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Tax Reference No. 155 of 1971, decided on 8th October 1978.

‑‑‑ S. 17 read with S. 7 and Notification No. 3‑ST, dated 15th March, 1954‑Reference to High Court‑Question whether use of "conduit pipes" to cover electrical wiring meets requirement of Notification‑ Held, not a question of fact but of law‑Finding of Tribunal on such question can be gone into by High Court.

‑‑‑‑ S. 7 read with Notification No. 3‑ST, dated 15th March, 1954, and Notification No. 14‑C, dated 15th March 1954, Items (iii) & (iv)‑ Exemption from tax‑"Conduit pipes"‑Notification for exemption attracted only if pipes made for purpose specified therein ‑ No evidence to show that "conduit pipes, had been "specially adopted" for use in conjunction with machinery‑Mere fact that such pipes are also used to cover electric wires used in machinery‑Held, would not attract exemption under Notification.

Commissioner of Sales Tax v. Messrs Premier Machinery Works, Karachi 1978 P T D 118 ref.

Sh. Abdul Hag for Petitioner.

Mahmood A. Mirza and A. H. Najafi for Respondent.

Date of hearing: 2nd October 1979.

.‑For the assessment years 1961‑62 and 1962‑63 the respondent, Messrs Ijaz Oil and Conduit Pipe Mills, Gujranwala, claimed exemption from payment of tax on the sale of conduit pipes by relying upon Sales Tax Notification No. 3‑S. T. dated 15‑3‑‑1954 read with Customs Notifi cation No. 14‑C of the same date. The Sales Tax Officer rejected the claim on the finding that conduit pipes were not covered by the said Notifications. The Appellate Assistant Commissioner, however, relying on judgment in ST‑14 of 1960‑61 dated 18‑6‑1962 passed by the Appellate Tribunal, Karachi, held that conduit pipes were covered by item (v) read with item (i) of the Schedule to the Notification and as such were exempt. The Tribunal relying on the same decision of the Karachi Bench confirmed the finding of the Appellate Assistant Commissioner. The Department then moved the Tribunal for making a reference to this Court under section 17 (I) of the Sales Tax Act, 1951, whereupon the following question of law was referred for the opinion of this Court.

"Whether on the facts and in the circumstances of the case the conduit pipes manufactured by the assessee s are exempt from the levy of sales tax by virtue of Notification No. 14‑C dated the 15th March, 195‑1 read with Sales Tax Notification No. 3‑ST of the same date 2"

2. The items of goods specified for exemption in the aforesaid Notification No. 3‑ST dated 15‑3‑1954 and the Customs Notification No. 14‑C of the same date are the following :‑‑

"(i) Machinery of all sorts, not otherwise specified, operated by power of any description (including tractors other than agricultural) such as is used in any industrial process, including the generation, transmission and distribution of power, or used in processes directly connected with the extraction of minerals and timber, construction of buildings roads, dams, bridges and similar structures and the manufacture of goods,

(ii) Component parts including spare parts of Machinery as defined iii Item (i) above, which have been given sortie special shape, size and quality essential for the use as such.

(iii) Apparatus and appliances not otherwise specified, specially adapted for use in conjunction with Machinery as defined in item (i) above.

(iv) Component gaits including spare parts of Machinery as defined in item (iii) above, which have been given some special shape, size and quality essential for the use as such.

(v) Mechanical and electrical control and transmission gear adapted for use in conjunction with Machinery as defined in item (i) above, includ ing belting all types, designed for use with machinery, driving chains, switch board, switches and/or fuses assembled is iron‑clad cases, copper wires and cables insulated with impregnated paper, electrical earthen ware and porcelain, not otherwise specified.

(vi) Component parts including spare parts of goods enumerated in item (v) above."

The decision of the Sales Tax Officer was based upon the view that the conduit pipes did not constitute "any mechanical and electrical control and transmis sion gear adapted for use in conjunction with machinery' and that "these pipes are made out of iron and have no restricted use for electric fittings". Neither the Appellate Assistant Commissioner nor the Tribunal discussed the question but followed simply the decision of the Karachi Bench of the Tribunal in ST‑I4 of 1960‑61. In that case the Karachi Tribunal had expressed that:

"Conduit is a pipe‑shaped thing which is used to cover the wiring and 'its use appears necessary in conjunction with the main machinery for safer and proper transmission of electric energy. The word conduit is not specifically mentioned in the aforesaid Schedule which, however, is more exhaustive of item, intended to be exempted from sales tax than the superseded Notification in which this word was used specifically. In our view the article in question appears fully covered by Item (v) of the aforesaid Schedule and is, therefore, exempt from the payment of sales tax thereon."

3. The decision thus proceeds from the view that conduit pipes come under item (v) because they are used to cover electrical wiring. A careful reading of item (v), however, does not support the conclusion. For an exemption under item (v), it is necessary that the conduit pipe should be a "mechanical and electrical control and transmission gear adapted for use in conjunction with machinery as defined in item (1)". The definition includes belting all types designed for use with machinery, driving chains, switch boards switches and/or fuses assembled in iron‑clad cases, copper wires and cables insulated with impregnated paper, electrical earthenware and porcelain, not otherwise specified. Conduit pipe is not one of the items so included. Nevertheless, it can claim exemption on the principle of ejusdem generis. Conduit pipe may be used for encasing electrical wires for safer V transmission of energy but thereby it cannot be said to be "mechanical and electrical control and transmission gear adapted for use in conjunction with machinery". Con duit pipe can claim to be meant for such use only if it had been designed for that purpose. It cannot qualify for exemption if meant for general use and not restricted to the purpose of item (v).

4. Learned counsel for the respondent referred to a brochure entitled "Steel Conduit and Fitting for Electrical Wiring" issued by the British Standards Institution as British Standard 31: 1940, which contains specifications for steel conduits and fittings for electrical wiring. But even if the conduit pipe in question had been manufactured to a given standard (and even this is not the case here), it will not qualify for the exemption unless it is shown that the standard was peculiar to the purpose set out in Item (v).

5. It will be relevant to note here that the notification in question, i. e., 3‑ST dated 15‑3‑1.954, had superseded the earlier Notification No. 8 dated 27th June, 1951, as amended by Notification No. 9 dated 30‑8‑1952. In the said earlier Notification, Item No. 72 (e) which had included conduits, read as under: -

72(e) "bare hard‑drawn electrolytic copper wires and cables and other electrical wires and cables, insulated or not, and poles, troughs, con duits and insulators designed as parts of a transmission system into the fittings thereof."

Conduits qualifying under the above description had, thus, been exempt from sales tax. The omission of conduits in the subsequent relevant notification of 15‑3‑1954, therefore, would amount to their deliberate exclusion from the exemption.

6. In Commissioner of Sales Tax v. Messrs Premier Machinery Works, Karachi 1978 P T D 118 the question;

"Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the conduit pipe falls within the meaning of Items (v) and (vi) of the Customs Notification No. 14 (c) dated 1 5th March, 1954, and is consequently exempt from tax by virtue of Sales Tax Notification No. 3 dated 15th March, 1954."

which had been referred to the Court had been answered in the negative and it had been held that the Tribunal had misdirected itself in holding that a conduit pipe is necessary for transmission of electric energy and that the necessary facts that the conduit pipe was a mechanical and electrical control and transmission gear had not been proved. Learned counsel for the respon dent contended that this ruling would not be relevant because the question there bad been limited to an interpretation of Items (v) and (vi) of the notifica tion, whereas the question before this Court is broader in perspective and would cover an interpretation of the entire notification. He particularly refer red to Item (iii). But in order that conduit pipe comes under Item (iii) it has to be established that it was an "apparatus and appliances not otherwise specified, specially adapted for use in conjunction with machinery as defined in Item (i) above". The respondent had led no evidence to show that the conduct pipes had been "specially adapted" for use in conjunction with machinery. Merely because conduit pipes are also used to cover electrical wires used in machinery will not attract the exemption under the notification in the absence of any proof that they had been "specially adapted" or design ed for use with machinery or in conjunction with machinery.

7. Learned counsel next urged that as the use to which conduit pipes are, put to is a question of fact, this Court is not to go into that question, already decided by the Tribunal. The basic question, however, is not whether the conduit pipes are used to cover electrical wiring but whether such use meets the requirement of the notification, which is not a question of fact but of law. The Tribunal had failed to expressly repel the Sales Tax Officer's finding that "these pipes are made out of iron and have no restricted use for electric fittings". The notification does not cover every apparatus or appliance meant for general use including use with machinery or transmission/distribution of power. It is attracted only if the pipes .are made for the purpose specified therein. In the absence of any evidence in that regard, the Tribunal had erred in holding that the same were entitled to an exemption from sales tax.

8. For these reasons we answer the question referred to us in the nega tive. There shall be no order as to costs.

Reference answered in negative.

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