Sales Tax Instructions

Sales Tax Instructions, 2009
―Taxes on the sales and purchases of goods imported, exported produced, manufactured or
consumed‖. It is the objection of the petitioners that amended provision being a penalty or being
in nature of a penalty was not covered by item No.49. The submission is fallacious for a number of
reasons. Firstly the power of legislature to provide for a levy undoubtedly also aims it with the
power to legislate charging, machinery and recovery provisions. Penalty provisions are invariably
an inseparable part of a taxing statute intrinsically connected with both machinery as well as
recovery provisions. In absence of penalty provisions the levy or collection of a tax would not be
more than a pious thinking. It is an established rule of interpretation of constitutional instruments,
particularly legislative lists that these could not be construed narrowly. In the aforesaid case re:
Messrs Ellahi Cotton Mills (Supra) in some what similar situation their Lordships re-affirmed the
principle by finding that such lists could not be construed narrowly and were rather to be given
liberal construction. In cases of laws relevant to economic activities the principles of
interpretation were explained by the apex Court. Also the principles governing the determination
of Constitutionality of a legislation were dealt with. It was accordingly held that law should be
saved rather than destroyed and that the Courts must lean in favour of upholding the
constitutionality of a legislation; that there was a presumption in favour of the constitutionality of
legislative enactments unless ex-facie it was violative of a constitutional provision. As the laws
relating to economic activities, their Lordships desired that Courts should view them with greater
latitude than the laws relating to civil rights such as freedom of speech, religion etc. Also their
Lordships approved reading together of various items in the legislative list in order to re-concile
the powers of the legislature. Item No.49 in the Federal Legislative List provides for framing of
laws to impose taxes on sales or purchases of goods etc. Such power includes the power to
legislate the charging, machinery, recovery as well as penalty provisions. Item No.49 when read
with items No.58 and 59 makes it otherwise clear that the legislature is competent to legislate not
only on a particular subject but also on matters incidental or ancillary to those enumerated in the
list. In re: Pakistan Industrial Development Corporation v. Pakistan through the Secretary,
Ministry of Finance (1992 SCMR 891) it was found that items in the list in respect of which power
of taxation can be exercised should not be interpreted in a restricted and pedantic manner. The
objection of the petitioners, therefore, is without any basis. It is however, re-iterated that the
provisions of further tax as introduced through sub-section (1-A) are neither penalty nor in the
nature of penalty provisions. Since a registered person has a choice not to supply to an unregistered
person, the further tax provided for may at best be a disincentive both for the registered
person as well as an un-registered person. However, to call it a penalty would not be legal when
the definition clause section 2(34) describes it to be a part of sales tax.
18. The other contention that the amended provision is violative of Article-4 (right of
individuals to be dealt with in accordance with law, Article-18 (freedom of trade business or
profession), Article-24 (protection of property rights) and Article-25 (equity of citizens) is not
supported by any cogent reason. It is not explained as to how the petitioners have not been dealt
with in accordance with law or that any restriction was placed upon them in respect of their trade
business or profession or as to how they have been discriminated against. The fact of the manner,
on the other hand, is that they are fighting for an un-identified class whom they would like to
protect and whose identity they would not like to be disclose. Their zeal to shield the above class
rather gives support to the submissions of the revenue that these petitioners are meant to protect
their alternate dealers who operate in order to suppress volume of supplies and avoid faithful
maintenance of accounts. The petitioners in the face of these facts do not appear to have
approached this Court with clear hands. As such they are otherwise not entitled to relief from a
Court of equity.
19. The case law relied upon by the Revenue and the learned Deputy Attorney General
including re: V.M. Syed Muhammad and Co. v. State of Andhra (Supra) is relevant and pertinent.