IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: MR. JUSTICE MIAN SAQIB NISAR 
 
 
MR. JUSTICE FAISAL ARAB 
 
 
MR. JUSTICE IJAZ UL AHSAN 
 
CIVIL APPEAL NO.1419 OF 2009 
(Against the judgment dated 16.6.2009 of the 
Islamabad High Court, Islamabad passed in 
STR No.1/2009) 
 
 
Chairman, Federal Board of Revenue, Islamabad 
 
…Appellant(s) 
VERSUS 
 
M/s Al-Technique Corporation of Pakistan Ltd. etc. 
 
…Respondent(s) 
 
For the appellant(s): 
Mr. Khalid Abbas, ASC 
 
 
For respondent No.1: 
Sh. Iftikhar Ahmad, ASC 
Mr. Sohail Akram Malik, 
Senior Law Officer, Al-Technique Corporation 
 
 
Date of hearing: 
22.11.2016 
… 
ORDER 
 
 
MIAN SAQIB NISAR, J.- The leave granting order in this 
appeal envisages three questions of law but the learned counsel for the 
appellant whilst arguing the matter has confined himself to only one i.e. 
whether sterilization of syringes or other medical/surgical products by 
respondent No.1 (respondent) falls within the definition of ‘manufacture’ 
under Section 2(16) of the Sales Tax Act, 1990 (the Act) and consequently is 
chargeable to sales tax. The other two questions are identical and 
dependent on the above proposition, and require no independent 
expression of opinion by us. 
2. 
 
The brief facts of the case are that the respondent is engaged 
in the business of gamma sterilization of medical/surgical products which 
are provided to it by other individuals/companies. The appellant 
department issued a notice to the respondent claiming that it was liable to 
Civil Appeal No.1419 of 2009 
-: 2 :-
pay sales tax on the sterilization process along with additional tax and 
thereafter passed an order in original to this effect. The respondent 
appealed against the order before the Sales Tax Appellate Tribunal but 
lost. However the learned High Court in the tax reference filed by the 
respondent held that the process of sterilization did not amount to 
‘manufacturing’ and therefore sales tax was not payable.  
3. 
 
Learned counsel for the appellant, by referring to the 
definition of ‘manufacture’ and ‘taxable supply’ (as reproduced later in this 
opinion), argued that value is added to the medical/surgical products on 
account of the sterilization process and this squarely falls within the 
definition of ‘manufacture’ and, therefore, the respondent is liable to pay 
sales tax. In support of his contention, he has cited the judgments 
reported as Collector of Customs, Central Excise and Sales Tax and 
others Vs. Mahboob Industries (Pvt.) Ltd. and others (PLD 2006 SC 
148), Adil Polypropyleneah22 Products Limited and others Vs. The 
Federation 
of 
Pakistan 
through 
Secretary 
Finance, 
Federal 
Secretariat, Islamabad and others (2000 SCMR 1708) and Sheikhoo 
Sugar Mills Ltd. and others Vs. Government of Pakistan and others 
(2001 SCMR 1376).  
4. 
 
Heard. It is settled principle of law that tax cannot be charged 
and levied unless it falls squarely within the purview of the charging 
provisions. Taxing laws are not to be extended by implication beyond the 
clear import of the language used. To hold otherwise would violate another 
principle of interpretation of taxing statutes: that tax laws should be 
construed in favour of the taxpayer and any substantial doubt resolved in 
favour of the citizen and against the government. This principle is based 
on the fact that taxation is a process which interferes with the personal 
and property rights of the people, although it is a necessary interference. 
Civil Appeal No.1419 of 2009 
-: 3 :-
But because it does take from the people a portion of their property, the 
tax laws must be construed in favour of the taxpayer1. In this context, 
Section 3 of the Act mandates as under:- 
 
“3. 
Scope of tax.—(1) 
Subject to the provisions of 
this Act, there shall be charged, levied and paid a tax 
known as sales tax at the rate of seventeen per cent of the 
value of— 
(a) 
taxable supplies made by a registered person in the 
course or furtherance of any taxable activity 
carried on by him; and 
(b) 
…………………………………………………………...”  
 
‘Taxable supply’ has been defined in Section 2(41) as:- 
 
“2(41) “taxably supply” means a supply of taxable goods 
made by an importer, manufacturer, wholesaler (including 
dealer), distributor or retailer other than a supply of goods 
which is exempt under section 13 and includes a supply of 
goods chargeable to tax at the rate of zero per cent under 
section 4”  
(Emphasis supplied) 
 
‘Manufacturer’ has been defined in Section 2(17) of the Act which reads as 
under:- 
 
“2(17) “manufacturer” or “producer” means a person 
who engages, whether exclusively or not, in the production 
or manufacture of goods whether or not the raw material 
of which the goods are produced or manufactured are 
owned by him; and shall include— 
(a) 
……………………………………………………………… 
                                       
1 The Construction of Statutes, Crawford, 1998. 
Civil Appeal No.1419 of 2009 
-: 4 :-
(b) 
……………………………………………………………… 
(c) 
……………………………………………………………… 
Provided that………………………………………………………” 
(Emphasis supplied) 
 
‘Manufacture’ has in turn been defined in Section 2(16) of the Act which 
reads as follows:- 
 
“2(16) “manufacture” or “produce” includes— 
(a) 
any process in which an article singly or in 
combination 
with 
other 
articles, 
materials, 
components, is either converted into another 
distinct article or product or is so changed, 
transformed or reshaped that it becomes capable of 
being put to use differently or distinctly and 
includes any process incidental or ancillary to the 
completion of a manufactured product; 
 
(b) 
…………………………………………………………… 
(c) 
…………………………………………………………” 
(Emphasis supplied) 
 
We reiterate that there is no cavil with the principle that a charging 
provision in a fiscal statute is to be given a strict interpretation and if a 
case does not fall within the purview thereof, tax cannot be charged from a 
person from whom it is being claimed. As is clear from Section 3 of the 
Act, sales tax can only be charged/levied against a person who makes a 
taxable supply which has been defined in Section 2(41) of the Act which 
specifically and unequivocally provides that it is supply of taxable goods 
by inter alia a manufacturer. According to Section 2(17) of the Act a 
manufacturer is a person who engages in the manufacture of goods and 
therefore, the definition of manufacture provided in Section 2(16) of the 
Civil Appeal No.1419 of 2009 
-: 5 :-
Act becomes germane in the instant case. It is settled that a definition 
clause is foundational when construing provisions of law. The definition 
given in the Act should be so construed as not to be repugnant to the 
context and would not defeat or enable the defeating of the purpose of the 
Act. It must be read in its context and the background of the scheme of 
the statute and the remedy intended by it2. A bare reading of the definition 
of ‘manufacture’ suggests that it is a process where:- 
(i) 
an article singly or in combination with other articles, 
materials, components, is either converted into another 
distinct article or product; or 
(ii) 
an article is so changed, transformed or reshaped that it 
becomes capable of being put to use differently or distinctly; 
and 
(iii) 
includes any process incidental or ancillary to the completion 
of a manufactured product.  
 
Does the process of sterilization of the syringes/surgical products convert 
them into a distinct article or product or is the article (syringes) changed, 
transformed or reshaped? The answer will depend on the meaning 
attributed to said words. It may be pointed out at this juncture that the 
part of Section 2(16) of the Act “any process incidental or ancillary to the 
completion of a manufactured product” is ejusdem generis to the earlier part of 
the definition [paragraphs (i) and (ii)]. The alleged manufacturing activity must 
fall within the first two categories else the third category would have no 
independent application or legal significance. Returning to the issue at 
hand, the words ‘convert’, ‘change’, ‘transform’ and ‘reshape’ are 
important. Chambers 21st Century Dictionary has defined them as 
follows:- 
                                       
2 Interpretation of Statutes, N. S. Bindra, tenth edition. 
Civil Appeal No.1419 of 2009 
-: 6 :-
 
“Convert – to change the form or function of one thing into 
another; 
Change – to make or become different; 
Transform – to change in appearance, nature, function, etc. 
often completely and dramatically; 
Reshape – to form or fashion or to give a particular form to 
something, again, or again and in a different way.” 
 
The Concise Oxford Dictionary (1982 ed.) has assigned the following 
meanings:- 
 
“Convert – change; change in character or function; 
Change – making or becoming different; 
Transform – make change in the form, outward 
appearance, character, disposition, etc.; 
Reshape – create, form, construct, model, mould, fashion, 
bring into desired or definite figure or form once more, 
again, afresh.” 
 
Further, ‘sterilization’ means “the treatment of food, surgical or laboratory 
equipment, etc. with heat, chemicals or radiation in order to destroy all living micro-
organisms”.3 
5. 
 
Adverting to the case law referred to by the learned counsel, 
the cases of Mahboob Industries (supra) and Adil Polypropylene Products 
(supra) pertain to excise and are therefore not relevant to the instant 
matter. In Sheikhoo Sugar Mills (supra) this Court held that the definition 
of the word ‘manufacture’ in Section 2(16) of the Act clearly suggested that 
the bagasse produced during the extrusion of sugarcane had an 
independent identity, status and character and was capable of being put 
                                       
3 Chambers 21st Century Dictionary. 
Civil Appeal No.1419 of 2009 
-: 7 :-
to use differently therefore it fell within the said definition, therefore 
supplying bagasse fell within the definition of taxable supply.  
6. 
 
From the facts of the present case, it is quite clear that the 
activity of gamma sterilization, which the respondent is engaged in – a 
process that eliminates all forms of living organisms – does not involve the 
conversion of any article singly or in combination with other articles into 
another distinct article or product. The process does not change, 
transform or reshape the syringes in any way, thereby rendering them 
capable of being put to use differently or distinctly. The syringes remain 
syringes after sterilization. Therefore, a bare reading of all the 
aforementioned definitions in their legal and usual context makes it 
manifest that the process of sterilization of medical/surgical products 
does not fall within the meaning of ‘manufacture’ as provided in Section 
2(16) thus the respondent is not a ‘manufacturer’ under Section 2(17) and 
is not making a ‘taxable supply’ as per Section 2(41) and therefore cannot 
be charged to sales tax under Section 3 of the Act. In light whereof, this 
appeal is dismissed. 
 
 
 
JUDGE 
 
 
 
 
JUDGE 
 
 
 
 
JUDGE 
Bench-I 
Islamabad, the 
22nd November, 2016 
Not Approved For Reporting 
Waqas Naseer/* 
