Case Description
PLD 1990 Supreme Court 68
Present: Nasim Hasan Shah, Gulam Mujaddid and Ali Hussain
Qazilbash, JJ
GOVERNMENT OF PAKISTAN and others-- Appellants
versus
Messrs HASHWANI HOTEL LTD. --Respondent
Civil Appeal No. 186 of 1982 in Civil Petition No. 127/R of 1982,
decided on 1lth, February,'1989.
(a) Central Excises and Salt Act (I of 1944)--
----S. 4 (3)(a) --- Constitution of Pakistan (1973), Art. 185 (3) ---
Leave to appeal was granted to consider whether the charging
provision S. 4(3)(a), of the Act applies to a concessional exception
within the respective categories ,of customers prescribed in
advance or to the category itself considered with, the customers
charged at the highest rate.
(b) Interpretation of statutes--
--- Taxing Statute --- Guidelines for interpretation.
The first and the foremost principle of interpretation is that words
are to be taken in their literal meaning. The plain ordinary
meaning of the words to be adopted in construing a document.
There have to be special circumstances where this principle is to
be deviated and certain words have to be interpreted differently
than their plain meanings with reference to the context.
Link 1
In a taxing statute,- as in any other statute, there is no reason to
depart from the general rule that words used in a statute must
first be given their ordinary and natural meaning. it is only when
such an ordinary meaning does not make sense that resort can be
made to discovering other appropriate meanings.
Link 2
Interpreting the taxing statute the Courts must look to the words
of the statute and interpret it in the light of what is clearly
expressed. It cannot import provisions in the statute so as to
support assumed deficiency.
Link 3
In taxing Act one has to look, merely at what is clearly said. There
is no room for any intendment. There is no equity about a tax.
There is no presumption as to a tax. Nothing is to be read in,
nothing is to be implied. One can only look fairly at the language
used.
Link 4
Where the statute's meaning is clear and explicit, words cannot
be interpolated in the first , in such a case, they are not needed. If
they should be interpolated, the statute would more than likely
fail to express the legislative intent, as the thought intended to be
conveyed might be altered by the addition of new words. They
should not be interpolated even though the remedy of the statute
would thereby be advanced, or a more desirable or just result
would occur Even where the meaning of the statute is clear and
sensible, either with or without the omitted word interpolation is
improper, since the primary source of the legislative intent is in
the language of the statute.
Atlas Batteiy Ltd. v. Superintendent Central Excise and Land
Customs Karachi PLD 1984 SC 86; Sky Rooms Ltd. v. Assistant
Collector, Central Excise and Land Customs, Karachi PLD 1982
Kar. 244; Pakistan through the Secretary, Ministry of Finance '.
Government of Pakistan, Karachi v Popular Tobacco Co. Karachi
PLD 1961 SC 66; Pakistan Textile Mill-Owners' Association Karachi
v. Administrator of Karachi PLD 1963 S C !3'1; Messrs Hirjina &
Co. Pakistan Ltd., Karachi v. Commissioner of Sales Tax, Central,
Karachi 1971 SCMR 128; Cape Brandy Syndicate v. Inland
revenue Commissioners (1921) 1 K B 65 and Crawford on
Statutory Construction, Crawford Edn-,
(c) Central Excises and Salt Act (I of 1944)--
--- S. 4(3) --- Term "concession"---Scope and interpretation ---
Provision of S. 4(3) 'does not expressly or even by implication
prohibit the hotel management to create different categories of
different classes of customers? thus is lawful and? "concession"
'Imports reduction of prices already fixed for a class of customers
or for a quantity, and if different rates are fixed for different
classes of customers or for different quantities, then the
difference in rate cannot be said to be a "concession".
Further, according to dictionary meaning the term, in the
prescribed, context, means, rebate or reduction in fixed rate or
price as a favour but when its rates or prices are already fixed
and known and the services, facilities, and utilities could be
obtained by any person of that class not arise.
Link 5
It is, therefore, apparent that the- rates charged from different
Airlines on account of their crew members and twits Passengers
are not in the nature of concession and they could conveniently
be trained as, or compared with the rates, for bulk sale, quantity-
wise or number wise. The convenient and safe criteria to judging
whether a conreq6nn has been allowed or not would be that it
two customers of the same class are sold the same goods in the
name or similar quantity of different rates, then in the absence of
some other good reason, the one who purchases the same at
lower rate can be said to have been granted concession.
There is nothing in the aforesaid Provision which either expressly
or ever by implication prohibited the hotel management to create
different categories of different customers. There being no legal
bar categorisation was lawful and was not done with any ulterior
motive or to avoid paying the duty.
Link 6
According to subsection (3) of section 4 of the Act,? undoubtfuly
charges for service facilities and utilities are to be fixed by the
management of the hotel and not by the law of the excise
authorities. It is only the rate of the duty which is to be prescribed
by law. Fixation of different charges for different categories of
customers is not forbidden by law. Perhaps such fixation has got
to be done by the management for operational considerations.
The law also does not insist that a single uniform charge shall be
fixed for all categories of customers.
Atlas Battery Ltd. v. Superintendent, Central Excise and Land
Customs, Karachi PLD 1984 SC 80 and Sky Rooms Ltd. v.
Assistant Collector, Central Excise and Land Customs, Karachi PLD
1982 Kar. 244 ref.
(d) Central Excises and Salt Act (I of 1944)--
--- S.4(3) --- General Clauses Act (X of 1897), S. 13 --- Expression
'in arty case"--?Interpetation---Expression is to be read
conjunctively and not disjunctively--?Provision of S. 13, General
Clauses Act, 1897, therefore, would not be applicable.
M-Bilal, DA.-G. and Imtiaz Muhammad Khan, Advocate-on-Record
for Appellants.
Muhammad Zaman, Advocate Supreme Court and Ch. Akhtar Ali,
Advocate on Record for Respondent.
Date of hearing: 11th February 1989.
JUDGMENT
GHUIAM MUJADDID, J.--This appeal by Government of Pakistan
and two other is by leave of this Court. The judgment impugned is
that of the Lahore High Court dated 3-5-1982 passed in the
Constitution petition filed by Niessrs Hashwani Hotel Limited
(hereinafter to be referred as the hotel), the respondent in this
appeal.
The respondent is a public limited company. It owns Holiday Inn, a
four star hotel, in Islamabad, the capital of Pakistan.
Three show-cause notices dated 6-1-1981, 27-1-1981 and 27-1-
1981, respectively, were served on the respondent from the
Office of Deputy Collector, Central Excises and Land customs
wide, the signatures of the Deputy Collector.
By means of notice dated 6-1-1981, the respondent was required
to show cause why central excise duty short deposited amounting
to Rs.175,680.60 should not be recovered from them under Rule
10 of the Central Excise Rules, 1944 and why penal action should
not be taken against them under Rules 226 and 210 of the
Central Excise Rules.
By means of the notice dated 27-1-1981, the respondent was
called upon to show cause why the central excise duty evaded
amounting to Rs.60,794.94 and additional duty amounting to
Rs.30,397.97 should not be recovered from them under Rules 10
and 96 of Central Excise Rules, 1944 and why action should not
be taken against them under Rules 210 and 226 of these Rules.
By means of the third notice dated 27-1-1981, the respondent
was required to show cause why the central excise duty
amounting to Rs.77/,807.90 and additional duty of Rs.-388,933.95
be not , recovered from them under Rules 10 and 96W and they
should not be penalised under Rules 218 and 226 of the Central
Excise Rules, 1944.
The respondent was given option to be heard "in person through
representative or a counsel". The respondent availed of this
facility; filed representation before the Chairman, Central Board of
Revenue. On 29-1-81 the representation was rejected.
Messrs Hashwani Hotel Limited then invoked the Constitutional
jurisdiction of the Lahore High Court in which they impugned the
show-cause notices and the order dated 29-1-1981 paused by the
Central Board of Revenue whereby the representation was
rejected on the ground that those were without lawful authority
and of no legal effect.
The Constitution petition was accepted by means of the impugned
Judgment. Government of Pakistan felt aggrieved. A petition for
leave to appeal was riled in this Court. Leave was granted to
consider ?whether the charging provision Section 4(3) Clause (a)
of the Under Excises and Salt Act, 1944 applies to a concessional
exception within the respective categories of customers
prescribed in advance or to the category itself considered with
the category of customers charged at the highest rate.?
Before, dealing with the contentions of the learned counsel for the
parties, it is important to mention the set up/arrangement of the
hotel. According to the averments in the Constitution petition
before the High Court, there are 150 single and double bed rooms
in the hotel, They have the usual facilities of service and other
amenities. The customers are categorised in different categories
and the following rates have been prescribed:--
??????????????????????????????????????????????????????????????
?????????????? Single?????? Twin?????? Suite????????????????? Pr
esidential?
?????????????????????? ????????????????????????????????????????
????????????(Rs.)?????????? (Rs.)????????? (Rs.)??????????????? S
uite? (Rs.)
Airlines Personnel & Bona
Fide Travel
Agents??????????????????????????????????????????????? 225.00??
?? 300.00????????? 500.00???????? 900.00
Quarterly &
monthly??????????????????????????????????????????? 3250.00???
???? 300.00??????? --------??????? --------
rates seminars & conven?tions
for 15 rooms or
more.????????????????????????????????????????? 250.00????????
300.00????????? -------??? ????????????????--------
International Trouist group
for 10 persons or
more.?????????????????????????????????????? 300.00????????? 35
0.00???????? -------??????????????????? --------
Commercial
accounts.???????????????????????????????????????? ------????? ???
????------??????????? -------??????????????????? -------??????????????
?
Diplomatic/UN &
officials????????????????????????????????? 400.00????????? 480.0
0???????? 800.00????????????????? 1,500.00
British Airways Crew???????????????????????????????? ????????
320.00????????? --------????????? --------??????????????????? --------
F.I.T.
standard??????????????????????????????????????????????? Single?
???????????? Twin??
??????????????????????????????????????????????????????????????
????????? 480.00????????? 570.00
Deluxe??????????????????????????????????????????????? ????????
?????510.00????????? 600.00
Deluxe
Suite??????????????????????????????????????????????????? 1000.
00??????? 600.00
Presidential
suite????????????????????????????????????????????? 1800.00????
??? -------
The services and facilities provided to the guests are subject to
duty under the Central Excises and Salt Act of 1944. The rate is
15% of charges for the services. The rate of duty is not disputed.
It is with regard to the charges for the service facilities and other
amenities. The hotel has been paying duty on the actual income
from the different categories of customers as referred to above.
Learned counsel for the' appellant contended that the duty was
not being demanded on the basis of any notional rent but was in
accordance with the provisions of subsection (3) of section 4 of
the Central Excises and Salt Act of 1944 (hereinafter to be
referred as the Act) which provisions did not exempt from the
levy of the central excise duty. It was further submitted that the
violation of the aforesaid provisions exposed the respondent to
penal liability.
The main emphasis of the learned counsel was on the word
"concession" mentioned in subsection (3) of section 4 of the Act.
It was contended that the respondent was debarred by law to
create categories of customers. According to the learned counsel,
it was a mere pretext, to come out of the ambit of the word
concession".
Learned counsel then pressed into service section 13 of the
General Clauses Act in order to explain the scope of the
expression, "in any case" used in clause (a) of subsection (3) of
the Act.
It was argued that the expression not only applied to the cases of
particular individuals but was applicable in any case that is to say
to the cases of number of individuals and classes of individuals.
What the learned counsel meant was that categorisation did not
exempt the respondent from paying the maximum duty. Learned
counsel could only cite one decided case which is that of Atlas
Battery Ltd. v. Superintendent, Central Excise and Land Customs,
Karachi (PLD 1984 SC 86).
The learned counsel for the respondent supported the impugned
judgment and submitted that the word, "concession" cannot be
legally extended so as to cover the categorisation done by the
respondent. According to the learned counsel, the categorisation
was nothing new in the hotel business and the management is
fully authorised to do so without violating any legal provision. It is
the privilege of the management to do so.
Learned counsel relied upon the case of Sky Rooms Limited v.
Assistant Collector, Central Excise and Land Customs, Karachi
(PLD 1982 Kar. 244). In this case the Court observed that:--
?"Now, it is well known practice in the field of trade and
commerce that various merchandise or commodities are sold to
different classes of customers at different rates, for example a
mill sells cloth produced by it in wholesale at a rate different from
the one charged by it at its retail shop, and in such a case the
rate charges from a whole seller cannot be termed as a
concessional rate, for the term "concession" in our view imports
reduction of prices already fixed for a class of customers or for a
quantity, and if different rates are fixed for different classes of
customers or for different quantities, then the difference in rate
cannot be said to be a "concession".
Further, according to dictionary meaning the term, in the present
context means, rebate or reduction in fixed rate or price as a
favour but when the rates or prices are already fixed and known
and the services, facilities, and utilities could be obtained by any
person or that class then the question of favour would not arise."
It was further observed by the High Court that:--
"It is, therefore, apparent that the rates charged from different
Airlines or from P.I.A. on account of their crew members and
transit passengers are not in the nature of concession and they
could conveniently be termed as, or compared with the rates for
bulk sale, quantity-wise or number wise. In our view the
convenient and safe criteria for judging whether a concession has
been allowed or not would be that if two customers of the same
class are sold the same goods in the name or similar quantity at
different rates, then in the absence of some other good reason,
the one who purchases the same at lower rate can be said to
have been granted a concession."
The other case relied upon by the learned counsel was Pakistan
through the Secretary, Ministry of Finance, Govt. of Pakistan,
Karachi v. Popular Tobacco, Co., Karachi (PLD 1961 SC 66) where
it was observed that:--
"The, intention of the law is that excise duty should be paid by the
manufacturers on the amount which they actually receive and it is
on such amount that excise duty was being originally levied. In
agreement with the learned Judges of the High Court we find that
the demand for additional duty made by the Excise Department
was unjustified and we dismiss the appeal with costs."
Before examining the wording of clause (a) of section 4 (3) of the
Act to which reference shall be made later on, it is essential to
advert to the accepted B principles for the construction of
statutes with special reference to the Taxing Statute.
The first and the foremost principle of interpretation is that words
are to be taken in their literal meaning. The plain ordinary
meaning of the word is to be adopted in construing a document.
There have to be special circumstances where this principle is to
be deviated and certain words have to be interpreted differently
than their plain meanings with reference to the context.
In the case of Pakistan Textile Mill Owners Association Karachi V.
Administrator of Karachi PLD 1963 Supreme Court 137, it was
observed that:-
"In a taxing statute, as in any other statute, there is no reason to
depart from the general rule that words used in a statute must
first be given C their ordinary and natural meaning. It is only
when such an ordinary meaning does not make sense that resort
can be made to discovering other appropriate meanings."
This Court in the case of Messrs Hirjina and Co. (Pakistan) Ltd.,
Karachi v. Commissioner of Sales Tax Central, Karachi? SCMR 128
made it quite clear by making the following observation----
"We may here observe that interpreting the taxing statute the
Courts must look to the words of the statute and interpret it in the
light of what is clearly expressed. It cannot import Provisions in
the statute se as to support assumed deficiency.
While dealing with the question of interpreting a taxing Act in the
case of Cape Brandy Syndicate v. Inland Revenue Commissioners
(1921) 1 K. B. 65 at page 71, Rowlatt , J observed as follows:-
"It simply means that in taxing Act one has to look merely at what
is clearly said. There is no room for any intendment. There is no
equity about a tax. There is no presumption as to a tax. Nothing is
to be read in, nothing is to be implied, one can only look fairly at
the language used."
This is an excellent guideline and can be safely utilized for
interpreting a taxing statute.
In this very sequence it is important to refer to the following
paragraph from the Statutory Construction (Crawford Edition page
270):--
"Where the statute's meaning is clear and explicit, words cannot
be interpolated. In the first place in such a case, they are, not
needed. If they should be interpolated, the statute would more
than likely fail to express the legislative intent, as the thought
intended to be conveyed might be altered by the addition of new
words. They should not be interpolated even though the remedy
of the statute would thereby be advanced, or a more desirable or
just result would occur. Even where the meaning of the statute is
clear and sensible, either with or without the omitted word,
interpolation is improper, since the primary source of the
legislative intent is in the language of the statute."
Section 4(3)(a) of the Act is to the following effect:--
(a) any such services, facilities or utilities are, in any case,
rendered or provided free of charge or at a concessional rate, the
duty shall be levied and collected on the amount which would
have been charged for such services, facilities and utilities had
they not been rendered or provided free of charge or at a
concessional rate."
The word "concession" was thoroughly examined by the learned
Judges of the Sind High Court in the case referred to above. We
are fully in agreement with the reasoning of the learned Judges
while determining as to what is meant by the word "concession"
its scope and interpretation.
We have not found anything in the aforesaid provision which
either expressly or even by implication prohibited the hotel
management to create different categories of different customers.
There being no legal bar we are of the view that categorisation
was lawful and was not done with any ulterior motive or to avoid
paying the duty.
We are further of the view that the learned Judge of the Lahore
High Court, therefore, rightly observed:--
"While subscribing to the conclusion reached by the Sind High
Court I will like to add that according to subsection (3) of section 4
of the said Act, undoubtedly the charges for service facilities and
utilities a ( to be? fixed by the management of the hotel and not
by the law of the excise authorities. It is only the rate of the duty
which is to be prescribed by law. Fixation of different charges for
different categories of customers is not forbidden by law. Perhaps
such fixation has got to be done by the management for
operational considerations. The law also does not insist that a
single, uniform charge shall be fixed for all categories of
customers."
This leaves us to examine as to whether section 13 of the General
Clauses Act can be of some help to the learned counsel for the
appellants so far as the expression "in any case" is concerned.
The expression "in any case" is to be read conjunctively not
disjunctively. Having held that categorisation does not amount to
any concession, we don't think that section 13 is applicable in the
instant case.
The result is that there is no merit in this appeal which is, hereby
dismissed.
M.B.A./G-238/
S???????????????????????????????????????????????????? Appeal
dismissed.
