MIAN SAQIB NISAR, J.--(1). Through the instant petition, mainly the legality and vires of the instructions contained in Letter No. 1(59) STP-94, dated 14.11.1994 issued by respondent No. 2 (Central Board of Revenue), have been challenged, whereby the said respondent has elucidated the department's interpretation of section 2(30) of the Sales Tax Act, 1990 (the Act) by stating that sales tax can be levied and charged on the payment of advances to the cement manufacturers by the stockists/dealers.
2. The petitioner is engaged in the manufacture of cement, it sells cement direct to various wholesale dealers and it is stated in the petition that in terms of section 3 of the Act, it is liable to pay sales tax at the rate of 15% of the value of taxable supply made in Pakistan in the course or furtherance of any business carried on by the petitioner. Respondent No. 5 issued a show cause notice dated 6-5-1995 requiring the petitioner to produce record etc. For reassessing the sales tax payable by it as according to this notice, it was Department's view that the petitioner had received payment in advance by 2/3 months but made supplies of goods in subsequent months. Therefore, it was necessary for the petitioner to make payment of sales tax during the month in which the payment has been received. In order to calculate the amount of additional tax/surcharges, a direction was issued to the respondent to produce the relevant record. Subsequently an assessm ent order, dated 18-6-1995 under section 11 of the Act was passed by the Superintendent, Sales Tax. Sargodha, by virtue whereof, the petitioner was required to pay additional sales tax and surcharge on the receipt of advance mentioned in the order from 7th July, 1994 to 4th April, 1995 by 20-6-1995.
3. It may be pertinent to state here that vide letter, dated 22-9-1994, the Directorate General Intelligence and Investigation have sought instructions from the Board of Revenue on the proposition and interpretation of section 2(30) as to when the sales tax under this section becomes due in the case of cement industry, when the advances are received earlier whereas the supply is made after some months, it was observed in the letter that the Directorate of intelligence etc., holds the view, that in the cases where payment for certain supplies are received in advance, the sales tax for such supplies should be paid to the Government by the 20th of the following month.
This would raised by the respondent's side is qua the maintainability of the petition, in view of the remedy of appeal available to the B petitioner at the the of filing the petition but not availed by it.
6. Learned counsel for the petitioner has made reference to sections 3, 2(22), 2(28) and 2(30) to argue that the petitioner would only be liable to pay sales tax when "sale" has actually taken place and not on the payment/receipt of any advance amount, which is simply bailment of money and the sale is yet to take place.
In order to appreciate the submissions made by the learned counsel, it is expedient to re-produce for convenience the relevant provisions of the Act: - "(3) Scope of Tax.--(1) Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of [fifteen] per cent of the value of--
(a) taxable supplies made in Pakistan by a registered person in the course or furtherance of any business carried on by him; and
(b) goods imported into Pakistan. 2(22) "Supply" means sale, transfer, lease or other disposition of goods in the course or furtherance of business carried out for consideration and includes.
(a) putting to private, business or non-business use of goods acquired, produced or manufactured in the course of business;
(b) auction or disposal of goods to satisfy a debt owned by a person;
(c) possession of taxable'goods held immediately before a person ceases to he a registered person;
(d) removal of goods from the manufacturing.
2(28) "taxable supply" means a supply of taxable goods made in Pakistan other than a supply of goods which is exempt under section 13, and includes a supply of goods chargeable to tax at the rate of zero per cent under section 4."
2(30) "the of supply" (i) A supply made in Pakistan shall be deemed to take place at the earlier of the the of delivery of goods or the the when any payment is received by the supplier in respect of that supply."
7. From the above, it is clear that according to the charging section 3, sales tax shall be charged on the taxable supply made in Pakistan. Taxable supplies have been defined in section 2(28) to mean supply of taxable goods made in Pakistan other than those which are exempted etc. According to section 2(22), "supply" means sale, transfer, lease or other disposition of goods in the course or furtherance of business carried out by one for consideration. The collective reading of these provisions would show that the sales tax has been imposed on the actual sale, transfer, lease or any other means for disposing of the goods but if no such sale, transfer, etc., has taken place, sales tax cannot be charged thereon.
8. The case of the Department is that according to section 2(30) by fiction of law transaction of sale etc. Shall be presumed if the payment has been received/paid without the delivery of goods which even might occur later meaning thereby that even if the goods have not been actually supplied or delivered, but any advance payment had been received for the purpose of the supply of such goods, the the of supply by fiction would be deemed to be point in the when the money has been received notwithstanding the actual delivery.
9. In my view, the obvious meaning and import of section 2(30) is that if the goods are delivered and the property in the goods is transferred to the buyer, notwithstanding the non-Tayment of the price, a sale takes place and the sales -tax shall become leviable. Moreover, if payment is made in such a manner that the property in goods -is- transferred to the buyer, even then sale is effected which is liable to tax irrespective of the fact that the delivery is to be made subsequently. The important event in law is the date on which the property in goods passes to the buyer and it is only on that date the sale shall be deemed to have taken place in the eyes of law.
10. In terms of section 2(30), the Department in fact is requiring and charging the sales tax from the petitioner without confirmation of the event whether the property has passed from petitioner to the buyer, which means whether sale in law having yet taken place or not.
11. In order to elucidate the point of the when payment of sale tax becomes chargeable, there can be the following four situations:
(a) When a sale is made. Against cash and goods are delivered immediately upon payment, no difficuIty arises. The date of receipt of money and delivery being the same.
(b) When goods are sold and delivered but the payment is received subsequently, in such a case the date of payment of sales tax will be the date when the goods are supplied i.e. Sold and delivered to the purchaser.
(c) The third category of cases is where a purchaser deposits the amount in advance with the seller against which supplies are yet to be made, simple receipt of money would not entail the liability to pay sales tax. However, if a proper sale agreement is entered into in which the price is fixed between the parties with regard to the quantity of goods sold (aIthough the delivery of goods is to be made subsequently) then the sales tax liability will accrue on the date of the sale agreement alongwith the money received.
(d) However, if money is deposited by a person to whom goods will be supplied subsequently and there is no firm sale agreement either with reference to the price or the exact quantity to be sold, then in such a case, simple deposit of money in advance will not entail liability to pay sales tax. In such a case, if for any reason the seller is not able to supply the goods of the price fixed by the seller, at the relevant the is not acceptable to the purchaser and the money received as deposit in advance is refunded, no sales tax would accrue on this nature of the transaction.
12. For the purpose of the proposition in hand, the word "supply" occurring in sub-section (2) of section 22 may well be equated with the word "sale" in that the petitioner may manufacture and then sells cement. Consequently, in the context of the instant petition, section 2(30) simply implies that a given sale shall be deemed to take place when in respect of that sale either the goods are delivered or payment is received. It may be noted that in terms of section 19 of the Sales Tax Goods Act, 1930, a sale takes place when the parties intend that the property in the goods being sold be transferred to the buyer by the seller. For the sale to occur neither the delivery of goods nor the receipt of payment is necessary. ResuItantly, it is legally. Quite possible for the actual the at which a sale has been concluded to precede the the of delivery of goods as well as the the of receipt of money with respect to that sale. All that section 2(30) has laid down is, that regardless of when a sale might actually have taken place in accordance with the terms of the agreement between the parties and the applicable law, sales tax will be payable only at the the when the goods are either delivered or payment in respect of the concluded sale is received. This interpretation of section 2(30) is also consistent with the principles that a tax cannot become payable prior to the occurrence of a "taxable" event. In terms of section 3 of the Act, the taxable event is the supply of the goods which in the context of the instant petition means the sale of cement, therefore, the mere deposit of money in anticipation of a future sale cannot be made the occasion for demanding the payment of sales tax. It is a regular feature in the sales of cement that the stockists of cements deposit money with manufacturer in routine even though at the the of deposit no contract specifying the price to be paid or the quantity to be purchased by the stockists is in place.
The cement manufacturer at the the of deposit is under no obligation to provide any quantity of cement to the stockists nor are the stockists under any obligation to purchase any particular quantity. In other words, simply at the the of deposit of money, there is no concluded sale in existence and the transaction can be nullified by the manufacturer or the stockists.
13. The departmental interpretation (C.B.R.) that the sale tax is payable as soon as money so received by the registered person would appear to be reading into the Sales Tax Act, following statement:-- "Whenever money is received by the manufacturer the manufacturer shall be deemed to have made a sale of value equivalent to the amount of the money received." No provision of Sales Tax Act has purported to deem the receipt of money to be a sale. Consequently, the department's interpretation has no basis in the text of the Act and that it seeks to change the nature of the tax from a levy on the supply of goods to a tax on the mere bailment of money. In none of the provisions of the Sales Tax Act, bailment of money could be deemed to be a sale or a supply of the goods.
14. The provision of section 2(30) of the Act has only employed the legislative device of deeming so as to crystallize the point in the at which sales tax is payable with respect to a supply that has already occurred. It cannot be employed to the extent of conceiving the payment of money so as to change the scope of word "supply" beyond the provisions of section 2(22) of the Act, read with section 3 which is the charging section. It cannot be held that section 2(30) would in any way aIter the scope and nature of the charging section. There can be no doubt that where legislature could have expressly specified as regards the charging of tax but has chosen not to specify must not be read into the text of the statute by way of intendment so as to expand or circumvent the scope of the charging provisions.
15. Reference with regard to the interpretation of deeming the provisions can be made to the following judgments of the Superior Courts reported as Elahi Cotton Mills Itd. v. Federation of Pakistan and others (PLD 1997 SC 582 at 677) = PTCL 1997 CL. 260 at Page CL. 385. "that the legal fictions are limited for a definite purpose, they cannot be extended beyond the purpose for which they are created." B. N. Syed v. Afzal Jahan Begum (PLD 1970 SC 29 at 35) "It cannot be denied that the Court has to determine the limits within which and for the purposes for which the Legislature has created the fiction." Siraj Din V. Sardar Khan (1993 SCM R 745 at 749) "It is settled rule that the Court is entitled to ascertain the object for which the legal fiction is created and confuted to the purposes for which it is meant." Mehran Associates Limited v. The Commissioner of Income Tax, Karachi 1993 PID 69 = (1993 SCM R 274 at p. 286, 287) "The cardinal principles of interpretation of a fiscal statute seem to be that all charges upon the subject are to be imposed by clear and unambiguous words. There is no room for any intendment nor there is any equity or presumption as to a tax. A fiscal provision of a statute is to be construed liberally in favour of the tax payer and in case of any substantial doubt the same is to be resolved in favour of the citizen."
16. In the light of above I have no hesitation to hold that the interpretation placed by the department through the impugned letter/instructions, the impugned show-cause notice and the assessm ent order passed in pursuance thereof are without jurisdiction and of no legal effect.
17. As regards the other question involved in this matter pertaining to the maintainability of the instant petition, it may be stated that as complicated question of interpretation of law is involved, in the present matter and as a matter of fact, the petitioner has not challenged directly the show- cause notice or the assessm ent order rather instructions of C.B.R., which instructions are binding upon the subordinate officials to the Board of Revenue, therefore, to say that the petitioner had aIternate remedy of filing appeal which is adequate and efficacious is not tenable. If any reference of the case-law is required following judgments are relevant:-- Julian Hoshang Dinshaw Trust v. I.T.O. 1992 SCM R 250 at p. 255 = PTCL 1992 CL. 181 at Pp. 196 & 197.
Kamran Industries v. Collector of Customs PLD 1996 Kar.. 68 at p. 94 = PTCL 1996 CL. 1 at Pp. 46 & 47.
18. Learned counsel for the respondent has objected that in the instant case though the assessm ent order under section 11 has been passed against the petitioner prior to this petition but the same has not been impugned through the instant petition. Suffice it to say, that this Court has ample jurisdiction to mould and grant the relief to the petitioner which he is legally entitled to. As the impugned assessm ent order is also based upon the instructions issued by the Board of Revenue, thus, even though it has not been directly challenged in the petition, while it can be set aside in exercise of Constitutional jurisdiction by this Court in order to advance the interest of justice and to prevent the abuse of the authority by the respondent-department.
In the light of above, this writ petition is allowed, the instructions contained in the Letter No. 1(59)STP-94, dated 14-11-1994 issued by the Board of Revenue are declared to be without jurisdiction and lawful authority and all the subsequent actions/orders against the petitioner based upon the said letter and instructions are of no legal effect.