IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
PRESENT: 
MR. JUSTICE MIAN SAQIB NISAR, HCJ 
MR. JUSTICE MUSHIR ALAM 
MR. JUSTICE IJAZ UL AHSAN 
 
CIVIL APPEAL NO.1509 OF 2016 
(Against 
the 
judgment 
dated 
29.3.2016 of the Islamabad High 
Court Islamabad passed in S.T.R. 
No.27 of 2012) 
 
M/s Pakistan Television Corporation Ltd. 
 
… Appellant(s) 
Versus 
 
Commissioner Inland Revenue (Legal) LTU, Islamabad etc. 
 
… Respondent(s) 
 
For the appellant(s): 
Mr. M. Makhdoom Ali Khan, Sr. ASC 
Syed Rifaqat Hussain Shah, AOR 
 
 
For the respondent(s): 
Dr. Farhat Zafar, ASC 
Raja Abdul Ghafoor, AOR 
 
 
Date of hearing: 
23.10.2018 
… 
JUDGMENT 
 
 
MIAN SAQIB NISAR, CJ.- The brief facts of this appeal are that 
a show cause notice (SCN) dated 23.05.2011 was issued to the appellant for 
the tax years 2006-2007, 2008-2009 and 2009-2010 raising four issues: (i) 
non-payment of Federal Exercise Duty (FED) on receipt of PTV license fee; (ii) 
non-payment of sales tax on program sales; (iii) non-payment of sales tax on 
sales of fixed assets; and (iv) non-payment of sales tax on sale of scrap. After 
receiving two replies dated 08.06.2011 and 15.06.2011, the Deputy 
Commissioner Inland Revenue (DCIR) passed an Order-in-Original (O-in-O) 
dated 04.10.2011 for recovery of the amounts mentioned in the SCN along 
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with default surcharge and penalty (all under the relevant provisions of law). The 
appellant preferred an appeal against the O-in-O before the Commissioner 
Inland Revenue, Appeals-II (CIRA) which, vide Order-in-Appeal (O-in-A) dated 
27.02.2012, was accepted to the extent that the matter of sales tax on sale of 
programs was remanded and the matters of non-payment of sales tax on 
sale of fixed assets and of scrap were vacated, whereas the appeal was 
dismissed on the point of non-payment of FED on receipt of PTV license fee. 
Thereafter the appellant filed an appeal before the Appellate Tribunal Inland 
Revenue (ATIR) which was also dismissed vide order dated 04.12.2012. This 
order was assailed before the learned High Court through a Sales Tax 
Reference (STA) which was dismissed through the impugned judgment. 
Hence, the instant appeal with the leave of the Court dated 23.05.2016 
which reads as under:- 
 
“Federal Excise Duty was levied on TV license fee which is 
being collected through electricity bills via various distribution 
companies. This levy was made under the Wireless Telegraphy 
Act, 1993 read with the Television Receiving Apparatus 
(Possession 
and 
Licensing) 
Rules, 
1970 
and 
in 
the 
circumstances no excisable services are being provided by the 
petitioners as defined under Section (1)(d) of the Federal Excise 
Act, 2005. It is stated by the learned counsel for the petition that 
the view set out by the learned High Court to the contrary is not 
based on a proper construction/interpretation of the requisite 
law…” 
 
2. 
 
We have heard the arguments of the learned counsel for the 
parties which are not reproduced for the sake of brevity, but shall reflect in 
the course of this opinion. However for ease of reference, the relevant 
provisions of law are reproduced as under:- 
 
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Federal Excise Act, 2005 
 
“3. Duties specified in the First Schedule to be levied.- (1) 
Subject to the provisions of this Act and rules made there 
under, there shall be levied and collected in such manner as 
may be prescribed duties of excise on,- 
(a) ………………………………………………………………………. 
(b) ………………………………………………………………………. 
(c) ………………………………………………………………………. 
(d) services provided in Pakistan including the services 
originated outside but rendered in Pakistan; 
at the rate of fifteen 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, as set-forth 
therein. 
 
(2) 
………………………………………………………………….. 
 
(3) 
The Board may, by notification in the official Gazette, in 
lieu of levying and collecting under sub-section (1) duties of 
excise on goods and services, as the case may be, levy and 
collect duties,- 
(a) ………………………………………………………………………. 
(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. 
 
(3A) 
…………………………………………………………………..  
 
(4) 
…………………………………………………………………..  
 
(5) 
the liability to pay duty shall be- 
(a) ………………………………………………………………………. 
(b) ………………………………………………………………………. 
(c) in case of services provided or rendered in Pakistan, of the 
person providing or rendering such service, provided where 
services are rendered by the person out of Pakistan, the 
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recipient of such service in Pakistan shall be liable to pay 
duty; and  
(d) ………………………………………………………………………. 
 
Explanation.- Subject to sub-section (1), for the purpose of this 
section, (goods) means the goods specified in CHAPTERS 1 TO 
97 and “services” means the services specified in CHAPTER 
98 of the First Schedule to the Customs Act, 1969 (IV of 1969). 
 
7. 
Application of the provisions of the Sales Tax Act, 
1990.- (1) In case of goods specified in the Second Schedule or 
such services as may be specified by the Board through a 
notification in the official Gazette the duty shall be payable in 
sales tax mode, whereby- 
(a) 
a registered person manufacturing or producing such 
goods or providing or rendering such services shall be entitled 
to deduct input tax paid during the tax period from the amount 
of duty of excise due from him on such goods or services in 
respect of that tax period; 
(b) 
a registered person shall be entitled to deduct the 
amount of duty of excise paid or payable by him on such goods 
or services as are acquired by him during a tax period from the 
output tax due from him in respect of that tax period;  
(c) 
a registered person supplying such goods or providing 
or rendering such services shall be entitled to deduct duty of 
excise paid or payable on such goods or services as are 
acquired by him during the tax period from the amount of duty 
of excise due from him on such goods manufactured or 
produced or services as are provided or rendered by him during 
that period; and 
(d) 
a person shall be entitled to deduct duty of excise paid or 
payable, on such goods or services as are acquired by him 
during a month, from the amount of duty of excise due from him 
on such goods manufactured or produced or services as are 
provided or rendered by him, during that month. Such services 
as are provided or rendered by him, during that month. 
 
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(2) 
………………………………………………………………….. 
 
Explanation.— ……………………………………………………....... 
 
First Schedule 
Table II 
(Excisable Services) 
S.No. Description of Goods 
Heading/sub-
heading Number 
Rate of 
Duty 
6. 
Telecommunication 
services, excluding 
such services in the 
area of a Province 
where such Province 
has imposed Provincial 
sales tax and has 
started collecting the 
same through its own 
Board or Authority, as 
the case may be. 
 
98.12 
(All sub-
headings) 
 
Seventeen 
per cent of 
charges  
 
 
[Emphasis supplied] 
 
Customs Act, 1969 
The First Schedule 
Section  
Chapter 98 
(SERVICES) 
 
98.12 
Telecommunication services 
9812.1000 
Telephone services 
9812.1100 
Fixed line voice telephone service 
9812.1200 
Wireless telephone 
9812.1210 
Cellular telephone 
9812.1220 
Wireless Local Loop telephone 
9812.1300 
Video telephone 
9812.1400 
Payphone cards 
9812.1500 
Pre-paid calling cards 
9812.1600 
Voice mail service 
9812.1700 
Massaging service 
9812.1710 
Short Message service (SMS) 
9812.1720 
Multimedia message service (MMS) 
9812.1910 
Shifting of telephone connection 
9812.1920 
Installation of telephone extension 
9812.1930 
Provision of telephone extension 
9812.1940 
Changing of telephone connection 
9812.1950 
Conversion of NWD connection to non 
NWD or vice versa 
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9812.1960 
Cost of telephone set 
9812.1970 
Restoration of telephone connection 
9812.1990 
Others 
9812.2000 
Bandwith services1970 
9812.2100 
Copper line based 
9812.2200 
Fibre-optic based 
9812.2300 
Co-axial cable based 
9812.2400 
Microwave based 
9812.2500 
Satellite based 
9812.2900 
Others 
9812.3000 
Telegraph 
9812.4000 
Telex 
9812.5000 
Telefax 
9812.5010 
Store and forward fax services 
9812.5090 
Others 
9812.6000 
Internet services 
9812.6100 
Internet services including e-mail services 
9812.6110 
Dial-up internet services 
9812.6120 
Broadband services for DSL connection 
9812.6121 
Copper line based 
9812.6122 
Fibre-optic based 
9812.6123 
Co-axial cable based 
9812.6124 
Wireless based 
9812.6125 
Satellite based 
9812.6129 
Others 
9812.6130 
Internet/e-mail/Data/SMS/MMS services 
on WLL networks 
9812.6140 
Internet/e-mail/Data/SMS/MMS services 
on cellular mobile networks 
9812.6190 
Others 
9812.6200 
Data Communication Network services 
(DCNS) 
9812.6210 
Copper Line based 
9812.6220 
Co-axial cable based 
9812.6230 
Fibre-optic based 
9812.6240 
Wireless/Radio based 
9812.6250 
Satellite based 
9812.6290 
Others 
9812.6300 
Value added data services 
9812.6310 
Virtual private Network service (VPN) 
9812.6320 
Digital Signature service 
9812.6390 
Others 
9812.9000 
Audiotext services 
9812.9100 
Teletext services 
9812.9200 
Trunk radio services 
9812.9300 
Paging services 
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9812.9400 
Voice paging services 
9812.9410 
Radio paging services 
9812.9490 
Vehicle tracking services 
9812.9500 
Burglar alarm services 
9812.9090 
Others 
 
At first glance, this case is about the challenge by the appellant to the 
jurisdiction of the tax authorities to levy FED on TV license fee. At the heart 
of the case, however, is an important question, i.e. what is the correct 
method of interpreting the headings and sub-headings of the First Schedule 
to the Customs Act, 1969 (Customs Act) – commonly known as the Pakistan 
Customs Tariff (PCT)? However before proceeding further, we think it 
expedient to discuss the various orders passed by the lower fora.  
3. 
 
The SCN issued by the DCIR to the appellant alleged that:- 
 
“The Federal Government has appointed you as an agent in the 
matter of issuing licences to possess television receiving 
apparatus, 
video 
recording 
apparatus 
or 
reproducing 
apparatus and television broadcasting receiving antenna under 
section 5 of the Wireless and Telegraphy Act, 1933 (XVII of 
1993)…  
 
This fee is collected through domestic electricity bills…This 
revenue being receipts on account of PTV license fee is taxable 
under section 3 of the Federal Excise Act, 2005 being 
telecommunication services (PCT heading 98.12) read with 
SRO 550(I)/2006 dated 12.06.2006…Therefore, an amount of 
Rs. 1,522,614,090/- is recoverable from you under section 14 
along with default surcharge under section 8 and penalty under 
section 19 of the Federal Excise Act, 2005.” 
[Emphasis supplied] 
 
The O-in-O passed by the DCIR basically regurgitated the allegations in the 
SCN without any discussion on the law or the facts. However it is worthy to 
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note that three things in the SCN and the O-in-O: (i) the licenses were for the 
possession of television receiving apparatus; (ii) the fee was levied by the 
Government of Pakistan; and (iii) the appellant received the TV license fee.  
4. 
 
In the O-in-A the CIRA was of the view that:- 
 
“…it is a fact that TV sets are used by the public to avail the 
telecast services as the federal excise is levied on the 
telecommunication services PCT Headings 98.12 in the First 
Schedule to the Customs Act, 1969… 
 
Further the term “telecommunication services” is elaborated 
from the SRO issued in this regard in SRO No. 648(I)/2005 
dated 1.7.2005 PCT heading 98.12 which was showing the 
description “services provided or rendered by persons engaged 
in telecommunication work in respect of telephone, telegraph, 
telex, telefax and alive” [sic]. This SRO was superseded by SRO 
No. 550(I)/2006 dated 5th June, 2006 wherein PCT heading 
98.12 was described as “telecommunication service” which 
means that the scope of these services was broadened and 
services like TV telecast were brought within the scope of this 
term. 
 
In view of above noted discussion the TV Telecast fall within the 
definition of telecommunication services accordingly the TV 
license fee is liable to federal excise, hence the action of the 
DCIR is confirmed.” 
   
The CIRA decided the case against PTV because, in his view, FED was levied 
on Telecommunication Services: PCT Heading 98.12. This Heading, in his 
opinion, was broad enough to cover any and all kinds of ‘telecommunication 
services’. PTV made telecasts; these were received on television sets; this was 
telecommunication. The CIRA further concluded that the TV license fee too 
was covered by PCT Heading 98.12. In reaching these conclusions the CIRA 
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did not examine whether any of the sub-headings of PCT Heading 98.12 
covered telecasts or television sets or TV license fee. The CIRA referred to 
SRO No.648(I)/2005 dated 01.07.2005 (SRO 648) and SRO No.550(I)/2006 
dated 05.06.2006 (SRO 550). In SRO 648 the services under PCT Heading 
98.12 were described as “Services provided or rendered by persons engaged in 
telecommunication work in respect of telephone, telegraph, telex, telefax and alike”. In SRO 
550 which superseded SRO 648, the services under PCT Heading 98.12 were 
described as “Telecommunication services”. From the variation in the language 
regarding the description of services in the two SROs the CIRA concluded 
that “the scope of these services was broadened” under SRO 550 “and services like TV 
telecast were brought within the scope of this term”. 
The finding by the CIRA that because PCT Heading 98.12 was titled 
‘Telecommunication 
services’ 
and 
because 
a 
telecast 
was 
a 
telecommunication service, therefore, TV license fee was covered by this 
Heading and subject to FED will be examined later. It will be addressed 
when discussing the order of the Appellate Tribunal Inland Revenue (ATIR) 
and the judgment of the Islamabad High Court which are to similar effect. 
The conclusion based on SRO 550 being peculiar to the CIRA and the ATIR 
will be addressed immediately after the discussion on the order of the ATIR. 
5. 
 
The appellant filed an appeal with the ATIR against the order of 
the CIRA. By order dated 04.12.2012 the ATIR dismissed the appeal in 
which it held as follows:- 
 
“The signals based television telecast services are no different 
to the telecommunication services falling under PCT heading 
98.12 chargeable to federal excise duty under SRO No. 
550(I)/2006 dated 05.06.2006. In our view anything which is 
signal based and is provided as a service is liable to excise 
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duty. The only purpose of license fee is a provision of telecast 
service and this service is not outside the ambit of PCT 98.” 
[Emphasis supplied] 
 
The conclusion of the CIRA and the ATIR insofar as it is based on SRO 550 
or the superseded SRO 648 is contrary to the Constitution of the Islamic 
Republic of Pakistan, 1973 (Constitution) and the scheme of levy of a tax as 
provided in fiscal statutes. A tax, under Article 77 of the Constitution, can 
only be levied by or under the authority of an Act of Parliament. It is levied 
under the charging section of such an Act. Section 3 and the First Schedule 
to the Federal Excise Act, 2005 (Federal Excise Act) as well as the First Schedule 
to the Customs Act including PCT Heading 98.12 are statutory provisions. 
These can only be amended by an Act of Parliament. Delegated legislation 
such as a SRO cannot amend these. Even more so when neither of the two 
SROs was issued under Section 3 of the FEA, the charging section. Therefore 
the findings of the CIRA and ATIR to this extent are incorrect and invalid.   
The SROs and their effect have also been misread. The SROs do not 
seek to enlarge the scope of PCT Heading 98.12. Both SRO 648 and 550 
were issued by the Government of Pakistan, in exercise of its powers under 
Section 7 of the Federal Excise Act. This section authorises collection of FED 
in Sales Tax mode for such services as may be specified by the Federal Board 
of Revenue. SRO 648 as well as SRO 550, thus, merely authorised the 
collection of FED on ‘Telecommunication Services’ in Sales Tax mode. The 
notifications explicitly state so. A provision providing for a mode of collection 
is not a charging provision. It can neither abridge nor expand the scope of a 
charging provision in an Act. These SROs were, therefore, not intended to 
and in fact had no effect on the scope of levy of FED on ‘Telecommunication 
Services’. FED can only be levied under Section 3 of the Federal Excise Act, 
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on services specified thereunder or in the First Schedule thereto read with 
Chapter 98 of the PCT, and not under any SRO. In particular, it could not be 
levied under an SRO issued under Section 7 of the Federal Excise Act.  
6. 
 
The decision of the ATIR was examined by the Islamabad High 
Court in a reference application which was decided against the appellant 
vide impugned judgment. The learned High Court discussed what in its 
opinion were the main elements of the TV process and the three major ways 
to receive TV signals. Based on this discussion the learned High Court 
concluded as under:- 
 
“…that the Television set has been used for the transmission, 
broadcast and rebroadcast of different programmes through 
Television signals and the PCT Heading 98.12 refers 
Telecommunication services including Telephone services etc. 
and others vide reference No. 9812.9090.” 
 
The learned High Court observed that “the International Convention on the 
harmonized commodity description and coding system provides Rules for interpretation”. It 
observed that if “through the said interpretation rules if one can review the First Schedule 
to the Customs Act, 1969, Chapter 98 (Services) heading “Telecommunication Services 98.12 
covers Wireless based 9812.6124, Satellite bases 9812.6125, Data Communication Network 
Services (DCNS) 9812.6200, Wireless/radio based 9812.6240, Satellite based 9812.6250 and 
others 9812.9090…” Based on these observations the learned High Court 
concluded that:- 
 
“…in view of these Pakistan Customs Tariff headings and 
subheadings, the TV technology main elements of its process 
covers the video source, audio source, transmitter, receiver etc. 
and through three major ways to receive TV signals it includes 
Broadcast TV, Satellite TV and Cable TV, hence all features 
are fully attracted in the First Schedule to the Customs Act, 
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1969, Chapter 98 (Services) heading Telecommunication 
Services, therefore, there is no issue suggesting that the 
Television provides the services which falls within the definition 
of word “services” defined in section 2(23) of Federal Excise 
Act, 2005…” 
[Emphasis supplied]  
 
The learned High Court observed that its “net conclusion” was further 
strengthened:- 
 
“…from the bare reading of section 16 (Exemptions) of Federal 
Excise 
Act, 
2005 
wherein 
if 
Pakistan 
Television 
Corporation…consider itself exempted, it can apply for 
exemption but in the present case there is no such exemption 
issued by the Federal Government.” 
 
7. 
 
It is worthy to note that none of the forums below, apart from 
the learned High Court, referred to Section 16 of the Federal Excise Act to 
support their conclusions. Before examining the provisions of the Federal 
Excise Act and the rules for interpretation of the PCT it may be pertinent to 
first address the finding regarding Section 16 ibid. The Customs Act, the 
Sales Tax Act, 1990 (Sales Tax Act) and the Income Tax Ordinance, 2001 (Income 
Tax Ordinance) have their respective charging sections. Tax is levied on a 
subject covered by the charging section. All these statutes also have 
provisions which exempt an assessee from the payment of the whole or a 
part of the leviable tax. An exemption does not take the assessee out of the 
scope of the charging section. The assessee remains within the tax net and 
the tax remains leviable. The assessee is, however, exempt from paying the 
whole or a part of the tax. If the exemption is withdrawn the leviable tax 
becomes payable. The scheme of the Federal Excise Act is different. Section 
3 of the Federal Excise Act provides that services provided in Pakistan are 
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liable to FED at the rate of 15% ad valorem “except the…services specified in the 
First Schedule, which shall be charged to Federal excise duty as, and at the rates, set forth 
therein.” Section 16(1) of the Federal Excise Act provides that “All goods 
imported, produced or manufactured in Pakistan and services provided or rendered except 
such goods and services as are specified in the First Schedule shall be exempt from whole of 
excise duties levied under section 3”. In other words all services provided in 
Pakistan are exempt from FED unless specified in the First Schedule to the 
Federal Excise Act. Even an activity within the definition of “services” under 
Section 2(23) of the Federal Excise Act is exempt from FED unless specified 
in the First Schedule. An assessee, therefore, does not have to apply under 
Section 16 of the Federal Excise Act for exemption. The services provided by 
the assessee are exempt if not specified in the First Schedule to the Federal 
Excise Act. 
8. 
 
Both the Explanation to Section 3 of the Federal Excise Act and 
the definition of “services” in Section 2(23) thereof make it clear that for an 
activity to be a service leviable to FED it must be specified in the Federal 
Excise Act or Table II to the First Schedule thereto read with Chapter 98 of 
the PCT. The First Schedule to the Federal Excise Act is not to be read in 
isolation, rather has to be read with Chapter 98 of the PCT. Table II of the 
First Schedule to the Federal Excise Act broadly identifies the services and 
mentions the PCT Headings. Item 6 of this Table lists PCT Heading 98.12: 
Telecommunication Services (including all sub-headings) and states the rate of 
duty as 17% ad valorem. Item 6 of Table II has to be read with Chapter 98 of 
the PCT as required by Section 2(23) of the Federal Excise Act and the 
Explanation to Section 3 thereof. PCT Heading 98.12: Telecommunication 
Services of Chapter 98 of the First Schedule to the Customs Act is a broad 
general category. Under it are 65 sub-headings. Like in the orders of the 
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DCIR, CIRA and ATIR there is no discussion in the judgment of the learned 
High Court on how a Heading of the PCT and its sub-headings are to be 
read. There is also no discussion about which sub-heading, if any, will cover 
TV license fee. Only at one place (paragraph No.16) in the judgment, the learned 
High Court seems to suggest that PCT Heading 9812.9090: “Others” may 
provide legal cover for the charge of FED on TV license fee. 
9. 
 
The learned counsel for the respondent did not dispute that 
Section 2(23) of the Federal Excise Act and the Explanation to Section 3 
thereof require that Table II to the First Schedule to the Federal Excise Act 
must be read with Chapter 98 of the PCT. She, however, vehemently argued 
that Section 2(23) ibid defines services and this definition read with PCT 
Heading 98.12: ‘Telecommunication Services’ would cover TV license fee. The 
main plank of her argument was that only PCT Heading 98.12 was relevant 
which covered all ‘Telecommunication Services’. PTV made telecasts and 
telecasts were received on TV sets, and telecasts and their reception on TV 
sets was a ‘Telecommunication Service’, therefore, it was covered by PCT 
Heading 98.12. Since TV License Fee was received by PTV, it must, therefore, 
have been received by PTV for the service of telecast. It was therefore, 
chargeable to FED under PCT Heading 98.12. All telecommunication services 
irrespective of their nature and kind, according to her, were covered by PCT 
Heading 98.12. Even if TV license fee or telecast did not fall within any of the 
sub-headings of PCT 98.12, the demand survived as it was covered by the 
main Heading: PCT 98.12. The sub-headings, according to her, were of no 
consequence. If this argument was accepted to be correct, then the definition 
of “services” in Section 2(23) of the Federal Excise Act which requires that its 
First Schedule be read with Chapter 98 of the PCT has to be disregarded. 
The First Schedule to the Federal Excise Act, in Item 6 of Table II mentions 
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PCT Heading 98.12 and “all sub-headings” in parenthesis. Therefore all the 
sub-headings of PCT Heading 98.12 are imported into the definition through 
The First Schedule to the Federal Excise Act and Chapter 98 of the PCT. If 
the sub-headings were of no consequence, then there was no need for 
Parliament to provide that the First Schedule to the Federal Excise Act be 
read with Chapter 98 of PCT. Equally unnecessary was, the Explanation to 
Section 3 of the Federal Excise Act, the charging section, which provided 
that for the purposes of that section “services” meant the services specified 
in Chapter 98 of the First Schedule to the Customs Act. 
10. 
 
One may explore the argument of the learned counsel for the 
respondent further. A number of service providers, activities and services are 
defined in Section 2 of the Federal Excise Act. ‘Telecommunication Services’ 
are not so specified. One must, therefore, proceed to examine the First 
Schedule to the Federal Excise Act and Chapter 98 of the PCT. Section 3 of 
the Federal Excise Act is the charging section which levies FED on services 
provided in Pakistan. The Explanation to the said section makes it clear, 
however, that services for the purposes of the charging section “mean the 
services specified in Chapter 98 of the First Schedule to the Customs Act, 1969.” FED 
cannot, therefore, be levied on a service which is not specified in Chapter 98 
of the PCT. PCT Heading 98.12 has 65 sub-headings. A close examination of 
the various sub-headings of PCT Heading 98.12 makes it clear that all these 
deal with ‘Telecommunication Services’. Try as one may, one cannot find that 
any of these 65 sub-headings cover telecasts, TV sets or TV license fee. At 
this point it would be relevant to mention Rule 6 of the General Rules for the 
Interpretation of the First Schedule of the Customs Act, i.e. the PCT, which 
provides that “For legal purposes, the classification of goods in the sub-headings of a 
heading except Chapter 99 shall be determined according to the terms of those sub-headings 
C.A. NO.1509/2016  
 
 
 
 
 
 
 
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and any related sub-heading Notes and, mutatis mutandis, to the above Rules, on the 
understanding that only sub-headings at the same level are comparable.” Accordingly, not 
being covered by any of the sub-headings to PCT Heading 98.12 read with 
Item 6 of Table II of the First Schedule to the Federal Excise Act, telecasts, 
TV sets and TV license fee are outside the charging provisions of the Federal 
Excise Act. If one were to accept the argument of the learned counsel for the 
respondent that only the Heading of PCT 98.12 is to be applied and all its 
sub-heading are irrelevant, it would render the specific services listed under 
the 65 sub-headings of PCT Heading 98.12 redundant. If the legislative 
intent 
was 
for 
PCT 
Heading 
98.12 
to 
cover 
every 
conceivable 
‘Telecommunication Service’ there was no need to provide 65 sub-headings, 
listing specific telecommunication services, under it. It would make the 
reference to Chapter 98 of PCT in several places by the Federal Excise Act of 
no consequence or relevance. If the legislature intended PCT Heading 98.12 
to have as wide a meaning as ascribed to it by the counsel for the 
respondent, then there was no need to provide 65 specific sub-headings 
under this PCT Heading. 
11. 
 
Even otherwise, it is not possible to accept the argument of the 
respondent without an unnecessarily strained construction of the Federal 
Excise Act. The Federal Excise Act is a fiscal statute. The principles of 
interpreting such statutes are well settled. Some of these principles have 
been recently repeated in Messrs Pakistan Television Corporation Vs. 
Commissioner Inland Revenue (Legal), Islamabad and others (2017 
SCMR 1136) which are summarised as follows:- 
i. 
There is no intendment or equity about tax and the provisions of 
a taxing statute must be applied as they stand; 
 
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ii. 
The provision creating a tax liability must be interpreted strictly 
in favour of the taxpayer and against the revenue authorities; 
 
iii. 
Any doubts arising from the interpretation of a fiscal provision 
must be resolved in favour of the taxpayer; 
 
iv. 
If two reasonable interpretations are possible, the one favoring 
the taxpayer must be adopted;  
 
v. 
When a tax is clearly imposed by a statutory provision any 
exemption from it must be clearly expressed in the statute or 
clearly implied from it; 
 
vi. 
Where the taxpayer claims the benefit of such express or implied 
exemption, the burden is on him to establish that his case is 
covered by the exemption; 
 
vii. 
The terms of the exemption ought to be reasonably construed; 
and 
  
viii. 
If a taxpayer is entitled to an exemption on a reasonable 
construction of the law it ought not to be denied to him by a 
strained, strict or convoluted interpretation of the law. 
 
Applying the above principles, it is clear that telecasts, TV sets and TV 
license fee are not covered by the definition of services in Section 2(23) of the 
Federal Excise Act and Item 6 of Table II of the First Schedule to the Federal 
Excise Act read with Chapter 98 of the PCT. At the risk of repetition, TV 
license fee, telecasts and TV sets not being covered by any of the sub-
headings of PCT Heading 98.12 are not subject to FED on a reasonable 
interpretation of the law. Being plainly outside the ambit of the charging 
provision they cannot be brought in by a strained construction of the law. 
The issue may be examined in another manner. As stated above that 
telecasts, TV sets and TV license fee are not within Table II of the First 
Schedule to the Federal Excise Act, read with Chapter 98 of the First 
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Schedule to the Customs Act. These are not covered by any of the sub-
headings of PCT 98.12. These, are, therefore, exempt from FED under 
Section 16 of the Federal Excise Act. The appellant is, therefore, exempt from 
payment of FED on TV license fee. A reasonable interpretation of the law 
plainly entitles it to such an exemption. It cannot be denied to it by a 
strained, forced or convoluted interpretation of the law. The conclusion, 
therefore, remains unchanged. In any case, the demand of FED on TV 
license fee received by the appellant is, therefore, not legal. The above 
principles also make clear that the Federal Excise Act being a fiscal statute 
has to be construed, where possible, in favour of the assessee.  
12. 
 
This submission of the counsel for the respondent also runs 
counter to the structure of the PCT. As observed in Messrs Citibank NA Vs. 
Commissioner Inland Revenue (2014 PTD 284):- 
 
“This is based on and is almost identical to the Harmonized 
Commodity Description and Coding System ("HS System"), 
which has been agreed upon under an international convention 
and which is regulated by the World Customs Organization. The 
HS System is of course concerned with goods, and it comprises 
of 97 chapters (with one chapter, 77, being left "blank" for 
possible future use) wherein all manner of goods are listed and 
categorized. The Pakistan Customs Tariff faithfully reproduces 
and gives effect to this system. In addition, the HS System allows 
two final chapters (i.e., 98 and 99) to be used for national 
purposes and Pakistan has utilized Chapter 98 for "services". 
Even a quick glance shows that Chapter 98 replicates the 
system of classification adopted for goods under the HS System. 
Now, the chapters of the HS System are preceded by certain 
"General Rules for the interpretation of the Harmonized 
System" ("General Rules"). These rules are incorporated in the 
Pakistan Customs Tariff and therefore have the force of law. 
Although the rules are concerned with goods, in our view they 
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            -: 19 :- 
 
may, subject to suitable adaptation, also be used for the 
purposes of Chapter 98. This is so because of the close 
correspondence between the classification system under the HS 
System and that used in Chapter 98. Rule 6 of the General 
Rules has been understood to mean, inter alia, that in those 
headings under which sub-headings are to be found, the 
classification is to be on the basis and in terms of the sub-
headings.  
[Emphasis Supplied] 
 
When this Rule is applied to PCT Heading 98.12 it is absolutely clear that it 
is the sub-headings under PCT Heading 98.12 that are to be applied. Such 
an approach is in conformity with the HS System, and is, therefore, the 
correct approach to applying Chapter 98.  
13. 
 
Another argument advanced by the learned counsel for the 
respondent and which found favour with the learned High Court was that 
even if TV license fee was not covered by any of the specific sub-headings of 
PCT Heading 98.12 it would be covered by PCT 9812.9090: “Others”. This 
argument ignores the scheme of division of specific services under the 
various sub-headings of PCT Heading 98.12. The various types of 
telecommunication services are bunched together in separate groups. At the 
end of each bunch one finds the entry “Others”. The services under the sub-
headings of PCT Heading 98.12 are in 8 groups. And the sub-heading 
“Others”, therefore, appears eight times under PCT Heading 98.12. For 
instance, the first group consists of various kinds of telephone services. 
These are listed from PCT 9812.1000 to 9812.1970. At the end is PCT 
9812.1990: “Others”. The last group is of sub-headings PCT 9812.9000: 
‘Audio text services’, PCT 9812.9100: ‘Teletext services’, 9812.9200: ‘Trunk 
radio services’, PCT 9812.9300: ‘Paging services’, PCT 9812.9400: ‘Voice 
paging services’, PCT 9812.9410 ‘Radio paging services’, PCT 9812.9490: 
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            -: 20 :- 
 
‘Vehicle tracking services’ and 9812.9500: ‘Burglar alarm services’, followed 
by PCT 9812.9090: “Others”. The sub-heading “Others” is, therefore, to be 
read ejusdem generis with the preceding entries in the group. It will apply to 
and cover only such services which are similar to the ones specifically 
described before it. It cannot include every conceivable telecommunication 
service. Reading the sub-heading “Others” to include all kinds of 
telecommunication services would render all the specific sub-headings 
otiose. Such an interpretation being clearly flawed cannot be sustained.   
14. 
 
There is yet another aspect of the matter. TV license fee is levied 
under the Wireless Telegraphy Act, 1933 (Wireless Telegraphy Act). Section 2(2) of 
the Wireless Telegraphy Act defines “wireless telegraphy apparatus” as under:- 
 
“any apparatus, appliance, instrument or material used or 
capable of use in wireless communication, and includes any 
article determined by rule made under Section 10 to be wireless 
telegraphy apparatus, but does not include any such apparatus, 
appliance, instrument or material commonly used for other 
electrical purposes, unless it has been specially designed or 
adapted for wireless communication or forms part of some 
apparatus, appliance, instrument or material specially so 
designed or adapted, nor any article determined by rule made 
under Section 10 not to be wireless telegraphy apparatus.” 
 
Section 3 of the Wireless Telegraphy Act provides that “no person shall possess 
wireless telegraphy apparatus except under and in accordance with a license issued under 
this Act” [Emphasis supplied]. Section 5 thereof designates the authority “competent 
to issue licenses to possess wireless telegraphy apparatus…” [Emphasis supplied] Section 6 
makes possession of wireless telegraphy apparatus in contravention of 
Section 3 ibid an offence. 
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15. 
 
The Television Receiving Apparatus (Possession & Licensing) 
Rules, 1970 (Rules) were framed under Section 10 of the Wireless Telegraphy 
Act. Rule 3(3) of the Rules, requires the “holder” to obtain a license 
“immediately after he comes into possession of a television set” [Emphasis supplied]. Rule 
2(e) of the Rules defines a “holder” as “any person for the time being in possession of 
a television receiving apparatus” [Emphasis supplied]. Rule 2(i) of the Rules defines 
“Television Receiving Apparatus” as “any apparatus…capable of being used for 
receiving the telecasts…and includes any apparatus which is temporarily incapable of being 
so used by reason of a defect…” [Emphasis supplied]. Although now the collection of TV 
license fee is made through electricity bills, the Wireless Telegraphy Act and 
the Rules make the Parliamentary intention clear. The license fee is paid not 
for any service provided by the appellant but by the holder of the TV set for 
its possession. The taxable event is not the provision of any service by the 
appellant. It is the possession of a television set by the holder. The 
Government of Pakistan allows the fee so collected to be used by the 
appellant for its maintenance and operations. The State has an interest in 
owning and operating a television corporation. This requires money. It, 
therefore, decided to levy license fee, collect it and allow the appellant to 
receive and use it for its maintenance and operations. It is for this reason 
that the amount of license fee received by the appellant is disclosed in its 
financials. The contention of the learned counsel for the respondent that the 
receipt of fee by the appellant establishes that it is subject to FED is not 
correct. All that it establishes is that the Government of Pakistan which has 
levied the fee has decided to allow the appellant to receive it and to use this 
revenue for its maintenance and operations. For FED to be levied on this 
amount it must further be established that it is a “service” as defined in 
Section 2(23) of the Federal Excise Act and is subject to the charge levied 
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under Section 3 thereof which, as discussed above, is clearly not the case. 
TV license fee not being the product of any service provided by PTV, FED 
cannot be levied on it. 
16. 
 
The foregoing are the detailed reasons for our short order of even 
date which reads as under:- 
 
“For the reasons to be recorded later, this appeal is allowed 
and the impugned order is set aside.” 
 
 
 
 
CHIEF JUSTICE 
 
 
 
 
 
 
Islamabad, the 
23rd of October, 2018 
Not approved for reporting 
 
 
 
 
JUDGE 
 
 
 
JUDGE 
M. Azhar Malik/*