IFTIKHAR MUHAMMAD CHAUDHRY, J.- Petitioners sought leave to appeal against judgments dated 6th February, 2001 passed by Lahore High Court, Lahore whereby appeals bearing STA No. 3/2001 and STA 8/2001 filed by them have been dismissed.
2. Precisely stating facts of the case are that vide show-cause notices dated 7th March, 2000 and 29th May, 2000 petitioners were respectively called upon to explain as to why sales tax amounting to Rs. 4,132,880/- and Rs.4,070,299/- alongwith additional sales tax and penalty may not be recovered from them on the stated allegations that they have violated the provisions of section 2(9) read with sections 8 and 34 of Sales Tax Act, 1990 (hereinafter referred to as the "Act") punishable under section 33 of the Act recoverable under sections 36 and 48 of the Act. It was alleged against both the petitioners that they purchased Electric Generators on which input sales tax was payable which was wrongly adjusted against output sales tax being not permissible under SRO No. 5/8(l)/98, dated 12.6.1998.
3. Petitioners resisted the proceedings and relying upon the judgment of this Court in the case of Attock Cement V. Federation of Pakistan (1999 PTD 1892) contended that the Generators squarely fails within the definition of term "Stock in Trade" as defined under section 8(1)(b) of the Act, therefore, no violation of any provisions of the Act or notifications issued subsequently has been made. Plea so raised by petitioners did not prevail upon the Additional Collector (Adjudication) concerned, as such they were respectively found liable to pay input tax with additional sales tax. In addition to it penalty at the rate of 5% of the sales tax was imposed under section 33 of the Act upon petitioners in C.P. No. 880-L/2001.
Against such orders appeals were preferred before Sales Tax Tribunal which were dismissed on 29th November, 2000 and 4th January, 2001. Accordingly petitioners invoked appellate jurisdiction of the High Court by preferring Sales Tax Appeals numbered hereinabove under section 47 of the Act but the appeals so filed by them were dismissed vide impugned orders.
4. Learned counsel for the petitioners contended that Notification SRO 578(l)/98, dated 12th June, 1998 was not applicable on the facts of the case because Generators and Generator Sets fall within the definition of term "Stock-in- Trade"; according to the definition assigned to the expression "Stock-in-Trade" by this Court in the case of Attock Cements (Supra) and as defined in the Words and Phrases, Vol. 40. For convenience relevant para from the definition of expression "Stock-in- Trade" from this book is reproduced hereinbelow:- "A fire insurance policy, insuring the "stock-in- trade" of a baker, should be constructed to cover the tools, fixtures, and implements of business, necessary for the carrying on of such baker's business.
The term "stock-in-trade" is to have a more extended meaning than in the ordinary application to the business of merchants. The policy protected everything which was necessary for carrying on the baker's business. The meaning of the term will very according to the business to which it is applied. The stock of a merchant comprehends articles entirely different from the stock of a farmer; but the term in all cases applies to personal property only. A mechanic, who insures his stock, covers his implements of trade also. Moadinger v. Mechanics' Fire ins. Co., 2 N.Y. Super. (2 Mali) 527, 530."
Learned counsel explained that Electric Generators and Generator Sets is an important component of the machinery for the purpose of generating electricity during crushing season of the sugarcane because on account of frequent load shedding of electric by WAPDA and on account of uncertain break down of the electricity petitioners cannot take risk to close the crushing process of the sugar cane because otherwise they have to expose themselves to heavy losses.
5. On the other hand learned counsel for respondents contended that Generators and Generator Sets are not covered by term "stock-in-trade" because as per petitioners own admission the generators etc. Are kept in a stand by position only to encumber an emergency occasionally due to temporary disconnection of the electricity which rarely occurs now-a-days due to highly improved performance of WAPDA.
6. After hearing learned counsel for parties and having gone through earlier judgment delivered by this Court in the case of Attock Cement Pakistan Limited (ibid) and the dictionary meanings of the term "Stock-in-Trade" we are inclined to grant leave to consider as to 'Whether Generators/Generating Sets purchased by the petitioners for generating energy to run sugar mills without any break during crushing season fall within the definition of term "stock-in-trade" and petitioners were liable to claim exemption of sales-tax under the Act and SRO 578(l)/98, dated 12th June, 1998 will not be applicable because allegedly the Generators and Generating Sets are treated as one of the important components of the machinery installed for manufacturing of sugar'.
Accordingly leave is granted.