Sales Tax Act (III of 1951)---

----S.7---S.R.O. No.542(1)/89, dated 3-6-1989---S.R.O. No. 566(1)/89, dated 3-6-1989---Customs Act (IV of 1969), S.31-A---Constitution of Pakistan (1973), Art.199---Constitutional petition---Exemption---Withdrawal of exemption from sales tax---Importer entered into a contract with an exporter and after obtaining import licence for the item opened- Letter of Credit in its favour on 16-4-1988---Importer filed Bills of Entry on 8-9-1988 which were completed by Customs Department after verification and goods were kept by importer in a bonded warehouse---Federal Government, meanwhile on 3-6-1989 enhanced the rate of duty on the item and sales tax was also levied on the imported item --When importer requested the Custom Authorities to release the goods on payment of the original rate of customs duty and without payment of sales tax so levied, it was asked to furnish a bank guarantee for the differential amount of the duty and sales tax---Validity---Held, once a vested right was created in favour of the importer (petitioner) the same could not be subsequently taken away by withdrawal of a notification---Provision in the Customs Act 1969 was introduced to meet the situation but admittedly no such corresponding provision was introduced in the Sales Tax Act---Importer was not liable to pay sales tax but was liable to pay customs duty so enhanced in view of introduction of S.31-A, in the Customs Act, 1969.

Amanullah Khan for Petitioner.

Naimur Rehman, Standing Counsel for Respondents.

Date of hearing: 27th March, 1991.

JUDGMENT

MAMOON KAZI, J.---The petitioner is engaged in the manufacture of steel products such as billets, ingots etc. and for such purpose it imported shredded scarp. The petitioner for this purpose entered into a contract with M/s. Hansa Rohstoffe GMBH of West Germany on 16th June, 1988, for supply of 25,000 tons of the said material. After obtaining import licence for the same the petitioner opened Letter of Credit on 16-4-1988 in favour of the foreign supplier valued at $ 4.16 million for supply of 24,376 metric tons of the said material. After the goods landed on 27-8-1988 the petitioner filed the Bills of Entry on 8-9-1988 which were completed by the Customs Department after verification and the goods at the relevant time were subject to the payment of custom duty at the rate of Rs.1,000 per metric ton. It is pertinent to point out that the goods at the relevant time were exempt from sales tax. Thereafter the goods were kept by the petitioner in a bonded warehouse. However, in the meanwhile on 3-6-1989 the Federal Government vide S.R.O. No.542(1)/89 enhanced the rate of duty on steel scrap to Rs.1,500 per metric ton. Sales tax was also levied on the same at the rate of Rs.12-1/2% vide S.R.O. No.566(1)/89, dated 3-6-1989. Thereafter, the petitioner requested the respondents to release the goods on payment of the original rate of customs duty i.e. Rs.1,000 per metric ton and without payment of sales tax but the petitioner was asked to furnish a bank guarantee for the differential amount of the duty and sales tax and hence the petition.

2. We have .heard Mr. Amanullah Khan, learned counsel for the petitioner and the learned Standing Counsel who has appeared on behalf of the respondents.

3. Mr. Amanullah Khan has contended that withdrawal of exemption through a notification can only be prospective but retrospective effect cannot be given to a notification withdrawing exemption so as to infringe rights already accrued. Reference has been made to the case of Al-Samrez reported in 1986 SCMR 1917. Further, contention made by the learned counsel is that although section 31-A was introduced in the Customs Act to meet such a situation but no corresponding amendment has been introduced in the Sales Tax Act. Reliance has been placed by the learned counsel on the cases of Punjab Steel Limited v: Deputy Collector of Customs, Dry Port, Lahore PLD 1989 Lah. 237, Crescent Pak. Industries (Pvt.) Limited v. Central Board of Revenue 1990 PTD 29 and Rachna Chemical Industries v. Government of Pakistan 1991 PTD 1 which clearly support the petitioner's case so far as the withdrawal of exemption from sales tax is concerned.

4. It may be pointed out that following the decision in the case of Al -Samrez 1986 SCMR 1917 several petitions were decided by this Court as it had been held that once a vested right was created in favour of the petitioners, the same could not be subsequently taken away by withdrawal of a notification. Thereafter section 31-A was introduced in the Customs Act to meet such a situation but admittedly no such corresponding amendment has been made in respect of the sales tax. Since the goods imported by the petitioner had already arrived at the Karachi Port and Bills of Entry had also been presented to the Customs Authorities in respect thereof, therefore, in view of the principle laid down in Al-Samrez' s case, the petitioner had acquired a vested right which could not be taken away by subsequent withdrawal. We are consequently of the view that the cases cited by Mr. Amanullah Khan are fully attracted to the present case, so far as withdrawal of exemption from sales tax is concerned. l However, the petitioner would be liable to pay customs duty at the enhanced rate i.e. at the rate of Rs.1,500 per metric ton in view of section 31-A of the Customs Act.

5. In the result, this petition is allowed to the extent as pointed out above only in regard to the exemption extended to the payment of sales tax. The parties are left to bear their own costs.

M.B.A./A-1427/KPetition allowed.