' EJAZ AFZAL KHAN. J.---By this single judgment, we dispose of S.A.Os. Nos. 29 to 32 of 2000 and S.A.Os. Nos.3 to 5 of 2000 filed by Messrs Al-Khair Gadoon Ltd, and the Commissioner Income Tax/ Wealth Tax, Companies Zone Peshawar, respectively under section 136 of the Income Tax Ordinance, as a common question of law is involved therein. The controversy for the decision of this Court in all these appeals gives rise to only two formulations which read as under:--
(l) Whether on the facts and circumstances of the case the learned Income Tax Appellate Tribunal Peshawar was justified to include in its judgment, dated 6-4-2000 under appeal in Appeals Nos.29 to 32 of 2000, the cash purchases from the purview of section 50(4) of the Income Tax Ordinance?
(2) Whether on the facts and circumstances of the case, the learned Income Tax Appellate Tribunal Peshawar was justified to exclude in its, judgment, dated 15-10-1999 under appeal in Appeals Nos.3 to 5 of 2000, the cash purchases from the purview of section 50(4) of the Income Tax Ordinance, 1979?
2. Appellants in Appeals Nos.29 to 32 of 2000 and for that matter the respondents in Appeals Nos.3 to 5 of 2000 do not dispute the purchase of goods from the supplier thereof against payments made by them. They also do not dispute that none of their purchases was subjected to deduction of income tax at the source. But their case, however, is that supply of goods does not include both cash and credit purchases of goods by the payer, therefore, it cannot be brought within the mischief of section 50(4) of the Income Tax. Ordinance, 1979. The explanation, as per their instance, inserted by virtue of amendment in Finance Act. 1998 (Act No,III of 1998) promulgated,on 1st July, 1998, whereby the expression supply has been held to include both cash and credit purchase of goods by the payer will not have any application on their cases which relate to the assessment year of 1994-95, 1995-96, 1996-97 and 1997-98 as no law imposing a liability can be retrospective.
Reliance was also made on the cases of Commissioner Income Tax Karachi v. Eastern Federation Union Insurance Co. (PLD 1982 SC 247), Aftabuddin Qureshi and another v. Mst. Rachel Joseph and another (PLD 2001 Supreme Court 482) and Khalid Qureshi and 5 others v. United Bank Limited I,I.
Chundrigar Road, Karachi (2001 SCM R 103).
3. As against that the learned counsel appearing on behalf of the Income Tax Department argued that when the income-tax at the source was not deducted in terms of section 50(4) of the Ordinance, 'appellants in Appeals Nos.29 to 32 of 2000 as well as respondents in Appeals Nos.3 to 5 of 2000 were liable to be proceeded against under section 52 of the Ordinance. It was next argued that since the provision contained in section 50(4) of the Ordinance was interpreted differently by the various forums of the' concerned hierarchy, the legislature inserted explanation thereto which being declaratory cannot be held to be an addition to or deletion from the Ordinance, therefore, it shall be applicable from the date the original provision was given effect. The learned counsel in support of his arguments referred to the judgment of this Court rendered in the case of Commissioner Income-tax v. Messrs Ithihad Product in Tax Reference No,42 of 2002 decided on 26- 8-2003.
4. We have gone through the record carefully and considered the submissions of the learned counsel for the parties.
5. Before we evaluate the worth and weight of the arguments addressed by the learned counsel at the bar, it is worthwhile to reproduce the relevant provision of the Ordinance which reads as under:-- "(50) Deduction of tax at source.--- (1)
(2) ...........................
(2-A)
(2-B)
(3)
(3-1) .....................................
(3-2) .....................................
(1) (ii)
(3-3) .............
(3-A) .....................................
(4) Notwithstanding anything contained in this Ordinance,-
(a) any person responsible for making any payment in full or in part (including a payment by way of advance) to any person, (being resident), (hereinafter referred to respectively as "payer" and "recipient"), on account of the supply of goods or for service rendered to, or the execution of a contract with the. Government, or a local authority, or (a company,) (or a registered firm or any foreign contractor or consultant or consortium shall, (xxxxx) deduct advance tax, at the time of making such payment, at the rate specified in the First Schedule, and credit for the tax so deducted 'in any financial year shall, subject to the provisions of section 53, be given in computing the tax payable by the recipient for the assessment year commencing on the first day of July next following the said financial year, or in the case of an assessee to whom section 72 or section 81 applies, the assessm ent year, if any, in which the "said date" as referred to therein, falls, whichever is the later.
6. The explanation which was inserted vide Act. No,III of 1998, also merits reference which reads as under:-- "Explanation.-For the purposes of clause (a) the expression" supply of goods" includes both cash and credit purchases of goods by the payer, whether under a contract or not, on credit or in cash."
7. A perusal of the above quoted provision would reveal that the legislative intent behind its insertion was to evolve a mechanism to collect tax in advance at the source from a person responsible for making any payment in full or in part to any person, be he a payer or recipient on account of supply of goods or for service rendered to or the execution of a contract with the Government or a local authority etc. No doubt in the original provision only supply was mentioned and purchase did not figure anywhere but it will hardly be significant as expression supply itself is comprehensive enough to include the activity of both sale as well as purchase. Those who understood its true import included purchase, those who did not exclude it therefrom. It was in view of this confusion whether contrived or real, that the legislature in its wisdom inserted the explanation. Since supply is just inconceivable without the activity of sale and purchase, it would be absurd and unconscionable to exclude purchase from the purview of the above mentioned provisions.
8. In the case of Commissioner of Income Tax/Wealth Tax, Companies-II Lawrence Road, Lahore v.
Messrs Prime Dairies Ice Cream Limited (1999 PTD Lahore High Court 4147), their Lordships of Lahore High. Court for the first time much before the insertion of the explanation while referring to the meaning of the expression 'supply' as defined in the Black Law Dictionary and explaining its true import and implication held that supply being an expression of general nature connotes the availability of aggregate of things needed and demanded for a given use or purpose and thus includes sale as well as purchase.
9. There is, however, no cavil with the argument that an amendment in an act or Ordinance cannot be retrospective, if it imposes a new or adds to an already existing liability or tends to take away a right already accrued as held in the cases of Commissioner Income Tax Karachi v. Eastern Federal Union Insurance Co., Aftabuddin Qureshi and another v. Mst. Rachel Joseph and another and Khalid Qureshi and 5 others v. United Bank Limited I. I. Chandigarh Road, Karachi (Supra), but as the explanation inserted vide Act No,III of 1998, neither imposes a new nor adds to an already existing liability nor tends to take away a right already accrued, none of the judgments cited at the bar will have any perceptible relevance to the instant case when it like all other declaratory Statutes simply removes the confusion which to our mind arose due to lack of proper comprehension of the true import of the expression "supply".
10. Assuming that the insertion of the explanation was an amendment, which is not the case, yet it being declaratory in nature will have retrospective effect from the date the original provision was given effect. The case of Commissioner Income Tax v. Messrs Ithehad Products (Supra), will thus squarely cover the case in hand.
11. Having considered in this context, we thus answer question No,1 in Appeals Nos.29 to 32 of 2000 in the affirmative while question No,II in Appeals Nos.3.To 5 of 2000 in the negative.
12. As a sequel to what has been discussed above, we while dismissing Appeals Nos.29 to 32 of 2000, uphold the judgments of the learned Appellate Tribunal and while' allowing Appeals Nos.3 to 5 of 2000, set aside the impugned judgments and restore those of the - Assessing Officer.