This writ petition is directed against the order dated 7-7-1964 of the Collector, Mianwali, respondent No, 2, by which the latter issued a notice for the recovery of cotton cess on waste cotton and also against the order dated 6.3-1964 of the Pakistan Central Cotton Committee, Karachi, respondent No, 1 by which the petitioner was directed to pay cotton cess on the waste cotton.
2. According to the facts of the case, the petitioner-Mill purchases raw cotton from the market and produces yarn from it. Under section 6 of the Cotton Cess Act, 1923 (hereinafter called the Act), the petitioner submitted a return on the prescribed form showing the total amount of cotton consumed or brought under process in the mill during the preceding months. The petitioner also submitted the return deducting 17 per cent. Of the total cotton which was declared as cotton waste.
The respondents demanded Rs, 9,739.25 as cotton cess for the months of March, 1962 to June, 1964 which was not paid by the petitioner. This cotton waste constitutes 17 per cent. Of the total cotton purchased.
The petitioner filed a writ petition against the said order and has raised the following pleas :-
(i) That cotton cess is not leviable on cotton waste;
(ii) that there is no provision in the Act to empower the Collector to recover cotton cess on cotton waste;
(iii) that the Legislature has not included cotton waste in the definition of "cotton", and
(iv) that the taxing statutes are to be construed strictly and whenever there is any ambiguity it should enure to the benefit of the subject and not the state.
3. On the other hand, the learned counsel for the respondents has argued that cotton waste which is reprocessed through the blower and not cotton waste which is separated from the cotton in the first instance is exempt from cotton cess. If there is any cotton waste obtained in the first operation of the cotton for consuming it into yarn, then according to the contention of the learned counsel for the respondents, it is not cotton waste but such cotton waste when again processed through the blower and whatever is collected as waste will be termed as waste cotton.
4. I have heard the arguments of the learned counsel of the parties and have gone through the record and I find that there is much force in the argument of the learned counsel for the petitioner and in order to understand the procedure by which cotton is consumed into yarn the cotton passes through various stages, as stated below :- The raw cotton after unbaling the lumps is fed into a process known as Blow Room. In this process the light particles and fibers blow off in the air and heavy particles of cotton brought down. The cotton so fed comes out in the form of sheet on the terminal point which is turned into round shape which is known as "lap". This lap is put into a machine known as Carding Engine which cleans the cotton, thus, dropping again the short fibre. Then it passes through various phases and eventually the cotton is consumed into yarn and whatever is left as waste or by-product that is dirt, dust, light particles and fibres, scalp of the cotton seed, they all, when collected, constitute cotton waste.
5. Under section 3 of the Act, cotton cess is leviable on the cotton consumed in the mill but not on cotton waste. It may be stated that a printed Form "A", which is placed on record as Annexure "D/1" is submitted under section 6 of the Act which shows the following entry at the footnote :- Note.-Cotton imported from outside Pakistan and cotton waste are not liable to the cess. The expression "Pakistan" in section 3 of the Act includes acceded States.
6. If the argument of the learned counsel for the respondents is accepted that cotton waste so obtained in the first operation if again reprocessed through the blower and whatever is left will be called cotton waste it means that if the cotton waste obtained in the first operation is reprocessed and fed into the blower, only dust and dirt will be left and it cannot be called as cotton waste. Had it been the intention of the framer of the Act it could easily be specified that cotton waste is that cotton which is obtained after undergoing processes in the Blow Room but this intention is not inferable from the provisions of the Act.
' While interpreting taxing statute the Court has to interpret in the light of what is expressly provided in the statute. Ordinary meaning should be given to the words used and new words cannot be imported in the statute so as to bring it at par with the so-called practice of the Department.
Reliance can be placed on Messrs Hirjiar & Co. (Pakistan) Ltd., Karachi v. Commissioner of Sales Tax, Central, Karachi wherein it was held :- "In 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."
In view of it the interpretation taken by the learned counsel for the respondents is not acceptable in the eye of law.
7. This case can he examined from another aspect and section 3 is relevant for the purposes of this case, It reads as under "(I) There shall be levied and collected on all cotton either exported from the Provinces of Pakistan to any place outside Pakistan or consumed any mill fan the Provinces of Pakistan a cess at such rate as the Central Government may fix by notification in the official Gazette."
The bare reading of the section indicates that the cess is leviable only on the cotton consumed in any mill. Cotton" is defined in section 2(c) of the Act which reads as under: "'Cotton' means raw cotton whether baled or loose which has been ginned."
'Mill' is defined in section 2(c) as under:1 " 'Mill' means any place which is a factory as defined in section 2 of the Factories Act, 1934, and in which cotton is converted into yarn or thread either for sale as such or for conversion into cotton goods as defined in section 3 of the Cotton Duties Act, 1896." which means that cotton which is converted into yarn will be considered as cotton consumed in the mill. So the cotton which is fed into the Blow Room and eventually after passing through processes will be converted into yarn is to be called as cotton consumed in the mill, and under section 3 cess is leviable on the cotton which has been converted into yarn and not on that cotton which is obtained as by-product in the form of dust, dirt, scalp of cotton-seed and light fibre and short staple cotton which is blown off in the air as useless for the purpose of yarn. All these would constitute waste cotton and is not liable to cess.
8. If the argument of the learned counsel for the respondents is accepted that light fibres of cotton which blow off along with dust and dirt should be again processed in order to obtain cotton waste, this argument will be fallacious because these light particles of cotton along with dust and dirt is not mentioned in the definition of section 2(c) wherein cotton has been defined. So the second process is not contemplated because whatever is obtained by the first process as a residue it is not cotton within the meaning of section 2(c) of the Act and as such it cannot be fed again into the process along with cotton in the Blow Room.
9. If this was the intention of the Legislature to include 'cotton waste' in the definition of "cotton" it could be done either by making amendment or including 'cotton waste' in the definition of "cotton".
In some of the legislations, whenever the Legislature wanted to include cotton waste in the definition of cotton, it has been clearly done by the Legislature, for example, in the West Pakistan Cotton Control Ordinance, 1966, "cotton" is defined in section 2(c) which reads as under :- " 'Cotton' means ginned or unginned cotton or cotton waste."
Similarly in Punjab Cotton Control Act, 1949, again, the definition of "cotton" in section 2(c) has been given in the following words :- " 'Cotton' means ginned or unginned cotton or cotton waste."
But, in this Act, "cotton waste" has not been included in the definition of "cotton" and as such the second process of feeding the cotton with 'cotton waste' in the Blow Room is not contemplated by the provisions of this Act.
10. It is an established law that taxing statute must be strictly construed and if there is any ambiguity whether "cotton" includes 'cotton waste' or not, that ambiguity must ensure to the benefit of the subject and not the state. Reliance can be place on Lt,-Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty etc. wherein it was held t- "The provisions relating to imposition of tax are to be strictly construed in favour of the subject so that if there be any substantial doubt it has to be resolved in his favour."
The learned counsel for the respondents has urged that it is a spirit of the law that 'cotton waste' should be construed in accordance to what he has stated earlier but it cannot be accepted because if the words are not so clear then the cess cannot be imposed simply because the respondent is claiming that such imposition of tax will be in accordance with the spirit of tee law.
Reliance can be placed on The Commissioner of Agricultural Income-tax, East Bengal v. B. W. M.
Abdur Rahman, Manager, Takl Bara Taraf Wards Estate wherein it was held :- "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 the letter of the law, he must be taxed, however great a hardship may thereby be involved but on the other hand if the Crown cannot bring the subject within the 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."2 3
11. The learned counsel for the respondents has last of all urged that under section 9(2) of the said Act the petitioner should have filed an application before the Central Government if he was aggrieved by the assessm ent and without availing that remedy the writ petition is not maintainable. There is no force in the contention of the learned counsel for the respondents. The Central Government has constituted Pakistan Central Cotton Committee under section 4 of the Act and the petitioner before invoking the writ jurisdiction has already submitted an application to this Committee and the request was turned down, which is Annexure "C" with the writ petition.
12. After hearing arguments of the learned counsel for the parties I hold that the cotton which is converted into yarn will be considered as cotton consumed in a mill within the meaning of section 3 of the Act and cotton cess is leviable only on such cotton which is so consumed and during this operation whatever is left as residue in the form of waste cotton, cotton cess is not leviable on it. On this view of the matter I declare the orders of respondents Noe. 1 and 2, dated 7-7-1964 and 6-8- 1964 respectively as illegal having been passed without any lawful authority and of no legal effect and accept the writ petition. Parties are left to hear their own costs. 1971 SCMR 128 PLD 1961 SC 119 1973 SC MR 445