C.M. PAK. LTD. VS ADDITIONAL COMMISSIONER, INLAND REVENUE, ISLAMABAD, 2013 PTD-SUPREME-COURT 831 (2012)

(On appeal against the judgment dated 25-5-2011 passed by Islamabad High Court, Islamabad in Tax Reference No.172 of 2011).

(a) Federal Excise Act (VII of 2005)---

----S. 3(1)(d) [since substituted by the Finance Act, (I of 2008)]---Levy of excise duty on service originated outside but provided or rendered in Pakistan [prior to amendment in S. 3(1)(d) of Federal Excise Act, 2005 inserted by Finance Act, 2008]---Scope---For purposes of levying and collecting excise duty what was required to be looked into was services provided or rendered in Pakistan---Words "provided or rendered" used in S.3(1)(d) of Federal Excise Act, 2005 (prior to amendment introduced by Finance Act, 2008) would alone be enough to justify levy and collection of excise duty on service originating outside but provided or rendered in Pakistan.

(b) Federal Excise Act (VII of 2005)---

----S. 34A---Reference to High Court---Scope---Question of fact cannot be raised in a reference before the High Court---Reference before High Court invariably lies on a question of law.

Ali Sibtain Fazli, Advocate Supreme Court and Ch. Akhtar Ali, Advocate-on-Record for Petitioner.

M. Bilal, Senior Advocate Supreme Court for Respondents Nos.1 and 3.

Baber Bilal, Advocate Supreme Court for Respondent No.2.

Date of hearing: 26th September, 2012.

ORDER

EJAZAFZALKHAN,J.---Thispetitionofleavetoappeal hasarisenoutof thejudgmentdated25-5-2011 of the Islamabad HighCourt,Islamabad,wherebytaxreferencefiledby the petitioner was dismissed.

2.Learned counsel appearing on behalf of the petitioner contended that since the matter related to 1-7-2006 to 31-12-2006, it was to be decided according to the law as it then stood and not in the light of the amendment which was inserted vide Finance Act, 2008. The decision of the High Court, the learned counsel maintained, when seen in this background appears to be erroneous on the face of it, therefore, it has to be set at naught. The learned counsel next contended that when the petitioner denied from the very inception of the proceeding its status as a franchisee, levy of duty thereon, in view of the definitions of the words franchise, franchisee and franchiser, is misconceived altogether.

3.As against that learned counsel appearing on behalf of the respondents by taking us through the order of the learned Appellate Tribunal contended that where petitioner itself declared in the note forty of the financial statement for the year 2000 that it paid Rs.166,479,000 as technical fee to the Franchiser Messrs Millicom International Cellular S.A., no finding whatever was to be handed down on this issue. The learned counsel by referring to section 3 of the Federal Excise Act, 2005 contended that for the purpose of levying and collecting excise duty what is required to be looked into is services provided or rendered in Pakistan. As far as this aspect of the case is concerned, the learned counsel maintained, it has not been disputed at any stage, therefore, the impugned judgment being free from any infirmity much less legal or jurisdictional is not open to any interference.

4.We have gone through the entire record carefully and considered the submissions of the learned counsel for the parties.

5.Before we appreciate the contentions raised by the learned counsel for the parties, it is worthwhile to refer to section 3 of the Act which reads as under:--

"3. DutiesspecifiedintheFirstScheduletobelevied.---(1) Subject to the provisions of this Act and rules made thereunder, there shall be levied and collected in such manner as may be prescribed duties of excise on,

(a).................................................................

(b).................................................................

(c).................................................................

(d)services, provided or rendered in Pakistan; at the rate of fifty per cent ad valorem except the goods and services specified in the First Schedule, which shall be charged to Federal excise duty as, and at the rates, set-forth therein.

(2).................................................................

(3)TheBoardmay,bynotificationintheofficialGazette, in lieu of levying and collecting under subsection (1) duties of excise on goods and services, as the case may be, levy and collect duties,--

(a)on the production capacity of plants, machinery, undertakings, establishments or installations producing or manufacturing such goods; and

(b)on fixed basis, as it may deem fit, on any goods or class of goods or on any services or class of services, payable by any establishment or undertaking producing or manufacturing such goods or providing or rendering such services.

(4).................................................................

Explanation. ......................................................."

6.A look at the above quoted provision would leave no doubt that what is to be considered for the purpose of levying and collecting excise duty is services provided or rendered in Pakistan. We for a while ignore the words "services originated" inserted by dint of the amendment mentioned above, yet the words "provided or rendered" would alone be enough to justify the levy and collection mentioned above. When asked whether the duty levied and collected has been levied and collected twice: once for provision and then for rendition of service, the answer was no. When this being the case. The whole exercise sought to be embarked upon appears to be academic.

7.The argument that when petitioner denied from the very inception of the proceeding its status as a franchisee levy of duty thereon was misconceived is also without force when the record, as contended by the learned counsel for the respondent, proves to the contrary. Even if it be as it was contended by the learned counsel for the petitioner, it being a question of fact could not have been raised in a reference before the High Court which always invariably lies only on a question of law. In this view of the matter, we don't think impugned judgment suffers from any infirmity much less legal or jurisdictional so as to justify interference therewith.

8.For the reasons discussed above, this petition being without merit is dismissed and the leave asked for is refused.

MWA/C-3/SCPetition dismissed.