FATIMA SUGAR MILLS LTD., MULTAN VS FEDERATION OF PAKISTAN
2005 P T D 1115
[Karachi High Court]
Before Anwar Zaheer Jamali and Muhammad Mujeebullah Siddiqui, JJ
FATIMA SUGAR MILLS LTD., MULTAN
versus
FEDERATION OF PAKISTAN through Secretary Finance and Economic Affairs, Islamabad and 4 others
Constitutional Petition No.D-373 of 2004, decided on 18/02/2005.
Customs Act (IV of 1969)---
----Ss. 31-A & 79---S.R.O. 484(I)/92 dated 14-5-1992---Sales Tax Act (VII of 1990), S. 5---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Exemption---Promissory estoppel, doctrine of---Applicability---Where the exemption granted by the Federal Government is not withdrawn but the S.R.O. dies its natural death on expiry of the date specified therein, the doctrine of promissory estoppel will not be applicable to the goods---Rate of Sales Tax is to be changed in case of the goods entered for home consumption on the date on which a bill of entry is presented under S. 79, Customs Act, 1969 as is in force on the date of presentation of the bill of entry---S.R.O. 484(I)/92 dated 14-5-1992 expired on 30-6-1995andthebillofentrywasadmittedlyfiledon29-7-1995 with the result that the exemption granted vide the S.R.O. was no more applicable and the importer was liable to pay the Sales Tax at the rate, as was in force on 29-7-1995---Tax officials, therefore, had rightly demanded the payment of Sales Tax to which no exception could be taken---Claim of exemption on the part of the importer was not warranted and consequently, he was liable to pay the Sales Tax as well as demurrage claimed by the Port Trust.
Collector of Customs v. Ravi Spinning Mills Ltd. 1999 SCMR 412; Pakistan through Ministry of Finance, Economic Affairs and another v. Fecto Belarus Tractors Limited PLD 2002 SC 208; Al-Samrez s case 1986 SCMR 1917; Crescent Pak. Industries v. Central Board of Revenue 1990 PTD 29; The Fecto Cement v. Collector of Customs 1994 MLD 1136; Hashwani Hotels Ltd. v. Government of Pakistan (2004) 90 Tax 158 ref.
Malik Muhammad Rafiq Rajwana for Petitioner.
Nasrullah Awan for Respondent No.3.
Ahmed Khan Bugti for Respondents Nos.1 & 2.
Arif Khan for Respondent No.5.
Date of hearing: 18th February, 2005.
JUDGMENT
MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---The petitioner has prayed that the act of the respondents/Customs and Sales Tax Authorities whereby an amount of Rs.678042 has been levied and charged as Sales Tax on the consignment/import of goods as mentioned in the Bill of Entry filed by the petitioner and notice of demand, dated 19-2-2004, issued by K.P.T. for Rs.56,90,791 as demurrage and liquidated damages (past and future) be declared as arbitrary, illegal, inequitable and without lawful authority. It is further prayed that the petitioner be declared entitled for the grant of exemption from Sales Tax under S.R.O. No.484(I)/92, which according to petitioner was applicable to them at the relevant time. A further order is sought for the refund of the amount paid.
2.The facts giving rise to this petition as stated in the Memo. of petition are that petitioner a Company running Sugar Mills in District Muzaffargarh, imported certain equipments and machinery from France, by establishing Letter of Credit, dated 12-1-1995. According to petitioner Federal Government issued Notification S.R.O. 484(I)/92, dated 14th May, 1992, granting exemption from customs duty and Sales Tax on import of such plant and machinery which were not manufactured locally and were imported during the period commencing from 1st of December, 1990 and ending on 30th June, 1995 for setting-up new units and for expansion or balancing, modernization and replacement of existing units. When the machinery reached Karachi Port, the petitioner was informed by the concerned customs officials that noexemption for customs duty and sales tax was available to the said consignment and clearance of machinery would only be possible on payment of customs dutyandsalestax. The petitioner therefore, filedawritpetitionon18-12-1995 in Lahore High Court, Multan Bench. The Lahore High Court vide order, dated 18-9-1996 directed the customs authorities for release of machinery/goods imported by petitioner subject to furnishing bank guarantee to the satisfaction of Chairman, C.B.R., Islamabad. The petitioner furnished the requisite bank guarantee. The K.P.T. refused to release the goods without payment of demurrage. The petitioner again approached the Lahore High Court and it was directed vide order, dated 25-2-1997, that the KPT authorities should release the goods without payment of demurrage but subject to furnishing bank guarantee. The petitioner furnished bank guarantee and consequently the goods were released.
3.The petition filed before Lahore High Court, Multan Bench, finally came up for hearing on 12-11-2003. The petitioner was returned to the petitioner for presenting the same before Sindh High Court. The petitioner thereafter filed the present petition in this Court on 3-3-2004.
4.It is averred in the petition that although the petitioner company was claiming exemption of customs duty and sales tax on the basis of S.R.O. 484(I)/92, dated 14-5-1992 but with all fairness on its part, the question of exemption of customs duty has already been settled by the Hon ble Supreme Court of Pakistan, in the case of Collector of Customs v. Ravi Spinning Mills Ltd., 1999 SCMR 412. It is further averred that after the return of original writ petition before Lahore High Court, the KPT has raised demand of Rs.5.691 Million vide letter, dated 19-2-2004 which is being assailed in the instant petition. It is stated that the petitioner had bonafidely challenged action of the respondents for charging customs duty, etc. claiming the benefit of S.R.O. referred to above. According to petitioner, there is no lawful justification for KPT to claim demurrage or other charges including liquidated damages as referred to above. It is further stated that though the petitioner is not claiming the exemption of customs duty in the present petition because of the law laid down by the Hon ble Supreme Court but when the original writ petition was filed this was live question and the interpretation of the S.R.O. mentioned above was sought in connection with the exemption of customs duty and sales tax. The petitioner was not claiming exemption of customs duty but was still claiming exemption of sales tax and was assailing action of KPT in charging the liquidated damages.
5.The petitioner has based his claim on the law laid down by the Hon ble Supreme Court in the case of Pakistan through Ministry of Finance, Economic Affairs and another v. Fecto Belarus Tractors Limited PLD 2002 SC 208. In this judgment the Hon ble Supreme Court after considering the concept of promissory estoppel with reference to the judgment of Hon ble Supreme Court in Al-Samrez s case, reported as 1986 SCMR 1917 and also in the case of Crescent Pak Industries v. Central Board of Revenue, 1990 PTD 29 and several other judgments including the Fecto Cement v. Collector of Customs 1994 MLD 1136, held that notwithstanding the insertion of section 31A of the Customs Act, the importer was entitled to the exemption of sales tax, as the importer was protected on the doctrine of estoppel as well as under the Economic Reforms Act, 1992.
6.The petitioner has contended that the Letter of Credit was established and the contract was concluded with the Foreign Exporter on the basis of S.R.O. 484(I)/92, therefore, non-grant of exemption and charging the sales tax wasunlawful and mala fide. It is further submitted that under the principle of promissory estoppel the customs and sales tax authorities were estopped from refusing the exemption and to claim sales tax from the petitioner on the import of machinery and that the law laid down in Al-Samrez s case is still applicable. It is further contended that the petitioner is protected under the Economic Reforms Act, 1992 and the provisions of section 31A of the Customs Act, 1969 is not applicable to the case of sales tax, as there was no such provision in the Sales Tax Act, identical to section 31A of the Customs Act.
7.We have heard Mr. Malik M. Rafiq Rajwana, Advocate for the petitioner. Learned counsel for the petitioner was pointed out that the doctrine of promissory estoppel was not applicable at all, as the exemption granted in SRO 484(I)/92 was never withdrawn by the Federal Government. The learned counsel was pointed out that SRO 484(I)/92 wasa time bound notification granting exemption to the imports during the period commencing of 1st December, 1990, and ending on the 30th June, 1995. The SRO remained in field till the period specified in the notification, whereafteritexpired.Thebillofentrywasfiledon29-7-1995. The learned counselwas further pointed out that it is provided in section 5 of the Sales Tax Act, that if there is a change in the rate oftax, the imported goods shall be charged to tax at such rate as is in force, in case the goods are entered for home consumption, on the date on which a bill of entry is presented under section 79 of the Customs Act, 1969. The learned counsel was further pointed out that a Division Bench of this Court has already held in the case of Hashwani Hotels Ltd. v. Government of Pakistan (2004) 90 Tax 158, that the charge of sales tax and the rate as is in force on the date of presentation of bill of entry under section 79 of the Customs Act, 1969, shall be applicable.
8.After being confronted with the above propositions, the learned counsel was not able to pursue his arguments claiming exemption from payment of sales tax on the basis of concession available in S.R.O. 484(I)/92.
9.In the above circumstances, it is held that the doctrine of promissory estoppel is not applicable to the goods, where the exemption granted by the Federal Government is not withdrawn but the SRO dies its natural death on expiry of the date specified in the SRO. In thepresent case, the admitted fact is that SRO 484(I)/92, dated14-5-1992, was a time bound notification granting exemption for the period commencing from 1st December, 1990 and endingon 30th June, 1995.
10.It is further held that the rate of sales tax is to be charged in case of the goods entered for home consumption on the date on which a bill of entry is presented under section 79 of the Customs Act, 1969, as is in force on the date of presentation of the bill of entry. In the present case, the S.R.O. 484(I)/92 expired on 30-6-1995 and the bill of entry was admittedly filed on 29-7-1995, with the result that the exemption granted vide above S.R.O. was no more applicable and the petitioner was liable to pay the sales tax at the rate, as was in force on 29-7-1995. Thus, the tax officials have rightly demanded the payment of sales tax to which no exception can be taken. The position of law is very clear and unambiguous. The claim of exemption on the part of the petitioner was not warranted and consequently, he is liable to pay the sales tax as well as demurrage claimed by the KPT.
11.For the foregoing reasons, we do not find any substance in the petition, which stands dismissed in limine along with listed applications.
12.After hearing the learned advocates for the parties, the petition was dismissed in limine on 18-2-2005 by a short order. These are the detailed reasons in support thereof.
M.B.A./F-19/KPetition dismissed.