Messrs VARAN TOURS VS FEDERATION OF PAKISTAN
2004 P T D 1759
[Lahore High Court]
Before Maulvi Anwarul Haq, J
Messrs VARAN TOURS
Versus
FEDERATION OF PAKISTAN through Federal Secretary Finance Government of Pakistan, Islamabad and 2 others
Writ Petitions Nos.916 to 918, 1282, 1306 of 2003 and 3409 of 2002, heard on /01/.
rd
November, 2003. (a) Sales Tax Act (VII of 1990)‑‑‑--
‑‑‑‑S. 13(2)‑‑‑Scope‑‑‑Exemption clause, interpretation of‑‑‑Section 13(2) of Sales Tax Act, 1990, empowered the Federal Government and the Central Board of Revenue to exempt taxable supplies made in Pakistan or any goods or class of goods from the whole or any part, of the tax chargeable under the said Act‑‑‑Nothing was available in S.13(2) of the said Act providing that any person had a right to claim such exemption‑‑ Principles‑‑‑Exemption clauses could not be invoked as of right and, their grant was also not a right.
(b) Finance Act (IV of 1999)‑‑‑
‑‑‑‑S. 18‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Statutory notifications‑‑‑Validity‑‑‑Earlier notification by the Authorities provided for exemptions of customs duties and sales tax on import of certain goods‑‑‑Subsequent notification by the Authorities, however, placed limitations on the said exemptions by excluding sales tax exemption from its ambit‑‑‑Grievance of the petitioner was that it Commenced import operations on the understanding of earlier notification, but the Authorities refused to grant exemption in the matter Of sales tax‑‑‑Validity‑‑‑Import documents revealed that they were with deference to the subsequent notification and, therefore, the petitioner had 4 clear understanding that the exemption in the matter of sales tax was not available‑‑‑Petition, in circumstances, was dismissed.
(c) Sales Tax Act (VII of 1990)‑‑‑---
‑‑‑S. 6(1‑A)‑‑‑Customs Act (IV of 1969), S. 31‑A‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Analogy of provisions of Sales Tax Act, 1990 and Customs Act, 1969 with reference to their effect on superior Court cases considered‑‑‑Earlier notification by the Authorities provided for exemptions of customs duties and sales tax on import of certain goods‑‑‑Subsequent notification by Authorities, however, placed limitations on the said exemptions by excluding sales tax exemption from its ambit‑‑‑Grievance of the petitioner was that exemption was granted by the Authorities and then withdrawn, was not accepted as no exemption was ever granted by the Authorities and the petitioner was still vying for the gray: of said exemption, which could riot be granted as of right.
Fecto Belarus Tractors Limited v. Pakistan through Ministry of Finance Economic Affairs and another 2001 PTD 1829 and Al‑Samraz's case 1986 SCMR 1917 ref.
(d) Constitution of, Pakistan (1973)‑‑‑--
-----Art. 199‑‑‑Constitutional petition ‑‑‑Mala fide legislation, attribution of‑‑‑Contention of the petitioner was that a certain amendment was made the law in order to undo the effect of a judgment of a Superior Court, which amounted to mala fide legislation‑‑‑Principle‑High Court under Constitutional jurisdiction refused to accept the same on the principle that mala fides cannot to be attributed to the Legislature.
Ahmad Awais, M.S. Babar and Ibad‑ur‑Rehman Lodhi for Petitioner.
Farhat Nawaz Lodhi and Shahzad Mazher for Respondent.
Date of hearing: 3rd November, 2003.
JUDGMENT
This judgment shall decide Writ Petitions Nos. 916 to 918 of 2003, 3409 of 2002, 1282 of 2003 and 1306 of 2003 as common questions are involved. The petitioners in all these cases are transport concerns.
2. Vide Notification No.6(68) (E&F/98), dated 27‑5‑1999 published in the Gazette of Pakistan on 27‑5‑1999, it was notified that the Prime Minister has approved the "Prime Minister's Urban Transport Strategy". In the strategy a National Transport Board, Provincial Transport Authorities and Fare Regulation Commission were established. Relevant to these cases is para. 5(ii) of the said Notification which is as follows:‑‑
"No import duties and sales tax will be levied on import of Bus CKD Kits approved under the Strategy."
Under clause (iv) of the said para.5 it was provided that
"No import duty and sale tax will be levied on import of machinery and equipment, not manufactured in Pakistan, for CKD Bus Manufacturers and Bus Body Builders."
Pursuant to the said Strategy Notification No. S.R.O. 816(I)/99 was issued on 1‑7‑1998 by the Government of Pakistan, Ministry of Finance, Economic Affairs, Statistics and Revenue, Islamabad whereby conditions were specified and limitations and restrictions were placed for the grant of exemption duty on the import of goods specified in Table‑II to section 18 of the Finance Act, 1999. It may be noted here that the notification was issued for the exemption of Customs duty on the import of said goods including the said CKD Kits. It may be noted here that the S.R.O. was issued in exercise of powers conferred by section 18 of the Finance Act, 1999.
3. Feeling aggrieved of the fact that the Federal Government had not granted exemption in the matter of Sales Tax W.Ps. Nos. 1007 of 2002, 1205 of 2002, 2135 of 2002 and 2521 of 2002 were filed. These petitions were dismissed on 28‑8‑2002. I.‑C.As. Nos. 108 to 111 of 2002 were allowed. It was observed that the opinion of the Federal Government that it has no power to grant the exemption is not correct and that the requisite power is there. The matter was accordingly disposed of with the directions to the Federal Government to re‑consider the matter in the light of section 13(2) of the Sales Tax Act, 1990 as enacted vide section 2(4) of the Tax Laws Amendment Ordinance, 2000 and a decision be taken. Pursuant to the said direction a decision has been taken and it has been decided that the exemption cannot be granted. This has been done vide order, dated 7‑4‑2003 of the Secretary Finance to the Federal Government.
Mr. Ahmad Awais and Mr. M.S. Babar have led arguments for the petitioners. Mr. Ahmad Awais relies upon judgment in the case of Fecto Belarus Tractors Limited v. Pakistan through Ministry of Finance Economic Affairs and another (2001 PTD 1829) to urge that the representation made by the Government in the said Notification, dated 27‑5‑1999 issued from the Prime Minister's Office promising that the Sales Tax will not be levied on the import of the said machinery by the petitioners constitutes a promissory estoppel as the petitioners have acted on the same. According to him, the said representation contained in the said Statutory Notification itself constitutes grant of exemption from the payment of Sales Tax and it could not have been withdrawn. Also relies on the case of Government of Pakistan and others v. Messrs Saif Textile Mills Ltd. and 6 others (2003 SCMR 265). Mr. M.S. Babar also contends that despite the reasoning contained in the impugned order that the exemption is not to be provided in view of the International Commitments and Taxation Policy, several Notifications of exemptions have been issued even after the passing of the said order, Mr. Farhat Nawaz Lodhi, on the other hand, contends that exemption cannot be claimed as a matter of right and that no exemption was ever granted and at the point of time the petitioners started the import operation, it stood known to everyone that the Finance Department of the Government had refused to grant the said exemption and as such there is no question of promissory estoppel as at the time the import process was started the petitioners were fully aware that exemption from Sales Tax has not been granted and that the only exemption from Customs duty has been granted. He places implicit reliance on section 6(1)(1A) of the Sales Tax Act in addition to subsection (1A) which has been inserted by the Sales Tax (Amendment) Ordinance, 2002, to contend that the exemption cannot be granted to the petitioners on the principle of promissory estoppel. Mr. Ahmad Awais rejoins, to say that the said amendment in the law has been made to undo the effect of the said judgment in the case of Fecto Belarus Tractors Limited being relied upon 'by him and as such is a mala fide legislation.
5. I have given some thought to the respective contentions of the learned counsel for the parties. Now it will be seen that section 13(2) of the Sales Tax Act; 1990 does empower the Federal Government and the Board of Revenue to exempt taxable supplies made in Pakistan or any goods or class of goods from the whole or any part of the tax chargeable under the said Act. However, there is nothing stands spelt out of the said provisions of law that any person has a right to claim exemption. Even otherwise it is by now settled that the said exemption clause cannot be invoked as of right and the grant of said exemption is not a right.
6. Now the said Notification, dated 27‑5‑1999 issued from the Prime Minister's Office, does give the impression as being stated on behalf of the petitioners that it was conveyed to them that no Sales Tax will be levied on the imports to be made by them in terms of para. 5 of the said Urban Transport Strategy designed by SAMEDA. However, it is further apparent on the face of the record that despite requests made from the concerned Departments to the Ministry of Finance, whereas the exemption in payment of Customs duty was granted, the exemption in the matter of Sales Tax was refused point blank. Both the parties have appended the relevant correspondence. Now the Importer who was to import the Buses for the petitioner required a Certificate of the National Transport Board for the import of the machinery in question. Now these Certificates have been appended and they clearly refer only to the B S.R.O., dated 1‑7‑1999 granting exemption in the matter of Customs, Duty. Thus the petitioners commenced their import operations under a clear understanding that the exemption in the matter of Sales Tax is not available. Now so far as the said judgment in the case of Fecto Belarus. Tractors Limited is concerned, to my mind section 6(1‑A) of the Sales Tax Act, 1990 has the same effect as section 31‑A of. the Customs Act, 1969 has on the judgment in Al‑Samrez's case (1986 SCMR 1917). besides the said judgment would not be of any help to the petitioners C as in the said case the grievance was that exemption was granted and then withdrawn. In the present case, admittedly, no exemption was granted by the competent Authority and the petitioners are still vying for the grant of said exemption which, of course, cannot be granted as of right.
7. So far as the said latter contention of Mr. Ahmad Awais is concerned, suffice it to say that mala fides are not to be attributed to the Legislature.
8. All these writ petitions are accordingly dismissed without any orders as to costs.
M.A.W./V‑4/LPetitions dismissed.