Sales Tax Instructions

Sales Tax Instructions, 2009
15. In the first amendment brought about by Finance Act, 1998 the absence of any reference
to sub-section (c) of section 2 and sub-section 4 and 5 of section 3 is also of academic interest
only. The revenue has denied that absence of mention of the aforesaid provisions in the newly
added sub-section (1-A) was of any significance as far as the retailers are concerned. After the
latest amendment in the provisions in the year, 1999, no arguable ambiguity has been left. Even if
there was any such ambiguity in the amended provisions as earlier introduced in sub-section (1-
A), that by itself would not mean that the provisions were un-constitutional or ultra vires of
legislature. The claim of the retailers that it did not apply to them is again too optimistic. Even if
no reference to clause (c) of sub-section (2) existed therein no confusion was there as to the
persons chargeable to the further levy when a taxable supply was made to a person other than a
registered person. The addition of various sub-clauses or sub-sections of section 3 by Finance Act,
1999 has merely affirmed the legal position which in any case existed even before the latest
amendment.
16. The suggestion that sections 22 and 33 of the Act provide for an adequate penalty against
avoidance of registration and evasion is again not relevant. The intention or motive of legislature
cannot be questioned nor will it be proper to suggest if a particular legislation was in fact
required or not. Both sections 22 and 23 of the Act prescribe book keeping and invoicing
requirements and section 33 provides for general penalties. The amended provision in fact is a
mean to an end which is documentation as prescribed in the above provisions. Further it is for the
revenue to look for the ways and means by which it could protect its interest and it is not for the
assessee to sit in judgement as to which made should or should not be adopted. The submissions
made with reference to definition of registered person as contained in section 2(25) of the Act
have already been answered by the learned counsel for the revenue. Also I am in argument with
the respondents that the alleged contradictions pointed out in the provision in question and the
provisions of sections 13, 14 and 18 of the Act are not a good reason to declare them to be against
law. In fact, no contradiction of the kind could be brought home by the petitioners which could
render any provision of the Act as redundent or nugatory. In any case their co-existence in the
statute is neither impossible nor it is the case of the petitioners that they could not be re-conciled.
17. Learned counsel for the respondent is also correct in stating that most of the objections
raised at the bar against the amended provisions find adequate answer from the judgement of the
Supreme Court in re: M/s Elahi Cotton Mills (Supra). It will be seen that the only relevant
objection which could be taken note of against the constitutionality of the provisions is made on
the ground that the amended provision in nature of a penalty and therefore is against item No.49
of the 4 th Schedule to the Constitution. That item in the Federal Legislative List provides for
―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