' CH. MUHAMMAD ARIF; J.---The case of all the petitioners before the learned Judge in Chambers of the Lahore High Court, Lahore was that they are engaged in the production of Sugar. During the process of such production, 'Bagasse' does qualify to be some kind of a by-product and the same can be sold separately. 'Bagasse' was exempt from the payment of sales tax under the Sales Tax Act, 1990 under S.R.O. No,598(I)/90 dated 7-6-1990 and then under S.R.O. No,555(1)/90 dated 9-6- 1994. Subsequently, these notifications were done away with and by adding Sixth Schedule to the Sales Tax Act, 1990, without specifying bagasse as one of the exempted products with the result that respondent-authorities started demanding sales tax thereon. However, in June 1995. Sixth Schedule was amended and 'bagasse' was also included in the list of items amenable to the payment of sales tax. The challenge in all the petitions was to the payment of sales tax for the period between 1-7-1996 and 30-6-1997. The operative part of the common-judgment by the learned Judge in Chambers is reflected in paras. 6 and 7 thereof which read thus:- "6. The contention raised by Mr. Imtiaz A. Siddiqui, Advocate that the self consumption is not taxable, cannot be accepted. Reference to section 2(35) show that taxable supply not only includes sale by one person to another but also sales, manufacture, and production of any goods.
The word 'manufacture' has been defined in section 2(16) and clearly covers production of Bagasse. Consequently, even if the self-consumption is not covered by the earlier part of the definition of taxable supply yet it would clearly fall within the ambit of 'manufacture' as mentioned in the extended definition. For the same reason, the contention raised by Mr. Ali Sibtain Fazli, Advocate cannot be accepted. Whatever be the definition of word 'supply' is. Given in the Sales Tax Act, the fact remains that under section 3 of the Act it is the taxable supply which is being taxed which has been separately defined in section 2(41). Be that as it may, the tax on the sales of goods is clearly covered by item No,49 of the Federal Legislative List and when read with item No,59, it cannot be successfully contended that by levying tax on the manufacture of goods whether for self-consumption or not, the legislature has out stepped its limits.
7. Although there is force in the contention raised by the learned counsel for the respondents that Central Board of Revenue could not have issued circular and thereby pre-empting jurisdiction of the Adjudicating Authority, but as I have myself adverted to the jurisdictional question as to whether any taxable is payable on the use of Bagasse, this question loses all importance.
2. Learned counsel representing the petitioners in this case have, between themselves, chosen to rely upon Central Board of Revenue and others v. Messrs Champion Clock Company (1996 SCM R 1468), the Commissioner of Sales Tax v. Messrs Shaiq Corporation Limited (PLD 1986 SC 731), Abbasi Textile Mills Ltd. v. Commissioner of Sales Tax (East), Karachi (PLD 1990 SC 422) and the Commissioner of Sales Tax, Lahore v. Messrs Balochistan Textile Mills Ltd. (PLD 1992 SC 39) to contend that neither the respondent-authorities are competent in law to impose the disputed sales tax on 'Bagasse' nor the potentialities thereof for its future use in other finished goods could be considered for charging sales tax from the petitioners, in that, admittedly there was no intervening sale by the petitioners to any other party.
3. Mr. Maulvi Anwar-ul-Haq, the learned Law Officer, was present on Court's notice.
4. After hearing the learned counsel for the petitioners, we are inclined to grant to consider, among others, the following questions:--
(a) Whether in view of the admitted position that all the petitioners are consuming 'Bagasse' and further that no 3rd person is involved in the sale of 'Bagasse' in all cases, the petitioners are liable to the payment of disputed sales tax on 'Bagasse'?
(b) Whether within the ambit of section 3 of the Sales Tax Act, 1990, being the charging section, "taxable activity", "taxable supply", "time of supply" and "value of supply" respectively defined in section 2(35), (41), (44) and (46) of the Act ibid can be equated with the process of 'sale' even notionally?
(c) Whether the learned Judge in Chambers was correct in observing that the effect of joint reading of items Nos.49 and 59, Part I of the Federal Legislative List in Fourth Schedule of the Constitution of Pakistan is that petitioners can be made to pay sales tax on 'Bagasse' in the presence of the exemption to take effect during the financial year in question i.e, 1st July, 1996 to 30th of June, 1997 in that the same was rescinded during its currency, to wit on 30-6-1997?
4. The above are our reasons for the short order of even date which reads thus:-- "For reasons to be recorded later on, leave to appeal is granted in the above seven petitions. The miscellaneous application for grant of stay of recovery should be fixed on 20-10-1998 with notice to the Deputy Attorney-General."