Law: Sales Tax Act, 1990

Section: 3,6,14,23,26,33(2cc),33(3)&36(2)

Law: Central Excise Act, (I of 1944)

Section: 3,2(20),3B,4(3),FirstSched

Law: Pakistan Telecommunication (Reorganization) Act, 1996

Section: Preamble

(a) Central Excise Act (I of 1944)---Ss. 3, 2(20), 3-B, 4(3) & First Sched.---Central Excise Rules, 1944, R.10(1), 96ZZJ & 210(2)---Sales Tax Act (VII of 1990), Ss. 3, 6, 14, 23, 26, 33(2cc), 33(3) & 36(2)---Pakistan Telecommunication (Reorganization) Act (XVII of 1996), Preamble---S.R.O. 456(I)/1996 dated 13-6-1996---S.R.O. 333(I)/2002 dated 15-6-2002---S.R.O. 617(I)/2000 dated 9-2-2000---PTC Heading No.9812-9000---Duties specified in First Schedule to be levied---Transponder (Channel Access Service)---Charge of central excise duty---Taxpayer, Pakistan Television Corporation Limited, contended that services received did not fall within the definition of "excisable services" and taxpayer had merely obtained "on lease" for its use a transponder on the satellite operated, being a lease arrangement, the amounts paid to service providers were merely lease rentals for the taxpayer's use of the transponder and were not to be taken as compensation for any services rendered by service providers---Use of leased/rental equipment by the taxpayer and payment of charges/rentals in respect thereof to service providers shall not amount to provision of services by service providers to the Pakistan Television Corporation Limited to start with; and the said services were neither originating from, nor terminating in, Pakistan or its tariff area, but rather, both originate and terminate thirty-six thousand kilometers in upper space i.e. well outside the territorial and aerial limits/jurisdiction of Pakistan---Validity---Recipient of excisable services in Pakistan was as much service provider as other service providers do and was liable to pay Central Excise Duty on services so received/provided---Insertion of word "including" in the definition of excisable services was not accidental one, rather it had certain meanings which should have been assigned to it as redundancy was not permissible in law---Word "include" enlarged the meanings of the words and phrases occurring in the body of a statute---Appellant could not establish that services provided and rendered by them did not fall within the purview of telecommunication services and not chargeable to being Central Excise Duty or sales tax in vat mode---Central Excise Duty was recoverable from service providers on their respective share of the payments received from Pakistan Television Corporation Limited on account of provision of telecom services of the transponders and access channel system---Pakistan Television Corporation Limited as withholding agent had the onus of depositing the duties with the concerned revenue authorities---Providers of channel access system whether agents of the providers of the transponders service or otherwise i.e. independent of the provider of transponders telecom services were also determined to be providers of excisable services---Service providers was also obligated to pay the leviable taxes in respect of the service fee received from the Pakistan Television Corporation Limited---Pakistan Television Corporation Limited, having voluntarily assumed the role of a withholding agent was obligated to either charge the duties from the payments made to its service providers or pay those by itself---Bottom-line was that no agreement among the parties to a service or supply transaction containing certain clauses whereby the liability to pay a chargeable or leviable tax was confused to avoid payment of duties could not be construed to preclude the application of a public law to such transaction or the jurisdiction of a public agency to recover a tax from the provider of any such services, unless expressly exempted---Order-in-Original and Order-in-Appeal was upheld by the Appellate Tribunal being lawful---Appeals of the appellants i.e. Pakistan Television Corporation Limited, and service providers was dismissed and Department was directed to very carefully scrutinize the amounts of taxes recoverable from Pakistan Television Corporation Limited in respect of payments made by it to service providers and make sure that there was no overlap in the recovery of taxes from any of the appellants.

PLD 1989 SC 128; PLD 1976 Lah. 423 (DB); PLD 1967 Lah. 553 (DB) and AIR 1932 PC 121 ref.

(b) Interpretation of Statutes---

----Word "include" is very generally used in interpretation clauses in order to enlarge the meaning of words or words or phrases occurring in the body of statute. 

(c) Interpretation of Statutes---

----Where the interpretation clause of statute states that certain things are included in a term, the term includes, unless the context otherwise requires not only those things which the interpretation clause declares that it shall include but also such things as the term signifies according to its natural import. 

PLD 1989 SC 128; PLD 1976 Lah. 423 (DB); PLD 1967 Lah. 553 (DB) and AIR 1932 PC 121 ref.

(d) Central Excise Act (I of 1944)---

----Ss.2 (20) & 3---S.R.O. No.477(I)/2003 dated 7-6-2003---Excisable services---Channel Access Services---Taxability---"International Incoming Calls" received by the Pakistan Telecommunication Company Limited became excisable to which exemption was granted; and appellants were service providers in the eye of law and were liable to pay leviable Central Excise Duty.

(e) Central Excise Act (I of 1944)---

----Ss.2(20) & 3---Excisable services---Ground telecommunication facilities had directly, been operated by the appellants for the purpose of up-linking and it was incorrect to contend by them that they were mere recipient of the services. 

(f) Central Excise Act (I of 1944)---

----Ss. 3 (11) & First Sched.---Duties specified in the First Schedule to be levied---Input adjustment---Since the appellants did not discharge their liability to payment of duty in time and manner prescribed by law, they could not exercise, at present appeal stage, input adjustment right which was contingent upon their liability---Exercise of right to input adjustment was time specific as well as service specific. 

(g) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---S.R.O. 456(I)/1996 dated 13-6-1996---Duties specified in the First Schedule to be levied---Telecommunication Services---Definition of "alike"---There was no exhaustive list of Telecommunication Services which fell under the Sub-Heading "9812-9000---Others"---In view of very rapid day to day advancements in Telecommunication Sector, it was not possible to prescribe specifically any exhaustive list---All Telecommunication Services fell under "9812-9000---Others" with the exception of those specified at 9812-1000, 2000, 3000 & 4000 and if escaped from the purview of such heading would fall in the definition of "alike" appearing in the S.R.O. 456(I)/1996 dated 13-6-1996. 

(h) Central Excise Act (I of 1944)---

----Ss.2 (20) & 3---Excisable services---Change of nomenclature---Mere change of nomenclature did not exclude a service from the ambit of taxable activities whatsoever---To say that the functions/signal/services of the Transponders were not like the functions/signal/services of Telephone was erroneous as the purpose of using these gadgets from the same meanings.

(i) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---Duties specified in the First Schedule to be levied---PCT Heading No.9813-0000; sub-Heading 9812-9000---Services provided and rendered by the Pakistan Television Corporation Limited---Number of services were not defined in PCT Heading No.9813-0000 of the Central Excise Act, for example, banking companies, insurance companies, cooperative financing societies, modarbas, musharkas, leasing companies, liable to central excise duty when there was no special law then general law and finally dictionary meaning were to be followed---Sub-heading "9812-9000---Others" clearly applied to all instruments which had been advented with the passage of time as a result of advancement in the scientific technologies that had to be clearly interpreted to expand the scope of any one or more of the services specified under the said heading by reading it with conjunction with any one of them---Services provided and rendered by the Pakistan Television Corporation Limited expressly fell within the purview of excisable services under "Sub-heading 9812-9000---Others" of the First Schedule of the Central Excise Act, 1944. 

(j) Central Excise Act (I of 1944)---

----S.3 & First Sched.---S.R.O. 333(I)/2002, dated 15-6-2002---Duties specified in the First Schedule to be levied---Telecommunication Services---Transponders---Non-inclusion of "Transponders" in the S.R.O. 333(I)/2002 dated 15-6-2002---Effect---Had the legislature been in knowledge of these developments use of the words such as "others" "alike" and "include" would not have found in the Tariff---Requisite enactment/provisions of law existed which was binding on the persons in Pakistan rendering Telecommunication Services. 

(k) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---Duties specified in the First Schedule to be levied---Telecommunication services---Transponder (Channel Access Service)---Nature---Transponder (Channel Access Service) was essentially telecom service and could not be characterized as any thing else---All electronic signals whether satellite based or otherwise, in connection with speech, sound data, signal, writing, image or video emitted within, into, or from Pakistan are covered by the definition of "Telecommunication Services" envisaged in the Pakistan Telecommunication Regulation Act, 1996---Appellants being, intermediary provider of telecom services to Pakistan Television Corporation Limited through access channel system was also providing a telecom service to the Pakistan Television Corporation Limited. 

(l) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---Duties specified in the First Schedule to be levied---Telecommunication services---Transponder (Channel Access Service)---Exemption---Validity---Pakistan Television Corporation Limited failed to charge federal excise duty on the invoices submitted to it by the appellants for receiving the contractual amount---Telecom services were being rendered by the appellants in Pakistan in as much as the radio bandwidth beam or channel base through which Pakistan Television Corporation Limited was un-lining its transmission to the respective Satellite with the help of "rented equipment in Pakistan"---Unlike the international leased circuits used by the Pakistan Telecommunication Company Limited for International Calls, the services in question procured by Pakistan Television Corporation Limited did not enjoy the benefit of exemption from payment of federal excise duty. 

(m) Legislation/Rules---

----In parliamentary form of Government the law making is the exclusive domain of the legislature; however, alongside the delegation doctrine also exists to allow the administrative agencies to frame rules for achieving the stated objectives of a statute promulgated by the legislature---Rule framed in exercise of delegated legislative authority is valid only if it is made to advance public interest and purpose of the statute---In judicial review of rules framed under delegated legislative authority, superior courts of law had laid down certain criteria for testing the validity of a rule framed under delegated legislative authority which include "the intelligible test", "the welfare test" and "the statutory objective tests" - -- Any rule which does not conform to the criteria of public interest or other tests is unlikely to survive the test of judicial scrutiny, if challenged before a court having jurisdiction to interpret a law. 

(n) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---S.R.O. 477(I)/2003, dated 7-6-2003---Duties specified in the First Schedule to be levied---Exemption Order No.1/2003 dated 27-6-2003---Telecommunication services---Transponder (Channel Access Service)---Retrospective exemption being extended to Pakistan Telecommunication Company Limited being specific, did not and could not extend to the telecom services provided by the appellants---Appellants did not fall in the purview of S.R.O. 477(I)/2003 dated 7-6-2003 read with central excise special Exemption Order No.1/2003 dated 27-6-2003. 

(o) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---Duties specified in the First Schedule to be levied---Transponder---Definition of transponder given in the contract explained that transponders generate telecom signals within the tariff areas of Pakistan and said service couldn't be excluded from the purview of excisable services being "the services terminating in Pakistan and its tariff area" which was an excisable service within the meaning of S.3 of the Central Excise Act, 1944.

(p) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---Duties specified in the First Schedule to be levied---Transponder --�Service of---Transponder was rendering certain service which terminated in the tariff area of Pakistan as a service provider in as much other service providers do---Central Excise Duty was payable on such service under S.3 of the Central Excise Act, 1944. 

(q) Central Excise Act (I of 1944)---

----S.3 & First Sched.---S.R.O. 456(1) 2006 dated 13-6-2006---Economic Coordination Committee decision No. 44(4)/2002 dated 28-3-2002---Duties specified in the First Schedule to be levied---PCT Heading No."9812-9000---Others"---Alike service---Duty on "Others" services---Economic Coordination Committee had concurred with the chargeability of Central Excise Duty on the "Others" services as contained in Para (2) of the Economic Coordination Committee decision No.44 (4)2002 dated 28-3-2002 (levy of General Sales Tax) on remaining services of Pakistan Telecommunication Company Limited---Insertion of word "alike service" in the body of S.R.O. 456(I)/2006 dated 13-6-2006 was not accidental---Services like "Voice Cast" (Voice Broadcasting Service) and "VSAT" (Very Small Aperture Terminal Service) had also not elsewhere been provided specifically under PCT Heading No.9812-9000-"Others" yet these were subject to excise duty---Perception that decision of Economic Coordination Committee ousted such like services from the purview of S.2(20) of the Central Excise Act, 1944 was not correct because Central Excise Duty was chargeable from services like "Voice Cast" (Voice Broadcasting Service) and "VSAT" (Very Small Aperture Terminal Service) and Pakistan Telecommunication Company Limited had been paying Central Excise Duty---Charge of Central Excise Duty on services falling under the alike service of PTC Heading 9812-0000 was never challenged by the Pakistan Telecommunication Company Limited in any appellate forum and had attained finality---Use of word "alike service" was meant to enlarge the meaning of the words and phrases occurring in the body of a statute.

(r) Interpretation of Statutes---

----Interpretation clause---Word of a statute "includes"---Connotation---Where the interpretation clause of statute states that certain things are included in a term, the term includes, unless the context otherwise requires, not only those things which the interpretation clause declares that it shall include but also such things as the terms signifies according to its natural import. 

(s) Central Excise Act (I of 1944)---

----S.3 & First Sched.---S.R.O. 477(I)/2003, dated 7-6-2003---Duties specified in the First Schedule to be levied---Signal generated by the transponders---"Alike service" --�Taxability of---Since federal excise duty was paid under the category of "alike service" by the Pakistan Telecommunication Company Limited under PCT Heading 9812, the telecom signals generated by transponders were also liable to federal excise duty on the same analogy and fell under "alike service"---International incoming calls operating on mechanism and characteristics identical to the transponders were liable to federal excise duty---Telecom signals generated by transponders, being similar to the "Voice Cast" and "Very Small Aperture Terminal Service" need equal treatment under the doctrine of consistency---Retrospective exemption of duty granted by Federal Board of Revenue to international calls did not apply to telecom services provided by transponder because S.R.O. 477(I)/2003 dated 7-6-2003 was Pakistan Telecommunication Company Limited specific as it specified Pakistan Telecommunication Company Limited as the only beneficiary of the exemption. 

(t) Central Excise Rules, 1944---

----R. 96ZZJ---S.R.O. 456(I)/1996 dated 13-6-1996---S.R.O. 333(I)/2002 dated 15-6-2002---PCT Heading 9812-9000---Special procedure for collection of central excise duty on telecommunication services---"Alike" service---Exemption---Rule 96ZZJ of the Central Excise Rules, 1944 provides special procedure for collection of Central Excise Duty on telecommunication services as provided under S.R.O. 456(I)/1996 dated 13-6-1996---S.R.O. 333(I)/2002 dated 15-6-2002 extends exemption from Central Excise Duty to goods imported, produced or manufactured locally and services named therein---Said S.R.O. suggested that no exemption from payment of Central Excise Duty was available to "alike" service of PCT Heading 9812-9000.

(u) Central Excise Act (I of 1944)---

----S.2 (20)---Excisable services---Charging of Central Excise Duty (on VAT mode) from Pakistan Television Corporation Limited was lawful and consistent with S.2(20) of the Central Excise Act, 1944. 

(v) Central Excise Act (I of 1944)---

----S.3 & First Sched.---Duties specified in the First Schedule to be levied---Transponder---Nature of transaction---Pakistan Television Corporation Limited received telecom signals from satellite with the help of transponders and the access channel system and on the other hand delivers telecom signal to the satellite through and the access channel system---Such was unique transaction of a two way exchange of telecom signals---Pakistan Television Corporation Limited was both the recipient and provider of telecom signals characterizable as service within the meaning of Central Excise Act, 1944 and liable to Central Excise Duty. 

(w) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---Duties specified in the First Schedule to be levied---Transponder(Channel Access Service)---Privity of contract---Applicability of---Agreement/contract of privity between its parties was an inter se arrangement for settlement of fiscal, administrative, technical issues and so on but could not oust operation of a public law or jurisdiction of a State agency---Federal Government was not a party to the agreement between Pakistan Television Corporation Limited and service provider and in no way restricted or neutralized the operation of a public law or jurisdiction of a State agency like the Federal Board of Revenue or any office subordinate to it---Since the ground telecommunication facilities had directly been operated by the Pakistan Television Corporation Limited, their contention that they were mere recipient of the services was unfounded---Pakistan Television Corporation Limited paid income tax on behalf of service provider but in the case of payment of Central Excise Duty they had taken a divergent position---Privity of contract was not applicable because it was the Pakistan Television Corporation Limited who voluntarily delivered copy of its contracts with Service Provider and Interactive to the revenue authority. 

(x) Central Excise Act (I of 1944)---

----S. 3 & First Sched.---Duties specified in the First Schedule to be levied---Transponder (Channel Access Service)--Withholding agent---Pakistan Television Corporation Limited was a withholding agent from service providers---Pakistan Television Corporation Limited was liable to pay taxes as a withholding agent for service providers---Pakistan Television Corporation Limited was not justified in aiding them and to avoid or evade Central Excise Duty and injuring the government's revenue---Non-payment of tax due in the manner provided under the provisions of Sales Tax Act, 1990 and rules made thereunder also attracted penal action---Demand of duty and taxes was lawfully made from the Pakistan Television Corporation Limited in circumstances. 

JUDGMENT 

By this single judgment order we intend to dispose the afore-titled appeals having identical questions of law and facts. These appeals have been filed by Messrs PTVCL, Messrs Asia Satellite and Messrs Interactive (Pvt.) Ltd. represented by their respective counsel and the State represented by the respective DRs or Legal Advisors as named above. The fundamental issues raised in appeals are whether the appellant's provided or received excisable services and if they did who had the responsibility to pay the taxes. 

2. Brief facts of the case are that an information was received by the Directorate-General of Intelligence and Investigation (Customs, Federal Excise and Sales Tax), Islamabad that two foreign companies namely Messrs Asia Sat, through its local agent Messrs Interactive Communication Islamabad having its office at F-7/1, Islamabad and Messrs Shin Satellite also a foreign entity through her local agent, i.e. Dr. Saqib Lari, Chief Executive Officer, Messrs Transnet Communication (Pvt.) Ltd. 34-F, Muhammad Ali Housing Society Karachi, Telephone: 021-4542310 Fax: 021-4548415 have rendered Telecommunication Services to Messrs P.T.V.C.L. Islamabad during 2001-2004 but did not pay central excise duty leviable thereon. The services so provided by Messrs Asia Sat and Messrs Shin Satellite Co. Ltd. were liable to be registered under the Pakistan Telecommunication (Reorganization) Act, 1996. By virtue of their falling under PCT Heading No.9812-9000 of the First Schedule to the Central Excise Act, 1944, these services are chargeable to central excise duty @ 15% provided in S.R.O.456(I)/1996, dated 13-6-1996 and S.R.O. 333(I)/2002, dated 15-6-2002 read with S.R.O.617(I)/2000, dated 2-9-2000. 

3. Accordingly the Directorate General, of Intelligence and Investigation, Islamabad asked Messrs P.T.V.C.L., Islamabad vide letter C.No.1/DGCl/RC/2004/857, dated 29-5-2004 to furnish the record and detail of the services so received. The P.T.V.C.L. Islamabad vide their letter No.DCAD/F.EXC (03-04) PGM/602, dated 12-6-2004 intimated that they have received the following telecommunication services from Asia Sat, Islamabad and Messrs Shin Satellite in pursuance of a contract negotiated with each company:-- 

(a) 
Services provided by Asia Sat. 


(a) Transponder (Channel Access Service). 
Rs. 444,968,863.00 

(b) Digital Video Plat Form. 
Rs. 61,129,766.00 

Total: 
Rs.506,098,629.00 

Central Excise Duty involved: 
Rs.75,917,794.00 
(b) 
Service provided by Messrs Shin Satellite 

(a) Messrs Shin Satellite (1) Transponders. 

(i) Equipment Rental 
Rs.18,003,084.00 

(ii) Channel Access Service. 
Rs.84,832,523.00 

(b) Messrs Shin Satellite (11) Transponders: 


(i) Equipment Rental. 
Rs.19,689,301.00 

(ii) Channel Access Service. 
Rs.78,042,833.00 

Total: 
Rs.2,00,567,741.00 

Central Excise Duty involved: 
Rs.30,085,161.00 

4. Following up on the information turned in by the P.T.V.C.L a contravention report was made out and sent for adjudication to the competent adjudicating authority at Rawalpindi who issued show-cause notices both dated 30-9-2004 to the appellant on account of their failure to charge and collect tax and deposit central excise duty or sales tax paid or received from P.T.V.C.L. contrary to the provision of sections 3, 3-B and 4(3) of the Central Excise Act, 1944 read with S.R.O.456(I)/1996, dated 13-6-1996, S.R.O.333(I)/2002, dated 15-6-2002 and S.R.O.617(I)/2000, dated 2-9-2000 and therefore, demanded deposit of central excise duty recoverable under Rule-10(1) of the Central Excise Act, 1944 read with Rule 210(2) ibid identifying punishment for violation of sections 3, 6, 14, 23, 26 and 36(2) of the Sales Tax Act, 1990 punishable under section 33(2cc) and section 33(3) ibid. The case was heard at length and after due deliberations an Order-in-Original Nos.24-25 of 2004 dated 31-12-2004 was passed against Messrs P.T.V.C.L, Islamabad, Messrs Asia Satellite, Islamabad and Messrs Interactive (Pvt.) Ltd., confirming the tax demanded in the show-cause notice. This order-in-original mutatis mutandis applied to Messrs Shin Satellite, too, who did not join the appellate proceedings. 

5. Aggrieved by the said order the appellants have filed this appeal before Appellate Tribunal, (Customs, Central Excise and Sales Tax), Islamabad now renamed as Appellate Tribunal Inland Revenue. The grounds of appeal questioning the nature of the transaction between the appellants, its chargeability to tax and the liability of the Messrs P.T.V.C.L., Messrs Asia Sat and Messrs Interactive (Pvt.) Ltd., to pay central excise duty are common. However, it is the contention of the Messrs P.T.V.C.L. that even if central excise duty was determined to be essentially payable, it should be demanded only from Messrs Asia Sat and Messrs Interactive (Pvt.) Ltd., who provided certain services to Messrs P.T.V.C.L. Except for this, the rest of the grounds are similar. The common grounds of appeal discussed in the appeal memo of the appellants i.e. Messrs P.T.V.C.L., Messrs Asia Sat and Messrs Interactive (Pvt.) Ltd., hereinafter referred as appellants and their respective pleadings during several hearings held on different dates are consolidated and summarized for sake of brevity as follows:-- 

5.1 Messrs P.T.V.C.L contended that the respondent No. 1 has ignored the clear provisions of the Central Excise Act, 1944 and the Sales Tax Act, 1990 and has unlawfully proceeded against the appellant. The appellant could neither be served with the captioned show-cause notice nor proceeded against for levy and recovery of Central Excise Duty (CED). Neither the Central Excise Act, 1944 nor the Sales Tax Act, 1990 provides for recovery proceedings to be initiated or held against the recipient of services/taxable supplies. The supply/provision of services in question was being made by Messrs Asia Sat and Messrs Interactive (Pvt.) Ltd., hence, only Messrs Asia Sat and liable to pay CED, if any found due to be paid. 

5.2 That respondent No. 1 has failed to appreciate that any recovery proceedings (commencing with the issuance of show-cause notice) in respect of CED not levied or short-levied for any inadvertence, error or misconception could only be initiated and held against a "registered person" who is liable to pay CED under the Sales Tax Act, 1990. Clearly, the appellant does not fall within the definition of a "registered person", as defined in section 14 of the Sales Tax Act, 1990. 

5.3 That respondent No. 1 has wrongly held that the appellants could be proceeded and the taxes/duties recovered from them. Their mutual contracts are privileged under the privity of contract clause contained in the contract. The central excise department thus had no jurisdiction to implead the appellants in the proceedings in question. 

5.4 That respondent No. 2 is bent upon pursuing the case only against the appellant and even the responsibility of conveying the Show-Cause Notices to Messrs Asia Sat and Messrs Shin Satellite is being unlawfully shifted to the appellant. This speaks volumes about the conduct of Central Excise authorities in imposing the CED liability on the appellant and extracting tax from it by hook or crook without even bothering to fulfil the procedural formalities of law. 

5.5 That even otherwise, it is illogical and irrational to proceed against and penalize the appellant (P.T.V.C.L.) for the fault, if 
any, of Messrs Asia Sat and Messrs Interactive (Pvt.) Ltd. 

5.6 That the demand raised by Central Excise authorities vide Show-Cause Notice No. CE/Coll/ADJ/122004/10976 dated 30th September, 2004 is time-barred. 

5.7 That services received by the appellant (P.T.V.C.L.) from Messrs Asia Sat and Messrs Interactive (Pvt.) Ltd., do not fall within the definition of "excisable services" as laid down in section 2(20) of the Central Excise Act, 1944. 

5.8 The appellant has merely obtained "on lease" for its use a transponder on the satellite operated by Messrs Asia Sat and, being a lease arrangement, the amounts paid to Messrs Asia Sat and Messrs Interactive (Pvt.) Ltd., are merely lease rentals for the appellant's use of the transponder and are not to be taken as compensation for any services rendered by Messrs Asia Sat or Messrs Interactive (Pvt.) Ltd. Use of leased/rental equipment by the appellant and payment of charges/rentals in respect thereof to Messrs Asia Sat and Messrs Interactive (Pvt.) Ltd., shall not amount to provision of services by the latter to the appellant to start with. 

5.9 Without prejudice to the foregoing, assuming without conceding that the same do amount to services, the said services are neither originating from, nor terminating in, Pakistan or its tariff area, but rather, both originate and terminate thirty-six thousand kilometers in upper space i.e. well outside the territorial and aerial limits/jurisdiction of Pakistan. 

5.10 The nature of the services is as under:-- 

� The appellant sends/uplinks and carrier signal to upper space where it is received by a Transponder device fixed inside a satellite. 

� The transponder device modulates and amplifies the received signal and re-transmits the same signal back to earth. 

� That services utilized by the appellant only relate to the use of the Transponder device inside the satellite. The uplinking of the carrier signal as well as the receiving of the amplified signal are both carried out by the appellant without utilizing the services of Messrs Asia Sat in any manner. 

� As such, the entire services are performed in the upper space well beyond the jurisdiction/limits of Pakistan and its tariff area. 

5.11 The services must be differentiated from the signal since it is the signal which is received back on the earth which is in fact the very same signal earlier generated by the appellant but only amplified and modulated by the transponder which is all done and completed at the satellite orbiting in the upper space. 

5.12 That respondent No. 1 has also erroneously held that the services received by the appellant from Messrs Asia Sat fall under the head 98.12 of the First Schedule to the Central Excise Act, 1944. Respondent No. 1 has failed to appreciate the technical information provided to him by the appellant's technical expert and has wrongly concluded that a Television and Transponder, on the one hand, and telephone, telegraph, telex and telefax, on the other, are "alike" as the said word has been employed in the head 98.12 of the First Schedule to the Central Excise Act, 1944. 

5.13 That Serial No. 9812 of the First Schedule to the Central Excise Act, 1944 only relates to or covers services pertaining to telecommunication work relating to "telephone, telegraph, telefax and alike". 

5.14 That accordingly, it must be ascertained whether the transponder services in question are being rendered in relation to telecommunication work in respect of "telephone, telegraph, telex, telefax and alike" or not. 

5.15 That in the instant case, the transponder services are being rendered in relation to television broadcast. Hence, it has to be seen if "television" is "alike or similar to "telephone, telegraph, telex or telefax". 

5.16 That "television" is markedly different from "telephone, telegraph, telex and telefax". 

5.17 That the word "Others" listed in sub-heading/Serial No. 9812.9000 shall be deemed to refer to the word "alike" mentioned in the main heading/Serial No. 9812 and must be interpreted likewise. 

5.18            That even under the rule of ejusdem generic, the transponder services in respect of "television" do not come within the same classification as would similar services for "telephone, telegraph, telex and telefax" because of the differences highlighted above.

5.19            That respondent No. 1 has failed to advert to the detailed written arguments submitted by the appellant and has not even mentioned the same in the Order dated 31-12-2004. This alone has resulted in miscarriage of justice. The contents of the said written arguments may kindly be read as an integral part of the grounds of instant appeal as well.

5.20            That the impugned Order is against the facts of the case and the law, both statutory and case law, on the subject.