the amount of tax and penalty demanded from National Motors Limited was Rs. 2,23,290 which sum the petitioner deposited in the State Bank of Pakistan as per Treasury Challans dated 9-6-1969 and 26-6-1969.
7. In Constitutional Petition No, 75/67, Caltex Oil Company of Pakistan Limited were required to pay 1,02,290 as the total amount of tax including penalty which amount was deposited in Court on 3-3- 1967. It is not clear from the files as to what amounts of tax were demanded from the petitioners in the remaining petitions.
8. The petitioners have challenged the levy of the tax on several grounds, the main ground being that the levy of tax by the aforesaid West Pakistan Finance Acts, is ultra vires of the Provincial Legislature, as taxes on trades, import and export, fall within the exclusive legislative field of the Central Legislature under Article 131 of the Constitution of Pakistan (1962), and, otherwise, was in conflict with other Central Laws including laws providing for levy of tax on imported goods and fees on import licences. Without prejudice to these contentions, the petitioners pleaded that they were not liable to pay more than the maximum amount at the rate of Rs. 1,000 in respect of goods imported against all the licenses issued to the petitioners in each of the two financial years, making a maximum liability of Rs. 2,000 in respect of both years. They therefore prayed for a declaration that the demand of the tax was without lawful authority, ultra vires of the Provincial Legislature and without legal effect and, in the alternative, to declare that not more than a maximum amount of Rs.
2,000 was due in respect of the goods imported by the petitioners against the licences in the two fir ancial years.
9. We have heard Mr. Abdul Hamid Khan and Mr. Syed Iqbal Ahmed for the petitioners, and Mr. Muhammad Sharif on behalf of the respondent Provincial Government. Mr. Yahya Bakhtiar, Attorney-General, who appeared on behalf of the Government of Pakistan stated that the matter related exclusively to the Provincial Government and that the Federal Government supported the case of the Provincial Government.
10. It will be convenient to reproduce section 10(1) of the West Pakistan Finance Act, 1962 and the Third Schedule referred to therein. These provisions were se-enacted as section 8(1) and as the Third Schedule in the West Pakistan Finance Act, 1963 respectively. Section 10(1) reads as follows "10. Tax on Trades, Import and Export Licences.-(1) For the financial year 1962-63, there shall be levied and collected from every person engaged in the import and export trade who holds a licence issued under the Imports and Exports (Control) Act, 1950 (Act XXXIX of 1950), a tax on the value of the goods imported or, as the case may be, exported against such licence, according to the scale set out in the Third Schedule to this Act." {{TABLE}} THIRD SCHEDULE Amount of Tax When the licence is for an amount Nil not exceeding Rs. 4,999.
When the licence is for an amount Rupees ten. Exceeding Rs. 4,999 but not exceeding Rs. 9,999.
When the licence is for an amount Rupees fifty. Exceeding Rs. 9,999 but not exceeding R. 19,999.
IN hen the licence is for an amount Rupees one hundred exceeding Rs. 19,999 but not and fifty. Exceeding Rs. 49,999.
When the licence is for an amount Rupees five hundred. Exceeding Rs. 49,9.9 but not exceeding Rs.
99,999.
When the licence is for an amount Rupees one thousand. Exceeding Rs. 99,999. {{TABLE}}
11. It is not disputed that the petitioners fall in the category of persons "engaged in the import trade" within the meaning of sections 10 and 8 of the aforesaid Finance Acts, 1962 and 1963 respectively, as they had imported the goods for re-sale to the trade and public in the regular course of their business as importers of such products.
12. The attacks on the vires of the sections 10 and 8 of the aforesaid West Pakistan Finance Acts, 1962 and 1963 are made with reference to the Pakistan Constitution, 1962 which was then in force (which will hereinafter be referred to as "the Constitution").
13. The first submission of counsel for the petitioners is that sections 10 and 8 of the aforesaid Finance Acts, in so far as they purported to levy a tax on import and export trades in excess of Rs.
50 per annum, are inconsistent with section 2 of the Professions Tax Limitation Act, 1941 (Act No, XX of 1941) and are accordingly invalid. Section 2 of that Act reads as follows :- "2. Notwithstanding the provisions of any law for the time being in force, any taxes payable in respect of any one person to a Province, or to any one municipality, district board, local board or other local authority in any Province, by way of tax on professions, trades, callings or employments, shall from and after the commencement of this Act cease to be levied to the extent to which such taxes exceed fifty rupees per annum."
' It is contended that the Central Act fixed the limit to the imposition of a tax by a Provincial Law on a person engaged in professions, trades, callings or employments in excess of Rs. 50 per annum, and therefore, the Provincial Legislature had no power to impose a tax in excess of such limit, as is provided in Article 141 of the Constitution. Dealing with the first part of the submission, it must be observed that the Professions Tax Limitation Act, 1941, was passed in relation to the proviso to subsection (2) of section 142-A of the Government of India Act, 1935. The subsection (2 provided that the total amount payable in respect of any one person to the Province by way of taxes on professions, trades, callings or employments shall not after the 31st day of March 1939, exceed Rs 50 per annum, and the proviso to this subsection provided that if in the financial year ending with 31.3-1939, there was in force in any Province such a tax A exceeding Rs. 50 per annum, it shall not be invalid on the ground that it relates to a tax on income, unless provision to the contrary is made by a law of the Federal Legislature. It was to provide for this situation that the Professions Tax Limitation Act, 1941 was enacted, as will also be clear from the second recital to that Act. Under section 2 of the said Act reproduced earlier, the professional tax which was in force in any Province during the financial year ending 31-3-1939, shall after the commencement of the Act "cease to be levied" to the extent to which such a tax exceeds Rs. 50 per annum. The aforesaid limit of Rs. 50 was itself maintained b Article 117(2) of the 1956 Constitution, and accordingly, the Professions Tax, Limitation Act, 1941 became a redundant law upon the coming into force, of the 1956 Constitution.
However, it is still on the statute book as it was adopted in 1960 by the Central Law (Statutes Reforms) Ordinance, 19W Even if the Professions Tax Limitations Act, 1941 was an "existing law' as defined in Article 225(7) of the Constitution fixing the limit of the professional tax of Rs. 50 per annum, the question is whether the Provincial Legislature had no longer any power to exceed such limit under Article 141 of the Constitution. That Article provides that a Provincial law may impose taxes not exceeding such limits as may from time to time be fixed by Act of the Central Legislature on persons engaged in professions, trades, callings or employments. It is clear from the wording of this Article that it is prospective and curtails the power of the Provincial Legislature to impose the professional tax in future exceeding such limits as may from time to time be fixed by Act of the Central Legislature. No such Act of the Central Legislature has yet been passed. The Central Legislature has been defined in Article 242 of the Constitution as meaning the Central Legislature of Pakistan which makes it further clear that until the Central Legislature of Pakistan fixes a limit to the proefssional tax by an Act, there was no restriction on the power of the Provincial Legislature with regard to Imposition of professional taxes. Further, had there been such Act of the Provincial Legislature, the Provincial Law imporing professional tax in excess of the limit, would be inconsistent with the Central Lay, and under Article 134 of the Constitution it would be invalid to the extent of the inconsistency. The Central Law referred to in Article 134 has been defined in Article 242 as meaning a law made by or under the authority of the Central Legislature. It is therefore, abundantly clear that the Professions Tax Limitation Act, 1941 cannot be deemed to be a Central Law made by or under the authority of the Central Legislature of Pakistan. This point was also considered in Messrs Karachi Gas Co. Ltd. v. Government of West Pakistan and others (1). The Division Bench reached the same conclusion, but on a concession by the petitioner's counsel that there was no restriction on the power of the Provincial Legislature to impose a tax on trades by the West Pakistan Finance Acts, 1962 and 1963. For these reasons, we find that the submission of the petitioner's counsel is misconceived and must therefore, be rejected.
14. The next submission of Mr. Syed lqbal Ahmed is that sections 10 and 8 of the West Pakistan Finance Acts, 1962 and 19,53 read which the Third Schedule thereto, are ultra vires the Provincial Legislature in so far as they purport to levy a tax on import of goods and on import licences which are Central subjects covered by item No, 5 (trade and commerce) and item No, 43 (duties and taxes, duties of customs) of the Third Schedule to the Constitution, in respect of which the Central Legislature has exclusive power to make laws under Article 131(1) of the Constitution. We have considered' this submission, but we do not agree that the tax in question is a tax on import of goods or on import licences. In or opinion, it is a tax on a person engaged in the import and export trade. The nature of such a tax was considered in the Karachi Gas Com.'s case (2). Which was upheld on appeal to the Supreme Court. In that case, the Gas Company and others imported plant and machinery, raw materials etc. For industrial consumption and manufacture of finished goods.
The controversy was on the question whether the Karachi Gas Co. Ltd. And other persons, were persons "engaged in the import trade". It was answered in the negative on the ground that their main and regular business was manufacture and not import business. In the course of the discussion, the Supreme Court observed that the West Pakistan Finance Acts, 1962 and 1963 imposed tax on persons and not goods imported or exported and that the tax was payable by persons engaged in a particular trade. On a bare reading of sections 10 and 8 of the Finance Acts, it is clear that the levy of tax is {{FOOT NOTE}}
(1) PLD 1967 Kar. 418 (2) 1974 SC MR 237 {{FOOT NOTE}} ' on a person engaged in the import and export trade who holds a licence. Goods imported by a person not engaged in import or export trade, are not liable to tax under the said provisions. This is further clear from subsection (2) of section 10 which empowers the Government by a general or special order in writing to exempt a person holding such licence from the payment of the whole or a part of the tax payable by him in respect of the goods imported or exported against such licence.
This interpretation is also consistent with the object of the Finance Acts which by the earlier sections imposed a similar tax on persons such as legal practitioners, income-tax practitioners, clearing agents and contractors. It is true that in the case of persons engaged in the import and export trades, the tax is calculated on the value of the goods imported or exported. But that by itself, in my opinion, will not make it as tax on the goods imported or exported such as that levied by the Tariff Act, 1934. For the same reasons also, we find no force in the contention that the tax is in the nature of "a fee" on import licences, levied under the Licences and Permits Fees Order, 1957.
15. We however, find force in the submission of counsel for the petitioners that there is a patent inconsistency between the charging sections 10 and 8 of the West Pakistan Finance Acts, 1962 and 1963 and the Third Schedule reproduced above. Whereas, under the charging sections, the tax to be levied on the person is on the "value of the goods" imported or as the case may be, exported against such licence according to the scale set out in the Third Schedule, the Third Schedule provides a scale of tax "on the amount of the licence". The full amount of the licence may or may not be entirely utilized and an importer or exporter may, for one reason or another, import or export goods of a value less than the face C amount of the licence or even import or export goods piecemeal against the licence. From a statement of the particulars of the licences annexed to some of the petitions, it appears that in a number of cases, the full amounts of the licences were not utilized. There is therefore, clearly an inconsistency between the charging sections and the Third Schedules, due perhaps, to an invadevertent slip of the draftsman. Apparently when the mistake was discovered later on, an attempt was made first to cure the mistake appearing in the West Pakistan Finance Act, 1963 by rule 3 of the West Pakistan Tax on Import and Export Licences Rules, 1964 published in the Gazette of West Pakistan on 21-2-1964. Rule 3 provided that .- "3. For the purposes of the levy of the tax the amount of the licence shall be-
(a) in the case of an import licence, the c.i.f. Value of the goods imported under the licence ;
(b) in the case of an export licence, the value of the goods exported under the licence."
' Strangely, the mistake of the draftsman in the earlier West Pakistan Finance Act, 19o2 was sought to be cured even later by an identical rule 3 of the West Pakistan Tax on Holders of Import and Export Licences Rules published in the Gazette of West Pakistan on 30-6-1966. It seems clear to us that an inconsistency in a Act of the Legislature cannot be cured b D Rule made by the Government under its delegated power to make Rules conferred by sections 21 and 20 of the respective Finance Acts, 1962 and 1963 regarding the procedure "for the ,collection and payment of any tax" or "any other matter incidental thereto."
16. A Schedule attached to a Statute is as much an enactment as an other part. Craies on Statute Law, Seventh Edition (1971), p. 225 stated. That if an enactment in a schedule contradicts an earlier clause, the clause( prevails against the Schedule. The author stated a passage from In re Raines (1) per Lord Cottenham.
"If the enacting part of the statute cannot be made to correspond with the schedule, the latter must yield to the former."
' The words in the charging sections, "a tax on the value of the goods imported", are exact and admit of no ambiguity and must be given effect to as they cannot be treated as superfluous or redundant. They must prevail as expressing the intention of the Legislature to levy a tax on the person engaged in the import or export trade on the value of the goods imported or exported by him against the licence. The submission of Mr. Muhammad Sharif on behalf of the Government is that where the main object and intention of the statute are clear, it must not be reduced to a nullity by the draftsman's unskilfulness and that it is the duty of the Court to harmonize the apparently conflicting provisions by supplying necessary omission in the Third Schedule, such as by reading the words "consumed" or "utilized" after the words "licence" wherever appearing in the Third Schedule. When so modified, as suggested by counsel, the Third Schedule would read "when the licence consumed or utilized is for an amount not exceeding " He also submitted that the inconsistency has also been cured by rule 3 of the West Pakistan Tax on Import and Export Licences Rules, 1964, and the West Pakistan Tax on holders of Import and Export Rules published on 30-6- 1965, which has been reproduced earlier in this judgment, which provides that the amount of the licence shall be the c. i. f. Value of the goods imported or the value of the goods exported under the licence, as the case may be. As stated earlier, we fail to see how an inconsistency in an Act of the Legislature can be cured by a Rule made by the Government under its Rule-making power.
Moreover, to add the words in the Third Schedule as suggested by Mr. Muhammad Sharif, is to alter in a material respect, the enactment and the subject-matter of the tax, from a tax on the value of the goods imported to a tax on the amount of the licence. It would be a gross instance of the Court acting as a Legislature. It is a well-established rule of the interpretation of fiscal statutes that if a subject to be taxed is not within the letter of the law, he is free however apparent it may be that he falls within the spirit of the law. In this connection, the statement of law now appearing in Craies on Statute Law, Seventh Edition, 1971, p. 113 was icited with approval by Cornelius, J. (as be then was) of the Supreme Court n The Commissioner of Agricultural Income-tax. East Bengal v. B. W. M. Abdul Rehman, Manager, Tekai Bara Tarot' Wards Estate (2) :- "But indeed, in determining whether or not a particular matter comes within a taxing statute, it is only the letter of the law which must be looked to. There is ample authority for the proposition that in a fiscal case, form is of primary importance, the principle being that if the person sought to be taxed comes within letter of the law, he must be taxed, however great a hardship may thereby be involved but {{FOOT NOTE}}
(1) (1840) 12 A & E 27 (2) 1973 SCM R 455 {{FOOT NOTE}} ' on the other hand, if the Crown cannot bring the subject within letter of the law he is free, however apparent it may be that his case is within what might be called the spirit of the law. As was said by Rowlett. J., in Cap Brandy Syndicate v. Inland Revenue Commissioner (1921) 1 K B 64.
'In a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment.
There is no equity about tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used'. "
' In Tenant v. Smith 1892 A C 150 Lord Halsbury said : "In a Taxing Act it is impossible, I believe to assume any intention, any governing purpose in the Act, to do more than take such tax as the statute imposes cases, therefore, under the Taxing Acts always resolve themselves into the question whether or not the words of the Act have reached the alleged subject of Taxation."
' The Supreme Court also observed in Messrs Hirjina & Co. .(Pakistan) Ltd., Karachi v. Commissioner of Sales Tax, Central, Karachi (1) as follows :- "We may here observe that interpreting the taxing statute the Courts must look to the words of the statute and interpret it in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provisions in the statute so as to support assumed deficiency."
17. Mr. Muhammad Sharif further submitted that the Third Schedule provided a machinery for the assessm ent and collection of the tax and, as much, should receive a liberal interpretation in order to make the machinery workable. In this connection, he referred to the principles of law enunciated by Kaikaus, 1. (as he then was) in West Punjab Province v. K. B. Amir-ud-Din and others (2) which on appeal were approved by the Federal Court in PLD 1956 FC 220. These cases are, in my opinion, distinguishable. There, the question was whether a supplementary list of valuation of lands in Lahore, which were inadvertently omitted from the original valuation list by the assessing authority, could be issued before the expiry of five years from the date of the original valuation list made under the Punjab Urban Immovable Property Tax Act, 1940. In these cases, it was observed that there was no question of the interpretation of the liability of the lands to be taxed under that Act, but only the provisions which required interpretation were those relating to the machinery of assessm ent. It was in this context that the observations in the two cases were made that the machinery provisions should be construed liberally so as to make it workable even though the statute was a taxing statute. Mr. Muhammad Sharif also referred to Lt.-Col. Nawabzada Muha- amad Amir Khan v. The Controller of Estate Duty (3) and the decision of the Supreme Court on the review reported in PLD 1962 SC 335 for the proposition that the Court can in certain cases, modify the language of an enactment in order to give effect to the manifest and undoubted intention of the Legislature. In that case, Estate Duty Act of 1950 was amended in 1953 by introducing {{FOOT NOTE}}
(1) 1971 SCMR 128 (2) PLD 1953 Lab. 433
(3) PLD 1961 SC 119 {{FOOT NOTE}} ' a new scheme by which the Board of Revenue was replaced by an authority called the Controller of Estate Duty, who was empowered to determine the value of the property which passed on death to the heirs, if they did not amend the valuation when required to do so by him. It appears that through a draftsman's slip, consequential amendments were omitted from section 57 of the main Act which related to the machinery of collection of Estate duty. It was in that context that their Lordships of the Supreme Court observed that it was permisssible to modify and read into the section references to the Controller of Estate Duty, as these were consequential amendments and related not to the subject-matter of the liability, but to the form and the machinery of collection, which should be liberally construed in order to make the realization of the proper tax possible where there is no doubt as to the intention of the- Legislature with regard to the liability itself. These cases are therefore, in my opinion, distinguishable. In the instant case, it cannot be said that the Third Schedule prescribing a sliding scale of tax is a machinery section relating to collection of the tax. In fact, the machinery for its collection was created later, by the West Pakistan Tax Import and Export Licences Rules, 1954 and the West Pakistan Tax on Holders of Import and Export Licences Rules published on 30-6-1965. We therefore, find no force in the submission. Of Mr. Muhammad Sherif. In the absence of a scale for the assessment of tax on the value of the goods imported, the levy of the tax on the value of the goods imported cannot be validly made. Accordingly, we would declare that the demands of tax in question made by the respondents including the penalty, are illegal, without lawful authority and of no legal effect.
18. Such of the petitioners, who had deposited the tax and penalty in the State Bank of Pakistan are entitled to its refund and also in view of the undertaking given by the Assistant Advocate-General to refund the same to the petitioners in case these petitions succeed. Likewise, the petitioners who had deposited the amount of tax and penalty in Court would be entitled to withdraw the same. We would however, stay the operation of the order for refund and withdrawal for a period of one month, in case, the respondents desire to file an appeal to the Supreme Court.
19. In this view of the mattter, we do not propose to deal with the submission of the petitioners that their maximum liability for the two financial years in question is Rs. 2,000 and that the payment in excess made by them is liable to be refunded.
20. For the foregoing reasons, we would allow the petitions with costs.