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Civil Petition for Special Leave to Appeal No. 771 of 1976, decided on 8th March 1980.
(On appeal from the judgment and order of the Lahore High Court dated 12-5-1976 in C. R. No. 119 of 1971).
Art. 185(3) read with Sales Tax Act (III of 1951), Ss. 3 & 9-Sales tax-Whether ginner of cotton or wholesale licenses, liable to pay tax under S. 9 of Act-Leave to appeal granted to examine equation.
Sajjad Jafri, Advocate and Sh. A. Karim, Advocate-on-Record for Petitioner.
Nemo for Respondents.
Date of hearing: 8th March 1980.
-The petitioner owns a ginning mill and he claims to have leased it for a part of the assessment year 1961-62 to a business concern known as Messrs Karachi Cotton Ginners, Lyallpur, who had obtained a sellers license under section 9 of the Sales Tax Act for the relevant period. Now, the Sales Tax Officer levied sales tax from the petitioner even for the period for which it had leased its factory to Messrs Karachi Cotton Ginners, Lyallpur. This was because the firm or business known as Messrs Karachi Cotton Ginners, Lyallpur was not traceable. The petitioner, there fore chal lenged the) Sales Tax Officer's order in an appeal which was allowed by an Appellate Assistant Commissioner on 9-1-1969. Therefore, the Sales Tax Officer challenged this decision in an appeal before the Income-tax Appellate Tribunal which was allowed by Tribunal on 16-7-1978.
The petitioner, therefore, moved the Tribunal for a reference under section 17 (1) of the Sales Tax Act, but as the Tribunal rejected this applica tion, the petitioner filed an application in the High Court, in which it prayed that the following question be referred to the High Court. The question reads.
"Whether under the circumstances of present case, it is ginner of cotton (the present petitioner) or the whole-saler licensee liable to pay to under section 9 (5) read with section 3(c) and condition 3 of the license issued under section 9(2) of the Sales Tax Act, 1951."
As the question was decided against the petitioner by a learned Judge of the Lahore High Court by his judgment dated 12-5-1978, the petitioner, has filed this petition for leave:
In the question framed by it, the petitioner has abandoned its position that it has leased its factory premises to Messrs Karachi Cotton Ginners. Lyallpur, therefore, the petition can be argued only on the footing that the petitioner had ginned cotton for Messrs Karachi Cotton Ginners, Lyallpur under some contract, which has not been produced. Now, even on this assumption Mr. Sajjad Jafari submitted that Messrs Karachi Cotton Ginners Lyallpur had obtained a license under the Sales Tax Act and there appears to be no controversy about this aspect of the case or about the fact that this firm or business was directly liable under the Sales Tax Act for sales tax. Now, merely because this firm is untraceable Mr. Sajjad Jafari submitted that this was not sufficient to place the burden of sales tax on the petitioner.
The question turns on the proper construction of sections 3 and 9 of the Sales Tax Act and as the judgment is one of first impressions, we grant leave to examine the validity of the construction placed by the High Court on & these sections Security in the sum of Rs, 2,000. The appeal will be mad ready on the present record with liberty to the parties to file additional documents.
Leave granted and recovery
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