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Writ Petition No. 789 of 1965, decided on 26th October, 1966.

S. 10 (1) and West Pakistan Finance Act (IX of 1963), S. 8(1)‑Expression "person engaged in the import and export trade"‑Word "trade" Scope‑Every person who is importer under S. 1(c) of Imports and Exports (Control) Act, 1950 cannot be treated as person engaged in import and export‑imports anal Exports (Control) Act (XXXIX of 1950), S. 2(c).

Where the question was whether the word "trade" used in sections 10 (1) and 8 (1) respectively of the West Pakistan Finance Acts of 1962 and 190 had its primary sense or it had an extended meaning so as to embrace even person importing goods in his capacity as industrial consumer:

Held, the two enactments provide for the levying on, and collection from, "every person engaged in the import and export trade who holds a licence issued under the Imports do Exports (Control) Act" . . . . "a tax on the value of the goods imported or, as the case may be, exported against such licence . . . ." The word "trade" is here used in connection with persons who are engaged in the business of imports and exports. This word may be of the widest scope in legal usage, but in the context in which it is used in the two enactments requires limitation on its meaning. It is not every person who is an importer under section 2(c) of the Imports and Exports (Control) Act, who can be treated as a person engaged in import trade. A person who imports a motor‑vehicle for personal use is an importer under the Imports and Exports (Control) Act, 1950 but he does not thereby become a person engaged in the import trade. Likewise, a manufacturer who imports plant and machinery for installation in his factory, or raw materials for manufacture of finished products, though an importer under the Imports and Exports (Control) Act, would not be a person engaged in the trade of imports. The words used by the two Finance statutes, viz. the West Pakistan Finance Acts, 1962 and 1963 are "every person engaged in the import and export trade" and the first impression conveyed by these words is that the person who is liable to tax under the statute is one whose main and regular business is imports and exports: An extended meaning cannot be given to the word "trade" so as to make the West Pakistan Finance Acts applicable even to those persons whose imports are merely ancilliary to their principal business of manufacture or distribution of natural gas.

Stroud's Judicial Dictionary, Vol. IV, Third Edition, p. 3057; Commissioners of Taxation v. Kirk 1900 A C 588 ; National Association of Local Government Officers v. Bolton Corporation (1942) 2 A E L R 425 ; The Bank of New South Wales v. The Commonwealth 76 C L R 1 ; Mulshankar Maganlal Vyas and another v. Government of Bombay A I R 1951 Bom. 233 and 'Municipality of Chopda v. Motilal Maneckchand A I R 1958 Bom. 487 ref.

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--‑"Trade"‑Primary and extended meaning.

A. I.Chundrigar for Petitioner.

S. Nasiruddin, A.‑G. with Mohd. Salim, Asstt. A.‑G. and Usman Ghani for Respondents.

Dates of hearing: 8th and 9th.September 1966.

‑These three petitions under Article 98 of the Constitution raise the same question, namely, whether the petitioners are persons engaged in the import and export trade and, therefore liable to be taxed under the West Pakistan Finance Acts of 1962 and 1963.

2. The petitioner in Petition No. 789 of 1965 is the Karachi Gas Co. Ltd., whose business is the distribution of natural gas in. Karachi. During the financial years 1962‑63 and 1963‑64, this company imported into Pakistan plant and machinery, gas odorisers, silicon iron and anodes kraft paper, soil resistivity testers, drilling machines, cencentric support insulators and other spares and accessories.

3. The Steel Corporation of Pakistan, petitioner in petition No. 851 of 1965 is engaged in the business of manufacture of iron and steel articles. The imports of this company during the two financial years in question included plant and machinery, billets, fire-bricks, zinc ingots and spares.

4. The petitioner A. D. Marker & Sons Ltd., imported during the same period raw materials for manufacture of drugs and pharmaceuticals in its factory at Quetta.

5. The admitted position is that the imports were made by the three petitioners as industrial consumers that is, the plant and machinery, spares and accessories were to be installed or used in the petitioners' factories or workshop, and the raw materials were required for manufacture of finished products The imports were under licences issued by the Chief Controller of Imports and Exports, Government of Pakistan, under the imports and Exports (Control) Act (XXXIX of 1950). Section 2 (c) of this Act defines "Import" and "Export" to mean respectively "bringing into and taking out of the provinces by Sea, Land or by". Air Section 4‑B of the Act provides that except with the previous permission in writing of the Chief Controller, no person who imports goods against licences issued to him in. his capacity as industrial consumer shall sell or otherwise transfer such goods or use the goods for purpose other than the purpose for which the licence was issued.

6. The West Pakistan Finance Acts, 1962 and 1963, provided for collection from persons engaged in the import and export trade, who held licences issued under the Imports and Exports (Control) Act, 1950, taxes on the value of the goods imported or exported against such licences. The relevant section in the 1962 Act is section 10 which reads as under :‑‑

"10. Tax on Trades, Import Licences‑(1) For the financial year 1962‑63 there shall be levied and collected from every person engaged in the import and export trade who holds a licence issued under the Imports & Exports (Control) Act, 1950 (Act XXXIX of 1950), a tax on the value of the goods imported or, as the case may be, exported against such licence, according to the scale set out in the; Third Schedule to this Act.

(2) Government may, by a notification in "the official Gazette, exclude any class of licence issued as aforesaid from the purview of subsection (1), or, by a general or a special, order in writing, exempt a 'person holding such licence from the payment of the whole or a part of the tax payment by him in respect of the goods imported or exported against such licence."

The corresponding provision in the West Pakistan Finance Act, 1963 is section 8 which is as follows

"8. Tax on Trades, Import and Export Licences.----(1) For the financial year 1963‑64 there shall be levied and collected from every person engaged in the import and export trade who holds a licence issued under the Imports & Exports (Control) Act, 1950 (Act XXXIX of 1950), a tax on the value of the goods imported or, as the case may be, exported against such licence, according to the scale set out in the Third Schedule to this Act.

(2) Government may, by a notification in the official Gazette, exclude any class of licence issued as aforesaid from the purview of subsection (1) or, by a general or a special order in writing, exempt a person holding such licence from the payment of the whole or a part of the tax payable by him in respect of the goods imported or exported against such licence."

7. The Excise and Taxation Officers of the Government of West Pakistan made demands on the petitioners for payment of taxes under the two Finance Act on imports made by them during the relevant financial years as industrial consumers, under licences issued by the Chief Controller of Imports and Exports. The petitioners' contention that they were not persons engaged in import and export trade having been rejected, the petitioners have brought these petitions to challenge the validity of the demands made on them for payment of taxes on their imports.

8. Before examining the main question, which arises in these cases, we may note the additional point raised in the petition of A. D. Marker & Sons Ltd. This point is with regard to the competence of the Provincial Legislature to impose taxes on import or export trade. It was urged that this subject was within the exclusive jurisdiction of the Central Legislature under Arti cle 131 and the fifth entry in the Third Schedule of the Constitu tion. But this argument ignores Article 141, in which it is provided that a provincial Law may impose taxes riot exceeding such limits as may from time to time be fixed by an Act of the Central Legislature on persons engaged in professions, trades, callings or employments. No such Act has yet been passed by the Central Legislature. The petitioners did not contest the argument that the Professions Tax Limitation Act (XX of 1941) is relatable only to the proviso to Article 142‑A (2) of the Government of India Act, 1935 and, having become redundant on the coming into force of the 1956 Constitution, which itself, under Article 117, defined limits of provincial taxes on these subjects, could not be deemed to be an Act of the Central Legislature under Article 141 of the present Constitution.

9. The only question for decision, therefore, is whether the petitioners, who held licences under the Imports and Exports (Control) Act, 1950 are persons "engaged in the import and export trade" within the meaning of section 10 of the Finance Act, 1962 and section 8 of the Finance Act, 1963 enacted by the West Pakistan Legislature. The arguments on behalf of the Province of West Pakistan 1rere confined to the meaning of the expression "trade" appearing in these two sections. The learned Advocate‑General sought to suggest that the word "trade" embraced every business activity, including manufacture, and the petitioners being importers under section 2 (c) of the Imports and) Exports (Control) Act, 1950 they were persons engaged in the import trade. Reliance for this purpose was placed on Stroud's Judicial Dictionary, (Vol. IV, Third Edition, page 3057) where it is stated that the word "trade" in legal usage has the widest scope, and "may have a larger meaning so as to include manufacture", and, "pursuit of a calling or handicraft" and that the history of the expression "emphasises rather use, regularity and course of conduct, than concern with commodities".

10. These observations in Stroud are based on the interpreta tion given to the word "trade" in some decided cases which the learned Advocate‑General cited before us. The first of these cases is the decision of the Privy Council in Commissioners of Taxation v. Kirk (1900 A C 588) in which it was held, with reference to the New South Wales Land arid Income‑tax Assessment Act; 1895, that the opera tions of extraction of ore and its conversion into merchantable products constituted "trade". Their lordships observed that this expression no doubt primarily means "traffic by way of sale or exchange or‑commercial dealings but may have a larger meaning so as to include manufactures'". The next decision is that of the House of Lords in National Association of Local Government Officer v. Bolton Corporation ((1942) 2 A E L R 425). The question in this case was as to the construction of the words "trade dispute".' Lord right observed that "'trade' is not only in the etymological or dictionary sense, but in legal usage a term of the widest scope'. The Bank of New South Wales v. The Commonwealth (76 C L R 1) is the decision of the High Court of Australia is which the question was whether banking constitutes trade or commerce. Dixon, J. has discussed the scope of the expression "trade" as follows :‑

"'trade' strictly means the buying and selling of goods. That, however, is a specialized meaning of the word. The present primary meaning is much wider, covering as it does the pursuit of a calling or handicraft, and its history emphasizes rather use, regularity and course of conduct, than concern with commodi ties."

11. The learned Advocate‑General next referred to two decisions from the Indian jurisdiction. In Mulshankar Maganlal Vyas and another v. Government of Bombay (A I R 1951 Bom. 233) it was held that the word "trade" as used in section 168 of the Penal Code and Rule 21 of the Bombay Civil Services Conduct, Discipline and Appeal Rules, should not be construed in its technical sense and should not be confined only to mercantile operations or commercial transactions, but should be given a wider meaning, bearing in mind the context in which it is used and that so construed it would include any business carried on with a view to profit. It was held that the business of making plans and estimates for profits as consulting sanitary engineers and contractors would be included within the expression "trade". The question in the Municipality of Chopda v. Motilal Maneckchand (A I R 1958 Bom. 487) was with regard to the validity of a tax imposed by the Municipality of Chopda on cotton pressing. It was held that though in its primary sense the word "trade" means exchange of goods for goods or goods for money, in a secondary sense it includes any business carried on with a view to profit whether manual or mercantile as distinguished from the liberal arts or learned professions. .

12. Now, these decisions are concerned with the construction of the word "trade", and it has be.‑n stressed (Lord Wright's observation in National Association v. Bolton Corporation being to the contrary) that the original or the primary meaning of the word "trade" is traffic by sale or exchange or commercial dealings and mercantile operations, but that in its extended, the expression embraces any business carried on with a view to profit. The question for determination, therefore, is whether the West Pakistan Finance ‑ Acts, 1962 and 1963 use this word in its primary or extended meaning. We think that the answer to this question depends on the collection of the word or the connection in which it is used. The two enactments provide for the levying on, and collection from, "every person engaged in the import and export trade who holds a licence issued under the Imports and Exports (Control) Act" . . . . . "a tax on the value of the goods imported or, as the case may be, exported against such licence. . ." The word "trade" is here used in connection with persons who are engaged in the business of imports and exports. Assuming that this word is of the widest scope in legal usage, we think that context in which it is used in the two enactments requires limita tion on its meaning. It is not every person who is an importer under section 2 (c) of the Imports and Exports (Control) Act, who can be treated as a person engaged in import trade. A person who imports a motor‑vehicle for personal use is an importer under the Imports and Exports (Control) Act, but he does not thereby become a person engaged in the import trade. Likewise, a manufacturer who imports plant and machinery for installation in his factory, or raw materials for manufacture of finished products, though an importer under the Imports and Exports (Control) Act, would not be a person engaged in the trade of imports. The words used by the two Finance statute are "every person engaged in the import and export trade" and the first impression conveyed by these words is that the person who is liable to tax under the statute is one whose main and regular business is imports and exports. We cannot accept the suggestion that an extended meaning should be given to the word "trade" so as to make the West Pakistan Finance Acts applicable even to those persons whose imports are merely ancilliary to their principal business of manufacture or distribution of natural gas.

13. For the foregoing reasons, we are of the view that the three petitioners, whose imports during the relevant financial years were under industrial consumption licence, do not come in the category of persons "engaged in the imports and exports trade" and ate, therefore, not liable to be taxed for these imports under the West Pakistan Finance Acts of 1962 and 1963. We, there fore, hold that the respondent's demands that these petitioners pay taxes on their imports in question are without lawful authority. Accordingly, we accept the three petitions but make no order as to costs.

K. B. A.

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