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CHAIARMAN, FEDERAL BOARD OF REVENUE, ISLAMABAD versus MESSRS AL-TECHNIQUE CORPORATION OF PAKISTAN LTD

ax Tax / Financial Law - Scope - Taxes can be levied and not imposed unless it falls within the scope of the provision of compensation - Tax rules are beyond the explicit import of the language used. Could not be expanded by [p 102] A

PLD 2017 Supreme Court 99

Present: Mian Saqib Nisar, Faisal Arab and Ejaz ul Ahsan, JJ

CHIARMAN, FEDERAL BOARD OF REVENUE, ISLAMABAD—Appellant

versus

Messrs AL-TECHNIQUE CORPORATION OF PAKISTAN LTD. and others—Respondents

Civil Appeal No. 1419 of 2009, decided on 22nd November, 2016.

(Against the judgment dated 16-6-2009 of the Islamabad High Court, Islamabad passed in STR No.l of 2009).

(a) Interpretation of statutes—

—Tax/fiscal statute—Scope—Tax could not be charged and levied unless it fell squarely within the purview of the charging provisions— Taxing laws were not to be extended by implication beyond the clear import of the language used. [p. 102] A

(b) Interpretation of statutes—

—Tax statute—Tax laws should be construed in favour of the taxpayer and any substantial doubt should be resolved in favour of the citizen and against the government, [p. 102] B

(c) Interpretation of statutes—

—Fiscal statute—Charging provision—Scope—Charging provision in a fiscal statute was to be given a strict interpretation and if a case did not fall within the purview thereof tax could not be charged from a person from whom it was being claimed. [pp. 102, 103] A & C

(d) Interpretation of statutes—

—Definition clause in a statute—Scope—Definition clause was foundational when construing provisions of law—Definition given in the Act should be construed in a way so that it was not repugnant to the context and did not defeat or enable the defeating of the purpose of the Act—Definition clause must be read in its context and the background of the scheme of the statute and the remedy intended by it. [p. 103] D

Interpretation of Statutes, N.S. Bindra, tenth edition, ref.

(e) Sales Tax Act (VII of 1990)—

—S. 2(16)— uManufacture”—Definition—Definition of ‘manufacture* provided in S. 2(16) of Sales Tax, 1990 suggested that it was a process where an article singly or in combination with other articles, materials, components, was either converted into another distinct article or product; or an article was so changed, transfÓrm;ed or reshaped that it became capable of being put to use differently or distinctly; and included any process, incidental or ancillary to the completion of a manufactured product, [p. 103] E

(f) Sales Tax Act (VII of 1990)—

i -—Ss. 2(16), 2(17) & 2(41)—‘Manufacture*—Scope—Sterilization of syringes or other medical/ surgical products—Whether process of sterilization fell within the definition of 'manufacture' under S.2(16) of the Sales Tax Act, 1990 and consequently chargeable to sales tax— Activity of gamma sterilization, which the respondent-company was engaged in - a process that eliminated all fÓrm;s of living organisms did not involve the conversion of any article singly or in combination with other articles into another distinct article or product—Said process did not change, transfÓrm; or reshape the syringes in any way, thereby rendering them capable of being put to use differently or distinctly— Syringes remained syringes after sterilization—Process of sterilization of medical/surgical products did not fall within the meaning of 'manufacture ’ as provided in S. 2(16) of the Sales Tax Act, 1990, thus the respondent company was not a ‘manufacturer’ under S.2(17) and was not making a 'taxable supply' as per S.2(41) of the said Act and therefore could not be charged to sales tax—Appeal was dismissed accordingly, [p. 105] F

Khalid Abbas, Advocate Supreme Court for Appellant.

Sh.Iftikhar Ahmad, Advocate Supreme Court, Sohail Akram Malik, Senior Law Officer, Al-Technique Corporation for Respondent No.l.

Date of hearing: 22nd November, 2016.

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