KHALID ISHAQ, J.This Income Tax Reference Application, filed under section 133(1) of theIncome Tax Ordinance, 2001(the "Ordinance"), seeks opinion of this Court on the following questions of law, which are said to have arisen from order dated 29.05.2017 (Impugned Order) passed by Appellate Tribunal Inland Revenue, Lahore ("Tribunal"):

"i. Whether on the facts and in the circumstances of the case, learned Appellate Tribunal has erred in law in allowing taxpayer's appeal pertaining to tax credit under Section 65A by holding that threshold 90% is to be determined exclusively with regard to sales no covered by final tax regime whereas section 65A(1) does not provide for any such exclusion?

ii. Whether on the facts and in the circumstances of the case, learned Tribunal has erred in allowing taxpayers' appeal relating to tax credit under Section 65A(1) by holding that the expression "during the said tax year" is a condition linked to magnitude of sales and not as a condition for the admissibility of tax credit it ninety percent of sales are to the person who is registered during the tax year?

2.The following facts are germane for the purpose of answering the above questions proposed for determination through this Reference Application.

3.In the tax year 2011, 85.32% of the Respondent's sales were local sales, made toCoca Cola Beverages Pakistan Ltd. (CCB), whereas, 14.68% of the respondent's sales were made toHabib Gulzar Non-Alcoholic Beverages Limited(Habib Gulzar) by way of exports as the said buyer was an entity operating in Afghanistan and thus, it was neither ‘registered'nor ‘liable to be registered' in terms of the provisions contained in the Sales Tax Act, 1990 (Act). The respondent taxpayer accordingly claimed tax credit of the sales made to registered person i.e. CCB, and filed its return of income for the tax year 2011, which return was taken as an assessment order under Section 120 of the Ordinance. Subsequently, the case record was examined by the Revenue and it was alleged that the assessment finalized under Section 120(1) of the Ordinance is erroneous, therefore, a show cause notice under Section 122(9) of the Ordinance was issued to the respondent taxpayer. The notice was replied and allegations were refuted, however, the Revenue proceeded to amend the assessment order under Section 122(5A) of the Ordinance by virtue of the Amendment Order dated 31.01.2014 (the"Amendment Order"). Being aggrieved, the respondent taxpayer filed an appeal under Section 129 of the Ordinance before the Commissioner Inland Revenue (Appeals), who, vide order dated 30.04.2014, disallowed the appeal of the taxpayer to the extent of issue in hand i.e. tax credit under Section 65A of the Ordinance. Being dissatisfied, the Applicant filed second appeal under Section 131 of the Ordinance before the Tribunal, which appeal was decided by virtue of the Impugned Order whereby, the orders passed by the Adjudicating Authority and that of the Commissioner Inland Revenue (Appeals) were vacated and tax credit claimed by the taxpayer under Section 65A of the Ordinance was allowed. Hence this Reference Application.

4.It is the case of the Revenue that since it is admitted by the taxpayer that only 85.32% of its sales were made to a registered person i.e. CCB, therefore, the benefit of tax credit under Section 65A of the Ordinance was not available to the respondent taxpayer and since the provisions contained in Section 65A are in the nature of an exemption/benefit, therefore, it entails strict interpretation and nothing can be read into this provision for availing the tax credit, which is otherwise not due on its plain reading.

5.Conversely, it is the case of the respondent taxpayer that the term ‘sales',as used in Section 65A of the Ordinance, is confined to those supplies and sales, which are made locally, either to registered person(s) or liable to be registered and the term ‘sales' does not include the supplies made to Habib Gulzar as it was an export. It is further argued that since the sales made to the registered person is more than the threshold limit of 90%, therefore, the benefit of tax credit in terms of Section 65A is attracted on all fours.

6.We have heard the learned counsels for the parties and perused the available record with their able assistance.

7.The moot point, which requires determination by this Court is whether threshold requirement of 90%, as couched in Section 65A of the Ordinance, is required to be applied against the entire sales made by the taxpayer in the relevant tax year and whether such sales include the exports as well? For better understanding of the question, the relevant provision i.e. Section 65A of the Ordinance, as it existed at the relevant juncture, is reproduced below:

"65A. Tax credit to a person registered under the Sales Tax Act, 1990.— (1) Every manufacturer, registered under the Sales Tax Act, 1990, shall be entitled to a tax credit of two and half per cent of tax payable for a tax year,if ninety per cent of his sales are to the person who is registeredunder the aforesaid Act during the said tax year.

(2) For claiming of the credit, the person shall provide complete details of the persons to whom the sales were made.

(3) No credit will be allowed to a person whose income is covered under final tax or minimum tax.

(4) Carry forward of any amount where full credit may not be allowed against the tax liability for the tax year, shall not be allowed.

[Emphasis Supplied]

8.The use of term ‘sales to the person, who is registered under the Act' in Section 65A of the Ordinance, is not without a purpose. The contours of term ‘sales' is limited to only those supplies which are made locally. The condition of such sales to a ‘registered person' is also significant for the purpose of the case in hand as it is an admitted position under the law that Habib Gulzar is an entity, which was neither registered in Pakistan nor it was liable to be registered, therefore, the interpretation sought to be placed by the Revenue is clearly misconceived as the entire purpose and essence of the condition/threshold of 90% sales to registered person(s) was rooted in the rationale of promoting and incentivizing the sales to registered person(s). It is for this reason that a tax credit was being inured for those who make 90% of the total sales to registered person(s). The threshold requirement of 90% in this case is not applicable against the entire magnitude of the ‘sales' made; the term must be understood and construed in the context of ‘registered person' as used in the Act since both these terms are inextricably linked. As per Section 2(25) of the Act, the ‘registered person' includes two categories of persons: one, the person(s) actually registered; two, the person(s) not actually registered but liable to be registered under the Act. There is no possible third category in play, particularly for the purpose of the provision in issue i.e. Section 65A of the Ordinance. The term ‘registered persons' as defined in the Act clearly manifest that person(s) not even liable to be registered under the Act, cannot be included for the purpose of calculation of 90% threshold required under Section 65A of the Ordinance. We are in agreement with the submission made by learned counsel for the Applicant/Revenue that the provision in issue i.e. Section 65A of the Ordinance is in the nature of extension of a benefit on fulfillment of certain conditions and while invoking the said provision for availing exemption, the conditions have to be construed strictly. Nonetheless, it is equally well- settled that the meaning of the words used in any portion of the statute must depend upon the context in which they are placed. Moreover, in interpreting an enactment, all its parts must be construed together as forming one whole and it is not in accordance with sound principles of construction to consider one section, or group of sections, divorced from the rest of the statute. Further, so far as possible, that construction must be placed upon words used in any part of the statute which makes them consistent with remaining provisions and with the intention of the legislature to be derived from a consideration of the enactment1. When the question arises as to the meaning of a certain provision in a statute, it is not only legitimate but proper to read that provision in its context. It is a rule now firmly established that the intention of the legislature must be found by reading the statute as a whole. The rule is referred to as an "elementary rule" by Viscount Simons; a "compelling rule" by Lord Somervell of Harrow; and a "settled rule" by B.K. Mukherjee, J. "I agree", said Lord Halsbury, "that you must look at the whole instrument inasmuch as there may be inaccuracy and inconsistency; you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it" and said Lord Davey: "Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter. The rule is of general application as even plainest terms may be controlled by the context, and "it is conceivable," as Lord Watson said, "that the legislature whilst enacting one clause in plain terms, might introduce into the same statute other enactments which to some extent qualify or neutralize its effect". The same word may mean one thing in one context and another in a different context. For this reason the same word used in different sections of a statute or even when used at different places in the same clause or section of a statute may bear different meanings. The conclusion that the language used by the Legislature is plain or ambiguous can only be truly arrived at by studying the statute as a whole2. This principle of interpretation is also known asWhole Text Cannon, which is to the effect that in ascertaining the plain meaning of the statute, the Court must look to the particular statutory language at issue, as well as the language and design of statute as a whole. Perhaps no interpretive fault is more common than the failure to follow thewhole text canon, which calls on the judicial interpreter to consider the entire text, in view of its structure and of the physical and logical relation of its many parts. Sir Edward Coke explained the canon in 1628: '[I]t is the most natural

1N S Bindra's Interpretation of Statutes, (Eleventh Ed., pp. 293), published byLexisNexis

2Principles of Statutory Interpretationby Justice GP Singh (13th Ed., 2012) published by LexisNexis [pp. 35, 36, 37]

and genuine exposition of a statute to construe one part of the statute by another part of the same statute, for that best expresseth the meaning of the makers.' When Construing the United States Constitution in McCulloch v. Maryland, Chief Justice John Marshall rightly called for a "fair construction of the whole instrument." More than a century later, Justice Benjamin Cardozo echoed the point in the context of legislation: "[T]he meaning of a statute is to be looked for, not in any single section, but in all the parts together and in their relation to the end in view

3. In our jurisprudence, it is also firmly settled that the provisions of a statute have to be read as a whole and all its provisions must be harmoniously construed and reconciled; the intention of the lawmaker is gathered by reading the enactment as a whole and not in isolation and any interpretation of a provision, which is made in isolation of other provisions and overall scheme of the statute, is not in

accordance with the cannons of construction of statutes

4.9.There is another well settled principle of interpretation of statutes that any interpretation of a particular provision, which leads to render other provisions of the same statute as redundant or tend to make them anomalous, cannot be resorted

5.10.Considering the above principles, the interpretation sought to be applied by the Revenue cannot be given any countenance. It is fall to be noted that the term ‘sales' is being employed for penultimate times in the Ordinance, and on all such occasions, the same has been used in connection with the local supplies. When considered the use of words ‘sales' in the Ordinance, the only ineluctable conclusion which emerges is that the term ‘sales' has no reference and relevance to ‘imports' or ‘exports', as the case may be. The terms ‘import & export' has always been used in the Ordinance in the context of international suppliers, therefore, the position and argument

3Reading Law, The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner (1st Ed.), published by Thomson/West [pp. 167 & 168]

4Kamaluddin Qureshi v. Ali International Co.(PLD 2009 SC 367),Combined Investment (Pvt.) Ltd. v. Wali Bhati and others(PLD 2016 SC 730),Collector of Customs, Customs House, Karachi v. Syed Rehan Ahmed(2017 SCMR 152),Waqar Zafar Bakhtawari and 6 others v. Haji Mazhar Hussain Shah and others(PLD 2018 SC 81),

5Judges Pension Case(PLD 2013 SC 829),Searle IV Solution (Pvt.) Ltd. and others v. Federation of Pakistan and ohters(2018 SCMR 1444),Aam Log Ittehad and another v. the Election Commission of Pakistan and others(PLD 2022 SC 39),Commissioner Inland Revenue and others v. M/s. White Gold Steel Mills and others(2025 SCP 2017) for inclusion of these international supplies in the ambit of sales made to ‘registered' or ‘liable to be registered' person is not only without substance but also in complete negation of the scheme and essence of the relevant provisions in the Statute. This contradistinction between the ‘sales' and ‘import/export' is clearly manifest in many provisions of the Ordinance. The reference may be made to sub-section (7) of Section 1486of the Ordinance. Sub-Section (7)(d)(v) of Section 148 of the Ordinance makes the distinction abundantly clear as it clearly reflects that ‘sale of goods' and ‘imports' are two different situations. The same is reproduced below for the sake of clarity:

Sec. 148.Imports

[…]

(7) The tax collected under this section shall be a final tax except provided under sub-section (8) on the income of importer arising from the imports subject to sub-section (1) and this sub-section shall not apply in the case of import of:

[…]

(d) large import house, who: […]

(v) maintain computerized record of imports and sale of goods

If there was no distinction in the term ‘sales' and ‘imports', the legislature would only have employed the sole term ‘sale of goods' for both situations, be it a local sale or international supplies. This stark distinction becomes much more evident from the perusal of the scheme of the Ordinance, which creates further dissection and regimes for the imports (which are dealt with under Section 148 of the Ordinance) and exports (which are dealt with under Section 154 of the Ordinance). A further distinction is also of much more significance and relevance i.e. minimum tax regime on the income of every person arising from imports or on the income of the importer. This also attracts another well settled principle of

interpretation that no surplusages can be attributed to the legislature7. In the

6As it existed at the relevant time i.e. during the tax year 2011.

7Judges Pension Case(PLD 2013 SC 829),Commissioner Inland Revenue and others v. M/s. White Gold Steel Mills and others(2025 SCP 217),East and West Steamship Co. v. Queensland Insurance Co.(PLDfield of interpretation of statutes the courts always presume that the legislature inserted every part thereof with a purpose and the legislative intention is that every part of the statute should have effect. Effect must be given, if possible, to all the words used in the statutory provision, for the legislature is deemed not to waste its words or to say anything in vain8.

11.It is also worth mentioning here that as and when the legislature intended to collectively refer to local and international supplies, the composite terms like turnover/gross receipts etc. have been employed and not the term ‘sales' has been used in a composite fashion. Under the Scheme of the Ordinance, the term ‘turnover' is employed to refer to local and international supplies, as provided under Section 113 of the Ordinance, prior to its deletion vide Finance Act, 2008. The then existing provision was interpreted by a Division Bench of this Court in the case ofImperial Electric Company9. It was held that the term ‘turnover from all sources' as used in sub-section (1) included within its scope the receipts relating to international supplies (in addition to receipts relating to local supplies) which are subject to final tax. It is of note that Section 113 was deleted vide Finance Act, 2008 and was once again inserted vide Finance Act, 2009 with certain changes. The key difference between the provisions of erstwhile and reinserted Section 113 of the Ordinance are the specific exclusions with respect to receipts relating to international supplies, which receipts were inclusive in the erstwhile Section 113, prior to its deletion in 2008.

12.The foregoing clearly transpires that the term ‘sales', as used in Section 65A of the Ordinance cannot be read in isolation and must be construed in line with the overall scheme of the Ordinance. Although, we are clear in our mind that there is no ambiguity in the provision and the tax benefit was lawfully claimed by the respondent taxpayer, however, even if the Revenue seeks to create a confusionvizApplication of Section 65A of the Ordinance, the benefit thereof cannot be curtailed on the basis of such narrow and pedantic construction of the provisions in issue. Indeed, the1963 SC 663), Syed Jalal Mehmood Shah and another v. Federation of Pakistan and another(PLD 1999 SC 395)

8N S Bindra's Interpretation of Statutes, (Eleventh Ed., p. 311), published byLexisNexis

9 "Commissioner Inland Revenue v. Imperial Electric Company Pvt. Ltd" (2015 PTD 884)

provision in issue is in the nature of an exemption or benefit and has to be construed strictly, however, a strict interpretation of the said provision does not warrant that the said provision be read in a manner which is in absolute negation of the overall scheme of the Ordinance and so drastically dissected from rest of the provisions that the other provisions of the statute are rendered redundant, thus, the benefit cannot be denied on the basis of any supposed intention to the contrary. Be that as it may, even if it may be construed that two interpretations of the provision in question are possible, the one in favour of taxpayer has to be resorted to as it is well recognized cannon of construction of fiscal statutes that where a provision is susceptible of two interpretations and there was a doubt about its true import, the benefit will go in favour of the taxpayer and the language used in a tax or financial statute is not to be either stretched in favour of the State or narrowed in favour of the taxpayer10. Whenever the language of the legislature admits of two constructions and, if construed in one way, would lead to obvious injustice, the courts act upon the view that such a result could not have been intended, unless the intention had been manifested in express words. Again, out of the two interpretations, that which ends in the furtherance of the object of the statute should be preferred to the one that would frustrate it11.

13.The upshot of the above discussion is that the term ‘sales' as used in Section 65A of the Ordinance cannot be read in isolation and has to be construed in line with the overall scheme of the Ordinance. The reliance in this respect may further placed upon the case ofCombined Investment (Pvt.) Ltd. suprawherein it is held that in a situation where there is some ambiguity and it is difficult to understand the true import and meaning of the words defined in the statute itself, principle of harmonious construction will apply to avoid any mutually destructive or conflicting conclusions. In view of the foregoing, we are of the opinion that the Impugned Order has been passed in accordance with law and does not warrant intervention.

10Capital Development Authority, CDA through Chairman, CDA, Islamabad v. Ahmed Murtaza and another(2023 SCMR 61),Government of Sindh through Secretary and Director General, Excise and Taxation and another v. Muhammad Shafi and others(PLD 2015 SC 380),M/s. Mehran Associates Limited v. The Commissioner of Income Tax, Karachi(1993 SCMR 274),The Commissioner Inland Revenue v. Mekotex (Pvt) Limited & others(2024 SCP 316) 11N S Bindra's Interpretation of Statutes, (Eleventh Ed., p. 284), published byLexisNexis14.For what has been discussed above, the proposed questions are answered in negative and resultantly this Reference Application isdismissed.

15.Office shall send a copy of this order under seal of the Court to the Appellate Tribunal as per section 133(8) of the Ordinance.