Sales Tax Act (VII of 1990)--

----S.13, Sched. VI, Items 42 & 43---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Sales tax---Exemption---Raw material imported for manufacturing pharmaceutical products---Custom, Authorities refused to release the goods for non-payment of sales tax, on the ground that exemption granted under S.13, Sales Tax Act, 1990 had been withdrawn-- Items 42 & 43 of Sched. VI of Sales Tax Act, 1990 were in two parts, first being the grant of exemption for the payment of customs duty and the second laying down conditions for such an exemption---Exemption from customs duty was withdrawn resulting in that importers were no longer required to satisfy the conditions in order to avail exemption from the sales tax---Effect of amendment of the relevant items was only to lift the restrictions for availing the exemption---Amendment of relevant items of the Sched. VI of Sales Tax Act, 1990 was, thus, in the nature of beneficial statutory provision, which would ensure the benefit to importers for the purpose of sales tax.

Imran Aziz Khan for Petitioner.

A. Karim Malik, Legal Advisor for the Customs Department, Government of Pakistan.

ORDER

The petitioner/Company imported a consignment of raw material for manufacturing pharmaceutical products against L. C. No. 1322-01-49-58 0136, dated 5-5-1997. The bill of Entry No.3867/04 was filed before the Customs Authorities at Dryport, Lahore, on the arrival of the consignment. The respondents Nos. 3 and 4 refused to release the goods for non-payment of the sales tax as according to them the exemption granted under section 13 of the Sales Tax Act, 1990, read with Items Nos.42 and 43 of the Sixth Schedule of the Act had been withdrawn. Hence this petition.

2. Learned counsel for the petitioner has argued that an identical case of M/s. Wilshire Laboratories v. Federation of Pakistan, (Writ Petition No.29612 of 1997) has already been allowed by this Court vide order, dated 20-2-1998 wherein it was declared that the respondent had no lawful authority to demand the sales tax on the imported pharmaceutical raw material covered by Items 42 and 43 of the Sales Tax Act, 1990.

3. Learned counsel for the respondent when confronted was not in a position to controvert the position taken by the learned counsel for the petitioner.

4. I have heard the learned counsel for the parties. On the bare perusal of Items 42 and 43 of the Sixth Schedule of the Sales Tax Act, 1990 it would become clear that the same are in two parts. First being the grant of exemption for the payment of customs duty and the second laying down the conditions for such an exemption. However, the exemption from the customs duty was withdrawn. The result of such withdrawal was that an importer was no longer required to satisfy the conditions in order to avail the exemption from the sales tax. The effect of the amendment of the relevant Items of the Sales Tax Act was only to lift the limitations or restrictions for availing the exemption. The amendment was in the nature of beneficial statutory provision which would enure the benefit to the importers for the purpose of sales tax. At one stage, even the Central Board of Revenue had also taken the correct view but for some unknown reasons the earlier notification was withdrawn. I am also fortified by the judgment in the case of M/s. Wilshire Laboratories (supra).

5. In this view of the matter, this writ petition is allowed. The demand of respondents Nos.3 and 4 for the payment of sales tax from the petitioner- Company is declared to be without lawful authority and of no legal effect. There shall, however; be no order as to costs.

Q. M. H./D-16/L Petition allowed.