Shah Dairy Products Limited
Commissioner, Customs, Excise and VAT Chittagong and others
(Special Original Jurisdiction)
Kazi Ebadul Hoque J
Md. Muzammel Hossain J
Shah Dairy Products Limited………………Petitioner
Commissioner, Customs, Excise and VAT Chittagong and others………………Respondents
June 7, 1999.
Cases Referred To-
Cape Brandy Syndicate Vs. Inland Revenue Commissioner (1921)11 KB 64; Russell Vs. Scott (1948) AC 422 (6 & 7).
Rokonuddin Mahmud with Mobina Asif Rahman, Advocates—For the Petitioner.
Quazi Rezaul Hoque, Advocate—For Respondent No.1.
Writ Petition No. 2069 of 1998.
Kazi Ebadul Hoque J.- This Rule was issued at the instance of the petitioner Shah Dairy Products Ltd., calling upon the respondents to show cause as to why imposition of supplementary duty on the import of milk powder by the petitioner as evidenced by Ex-Bond Bills of Entry No.C69121 dated 2-7-98 and No.C676646 dated 8-7-98 No.C70199 dated 9-7-98 and No.C67668 dated 28-6-98 (Annexure ‘F’ series) and on the supply of the same milk powder of the petitioner as made by Memos being File No.4th/A(12)18/VAT Shah Dairy/9/1147 dated 14-6-98, File No.4th/A(12) VAT/Shah Dairy/96/1313 dated 16-6-98 and File No.4th/A(12)2/VAT/Budget/98/3404-7 dated 18-6-98 (Annexure-’F’ series) shall not be declared to have been made without any lawful authority or of no legal effect.
2. Learned Advocate for the petitioner after placing the petition and other materials on record submitted that imposition of 2.5% supplementary duty on the imported milk powder by section 7(15) of the Finance Act, 1998 by including the same in the Third Schedule of the Value Added Tax (VAT) Act, 1991 is contrary to the provisions of section 7 of the said Act and the said section 7 having provided for imposition of such supplementary duty on luxury, socially undesirable and unessential goods, imposition of the same on essential goods like milk powder by section 7(15) of the said Finance Act is ultra vires of said section 7 of the VAT Act. He further submitted that imposition of 2.5% on the import of milk powder once and again on the supply of the same is double taxation and as such the same is arbitrary, malafide and without any lawful authority. He further submitted that without clear and unambiguous words by implication any provision of law, tax cannot be imposed on a person.
3. It appears that the petitioner company imports milk powder in bulk packs from abroad and repacks the same in its factory keeping the same in the bonded warehouse into various sizes of packets and then sells the same to the buyers. Before the Finance Act 1998 petitioner company paid 40% customs duty and 15% VAT on the imported milk powder under HS code No. 04.02 and was not subject to supplementary duty as the same was essential and baby food item. Section 7(15) of the Finance Act, 1998 amended the Third Schedule of the VAT Act and included milk powder making the import of the same liable to payment of 2.5% supplementary duty. All the milk powders taken out of petitioner’s bonded ware-house since 11-6-1998 have been subjected to payment of supplementary duty at the rate of 2.5%. Petitioner claims that by Annexure-’F’ series respondents demanded 2.5% supplementary duty on all supplies of the milk powder made by the petitioner in addition to the supplementary duty already paid by the petitioner on the imported milk powders. Petitioner also claims that without express provision in the charging section 7 of VAT Act imposition and realisation of supplementary duty on the import and supply of milk powder merely by the inclusion of the same in the Third Schedule of the said Act by section 7(15) of the Finance Act, 1998 is not only arbitrary and mala fide but also without any lawful authority.
4. Value Added Tax (VAT) Act 1991 came into force on 2nd June and 1st July, 1991 respectively in respect of different provisions of the said Act. Section 3 of the said Act provides for assessment and payment of VAT at the rate of 15% on the import of goods at the stage of import, goods produced in Bangladesh at the stage of making or manufacture, services by the person at the, time of giving the service and in other cases by the supplier. Luxury goods, unessential and socially undesirable goods and services mentioned in the Third Schedule supplied, imported or given in Bangladesh shall be liable to imposition of supplementary duty at the rates mentioned in the said schedule under the provision of section 7 of the said Act. In the Third Schedule of the VAT Act, 1991 milk powder was not included at the time of passing the said Act. By section 7(15) of the Finance Act, 1998. Third Schedule of the VAT Act, 1991 was substituted by the Fourth Schedule of the said Finance Act and by such substitution, amongst others, milk powder was included in the Third Schedule of the VAT Act and the import of the same was made liable to payment of 2.5% supplementary duty.
5. Now the question raised to this Rule is whether such duty can be imposed by merely including the said goods in Third Schedule without amending the corresponding charging section 7 of the said Act and whether milk powder is an unessential goods making it liable to such duty: In other words, whether by implication such duty can be imposed in the absence of clear words in the said Act.
6. Before we consider the provisions of section 7 of the VAT Act, 1991 and provisions of section 7(15) of the Finance Act 1998 which includes milk powder imposing 2.5% supplementary duty in the Third Schedule of the said Act of 1991 let us see whether tax or duty can be imposed by ambiguous words used in a statute. In the case of Cape Brandy Syndicate Vs. Inland Revenue Commissioner reported in (1921)11 KB 64 it has been held that a person who had no pre-war trade or business could not be imposed tax under the Finance Act 1915. In that case it was observed: “In a 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 tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.” In the case of Russell Vs. Scott reported in (1948) AC 422 it has been held by the Privy Council that a sand pit is not a concern of like nature of the concerns enumerated in rule 3 of No. III of the schedule of the Income Tax Act 1918 of Ireland. In that case Viscount Simon observed- “I feel that the taxpayer is entitled to demand that his liability to a higher charge should be made out with reasonable clearness before he is adversely affected.” In that case Lord Porter observed:
“There is a maxim of income tax law which though it may sometimes be overstressed, yet ought not to be forgotten. It is that the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him.”
7. From the above decisions it is clear that no tax can be imposed on a person without using unambiguous and clear words by which tax is imposed.
8. In section 7 of the VAT Act, 1991 it has been clearly stated that supplementary duty shall be imposed on the luxury, unessential and socially undesirable goods and services supplied, imported or given in Bangladesh as mentioned in the Third Schedule of the said Act at the rates mentioned therein. Originally milk powder was not included in that schedule and by section 7(15) of the Finance Act, 1998 Third Schedule was amended and milk powder and other goods and services were included therein. Charging Section 7 only speaks of goods and services which are luxury, unessential and socially undesirable and Third Schedule includes the names of such luxury, unessential and socially undesirable goods and services. By including milk powder in the Third Schedule legislature clearly showed that milk powder is either luxury, or unessential or socially undesirable goods. When legislature has termed it so can the Court embark on an enquiry as to the nature of the said goods. In a given social context a goods may be luxurious or unessential or socially undesirable to the whole community or a section of it. It is a debatable proposition. When legislature termed it so we cannot reopen the same as wisdom of the Legislature cannot be questioned by us. Legislature represents the entire community and it was the plenary power to make law subject to the limitation imposed by the Constitution. In such capacity when the legislature included milk powder in the Third Schedule imposing 2.5% supplementary duty on the same we can only look to the words used as to whether imposition of the same has been made in an unambiguous and clear language and cannot question its wisdom. Inclusion of the words, milk powder” imposing “2.5%f supplementary duty,” in the Third Schedule in our view is very clear and unambiguous and there is no room for any doubt about the same. Even a lay man will clearly understand that by the Finance Act, 1998 2.5% supplementary duty has been imposed on the import of milk powder to Bangladesh. When language of the said statute is so clear and unambiguous merely saying that the said goods is essential petitioner cannot escape the liability of paying the said duty.
9. Schedule of a statute is very much part of the statute and inclusion or exclusion of any item in or from the schedule of the statute can be made by the legislature only. In the instant case inclusion of the milk powder imposing 2.5% supplementary duty on the same in the Third Schedule of the VAT Act, 1991 was made by the legislature by the Finance Act 1998 and not by any executive authority by any notification or circular and, as such, schedule is not subordinate legislation by the executive authority. Only when a subordinate legislation like rules is made by the executive authority in exercise of power vested under the parent law then the vires of such subordinate legislation can be questioned on the ground of its being in excess of such power or in conflict with the provisions of the parent law. But there is no scope for questioning the vires of any item included in the schedule of a statute by the legislature on the ground of its being not in conformity with the charging section. Charging section is couched in general terms and the schedule clarifies the same in specific term to avoid any ambiguity. We have already seen that there is no ambiguity in the inclusion of milk powder imposing 2.5% supplementary duty on the same in the Third Schedule of the VAT Act, 1991 and there is also no conflict with the same and the charging section 7 thereof.
10. It is not clear from the Exbond assessment notices Annexure ‘F’ series that supplementary duty at the rate of 2.5% was realised from the petitioner on the imported milk powder since 11-6-98. Even if it is assumed that the petitioner paid 2.5% supplementary duty on the import of milk powder there is nothing in the notices Annexures “F’ series to show that 2.5% supplementary duty was again charged from the petitioner. By the said notices petitioner was asked to add 2.5% supplementary duty in calculating price of the milk powder produced (possibly meant repacked) by it for purpose of payment of 15% VAT on such price since 14-6-98 and to file declaration of such price to the VAT authority. On consideration of the materials on record we find no substance in the contention that 2.5% supplementary duty was charged from the petitioner once on the import and then on the sale of milk powder by it.
In the above facts and circumstances we find no merit in this Rule.
In the result, the Rule is discharged without any order as to cost.
Source: 52 DLR (HCD) (2000) 72