KHALIL AHMAD VS MUHAMMAD AJMAL
1997 P T D 68
[Lahore High Court]
Before Malik Muhammad Qayyum, J
Messrs MEHRAN FEED INDUSTRIES (PVT.) LTD
Versus
CENTRAL BOARD OF REVENUE, GOVERNMENT OF PAKISTAN, ISLAMABAD and 2 others
Writ Petition No. 5999 of 1996, decided on 03/10/1996.
Sales Tax Act (III of 1990)---
----S.13(1)---Notification S.R.O. No.501(I)/94---Exemption---Notification granting exemption creates vested rights in the persons who have, acting on the basis of said notification taken some decisive steps---Withdrawal of such notification, therefore, cannot be retrospectively applied to such cases.
Notification granting exemption creates vested rights in the persons who have, acting on the basis of said notification taken some decisive steps and the withdrawal of the exemption cannot be retrospectively applied to such cases.
Notification regarding withdrawal of exemption in the payment of sales tax could not be given retrospective effect and vested rights which had accrued to the persons who had taken decisive steps pursuant to the earlier notification granting exemption by opening letters of credit, could not be interfered with and they were not liable to pay sales tax in respect of such consignments.
Al-Samrez Enterprises v. The Federation of Pakistan 1986 SCMR 1917; Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 and W.P. No. 17231 of 1995 ref.
JUDGMENT
This judgment shall dispose of W.Ps. Nos. 5999, 13153, 6000, 1065, 13143, 13154, 6134, 6138, 6139, 10863, 10422, 6495, 9038, 8840, 6924, 12170, 12171, 12205, 12207, 12208, 12209, 12210, 12211, 12457 and 12272 of 1996 in which controversy involved is the same.
2. The petitioners in all these petitions have imported various goods from abroad by entering into contracts with the foreign suppliers and opening necessary letters of credit in their favour. It is common ground between the parties that at the time when the agreements were entered into and the letters of credit opened, the goods in question were exempt from payment of sales tax under a Notification SRO No.501(I)/94 issued under section 13(1) of the Sales Tax Act, 1990. However, before the goods could be cleared from Customs, the exemption in payment of sales tax was withdrawn by rescinding the abovementioned notification through another notification issued on 4-4-1994 with the result that the respondents demanded from the petitioners the payment of sales tax on the goods as a condition for clearance of the same from Customs. Aggrieved, the petitioners have approached this Court by filing these petitions.
3. The only question in all these petitions is as to whether the withdrawal of exemption is applicable to those consignments where firm contracts had been entered into or letters of credit opened before the withdrawal of the exemption.
4. As regards the effect of withdrawal of exemption previously granted, the law on the subject appears to be well-settled. It has been held that the notification granting exemption creates vested rights in the persons who have, acting on the basis of the said notification, taken some decisive steps and the withdrawal of the exemption cannot be retrospectively applied to such cases. Reference may be made to Al-Samrez Enterprises v. The Federation of Pakistan 1986 SCMR 1917 and Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652.
5. It is unnecessary to dilate further on the subject as the effect of the withdrawal of exemption from payment of sales tax by the notification, which is in issue in these petitions, was considered by a Division Bench of this Court in numerous. petitions including W.P. No.17231/1995. Relying upon various precedents including two cited above, it was held that the impugned notification regarding withdrawal of exemption in the payment of sales tax cannot be given retrospective effect and vested rights which .had accrued to the persons who had taken decisive steps pursuant to the earlier notification granting exemption by opening letters of credit could not be interfered with and they were not liable to pay sales tax in respect of such consignments.
6. It follows therefore that the demand for payment of sales tax from the petitioners in respect of consignments where letters of credit have been opened before the withdrawal of the notification of exemption is without lawful authority.
As a result of what has been stated above, all these petitions are allowed. The parties are left to bear their own costs.
M.B.A./M-200/L ??????????????????????????????????????????????????????????????????????????????? Petitions allowed