GHANDHARA NISSAN (PVT.) LTD., KARACHI VS ASSISTANT COLLECTOR, CUSTOMS GROUP VIII through Collector of Customs (Appraisement), Karachi, 2006 PTD-KARACHI-HIGH-COURT-SINDH 2219 (2002)

Customs Act (IV of 1969)---

----Ss. 30 & 31-A--- Constitution of Pakistan (1973), Art.199---S.R.O. 5000(I)/100, dated 26-6-1988---S.R.O. 1105(I)/93, dated 18-10-1993---Constitutional petition---Exemption from levy of Sales Tax---Petitioner's contention was that when he opened Letter of Credit on 21-9-1993 for importing goods, no Sales Tax was payable on importation of such goods per S.R.O. 5000(I)/100 dated 26-6-1988 and that at the time when goods arrived at Karachi and Bill of Entry was filed on 3-11-1993, department demanded Sales Tax on basis that exemption stood withdrawn vide S.R.O. 1105(I)/93 dated 18-10-1993---Claim of petitioner was that since no Sales Tax was payable on goods when the letter of credit was opened on 21-9-1993 and the goods shipped on 14-10-1993, it had acquired, vested right to get the goods imported free from payment of Sales Tax---Validity---Petitioner having entered into a contract by opening a Letter of Credit had acquired a vested right in getting goods cleared without paying tax---Amendment in the Customs Act, 1969 by introducing S.31-A, would only be applicable in those matters where customs duty was involved.

Al-Samrez v. Federation of Pakistan 1986 SCMR 1917; Crescent Pa Industries (Pvt.) Ltd. v. Government of Pakistan and others PTCL 1990 CL 457 and Punjab Steel Ltd, and 3 other Companies v. Deputy Collector of Customs Dry Port Lahore and others PTCL 1989 CL 289 ref.

Aziz A. Shaikh for Petitioner.

Nadeem Azhar Siddiqui, DAG for Respondents.

ORDER

In this matter, the petitioner has prayed as follows:

(a) Declare that in terms of sections 30 and 31-A of Customs Act, 1969 the exemption from levy of Sales Tax was available to petitioner under S.R.O. 509(I)/88, dated 26-6-1988, when bill of entry was first presented.

(b) Declare that impugned order No.SI/Misc/1566/93-VIII, dated 19-4-1994 to recover Sales Tax of Rs.1,446,566 is without authority of law hence of no legal consequences to petitioner.

(c) Declare that mere printing date on Notification No. S.R.O. 1105(I)/93 i.e. 18-10-1993, cannot be equated with date of its publication in official Gazette, dated 18-11-1993 to make it operative from 18-10-1993.

(d) Declare that demand issued in derogation of valid exemption under section 13(1) of Sales Tax Act, 1990 is not sustainable in law.

(e) Declare that letter from Respondent No.2 has got no legal force and validity unless published in official Gazette in compliance of section 13 of Sales Tax Act, 1990.

(f) Suspend the operation of order No.SIIMisc/1567/3-VIII, dated 19-4-1994 till final disposal of this petition.

(g) Grant of costs of the petitioner.

(h) Grant any other relief/reliefs deemed appropriate in the circumstances of this case.

2. This matter involves an exemption that was enjoyed by the petitioner from the payment of Sales Tax. According to petitioner when the letter of credit was opened on 21-9-1993 for importing the goods no Sales Tax was payable on importation of such types of goods per S.R.O. 5000(I)/100, dated 26-6-1988. However, at the time when the goods arrived at Karachi and the Bill of Entry filed on 3-11-1993, Respondent No.1 demanded Sales Tax per notice, dated 19-12-1993 on the basis that the exemption stood withdrawn vide S.R.O. 1105(1)/93, dated 18-10-1993. According to the counsel since no Sales Tax was payable on such goods by the petitioner when the letter of credit was opened on 21-9-1993 and the goods shipped on 14-10-1993, it had acquired a vested right to get the goods imported which would be free from the payment of Sales Tax as demanded otherwise tremendous loss would occur to the petitioner.

3. In the famous cause of Al-Samrez v. Federation Pakistan 1986 SCMR 1917 the question of promissory Estoppel/vested Rights was discussed and the Hon'ble Supreme Court had held that having entered into a contract by opening a letter of credit the petitioner had acquired a vested right in getting the goods cleared without paying the tax and by amendment in the law such right cannot be taken away. After this decision was given, section 31-A was introduced in the Customs Act and through this amendment the effects of the Al-Samrez case were nullified. The Hon'ble Supreme Court ratified this amendment in the Customs Act and decided it as legal. But in cases pertaining to Sales Tax it was held "since the amendment was made in the Customs Act by introducing section 31-A, therefore, it would only be applicable in those matters where Customs Duty was involved and the principles of Al-Samrez case would be applicable to matters relating to Sales Tax, (Crescent Pa Industries (Pvt.) Ltd. v,. Government of Pakistan and others (PTCL 1090 CL 457) and Punjab Steel Ltd., and three other Companies v. Deputy Collector of Customs Dry Port Lahore and others (PTCL 1989 CL 289).

4. Mr. Nadeem Azhar Siddiqui learned DAG has not been able to controvert the above noted cases in the facts and circumstances of the matter. Consequently, we would hold that since this matter also relates to Sales Tax, therefore, the Principles laid down in the AI-Samrez case would be applicable as confirmed by the Hon'ble Supreme Court of Pakistan. Hence, we would allow the petition and set aside the impugned demand/order.

H.B.T./G-24/K??????????????????????????????????????????????????????????????????????????????????? Petition allowed.