National Board of Revenue

 Vs.

 Intertek Testing Services International Ltd. and another

Supreme Court

Appellate Division

(Civil)

Present:

Md. Ruhul Amin J

MM Ruhul Amin J

Md. Tafazzul Islam J

National Board of Revenue, represented by it’s by its Chairman, Segunbagicha, Dhaka and others……Appellants (In all the cases)

Vs.

Intertek Testing Services International Ltd. and another…….Respondents (In Civil Appeal No. 287 of 2003)

BIVAC International S.A. Bureau Vertias Group and another…….Respondents (In Civil Appeal No. 288 of 2003)

PSI Inspectorate Ltd. and another…….Respondents (In Civil Appeal No. 289 of 2003)

Judgment

August 30, 2005.

Cases Referred To-

Oriental Bank Corporation Vs. Henry B. Wright, 1980 Appeal Cases Vol. V (PC) 842; Megh Raj Vs. Ruchand Uttanm Chand, AIR 1946 Lahore, 280 (FB); Mrs. Momtaz Begum Vs. Taxim Officer PLD 1969, Dhaka, 803; A. V. Fernandez Vs. State of Kerala, AIR 1957 SC, 657; Haji Ghulam Zamin and Abul Hossain Vs. A. B. Khondkar and others 16 DLR, 486.

Lawyers Involved:

Mahmudul Islam, Senior Advocate (Probir Neagi, Advocate with him) instructed by Ahsanullah Patwary Advocate-on-record-For the Appellant No.1 (In all the cases.)

Fida M.Kamal, Additional Attorney General, Instructed by Ahsanullah Patwary, Advocate-on-record-For the appellant Nos. 2-9 (In all the cases.)

Dr. Kamal Hossain, Senior Advocate (Salahuddin Ahmed, Advocate with him) instructed by A.S.M. Khalequzzaman, Advocate-on-record-For Respondent No. 1 (In Civil Appeal No.287 of 2003.)

Not represented-Respondent No.2 (In Civil Appeal No. 287 of 2003.)

Rokonuddin Mahmud, Senior Advocate & Kh. Mahbubuddin Ahmed, Senior Advocate, instructed by Syed Mahbubur Rahman, Advocate-on-record-For the Respondents (In Civil Appeal No. 288 of 2003.)

Rafiqu-ul-Huq, Senior Advocate (Masood R. Sobhan, Advocate with him) instructed by Aftab Hossain, Advocate-on-record-For the Respondents (In Civil Appeal No. 289 of 2003.)

Civil Appeal Nos. 287-289 of 2003.

(From the Judgment and Order dated May 25, 2003 passed by the High Court Division in Writ Petition Nos.3475, 3439 and 3480 of 2002.)

Judgment

Md. Ruhul Amin J. – The appeals by leave are against the common judgment of the High Court Division dated May 25, 2003 in Writ Petition Nos.3475, 3439 and 3480 of 2002 making the Rules absolute upon declaring the action of the revenue levying VAT on the fees and commissions of the writ-petitioners who acted as Pre-shipment Inspection Agencies to have been passed without lawful authority and of no legal effect.

2. In Writ Petition No.3475 of 2002 the writ-petitioner impugned the Memo, being ??? ?? ?(?) ????/?????? ???? ? ???/??/??? (?-??) dated 11.5.2002 of the National Board of Revenue (NBR) com­municating the decision to the relevant authorities for realization of VAT treating the Pre-shipment Inspection Agencies (PSI) as (???? ??????), ???? ??? S 020.00 and the Memo, being ??? ?? ??/??/?????? ?????/????/??-????dated 25.6.2002 deduct­ing VAT from the pending bill of the writ-petitioners and that also expressing the intention to realize the arrear VAT from the bills of the writ-petitioners. In Writ Petition No.3439 of 2002 writ-petitioners impugned the Memo, being ??? ?? ?(?) ????/?????? ???? ? ???/??/??? (?-??) dated 11.5.2002 of the NBR written to the authorities for realization of the VAT from the fees and commissions of the PSI Agencies and the Memo, being ??? ?? ??(?) ????? ??? ??? ??(???-?)/???(??) dated March 11, 2001 of the NBR to the relevant authority communicating the decision for realization of VAT @15% from the 20% fees and commissions of the PSI Agencies. In Writ Petition No.3480 of 2002 the writ-petitioners impugned the Memo, being ??? ?? ?(?) ????/?????? ???? ? ???/??/??? (?-??) dated 11.5.2002 of the NBR to the con­cerned authority for realization of the VAT from the fees and commissions of the PSI Agencies and the Memo, being ??? ?? ??(?) ????? ??? ??? ??(???-?)/???(??) dated March 11, 2001 of the NBR to the author­ities for realization of VAT @ 15% from the 20% of the total fees and commissions of the PSI Agencies.

3. The High Court Division has declared the aforesaid Memos. of the NBR to have been passed without any lawful authority and are of no legal effect and thereupon further declared that the PSI Agencies “are not liable to pay VAT”. The High Court Division also directed the authorities to refund the VAT already realized from the bills of the PSI Agencies.

4. The writ petitions were filed more or less with the common contentions, that PSI Agencies  were  appointed by  the Government to  render service outside Bangladesh and that VAT being levyable for service rendered in Bangladesh hence PSI Agencies are not liable to be charged with VAT for rendering service to the Government  outside  Bangladesh,  that there is no express provision in the VAT Act, 1991 (Act No.22 of 1991) to levy VAT on the service of the PSI Agencies, that PSI Agencies are not liable to be charged with VAT because of the provi­sion in the Second part of sub-section (1) of section 3 of the VAT Act which pro­vides that except services mentioned in second  schedule  all  services  rendered within Bangladesh are to be charged with VAT, that in the contract signed between the parties i.e. Government of the People’s Republic of Bangladesh and the respective PSI Agencies there is no clear stipulation as to payment of VAT on the services ren­dering by the PSI Agencies and that PSI Order, 1999 and the VAT Act lack indica­tion as to charging of VAT on the services rendered by the PSI Agencies and as such charging of VAT on the fees and commis­sion payable against the services render­ing by PSI Agencies is bad in law, that the PSI Agencies  rendered  service  to  the Customs or in  other words to  the Government and as such not liable to be charged with VAT for the service so rendered by the PSI Agencies,  that PS Agencies being an agent of Government as mentioned in paragraph 7, clause ‘Gha of the Second Schedule of the VAT Act the said agency is not liable to be charged with VAT, that PSI Agencies being the statutory Agents of the Government and the NBR, the same are not required to pay VAT as because service is rendered to the Government. It has lastly been contended that the settled principle of law is that the fiscal law for charging a citizen with tax or levy is to be construed strictly and that for saddling the citizen with tax or levy plac­ing reliance on a particular law there must have clear legislative intention in the said law to saddle the citizen with levy or tax and that legislative intention for saddling the citizen with tax or levy must be in clear and unambiguous language and in case of ambiguity the benefit of doubt will go in favour of the subject.

5. In repelling the aforesaid contentions of the writ-petitioners it was contended from the side of the Revenue that in the contract signed between the Government and the PSI agencies there is clear mention that PSI agencies would be required to pay all local taxes including VAT in respect of the income and profit of the PSI agencies, that the service rendered by the PSI agencies is not extra-territorial and that the PSI agen­cies render service in Bangladesh and sub­mit bill to the authority in Bangladesh claiming fees and commission in terms of Taka and that the payment for the services render by the PSI agencies is being made in Bangladesh with the privilege of con­verting 80% payment into foreign curren­cy and as such the fees and commissions of the Pre-shipment Inspection Agencies as per provision of section 3 of the VAT Act is liable to be charged at 15%, that in the Second Schedule of the VAT act PSI Agencies have not been exempted from payment of VAT and as such the said agen­cies are liable to pay VAT on the total fees and commissions as per provision of sec­tions 4 and 5 of the VAT Act, that as per paragraphs 6(ka) and (kha) of the Second Schedule of the VAT Act PSI Agency has not been exempted from payment of VAT or in other words PSI Agency has been excepted in clause 6(ka) and (kha) of the Second Schedule and consequent there­upon the PSI agent is chargeable with VAT.

6. The High Court Division upon observ­ing that the submission of the learned Additional Attorney General that as PSI Agency has not been mentioned in the Second Schedule of the VAT Act (in the Second Schedule services mentioned other then the services excepted are exempted from payment of VAT) and as such the PSI Agency is liable to pay VAT can not be accepted since acceptance of the said submission would create anomaly, that there was no notification to the effect that service of PSI Agent is vatable serv­ice, that PSI Agency performs its primary service outside Bangladesh and that the said Agency renders some services in Bangladesh but as there is no clear cut demarcation as to quantity of service to be rendered in Bangladesh and outside Bangladesh and as such in the absence of determination VAT can not be levied, even if on certain part of the service VAT is levyable, because of uncertainty and ambiguity, that taking into consideration the provision of sections 3 and 5 of VAT Act and the provision of PSI Order, 1999 it appears the legislature and its delegation (NBR) have no intention to levy VAT on the services of PSI Agency, that the NBR as per provision of section 3(5) of the VAT Act has not declared the service of PSI as vatable and that in paragraph 7(L) of the Second Schedule of the VAT Act it has not been mentioned that PSI Agent would not be exempted from the payment of VAT for the service renders by it, that in the explanation add to ‘???? ??????’ the NBR expressly or in unambiguous term has not included service of PSI Agency for levy­ing VAT, that PSI Agency and ‘???? ??????’ are not synonymous and as such both can not be placed on the same footing in view of the legal terminology in the Customs Act and the PSI Order, that PSI Agency is not engaged in surveying the goods and as such the PSI Agency is not includable in the organization like ‘???? ??????’ and that explanation given by the NBR in relation to ‘???? ??????’ can legally be not extended to the service rendered by the PSI Agency.

7. The background whereof the writ peti­tions were filed is that Government as per provision of section 25A of the Customs Act, 1969 (inserted in the Customs Act by the Finance Act of 16 of 1999 upon repealing section 25A which was inserted by the Finance Act 11 of 1994) as well as in the light of the provisions of the Pre-shipment Inspection Order 1999 invited tender for appointment of PSI Agency for the purpose of “verification and certifica­tion of the quality, quantity, price, descrip­tion and customs classification of any goods to be imported into Bangladesh”. The writ petitioners’ bids were accepted and for the aforesaid purpose contract was entered into between the writ-petitioners and the Government between February 8 and 18 of 2000. The contract so entered into between the Government and the respective PSI Agency was for 3 years effective from February 15, 2000. The writ-petitioners in respect of the service rendered by them submitted bills and received payment for some time without deduction of VAT. On March 11, 2001 NBR wrote to the concern authorities for charging VAT @15% on the 20% fees and commission of the PSI Agency. It may be mentioned the NBR in support of their decision to levy VAT on the fees and com­mission of the PSI Agency, categorized the same as ‘???? ??????’. The PSI Agency took exception to the aforesaid decision of the NBR and thereupon the NBR by its letter dated May 21, 2001 wrote to the PSI Agency as well as to the customs authori­ties, that as the PSI Agency has taken exception to the decision of the NBR for charging VAT on the fees and commission of the PSI Agency, the matter is being examined by the NBR and that till the final decision is being made payment may be made to the PSI Agency against their pending bills upon obtaining undertaking from the PSI Agency to the effect that in case final decision is being made to the effect that fees and commission of PSI Agency are chargeable with VAT, the PSI Agency would pay the VAT on their fees and commission and thereupon the PSI Agency upon giving undertaking received payment for the services rendered by the time by them. Finally the NBR cancelled the Memos. i.e. Memo, dated March 11, 2001 and May 21, 2001 and made the decision to charge VAT on the fees and commission of the PSI Agency and com­municated the same to the concerned authorities by the Memo, dated May 11, 2002.

8. Leave was obtained contending that the High Court Division was in error in hold­ing that the PSI Agency does not render services in Bangladesh and thereupon arriving at the finding that the services ren­dered by the PSI Agency are not covered by section 3 of the VAT Act, that services rendered by the PSI Agency is liable to be charge with VAT as a Survey Agency ‘???? ??????’ under the service code S020.00 of the VAT Act, 1991 and as such in the facts and circumstances of the case the High Court Division was in error in holding otherwise and thereupon in making the Rule absolute, that in paragraph 6 of the Schedule 2 of the VAT Act ‘???? ??????’ hav­ing been clearly indicated as liable to VAT and as such as it was not necessary for the National Board of Revenue (NBR) to issue Gazette Notification to include PSI Agency as one of the Agency liable to be charged with VAT, the High Court Division was in error in holding that serv­ices rendered by PSI Agency are not vatable service since there was no notification by the NBR as to that effect.

9. The concept of verification and certifi­cation of the goods imported in Bangladesh by Pre-shipment Inspection Agency was introduced in 1994 through the insertion of section 25A in the Customs Act, 1969 (the Act). Provision of the said section was as follows:

“25A. Notwithstanding anything con­tained in any other section of this Act, the Government may, by notification in the official Gazette, declare that the quality, quantity, price and customs classification of goods verified and certified in the prescribed manner by an approved pre-shipment inspection agency will be accepted as the basis for assessment”.

10. This provision of law was inserted at the instance of the importer for the pur­pose of facilitating speedy clearance of the imported goods. It may be mentioned from the language of the section it is seen that acceptance of the certificate issued by the pre-shipment Inspection Agency was optional for the Customs Authority and that the matter of getting imported goods verified and certified by the pre-shipment Agency was not compulsory. Later on the Government by the Finance Act No.16 of 1999 substituted the section 25A of the Customs Act, 1969 and the substituted section 25A of the Customs Act reads as:

“25A. Pre-shipment inspection agen­cies and assessment on the basis of their certificates.-(1) For the purposes of this Act, the Government may, in the prescribed manner, appoint pre-shipment inspection agencies and determine the scope and manner of their certification and related matters.

(2) The Government may, by notifica­tion in the official Gazette, declare that the quality,   quantity, price, description and customs classification of any goods verified and certified in the prescribed manner by a pre-ship­ment inspection agency shall be accepted as the basis for assessment.

(3) For the purposes of this section, “price” means value of the goods determined in accordance with sub­sections (1) and (2) of section 25″.

11. And by the said Finance Act Government also inserted in the Customs Act, 1969 section 25B and 25C which are as follows:

“25B. Mandatory pre-shipment Inspection.- It is mandatory for the importers to have their importable goods inspected by a pre-shipment inspection agency before or at the time of shipment of those goods on board a vessel, aircraft or other conveyance:

Provided that the Government may, by notification in the official Gazette, exempt any class of goods or any goods imported by any class of importers or any goods imported through a customs port or a customs station or any area within such port or station from the mandatory pre-shipment inspection.

25C. Pre-shipment inspection service charge.- The Government may, by notification in the official Gazette, impose pre-shipment inspection serv­ice charge on imported goods required to be inspected by pre-ship­ment inspection agencies at a rate not exceeding one percent of the value of such goods and this charge shall be collected as if it were a customs duty leviable under section 18(1)”.

12. At the time of execution of the con­tract between the Government and the Pre-shipment Inspection Agencies the above was the law.

13. From the provision of the newly enact­ed section 25A and 25B it is seen that cer­tificate   issued by the Pre-shipment Inspection Agency was made basis for assessment of customs duties and other levies and that verification by the Pre-shipment Inspection Agency was made compulsory for the importer in respect of the goods imported. It may be mentioned under the provision of section 25A as enacted in 1999 for the verification of the imported goods the Pre-shipment Inspection Agency was appointed by the Government.

14. Keeping in view the object and pur­pose of inspection by the Pre-shipment Inspection Agency the Government in the light of the provision of section 25A of the Act by SRO No.316-Law/99/1807/Cus dated October 19, 1999 issued Pre-shipment Inspection Order, 1999 enabling the Government to appoint Pre-shipment Inspection Agency and audit Agency, set­ting out the function and responsibility of the said agency, mode of issuance of cer­tificate by the Pre-shipment Inspection Agency and use of the certificate issued by the Pre-shipment Inspection Agency, mode of payment of fees of the Pre-ship­ment Inspection Agency, etc. The Government floated tender for the appointment of Pre-shipment Inspection Agency on October 20, 1999. In pursuant to the advertisement the Respondent No.1 in the respective appeals dropped its bid and the bid of the Respondent No.1 of the respective appeals having been found acceptable, the Government entered into contract with the Respondent No.1 of the respective appeals between 8^th of February, 2000 and 18th of February, 2000. The effective date of the contract so signed by the respective Pre-shipment Inspection Agency was 15tn of February and the period of contract was for 36 months. In the tender document the bidder in its financial proposal was required to include all expenses including the taxes, duties, fees, levies and other charges imposed under the applicable law of Bangladesh as on 01.10.1999 (1st day of October, 1999). In the agreement entered into by the Government and the Respondent No.1 in the respective appeals clause 4 reads as:-

“4. Taxation: All income and profits of the second party accrued or derived by it and under this contract shall be subject to all local taxes including Value Added Tax, where applicable, Similarly import of all goods by the second party shall be subject to pay­ment of all applicable duties, taxes and other charges as are normally applicable to import of such goods”.

15. It may be mentioned prior to the sign­ing of the contract PSI Agency wrote on November 21, 1999 to the National Board of Revenue seeking clarification as to pay­ment of VAT “with regard to the Mandatory PSI Program”. The National Board of Revenue in its turn by the letter dated November 21, 1999 wrote to the PSI Agency as follows:

“Dear Sir,

With reference to the above noted let­ter the undersigned is directed to inform you that 15% VAT is applica­ble on the charge, commission or fees received by the PSI service Tenderer as per VAT Act, 1991. You are requested to contract the Income Tax wing of NBR regarding Income Tax matter”.

16. After the signing of the contract as stated hereinbefore PSI Agency for the service rendered submitted bill and the authority made payment for some time without deducting VAT. On March 11, 2001 NBR wrote to the Internal Resources Division of the Ministry of Finance about the realization of VAT and income tax from the bill submitted by the Pre-shipment Inspection Agency and communicat­ed the copy thereof to the respective Pre-shipment Inspection Agency i.e. Respondent No.1 in the respective appeals. The contents of the letter run as:

“??????? ???? ? ??????? ????? ????????? ??? ?????? ?????? ??, ????-???????? ????????? (PSI) ???????? ?????? ???????? ????????? ????? ??? ?? ???,??? ?? ????? ???? ?????? ?????? ???? ????????? ????? ?????? ?? ???, ???? ?? ???? ?(?) ??????? ???? ???????? ?? ????? ?????? ???????? ??????? ????? ??? ????? ?????? ?? ?????? ?????? ?????? ???????? ????? ??????? ??? ????? ???? ??? ????????? ?????? ??? ??? ????? ????? ?????? ??????? ????? ?????????? ????-???????? ????, ???? ?? ????????? ??? (?) ?????? ??????? ????? ?????? ??% ??? ????????? ??? ?????? PSI ?????? ?????? ??????? ????? ??????? ??????? ??? ??????? ??% ?? ??? ??% ???? ???? ?????????

‘???? ??????’ ?????? ?????? ?????? ??? ?????????? ?????? ??? ???????? ??? ???? ?????????? ??? ??? ???? ?????? ???????? ??????? ???? ???????? ??????? ????? ?????? ?? ????????? ???? ?????? ????? ????? ??????? ????????? ??? ???? ???? ?????? ? ???????? (Procurement Provider) ?????? ???????? ???????? ?????? ?????? ??????? ??% ?? ??% ???? ?????? ??? ?????? ??????? ??? ??? ?% ???? ???? ??????????? ?????? ???????? ????????? ?????? ?????? (???? ?? ??/????/???,??? ??/??/???) ???????? ?? ??????? PSI ???????? ???? ?????? ?????? ???????? ???? ?????? ?????? ????-?? ??????? ??????? ??? ???????? ???? ???? ???? ??????? ??????? ???? ??? ???????? ???? ?????? ????????? ??? ????????? ??? ???????? ?????? ?????? ??????? ??% ???? ???? ??? ????? ??? ??? ????? ?????? ???????? ??? ?????? ???? ???”?

17. The PSI Agency took exception to the aforesaid decision of the NBR. Thereupon the NBR by the letter dated 21.5.2001 informed the PSI Agency and the other authorities that the matter of payment of VAT by the PSI Agency on their fees or commission is under re-examination and the contents of the latter reads as:

“??????? ???? ? ??????? ????? ????? ??? ?????? ?????? ?????? ?????? ?????? ??, ???? ????? ?????? ????? ??????? PSI ???????? ?????? ??????? ???? ?? ????? ?????? ?????? ??????????? ??? ?????? ??????? “??????? ????????? ?? ???? ??????? ????? ?????? ??????? ?????? ??????? ?? ?? ??? pending ???-?? ?? ????? ???? ??????? ????????? ??????? ???? ?????? ????? ??????? ??????????? ???????????? ??? ???? ???? ?????????? ??????? ???? ???????? ??? ???? ??????? ????? ????”-????? ????????? ?????? ??? ???????????? ???? ??? ??? ?????? ???? ?????? ?????? ??? ???”

18. In the light of the aforesaid letter the authority paid the fees or commission of the PSI Agencies on their furnishing undertaking for payment of VAT in case of final decision that VAT is to be paid by the PSI Agencies. The NBR by its letter dated May 11, 2002 communicated to the Commissioner of Customs house and Commissioner of Customs Excise and VAT about the cancellation of the letter dated 11.3.2001 and 21.5.2001. The con­tents of the aforesaid letter dated May 11, 2002 reads as:

“??????? ???? ? ??????? ?????????? ?????? ??????? ????? ??????? ?????? ??????? ?????/??? ??? ???? ??????? ????? ????????? ????? ?????? ????? ???? ??????? ??? ????????? ? ????????? ???????? ????? ??? ???? ?????? ???????????? ?????? ??? ??? ????? ??? ?????,??? ?? ???? ??????? ???????? ???????? ?????? ????? ?????? ?? ?????? ???? ?????? ??????? ???? ???? ???????? ???????????? ??????? ???????? ???? ??????? ???? ????? ?????? ?????? ???? ?????? ??????? ?????? ??? ??? ?????? ????? ?? ????/????? ??????? ???? ???? ???????/???????? ????? ???? ?????? ???????? ????? ???? ???????? ??? ???????? ???? ????????? ????? ??????? ???? ????

19. It may be mentioned the NBR made the final decision to realize VAT from the fees or commission payable to the PSI Agency treating the said Agency in the category of ‘???? ??????’ under the service code S020.00 of the VAT Act. Above was the background in which the writ petitions were filed by the PS I Agencies.

20. Section 3 of the VAT Act, 1991 (Act No. 22 of 1991) is the charging section i.e. levying of VAT on the services rendered except the services mentioned in the Schedule 2. Provision of sub-section 1 of section 3 of the VAT Act, which was the law on the date of signing of the contract, as follows:

“?? ????? ?????? ?? ?????- (?) ????? ?????? ???????? ???????? ?????? ????????? ????????? ??? ???? ? ???? ?????? ???????? ???????? ?????? ??? ?????? ???????? ??? ???? ? ? ?????? ??????? ???????? ?????? ????? ???? ????? ?????? ?? ??????? ? ?????? ?????

21. And later on because of the amendment in July 2000 the provision of sub-section 1 of section 3 of the VAT Act stood as fol­lows:

“?? ????? ?????? ?? ?????- (?) ????? ?????? ???????? ???????? ?????? ????????? ????????? ??? ???? ? ???? ?????? ???????? ???????? ?????? ??? ?????? ???????? ??? ??? [??????? ?????? ???????? ???? ???? ??????] [????????? ???????] ??? ????? ??? ???? ? ? ?????? ??????? ???????? ???? ????? ???? ????? ?????? ?? ??????? ? ?????? ?????“

22. And the entries in paragraph Nos.6 (?), (?) as well as 7(?) p of the second Schedule of the Act as per provision of sub-section 1 of section 3 of the VAT Act stood as follows:

“?? ????????? ????? (?) ????????, ???????, ????, ????? ? ???????? ????????, ????, ???????, ?????????, ????? ??????, ??????, ???????????, ????????,????? ???????????, ?????? ??????????, ???????????,?????????????? ???????? (?????????????? ????? ? ???????????? ????? ? ???? ?????? ??????)

(?) ?????? ???? ????????? ?????, ?????????? ???? ????????? ?????, ????????? ???????? (?????????????? ????? ? ???????????? ????? ? ???? ?????? ??????)

?? (?) ?????, ??????? ?????????, ??????? ??????????? ???? ???? ?????????? ?????? ??????? ???? ??? ???  ????? ???? ?????????? ?????????? (?????, ??????? ?????????, ??????? ??????, ???? ?????? ? ??????? ???,???? ??????????,?????? ? ????  ?????????? ???????

(Other entries in the said two para­graphs are not relevant for the pur­pose of disposing of the appeals).

23. The NBR has directed the authorities to levy VAT on the fees or commission of the PSI Agency categorizing the said Agency as ‘???? ??????’. ‘???? ??????’ was in the Schedule of the Act from the very inception thereof as an Organization on which VAT was levyable. ‘???? ??????’ on the date of signing of the contract as an organization levyable with VAT was as follows:

“???? ???-S ???.??

???? ???????

???????

‘???? ??????’ ???? ????????? ???????? ?????????, ???????????, ????? ????????? ??????? ?? ????????? ?????? ???? ?????? ???? ???? ????????? ???? ?????? ???? ???? ?????? ??? ?????????, ??????, ???? ? ??????? ????? ?????? ?? ???? ?????? ?? ????-??????? ???? ?????? ?? ???? ?? ??? ???? ?????? ??????? ?? ??? ???????, ?????????? ?? ???????

24. The contention of the appellants was that the services render by the PSI Agencies is very much of the kind of the services render by the ‘???? ??????’ and as such the NBR has quite legally directed the relevant authority to levy VAT on the fees or commis­sion received by the Agency against the service renders by the Agency.

25. As against the aforesaid contention of the appellants the Respondents’ con­tention was that PSI Agency does not sur­vey the goods nor inspect the goods, and the PSI Agency only verify the goods to be imported in Bangladesh and issue cer­tificate in respect of the goods verified and the PSI Agency does not render service in Bangladesh, rather the Agency renders service outside Bangladesh i.e. in the country wherefrom the goods imported into Bangladesh and issue certificate in the country wherefrom goods imported.

26.The learned Counsel for the appellants submitted that services of PSI Agency is very much like that of the service renders by the ‘???? ??????’ and that the Agency initiates its service in Bangladesh and that to give completeness to its service  the Agency also renders service outside the Country i.e. the Country wherefrom goods imported.

27. The learned Counsel for the appellants has submitted that ‘???? ??????’ was vatable since inception of the VAT Act and as the service of PSI Agency is like that of the ‘???? ??????’ the service of the PSI Agency is very much vatable. It has also been sub­mitted by the learned Counsel that before PSI order the PSI Agency had no respon­sibility as to the certificate issued or in other words service rendered by it, but with the promulgation of PSI Order the PSI Agency became liable for the services it render.  He continued that as at the beginning i.e. in 1994 there was no exis­tence of PSI Agency in Bangladesh as such the service of the same was not vat­able but when the PSI Agency in the light of the provision of PSI Order, 1999 start­ed rendering service and that the service so rendered as is very much of the kind of the service rendered by the ‘???? ??????’ the service of the PSI Agency became vatable. The learned Counsel for the appellant to substantiate his contention that PSI Agency initiates its service in Bangladesh has referred to clause ‘?’ of Article 5 of the PSI Order, (?), (??), (?) of clause 7 of the PSI Order and clause 9 of the PSI Order. It has been argued by the learned Counsel for the appellants that the High Court Division was wrong in relying on paragraph 7(?) of the second Schedule of the VAT Act since same is as residual paragraph while there is specific para­graph i.e. paragraph 6(?) and (?) and the same clearly indicates that service of the ‘???? ??????’ is vatable and as such service rendered by the PSI being like that of the service rendered by the ‘???? ??????’ the same was and is vatable. The learned Counsel continued that the High Court Division was not correct in observing that there was no notification specifying that service of PSI order is vatable since there is specific provision in the second Schedule of the VAT Act that services of the Organization which are like that of the ‘???? ??????’ are vatable.

28. The learned Counsel Mr. Md. Salah Uddin Ahmed for the Respondent Nos.1 and 2 in Civil Appeal No. 287 of 2003 sub­mitted that sole question in the appeals is whether PSI Agency renders service in Bangladesh and that whether service ren­ders by PSI Agency is vatable. The learned Counsel continued that PSI Agency is supposed to perform its func­tion in the abroad and that the nature of the function of the PSI Agency explicitly shows that functions of the PSI Agency are to be performed in the abroad, that the Agency as mentioned in the contract are to be performed in the abroad. The learned Counsel referring to the expression “???????? ???????” as in sub-section 1 of sec­tion 3 of the VAT Act submitted that the same clearly specified for what service VAT is to be charged. It has also been con­tended that PSI Agency is not the ‘???? ??????’ and that even if for argument’s sake PSI Agency is considered as ‘???? ??????’ in that case also PSI Agency can not be charged with VAT since the Agency ren­ders service outside Bangladesh and does not render any service in Bangladesh. It has also been contended by the learned Counsel upon referring to the expression “???????? ???????” as in sub-section 1 of sec­tion 3 of the VAT Act and to the word “?????????” as in the ???????? to ‘???? ??????’ that the same clearly show that when an Organization renders service in Bangladesh then the service of the said Organization, say ‘???? ??????’ is vatable but PSI Agency does not render service in Bangladesh and as such the service of the said Agency can not be equal with the service of the ‘???? ??????’ for the purpose of levying VAT or charging VAT.

29. The learned Counsel continued that provision of section 3(1) of the Act is not attracted for charging the service rendered by the PSI Agency because of the fact the said Agency renders service abroad and that by no stretch of imagination the serv­ice renders by the PSI Agency can be con­sider to have been rendered in Bangladesh. The learned Counsel has referred to clause (?) of Article 2 of the PSI Order as well as clause (?) of the said Article. He has also referred to (??) as well as (?) of Article 5 of the PSI Order and thereupon emphasised that no service is rendered by the PSI Agency in Bangladesh and that the local office of the PSI Agency acts as a post office and that whatever the minor acts are performed by the local office of the PSI Agency prior to the submission of the report those are of so insignificant nature that the same can not be considered substantial service ren­ders by the PSI Agency. It has been sub­mitted on behalf of the Respondents that there was no statutory provision in the VAT Act, 1991 or elsewhere that the serv­ice of PSI Agency will be liable to VAT and that there is nothing in the contract or in the PSI Order, 1999 that the service of the PSI Agency would be charged with VAT. It has also been contended that to charge a citizen with the tax or levy there must have clear intention of the legislature in the legislation on the basis of which legislation the citizen is charged with taxes or levies and that in the legislation there must have specific and clear mention that the service of specific kind renders by an Organization irrespective of the matter whether service is rendered in Bangladesh or outside Bangladesh is chargeable with VAT. It has also been contended that a fis­cal statute is to be construed having regard to the strict letter of the law and not mere­ly to the sprit of the statute or the sub­stance of the law. In connection with the aforesaid submission the learned Counsel has referred to the case of Oriental Bank Corporation Vs. Henry B. Wright, 1980 Appeal Cases Vol. V (PC) 842, Megh Raj Vs. Ruchand Uttanm Chand, AIR 1946 Lahore, 280 (FB), Mrs. Momtaz Begum Vs. Taxim Officer reported in PLD 1969, Dhaka, 803 and the case of A.V. Fernandez Vs. State of Kerala, AIR 1957 SC, 657. Suffice it to say the law is now settled that fiscal statute is to be construed strictly and that in case of any ambiguity, as to the intention of the legislature, the benefit thereof would go to the subject or citizen.

30. In Civil Appeal No. 287 of 2003 for the Respondent Nos.1 and 2 Dr. Kamal Hossain also made submissions. It has been submitted by the learned Counsel that the Government has challenged part of the judgment or in other words Government has not challenged part of the judgment and as such the finding of the High Court Division that PSI Agency is appointed by the Government to verify and certify the quality, quantity, price, description and customs classification of importable goods and issue certificate in the foreign territory from where the goods imported into Bangladesh and with the issuance of the certificate primary duty of the PSI Agency is fully performed, that although the agent of the PSI Agency has represented its principal within the territo­ry of Bangladesh and the representative has its office in Bangladesh and that the said representative does some ancillary job in connection with the release of the goods imported as certified, but to what length the local Agency is rendering serv­ice in Bangladesh that remains undeter­mined, that the contention of the learned Additional Attorney General that since PSI Agency does not find its place in the exclusionary Second Schedule it is liable to pay VAT, if such contention is accepted plainly that will create great anomaly and would lead to absurdity since thereby per­son supplying chicken to a wedding recep­tion, a rickshaw puller rendering services to the passengers and the tiny boy who is carrying fishes, vegetables and other goods from the kitchen market to the pur­chaser’s kitchen will come under the VAT area and in that case there would be a sit­uation “as to who is to pay VAT to what extent whom to pay VAT” and that there can not be any such “unguided legisla­tion” and as such the legislative device and policy as adopted and has been indi­cated in sub-section (5) of section 3 of the VAT Act is that the Board in order to ful­fill the objects of the section in the public interest by notification in the official gazette shall declare the vatable goods and class of goods as vatable goods and the Board also in order to determine the periphery of vatable services can give explanation, that the Board of Revenue has not by any Gazette Notification declared the PSI Agency’s service as vat­able service remains unchallenged. The learned Counsel has submitted that there was no legislation for charging VAT in respect of the services rendered by the Agency and that Tax can not be imposed by silence and exclusion and that if VAT was required to be paid by PSI Agency then there would have no expression in clause 4-(Taxation) “where applicable”, that in the facts and circumstances of the case it is evident that VAT was not levyable on the services rendered by PSI Agency and that the NBR was in uncer­tainty about levying of VAT on the servic­es of PSI Agency and in that uncertainty the NBR wrote letter to the concerned Authority that VAT would be levyable at the rate of 15% on the 20% of the Tender value but later on cancelled that letter without assigning any reason and that thereafter on May 11, 2002 cancelled the letter dated March 11, 2001 and communi­cated the unreasonable decision to the rel­evant authority that VAT would be levyable on the service of the PSI Agency taking the same in the category of ‘???? ??????’ under the service Code No.S020.00, that Tax can be levied and collected in the light of the provision as in Article 83 of the Constitution i.e. only on the basis of legislation made by the Parliament and that as there is no legislation authorizing the Tax collecting authority to charge VAT on the service of the PSI Agency the action of the revenue charging VAT on the service of the PSI Agency is not legally sustainable, that no leave has been obtained in respect of the findings and decision made by the High Court Division to the effect that acceptance of contention of the learned Additional Attorney General plainly since PSI Agency does not find its place in the exclusionary Second Schedule the said Agency is liable to pay VAT, will create great anomaly and would lead to absurdity and that also would lead to a uncertain position “as to who is to pay VAT to what extend whom to pay VAT” and that there can not be any such unguided legislation, that legislative policy has been indicated in sub-section (5) of section 3 of the VAT Act authorizing the NBR to make official Gazette Notification declar­ing the vatable goods and class of job as vatable and that also empowering the NBR to give explanation for the purpose of determining the periphery of vatable services, that VAT is not Income Tax nor the same is the substitute of sale Tax, that it is not seen from the petition for leave to appeal and the leave granting order in what respect High Court Division was wrong in holding that learned Additional Attorney General was not correct in con­tending that as PSI Agency does not find place in the exclusionary Second Schedule, the same is liable to VAT, since acceptance of the said contention would create great anomaly and also would lead to absurdity as because thereby supplier of chicken to weeding reception, rickshaw pullar, the hawkers selling vegetables and the boy carrying the vegetables and other articles purchased in the kitchen market to the purchasers home would be brought within the net of VAT and in the said situ­ation “the position would be such as to who is to pay VAT to what extend whom to pay VAT” and as such there can not be any such unguided legislation and that sub-section (5) of section 3 of the VAT Act has authorized the NBR to make notifica­tion in the public interest for obtaining the object of the provision of law relating to VAT declaring which goods are vatable and what class of goods would be vatable and that also authorized the NBR to deter­mine the periphery of vatable services.

31. The learned Counsel has submitted that in the background of the decision made by the High Court Division as to that in the absence of Gazette Notification specifying that the service of the PSI Agency is vatable, the authority was not competent to charge VAT on the service rendered by PSI Agency, the appellants have made the contention in a very narrow compass i.e. whether PSI Agency is in the exclusionary service mentioned in the Second Schedule and as to whether the PSI Agency is ‘???? ??????’ and that the said argument has been made without looking to the provision of sub-section 5 of section 3, that in the absence of specif­ic and definite description which particu­lar service is to be considered as ‘????’ and that if particular service is considered as ‘????’ then how the service so rendered is to be vetted there can not be levy of VAT. The learned Counsel has submitted that the action of the NBR canceling its earlier notification i.e. notification dated March 11, 2001 whereby NBR directed the authorities to levy 15% VAT on the 20% of the tender value of the PSI Agency and thereupon issuing fresh notification for charging VAT on the fees or commission of the PSI Agency was arbitrary and the action of the NBR as manifests unguided power to make notification is not sustain­able in law or in other words bad in law, that reading law relating to VAT it is seen that legislature has never intended to give unguided power to the NBR to issue noti­fication levying VAT on the service ren­dered by a particular Agency or body and that it is the settled principle of law that a particular legislation giving unguided power to subordinate Agency to levy Tax is a bad legislation and not sustainable in law, that there is no guideline for the NBR to determine amount of VAT levyable on the service of the PSI Agency and that there is no notification by the NBR that the service of the PSI Agency would be levyable with VAT, that law provides for Notification authorizing the NBR to deter­mine the periphery of the services charge­able with VAT keeping in view the public interest or in other words explicitly show­ing that particular kind of service would be subject to VAT.

32. The learned Counsel has referred to the case of Haji Ghulam Zamin and Abul Hossain Vs. A.B. Khondkar and others reported in 16 DLR, 486 for the purpose of showing that delegation of power by the legislature to the subordinate Agency how much permissive and in the reported case it has been observed “Delegation by the Legislature is permitted within pre­scribed limits in order to execute the leg­islative norms and provisions that have been enacted…..Legislation being the exclusive function of the Legislature, it cannot abdicate such function; the Legislature, after having enunciated the essential legislative principles and stan­dards, is, however, entitled to delegate to outside agencies such functions which are essential to an effective exercise of the legislative power with which it has been endowed by the Constitution; the Legislature, however, cannot efface itself and delegate all its functions to an extra­neous agency.

33. Thus failure to enact standards for guidance has been equated to transference of essential legislative function”.

34. It has also been contended by the learned Counsel that the notification of the NBR dated 11.5.2002 i.e. the notification by which the earlier two notifications dated March 11, 2001 and May 21, 2001 were cancelled and thereupon directing the concerned authorities to levy VAT on the fees or commission of the PSI Agency considering the said Agency as ‘???? ??????’ under the ‘????’ code S020.00 was arbitrary since in the said notification there is no reference of the Rule or SRO/ circular on the basis  whereof the said notice was issued, that if the VAT Act is considered as authorizing the NBR to treat any service whatsoever   other   than the services expressly excluded  by the Second Schedule to be VAT-able then the VAT Act would in effect be providing unguided delegation by conferring on the NBR power to treat any service under the earth, other than those excluded, as VAT-able and such unguided delegation is not per­missible in law, that VAT can be charged in respect of the service of a particular Agency when there is a notification under section 3(5) of the VAT Act and that by such notification periphery of the VAT service is fixed, that charging of VAT on the fees or commission of the PSI Agency is not sustainable in law since no Rule has been framed in that regard or no SRO has been issued relating to the matter of charg­ing VAT on the service of PSI Agency, that a proper construction of the Second Schedule would show that PSI Agency should be treated as being part of the enti­ties appointed by Government as described in the Second Schedule in para­graph 7(gha), that as VAT is an indirect tax, as such entities from which Government receives services are not vatable as otherwise the effect would be that the Government would collect VAT from the end users and reimburse the service provider.

35. It is relevant in the background of the submission of the learned Counsel made upon referring to the provision of section 3(5) of the VAT Act to put the same on the record for the purpose of seeing the rele­vancy of the said provision in the back­ground of the facts and circumstances of the case as well as to consider soundness of the submission factually. The provision of section 3(5) of the VAT Act reads as:

“(?) ?? ????? ???????? ????????? ?????, ????????????, ?????? ?????? ????????? ??????-

(?) ?? ??? ??????? ???? ?? ???? ???????? ??????? ???? ??? ?? ??? ??????? ?????? ??????? ???? ?????? ???? ????? ??????, ??? (?) ??????? ?? ??? ?????, ????? ?????????? ???????, ???????? ?????? ????? ??????”

36. In Civil Appeal No. 288 of 2003 sub­missions have been made by Mr. Rokonuddin   Mahmud as well as by Khandker Mahbubuddin Ahmed for the Respondent Nos. 1 and 2.

37. It has been submitted by Mr. Rokonuddin Mahmud that by the provi­sion of section 25A of the Customs Act Government has not been authorized to appoint PSI Agency to survey the goods to be imported but PSI Agency has been appointed to verify the goods to be imported and to issue certificate as to the quality, quantity, price, description and customs classification of the goods veri­fied, that function of the PSI Agency is limited to the provision of section 25A (2) of the Customs Act i.e. verification of the quality, quantity, price, description and customs classification of the goods to be imported in Bangladesh and to Issue cer­tificate, that in the background of such verification and under the provision of the law certificate so issued by the PSI Agency “shall be accepted as the basis for assessment” i.e. assessment of customs duties, that as per provision of section 25B of the Customs Act it is mandatory for the importers to have their importable goods inspected by Pre-shipment Inspection Agency before or at the time of shipment of those goods on vessel, aircraft or any other conveyance and thus the function whatever the PSI Agency performs is performed outside Bangladesh, that PSI Agency performs its function as per provi­sion of PSI Order and that Pre-shipment Inspection Agency as defined in section 2(qq) of the Customs Act means any per­son appointed under section 25A of the Customs Act as a Pre-shipment Inspection Agency and include a representative of that person, that in the letter inviting offer from the Pre-shipment Inspection Agency the aim of the programme was mentioned verification of genuineness of importer, import authorization etc. and that PSI Agency shall render service in accordance with the provision of PSI Order, 1999 and that matters relating to Taxes and levies shall be governed as per provision of law as on October 1 of 1999, that as per terms of reference as was in the tender document the function of the PSI Agency limited to checking of description, quality, quantity, classification and verification of the correctness of value of all imports prior to shipment including the endorsement of invoice and the packing list in the manner as provided in Pre-shipment Order, 1999 and to issue certificate and that PSI Agency was also required to verify gen­uineness of letter of credit etc. and that during the inspection the PSI Agency shall inspect the goods for issuance certificate in the country of shipment, that PSI Agency renders its service in abroad and not in Bangladesh and as such VAT is not levyable on the fees or commission of the PSI Agency, that writ petitioner No.2 i.e. Bureau Verites (BIVAC) Bangladesh Ltd. is the subsidiary of the writ petitioner No.1 i.e. BIVAC Intervention S.A. Bureau Verities Group, that clause 14 of PSI Order prescribed the minimum fees for the specific function of the PSI Agency and clause 14(ka) of the PSI Order provides the mode of payment of bill submitted by the PSI Agency and that 80% of the total fees or commission is converted into for­eign currency as per sub-clause 5 of Clause 14 of the Pre-shipment Order, that as per provision of section 3 of the VAT Act, VAT is levyable in respect of the serv­ice as mentioned in the Schedule while the same is rendered in Bangladesh and as the PSI Agency does not render any service in Bangladesh the fees or commission of the PSI Agency is not vatable, that as per clause (?) of paragraph 7 of the Schedule 2 of the VAT Act PSI Agency is not required to pay VAT since the PSI Agency works for the Government and renders service to the Government, that in section 3 of the VAT Act it has been clearly men­tioned that the service mentioned in the Second  Schedule  is  not vatable, that because of the nature of the service renders by the PSI Agency the same comes within the class of service mentioned in clause (?) of Paragraphg 7 in the Second Schedule since PSI Agency renders serv­ice to the Government, that PSI Agency does not render personalized service and as such the same does not come in the exclusionary category of services men­tioned in paragraph 6 of the Second Schedule, that there is lack of certainty as to amount on which VAT is to be paid in case service of the PSI Agency becomes vatable, that as per sub-clause (?) and (?) of clause 5 of the PSI order, the PSI Agency is required to render its service in respect of “?????????” and as such it is evident that the PSI Agency is required to render service outside Bangladesh and that being so fees or commission of the PSI agency is not vatable, that PSI Agency has been appointed for inspection of importable goods and not for imported goods and consequently as the PSI Agency has no occasion to render service inside Bangladesh, the service renders by the said Agency not vatable. The learned Counsel in summing up his submissions submitted that as per provision of section 3 of the VAT Act in the case of service ren­dered in Bangladesh by an organization the said Organization for the rendered service is required to pay 15% VAT but as PSI Agency does not render any service in Bangladesh it is not required to pay VAT on its fees or commission at the rate as mentioned in section 3 of the VAT Act, that services except in exclusionary list, mentioned in Schedule 2 of the VAT Act are not vatable and that service renders by the PSI Agency being one of the class of the services as mentioned in clause (?) of paragraph 7 of the Second Schedule, the PSI Agency is not required to pay VAT on  the fees or commission payable for the services rendered, that PSI Agency does not render or perform any of the works done by the ‘???? ??????’ that the services to be rendered by PSI Agency specifically have been mentioned in the PSI Order, 1999, that the services render by PSI Agency are in no way of the kind of serv­ices render by ‘???? ??????’ that PSI Agency has been appointed by the Government as per provision of section 25A of the Customs Act, that for the pur­pose of determination whether PSI Agency is ‘???? ??????’ or not it is to be read with reference to service renders by PSI Agency and ”???? ??????’ and that on careful reading of the kind of service ren­ders by the PSI Agency and the ‘???? ??????’ the services render by the PSI Agency can no way be considered like that of the serv­ices of the ”???? ??????’, and as such fees or commission of the PSI Agency is not vatable considering the PSI Agency as ‘???? ??????’?

38. Khondker Mahbubuddin Ahmed has submitted that neither in the petition for leave to appeal nor in the leave granting order any point has been raised that the High Court Division was wrong in dispos­ing of the point raised in the writ petition and that there is also no contention from the side of the appellants that point raised by the writ-petitioner-Respondents before the High Court Division was wrongly answered by the said Division. The learned Counsel upon referring to the clause 4-Taxation of the Contract, which runs as:

“4. Taxation: All income and profits of THE SECOND PARTY accrued or derived by it and under this contract shall be subject to all local taxes including Value Added Tax, where applicable. Similarly import of all goods by THE SECOND PARTY shall be subject to payment of all applicable duties, taxes and other charges as are normally applicable to import of such goods”.

39. Submitted that contract entered into between the PSI Agency and the Government clearly shows that PSI Agency shall not be liable to pay VAT. The learned Counsel upon referring to the pro­vision of section 3 of the VAT Act, partic­ularly putting emphasis on the words “?? ?????? ???????? ???????? ??????? ????????? ??????? ??? ????? ???” and to the clause (?) of paragraph 7 of the Second Schedule sub­mitted that PSI Agency was not required to pay VAT since the said Agency does not render service in Bangladesh and that service as renders by the PSI Agency the same is rendered to the Government. The learned Counsel upon referring to the entries in paragraph 6 of the Second Schedule submits that when an individual renders service styling itself as firm then the said firm is chargeable with VAT, but when the service mentioned in paragraph 6 of the Second Schedule is rendered by an individual, he is not required to pay VAT. The aforesaid submission has been made in the context of entries in the para­graph 6 of the Second Schedule as regard the organization ‘???? ??????’ within the periphery of which PSI Agency has been brought in and thereupon service rendered by the PSI Agency has been made vatable. The learned Counsel upon referring to the clause (X) of paragraph 7 of the Second Schedule of the VAT Act and to the provi­sion of section 2(qq): definition of Pre-shipment Inspection Agency, in the Customs Act submitted that when the said provisions are read together then the same imply that PSI Agency acts for Government and as such not chargeable with VAT. It has also been submitted upon referring to the ‘???? ??????’ as has been inserted in the light of the provision of sub-section 5 of section 3 of the VAT Act to the ‘???? ??????’ that the definition or explanation so given by inserting the said is not consistent with the definition of PSI Agency as given in section 2(qq) of the Customs Act, that NBR through the notification is not authorized to insert explanation or ‘????????’ to the ‘???? ??????’ and thereby in bring PSI Agency within paragraph 6 of the Second Schedule of the VAT Act and taking out PSI Agency from paragraph 7(?) of the Second Schedule. The learned Counsel has empathically submitted that the explanation added to the ‘???? ??????’ by the notification issued by the NBR is wrong and illegal since the said explanation has been inserted to the ‘???? ??????’ only to extend periphery of VAT and that by the said wrong explana­tion NBR has intended to bring PSI Agency within the net of VAT. The learned Counsel also submitted that PSI Agency does not perform any work of inspection in Bangladesh under the law and that by inserting wrong explanation or ‘????????’ to the ‘???? ??????’ the NBR is legally not authorized to bring the PSI Agency within the net of VAT, that by legal fiction serv­ice rendered by PSI Agency outside Bangladesh can not be considered to have been done in Bangladesh, that High Court Division in making the decision that the PSI Agency is not vatable has not commit­ted any wrong, that law does not empow­er the NBR to give ‘????????’ to a particular entry in the Schedule of the VAT Act and thereupon to bring particular service with­in the net of VAT which is otherwise not vatable.

40. Mr. Rafique-ul-Huq, the learned Counsel for the Respondent Nos. 1 and 2 in Civil Appeal No.289 of 2003 has sub­mitted that the contract entered into between the Government and the PSI Agency is a statutory contract and that PSI Agency has been appointed by the Government for rendering the service which the Government was to render and as such service rendered by the PSI Agency is the service rendered to the Government. In support of the aforesaid contention the learned Counsel has referred to the Second paragraph of the contract which reads as follows “Whereas the first party desires to appoint the sec­ond party as Pre-shipment Inspection Agency ‘???? ??????’ to provide Pre-ship­ment Inspection Services (hereinafter referred to as “PSI Services”) in respect of verification and certification of quality, quantity, description, H.S. code classifica­tion and valuation of goods, prior to their shipment for the importation into Bangladesh…..” The learned Counsel upon referring to the PSI services i.e. ver­ification and certification of quality, quan­tity, description, H.S. code classification and valuation of goods prior to their ship­ment for the importation into Bangladesh submits that PSI Agency renders service outside Bangladesh and that the service so renders by the PSI Agency is being ren­dered to the Government and as such in the light of the entries in paragraph 7(?) of the Second Schedule of the VAT Act, the service renders by the PSI Agency has been excluded from VAT. The learned Counsel upon referring to the clause 4-Taxation clause of the Contract document submitted that language of the said clause clearly shows that VAT was not applicable in respect of the service rendered by PSI Agency and in connection with the aforesaid submission the learned Counsel has also referred to the section 6 and the Second Schedule of the VAT Act. The learned Counsel continued that the nature of the work performed by the PSI Agency is such that the same cannot be rendered in Bangladesh and that the service of the PSI Agency can also be not treated to have been rendered in Bangladesh, that upon referring to clause 7(?) of the PSI order the learned Counsel has submitted that the said provision clearly shows wherefrom certificate i.e. clean report of finding is to be issued and that the said provision clear­ly shows that the work of PSI Agency is done outside Bangladesh and that service of PSI Agency can not be rendered in Bangladesh. The learned Counsel upon referring to section 2- Information to bid­ders, of the tender document submits law relating to imposition of taxes, duties, fees, levies and other charges would be as on 1st day of October, 1999 and that on that date VAT was not levyable on the service rendered by the PSI Agency, that provision of section 25B of the Customs Act has made it mandatory for the importer to have their imported goods inspected by PSI Agency before or at the time of shipment of the goods on board a vessel, aircraft or any other conveyance and from the provision of the said section it is clear that the goods to be imported into Bangladesh not to be inspected after the same being imported into Bangladesh, that the law requires that the goods to be imported is to be inspected before or at the time of shipment, that at the time of sign­ing of the contract the Government ought to have told the PSI Agency that the said Agency would be required to pay VAT, that Government is rendering service to the importer through PSI Agency and charging the importer for the service so rendered by it to the importer through the PSI Agency and as such VAT is not levyable on the service rendered by the PSI Agency.

41. The learned Counsel upon referring to regulation 17 of ????? ?????? ?? ????????, ???? has submitted that the provision of the said regulation is not contemplated for PSI Agency. It has also been contended that since PSI Agency renders service out­side Bangladesh, as such tax if any payable for such service by the said Agency is to be paid where, that no proce­dure has been provided in the VAT Act prescribing procedure for the PSI Agency to pay VAT if any chargeable on the serv­ice renders b