SAPHIRE ENERGY LIMITED VS PAKISTAN
2001 P T D 2234
[Lahore High Court]
Before Sh. Amjad Ali, J
SAPHIRE ENERGY LIMITED and 10 others
Versus
PAKISTAN and others
Writ Petitions Nos. 1847, 2037, 2558, 2723, 2867 of 1997, 5, 503, 1559, 1714, 1951 of 1998 and 7 of 1999, decided on 08/04/1997.
(a) Sales Tax Act (VII of 1990)‑‑‑--
‑‑‑S.13‑‑‑Customs Act (IV of 1969), S.18‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Territorial jurisdiction ‑‑‑Exemption of sales tax and customs duty‑‑‑Maintainability of Constitutional petition was objected to on the ground that since the seat of business of all the petitioners was at Karachi, Lahore High Court, Rawalpindi Bench had no jurisdiction to entertain the petition‑‑‑Seat of Central Board of Revenue was it Islamabad which fell within the territorial jurisdiction of the Rawalpindi Bench of the Lahore High Court‑‑‑Constitutional petition could be filed at Rawalpindi Bench of the Lahore High Court in circumstances.
Sandalbar Enterprises (Pvt.) Ltd. v. Central Board of revenue and others PLD 1997 SC 334 and Flying Kraft Paper Mills (Pvt.) Ltd., Charsadda v. Central Board of Revenue, Islamabad and 2 others 1997 SCMR 1874 ref.
(b) Sales Tax Act (VII of 1990)‑‑‑--
‑‑‑‑S.13‑‑‑Customs Act (IV of 1969), S.18‑‑‑Exemption of sales tax and customs duty‑‑‑Discretion of Government‑‑‑Grant of exempt ion was a discretionary relief and Authority could or could not grant such relief in respect of any goods or class of goods and could grant exemption on any terms and conditions according to its own view of public policy and expediency.
Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 ref.
(c) Sales Tax Act (VII of 1990)‑‑‑--
‑‑‑‑S.13‑‑‑Customs Act (IV of 1969), S.18‑‑‑Notification No, S.R.O. 279(I)/94, dated 2‑4‑1992‑‑‑S.R.O. 585(I)/95, dated 1‑7‑1995‑‑‑S.R.O. 230(I)/97, dated 29‑3‑1997‑‑‑Constitution of Pakistan (1973), Art. 199---‑ Constitutional petition‑‑‑Exemption of sales tax and customs duty for import of electricity generating units‑‑‑Petitioners/importers who imported electricity manufacturing units (generators) on various dates from February 1997, had claimed exemption of sales tax and customs duty granted in respect of import of said goods under Notification No.279(I)/94 dated 2‑4‑1994 and S.R.0.230(I)/97, dated 24‑3‑1997‑‑‑First Notification of 1994 where under exemption was granted from whole of the customs duty and sales tax chargeable on machinery imported by the petitioners was subsequently amended and another Notification No.S.R.O. 585(I)/95, dated 1‑7‑ 1995 was issued where under machinery imported by the petitioners was exempted from the levy of customs duty in excess of 10% of such duty leviable on said machinery‑‑‑Petitioners, in circumstances, would be entitled to exemption of customs duty in excess of 10% of customs duty leviable under Notification No.585(I)/95, dated 1‑7‑1995 and from sales tax in terms of Notification No.230(I)/97, dated 29‑3‑1997.
Ittefaq Foundry v. Federation of Pakistan PLD 1990 Lah. 121; Saeed‑ud‑Din v. Secretary, Government of N.‑W.F.P. and 3 others 1990 CLC 8; Messrs Willy Foods (Pvt.) Ltd. v. Pakistan, Ministry of Finance, Government of Pakistan and 6 others 1997 PTD 63; Al‑Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917; Messrs Madina Traders v. Federation of Pakistan and 4 others 1999 SCMR 95 and Messrs M.Y. Electronics Industries (Pvt.) Ltd. and others v. Government of Pakistan and others 1998 SCMR 1404 ref.
Muhammad Akram Sheikh and Azid Nafees for Petitioners
Ch. Afrasiab Khan, Standing Counsel for Respondent.
Farhat Nawaz Lodhi, Legal Advisor.
Dates of hearing: 6th, 7th and 8th April, 1997
JUDGMENT
This judgment will dispose of eleven Constitutional petitions, namely, Writ Petition No. 1847 of 1997 (Saphire Energy Limited v. Pakistan and another), Writ Petition No.2037 of 1997 (Ahmad Fine Textile Mills v. Federation of Pakistan and others), Writ Petition No.2558 of 1997 (Gadoon Textile Mills v. Federation of Pakistan and others), Writ Petition No.2723 of 1997 (Fazal Textile Mills Ltd. v. Federation of Pakistan and others), Writ Petition No.2867 of 1997 (Messrs Jamia Spinning and Weaving Mills Limited v. Federation of Pakistan and others), Writ Petition No.5 of 1998 (Monno Energy Limited v. Federation of Pakistan and another), Writ Petition No.503 of 1998 (Chenab Fabrics and Processing Mills v. Federation of Pakistan and others), Writ Petition No. 1559 of 1998 (Tata Energy Limited v. Federation of Pakistan and others), Writ Petition No. 1714 of 1998 (Gadoon Textile Mills Ltd. v. Federation of Pakistan and others), Writ Petition No. 1951 of 1998 (Siddique Sons Tin Plate (Pvt.) Limited v. Federation of Pakistan and others) and Writ Petition No.7 of 1999 (Siddique Sons in Tin Plate (Pvt.) Limited v. Federation of Pakistan and others) involving common questions of law and facts.
2. Briefly, the facts leading to these petitions are that the petitioners are engaged in various businesses in Karachi. They imported electricity manufacturing units (generators) on various dates from February, 1997, so onward. The petitioners claimed exemption of sales tax and customs‑duty leviable on these items mainly under the Government of Pakistan, the Ministry of Finance, Notification No.S.R.O.279(1)/94 hated the 2nd April, 1994, and Notification No.S.R.O. 230(1)/97, dated the 29th March, 1997, The exemption from sales tax and customs‑duty was, however, declined on the ground that at the time of such imports, the petitioners were not entitled to such exemptions because of subsequent amendments made in the aforesaid notifications as clarified by the Central Board of Revenue in its letters, dated 9th April, 1997 and 18th June, 1997. The petitioners being aggrieved of denial of exemption from levy of sales tax and customs‑duty have brought these Constitutional petitions assailing the amendments made in Notification No.S.R.O. 279(1)/94, dated the 2nd April, 1994, and the aforesaid clarifications issued by the Central Board of Revenue on various grounds, including discrimination and promissory estoppel. All these petitions were, however, vehemently opposed by the respondents.
3. It is an admitted position that in order to overcome the shortage of electricity in the country, the Government had provided several incentives to the private sector for import of electricity generating units. In this connection, the first notification was issued vide S.R.O. 279(1)/94, dated 2‑4‑1994. whereby subject to certain conditions specified therein exemption was allowed from whole of the customs‑duty and sales tax chargeable on import of machinery and equipment, including coal mining equipment not manufactured locally, if imported for setting up or for balancing, modernization and extension of power generation i.e., through oil, gas, hydle, coal, wind and wave energy projects, including the under construction projects. This notification was amended vide Notification NO.S.R.O.584(1)/95, dated the 1st July, 1995, whereby the exemption from sales tax and customs‑duty under Notification NO.S.R.0.279(I)/94, dated 2‑4‑1994, was restricted to those projects the sponsors of which had entered into Power .Projects Agreements with Water and Power Development Authority (WAPDA) or Karachi Electric Supply Corporation (KESC). On the same. date, another Notification, namely S.R.O. No.585(I)/95, was issued whereunder machinery and equipment, including coal mining equipment, not manufactured locally, was exempted from the levy of customs‑duty in excess of 10% of such duty leviable thereon if such machinery and equipment were imported for setting up or for balancing, modernization and extension of power generation through oil, gas, coal, wind and wave energy projects, including under construction projects. Later on, another Notification numbering S.R.O. 773(1)/95, dated 1‑8‑1995, was issued whereunder the condition of entering into Power Projects Agreements with WAPDA or KESC as specified in Notification No.S.R.O.279(1)/94, dated 2‑4‑1994, was substituted to provide exemption from levy of sales tax and customs‑duty on imports of electricity manufacturing units by the importers who had entered into Implementation Agreements with the 13th June, 1996, further amendment was made in Notification No.279(1)/94, dated 2‑4‑1994, whereby the words 'sales tax' used therein were omitted. Resultantly exemption under the later notification was to customs duty.
4. Notification NO.S.R.O.279(I)/94, dated 2‑4‑1994, for the purpose of exemption also contains description regarding machinery and equipment. The relevant definition for the purpose of present controversy is contained in clause (i) thereof which is reproduced as below:
"For the purpose of Notification, 'machinery and equipment' shall means:
(i)machinery and equipment operated by power of any description such as is used in the generation of power. "
5. Sixth Schedule to the Sales Tax Act, 1990, contains the items specified therein falling under the Headings of the First Schedule to the Customs Act, 1969, which have been exempted from the levy of sales tax, pursuant to the provisions of section 13 of the Sales Tax Act, 1990. The said item 39 of the Sixth Schedule contains the entry in respect of plant and machinery the description of which is to be notified by the Federal Government in the Official Gazette. In this respect, the Ministry of Finance and Economic Affairs, Government of Pakistan, had issued Notification No.S.R.O.230(I)/97, on 29‑3‑1997. Under the said Notification, the following items were declared to be 'plant and machinery' which description is almost identical to the definition of the said expression under Notification No. S.R.O. 279(I)/94, dated 2‑4‑1994:‑‑‑
"(a)Machinery, operated by Power of any description, such as to be used in any industrial process for the manufacture of goods;
(b)apparatus and appliances, including metering and testing apparatus and appliances specifically adapted for use in conjunction with machinery specified in item (a) above
(c)mechanical and electrical control transmission gear adapted for use conjunction with machinery specified in item (a) above; and
(d)component parts of machinery as specified to items (a), (b) and (c) above, identifiable as for use in or with such machinery, but excluding maintenance spares for current use."
6. The claim of the petitioners as stated above is that they were entitled to exemption from the levy of sales tax and customs‑duty under Notification NO.S.R.0.279(1)/94, dated 2‑4‑1994. They further claim exemption from levy of sales tax on the basis of the Notification No.S.R.O. 230(1)/97 dated 29‑3‑1997, on the import of electricity manufacturing units. In this respect the petitioners have also assailed to clarification made by the Central Board' of Revenue through its Letter No.l/II‑SPIT/97, dated 18‑6‑1997, claiming the same to be contrary to its first Letter C.No.I/II‑SPT/97, dated 9‑4‑1997. The first letter reads as under:
"SUBJECT:SRO 230(I), 97, DATED, 29‑3‑1997 CLARIFICATION REGARDING
I am directed to refer to the subject noted above and to state that plant and machinery have been exempted from sales tax... (not eligible) a new entry at serial number 39 in the Sixth Schedule to the Sales Tax Act, 1990.
A question has arisen whether the Notification S.R.O. 230(1)/97, dated 29‑3‑1997 (Annexure‑A) issued in pursuance of the aforesaid... (not legible) covers the machinery and equipment which Was earlier chargeable to sales tax at the concessionary rate of 10% as per the entries at Serial Nos.44, 51, 52, 53 and 54 of the Seventh Schedule to the Sales Tax Act 1990 or not.
The Board is pleased to clarify in this regard that the plant, and machinery an equipment as was enlisted at Serial Nos.44; 51, 52, 53 and 54 of the Seventh Schedule to the Sales Tax Act, 1990 (Annexure 99‑B) are duly covered under S.R.O. 230(1)/97, dated 29‑3‑1997. Consequently, these entries have been deleted from the Seventh Schedule... (not legible) Finance Supplementary (Amendment) Bill, 1997."
In the second letter, dated 18‑6‑1997, further clarification was made in respect of Notification No.S.R.O.230(I)/97 dated 29‑3‑1997 and is read as under:
"SUBJECT:EXEMPTION OF SALES TAX UNDER S.R.O.230(I)/97,
CLARIFICATION REGARDING.
The undersigned is directed to refer to the subject cited above and to state that SRO 230(1)/97, dated 29th March, 1997 covers only machinery operated by power of any description, such as is used in any industrial process for the manufacture of goods Apparatus of Appliances including metering and testing Apparatus and appliances specifically adopted for use in conjunction with the said machinery alongwith mechanical and electrical control and transmission gears adopted for use in such machinery thereof are covered in the S.R.O.
The most important factor is that only such machinery which is used in any industrial process for the manufacture of woods is eligible for exemption in terms of Serial No.39 of the Sixth Schedule to the Sales Tax Act, 1990 read with S.R.O.230(I)/97, dated 29th March 1997 The meaning of the word 'machinery' has to be found in the said notification itself. Definitions maintained in other S.R.O's. or meanings of the words 'Plant and Machinery' given in dictionaries/encyclopaedias are not relevant having been so due to inconsistency with the specific definition assigned to these terms in S.R.O.230(I)/97. That being so, diesel engines falling under PCT heading 84.08 of the First Schedule to the Customs Act, 1969, combined harvesters, alternators (A.C. generators), Generator Sets and Tork Lift trucks are not covered under S.R.O. 230(1)/97, dated 29‑3‑1997."
8. In the meanwhile, Notification No. S.R.O. 582(1)/98, dated 12‑6‑1998, was issued under subsection (2) of section 13 of the Sales Tax Act, 1990, read with Entry 44 of the Sixth Schedule to the said Act, superseding Notification NO.S.R.O.230(I)/97, dated 29‑3‑1997. Under the new notification from the definition of 'plant 'and machinery' generators, generating sets, wires arid cables were excluded for the purpose of exemption from levy of sales tax. This notification was, modified by Notification NO.S.R.O.950(I)/98, dated 4‑9‑1998, whereby plant and machinery imported for generation of electrical energy by, or supplied to, WAPDA, KESC gnu other power generation companies as approved by the Federal Government were also allowed exemption from levy of sales tax.
9. Primarily, the petitioners are agitating against the amendments made in the principal Notification NO.S.R.O.279(I)/94, dated 2‑4‑1994, through Notification NO.S.R.0.584(1)/95, dated 1‑7‑1995, whereby the exemption from levy of customs‑duty and sales tax was restricted for projects the sponsors of which had entered into Power Project Agreement with WAPDA or KESC, and Notification NO.S.R.0.773(1)/95, dated 1‑8‑1995, whereunder only 'those importers who had entered into Implementation Agreements with the Government were entitled to exemption of sales tax and customs‑duty, and also against Notification NO.S.R.0.585(1)/95, dated 1‑7‑1995, under which exemption from levy of customs‑duty in excess of ‑10% of such duty leviable on power generating units was allowed claiming the same to be violative of Articles 18 and 25 of the Constitution being discriminatory and putting restraints on free trade and business. It was urged that Article 18 of the Constitution provides every citizen of Pakistan freedom to conduct any lawful trade and business, while Article 25 thereof protects the citizen of Pakistan from discriminatory treatment, including conduct of business and trade and thereby laws cannot be made to provide concessions to one set of persons or organisations to the disadvantage of others nor any restraints can be put on any section of citizens in their participation in market economy. But by these amending notifications and clarifications issued by the Central Board of Revenue on 9‑4‑1997 and 18‑6‑1997, the State owned or controlled organisations, namely WAPDA and KESC and those companies which have entered into Implementation Agreements with the Government of Pakistan have (laced the private entrepreneurs under heavy financial burden and thereby their imports of electricity manufacturing units became non competitive. The clarification issued by the Central Board of Revenue administrative letters was also assailed on the ground that under the garb of clarifications the rights accrued to the petitioners tinder the statutory notifications cannot be taken away.
10. In support of their contentions, Mr. M. Akram Sheikh, Advocate, the learned counsel representing the petitioners in Writ Petition No.1847/97 and W.P. No.5/98 and Mr. Tariq laved, learned Counsel for the petitioners in the remaining nine petitions, referred to Ittefaq Foundry v. Federation of Pakistan PLD 1990 Lah. 121, wherein it was held as under:
"There is no cavil proposition that exemption exits only by virtue of Constitutional or statutory provisions and that the right to immunity is not inherent in the persons or property exempted and it cannot be claimed as a matter of right but in the Constitutional set up where fundamental rights are guaranteed, to be treated in accordance with law is recognized as inalienable right of a citizen, I do not accept the proposition that grant of exemption from tax is a matter of grace as the statutory functionaries while framing rules or notifications with a view to lessening the burden of the tax through grant of exemption from tax are not showing grace as a king, dictator or an absolute ruler would do in his pleasure but are discharging the functions assigned to them not in their pleasure but for achieving the objects of the laws and in public interest. "
11. Reference was also made to Saeed‑ud‑din v. Secretary, Government of N.‑W.F.P. and 3 others 1990 CLC 8. Court had held that if the administrative organs of the State while applying the law were to discriminate between the civil servants of the same class and exercise what may be characterized as arbitrary authority singling out some persons for discriminatory treatment they would be acting counter to the ideal of equality before law. Similar view was taken in Messrs Willy Foods (Pvt.) Ltd., Pakistan, Ministry of Finance, Government of Pakistan and 6 others 1997 PTD 63 that all business concerns created under similar incentives given or involved in similar business and production should be entitled to equal facilities and giving edge to one set of business concerns over the other was a clear discrimination offending the provisions of Article 25 of the Constitution.
12. Opposing the petitions, the Central Board of Revenue and the Customs Authorities at the outset objected to the maintainability of the present petitions on the ground that, since the seat of business of all the petitioners was at Karachi, therefore, the Lahore High Court, Rawalpindi Bench, had no jurisdiction to entertain the same. In this respect reliance was placed upon Sandalbar Enterprises (Pvt.) Ltd. v. Central Board of Revenue' and others PLD 1997 SC 334, wherein it was held that Court is required to see the dominant object of filing of the writ petition. In the instant case, the only dominant object in filing these petitions is to challenge the vires of letter of Central Board of Revenue, dated 18‑6‑1997, whereby clarification of statutory notifications has been made for exclusion of generators or electricity manufacturing units from allowing exemption from levy of sales tax and customs‑duty chargeable thereon. The seat of Central Board of Revenue is admittedly at Islamabad which falls within the territorial jurisdiction of the Rawalpindi Bench of the Lahore High Court and thereby these writ petitions could be filed at this Bench. In this respect, support is drawn from Flying Kraft Paper Mills (Pvt.) Ltd., Charsadda v. Central Board of Revenue, Islamabad and 2 others 1997 SCMR 1874, wherein the Supreme Court had, considering its findings given in Sandalbar Enterprises Ltd. v. Central Board of Revenue (supra) wherein a similar matter in which not only the order of the Collector was challenged but the relief was also claimed against the Central Board of Revenue, held that petition could be filed at the Rawalpindi Bench of Lahore High Court.
13. As regards, the discrimination in grant of exemption to private entrepreneur on import of electricity manufacturing units, there is no denial to the fact that at present WAPDA and KESC are the main organisations which are responsible for generation and distribution of electricity in the country. These two State‑owned organisations provide electric energy to the general public at much cheaper rates than the private companies engaged in generation of electricity Both these organisations spend huge amount on generation arid distribution of electricity on nation‑wide basis. Naturally, for that purpose, these organisations have to be assisted financially either in the import of electricity manufacturing units or by providing exemption from taxes and duties to those entrepreneurs who instead of selling the energy produced by them in the market prefer its sale to WAPDA and KESC. In fact, this amendment of providing concession to private entrepreneurs who sell electricity to WAPDA and KESC was in line with the Power Policy announced in 1994. The petitioners had also the choice to enter into Implementation Agreements with the Government for seeking relief on imports of electricity generating units. In Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652, it was held by the apex Court that the grant of exemption is a discretionary relief and the Government may or may not exempt any goods or any class of goods from the levy of excise duty and likewise grant exemption on any terms and conditions according to its own view of public policy and expediency.
14. To sum up, it would be expedient to recapitulate hereunder various Notifications on the subject issued by the Federal Government from time to time according exemption from levy of sales tax and customs‑duty on import of electricity manufacturing units:
| Notification No. S.R.O. 279(1)/94, dated 2‑4‑1994. | Allowed exemption from levy of sales tax and customs‑duty on import of electricity manufacturing units. |
| Notification No. S.R.O 584(1)/95, dated 1‑7‑1995. | Under S.R.O. 279(1)/94dated 2‑4‑1994 exemption allowed from sales andcustoms dutywas restricted for those who had entered into Power Project Agreements with WAPDA or KESC. |
| Notification No. S.R.O 773(1)/95, dated 1‑9‑1995. | Exemptionallowed under Notification No.279(I)/94;dated 2‑4‑1994,wasrestricted for sponsorsenteringinto implementation Agreement with the Government. |
| Notification No. S.R.O. 585(1)/97, dated 1‑7‑1995. | Exemption from customs‑duty in excess of 10% of the duty leviable onimportsofelectricity manufacturing units were allowed. |
| Notification No. S.R.O 426(1)/96, dated 13‑6‑1996. | Exemption from sales tax under Notification NO.S.R.0.279(1)/94, dated 2‑4‑1994 in respect of sales tax was withdrawn completely. |
| Notification No. S.R.O. 230(1)/97, dated 29‑3‑1997. | Exemption from sales tax was allowed on plant and machinery specified in the Sixth Schedule to the Sales Tax Act, 1990. |
| Notification No. S.R.O. 582(1)/98, dated 12‑6‑1998. | Superseded Notification No.S.R.O. 230(I)/97, dated 29‑3‑1997 and excluded generators, generating sets, wires and cables for the purpose of exemption of Sales Tax from the definition of Plant and Machinery. |
15. The petitioners in all these writ petitions have admittedly imported electricity manufacturing units from February, 1997 onward. During the relevant period, by virtue of amendment of the principal notification, namely Notification NO.S.R.O.279(1)/94, dated 2‑4‑1994, made through Notifications Nos. S. R. O. 584(1)/95, dated 1‑7‑1995, 773(1)/95, dated 1‑8‑1995 and S.R.0.426(I)/96, dated 12‑6‑1996, the petitioners who had not entered into Implementation Agreements with the Government were not entitled to any exemption thereunder from levy of sales tax or customs duties on the electricity manufacturing units imported by them. Such units were, however, exempt from levy of customs‑duty in excess of 10% of the duty leviable thereon under Notification No.585(I)/95, dated 1‑7‑1995, provided that the Bills of Entry in respect of these goods were submitted to the concerned authorities before the 1st July, 1998, as by virtue of Notification NO.S.R.O.582(1)/98, dated 12‑6‑1998, generators generating sets, wires and cables were excluded from the definition of plant and machinery. Hence, barring generators generating sets, wires and cables, other plant and machinery, for generation of electricity energy were still allowed exemption under Item 44 of the Sixth Schedule to the Sales Tax Act, 1990. This exemption was, however, later on again restricted to imports or supplies made by WAPDA, KESC and other power generation companies approved by the Federal Government vide Notification No. S.R.O. 950(1)/98, dated 4‑9‑1998, whereby Notification NO.S.R.O.582(1)/98, dated 12‑6‑1998 was amended.
16. In this connection, the contentions of the learned counsel representing the Central Board of Revenue and Customs Department that Notification NO.S.R.O.230(1)/97, dated 29‑3‑1997, as clarified by the Central Board of Revenue letters, dated 9‑4‑1997 and 18‑6‑1997, do not entitle the importers of electricity manufacturing units to claim any exemption of customs‑duty or sales tax as those goods were excluded from the definition of plant and machinery specified therein have no force. In the first place, the administrative letters of the Central Board of Revenue need to be completely ignored as statutory notifications cannot be interpreted through administrative instructions. However, I agree with his view that the Central Board of Revenue letter of 9‑4‑1997 does not provide any additional benefit to importers as claimed by the petitioners but only clarifies that certain goods were partially exempted from levy of sales tax as specified in the Seventh Schedule to the Sales Tax Act, 1990, which was later on omitted by virtue of the Finance Act, 1997. The expression machinery operated by power of any description such as to be used in any industrial process for the manufacture of goods; and apparatus and appliances, including metering and testing apparatus and appliances specifically adopted for use in conjunction with the said machinery, clearly falls within the definition of 'Plant and Machinery'. Any other interpretation that electricity manufacturing units do not fall within the definition of plant and machinery referred to above will obviously be fallacious. The electricity manufacturing units certainly fall within the aforesaid expression. This fact further finds support from the very Noti fication NO.S.R.0.582(1)/98, dated 12‑6‑1998, wherein the Federal Govern ment had specifically, while superseding Notification No.S.R.O. 230(I)/97, dated 29‑3‑1997, clarified that for the purposes of exemption of sales tax, 'generator generating sets, wires and cables' will not be included in the plant and machinery specified therein. Meaning thereby that the Central Board of Revenue itself was of the view that these generators, generating sets, wires and cables do fall within the definition of 'Plant and Machinery'. This exclusion further contradicts the interpretation made by the Central Board of Revenue through its two letters, dated 9‑4‑1997 and 18‑6‑1997.
17. Mr. Tariq Javed, Advocate, the learned counsel for the petitioners, contended that majority of the petitioners had opened the letters of credit much earlier than enforcement of Notification No.582(I)/98, dated 12th June, 1998 therefore, notwithstanding the exclusion of generators or other electrical manufacturing units there from imported by those petitioners cannot be denied exemption from sales tax. In this respect, support was drawn from Al‑Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917. It is however, clear that when the letters of credit were opened the petitioners would be aware of the amending notifications and extent of exemptions from taxes and duties which were available to them on their imports. In Messrs Madina Traders v. Federation of Pakistan and 4 others 1999 SCMR 95, it was held by the apex Court that at the time of opening of letters of credit the importer was aware as to what will be the valuation on the basis of which he had to pay the customs‑duties and other taxes on the imports being made by him and as a prudent person he should have not imported the satire if he was to suffer any loss. Further, the provisions of section 31‑A of the Customs Act, 1969, which were enacted after, the decision of AI‑Samraiz Enterprises v. Federation of Pakistan (supra) clearly provides that the customs‑duties are levied on the imports at the rates prevalent on the date of submission of bills of entries for clearance of the goods for home consumption. Nevertheless, for the purpose of sales tax admissible under Notification No.S.R.O. 230(1)/97, dated 29th March, 1997, when the letters of credit were opened on the said date or thereafter till when Notification NO.S.R.O.582(I)/98. dated 12‑6‑1998 came into force on 1‑7‑1998, shall be admissible as the Sales Tax Act, 1990, does not contain any provision parallel to section 31‑A of the Customs Act, 1969 Support in this connection is drawn from Messrs M.Y. Electronics Industries (Pvt.) Ltd. and others v. Government of Pakistan and others 1998 SCMR 1404.
18. Mr. Farhat Nawaz Lodhi, Advocate, the learned counsel for the Central Board of Revenue and Customs Department, lastly contended that the petitioners will even not be entitled to exemption from customs‑duty under Notification NO.S.R.O.585(I)/95, dated 1‑7‑1995, as such exemption was available to power projects only as mentioned therein and as was specified in the Power Policy, 1994. He, however candidly conceded that the term 'power projects' has not been defined in the said Notification or in the Power Policy nor it clarifies as to the generators or machinery of which capacity will be considered for a power project. Hence, for that purpose a small generator producing electricity for ones own business or for sale thereof at a small scale will also fall under the expression of power project.
19. In view of the above discussion, the imports of electricity manufacturing units or generators imported by the petitioners who have not entered into any Implementation Agreements with the Government shall be entitled to exemption of customs‑duty in excess of 10% of such duty leviable thereon under Notification No.585(I)/95, dated 1‑7‑1995, and from sales tax in terms of Notification No.S.R.O. 230(I)/97, dated 29‑3‑1997, read with item 39 of the Sixth Schedule to the Sales Tax Act, 1990, provided that such imports were made prior to coming into force of Notification No.S.R.O. 582(I)/98, dated 12‑6‑1998. The petitions are allowed accordingly with no orders as to costs.
H.B.T./S‑224/LPetitions allowed.