ARYAN PETRO CHEMICAL INDUSTRIES (PVT.) LTD. vs MINISTRY OF FINANCE And 4 Other
This matter arises from petitions seeking leave to appeal against the judgment of the Peshawar High Court dated 14-6-1995, which dismissed writ petitions challenging the withdrawal of customs duty repayments and sales tax refunds. The Central Board of Revenue had initially authorised repayment and refund concessions for the import of plastic moulding compound and plastic goods via a 1991 notification, but subsequently withdrew the concession in respect of plastic shopping bags exported to Afghanistan through a 1994 notification. The core legal questions involve whether the withdrawal of the tax concession was discriminatory under constitutional safeguards and whether the principle of promissory estoppel applied. The High Court had held that exemptions could be withdrawn and that the notification applied generally to all exporters of plastic shopping bags to Afghanistan without discrimination. Upon consideration of the contentions regarding the rationale of the withdrawal and alleged discriminatory treatment, the Supreme Court granted leave to appeal, ordering that interim stay orders continue pending final disposal.
- Whether the withdrawal of a tax exemption or concession by the Government violates the constitutional safeguard against discrimination?
- Does the principle of promissory estoppel apply to prevent the Government from withdrawing a customs duty and sales tax concession once granted?
- Whether the withdrawal of a concession in respect of one particular item or industry provides valid grounds for invoking the constitutional jurisdiction of the High Court?
ORDER
ZIA MAHMOOD MIRZA, J.---Both these petitions seek leave to appeal against the same judgment of Peshawar High Court dated 14-6-1995 rendered in to identical writ petitions.
2. Facts relevant for the' disposal of these petitions briefly are that vide Notification SRO-1013(1)/1991 dated 5-10-1991, Central Board of Revenue authorised repayment of Customs duties and refund of sales tax to the extent specified in Columns (3) and (4) of the Table appended thereto in respect of the import of plastic moulding compound and all plastic goods made of 100% plastic moulding compound. This concession, it appears, was withdrawn vide Notification SRO(1)/1994 dated 9th May, 1994 in respect of "plastic shopping bags exported to Afghanistan": Petitioners in both the cases having been adversely affected by withdrawal of concession invoked the Constitutional jurisdiction of the Peshawar High Court contending that the impugned notification was discriminatory as against them as they alone were the exporters of plastic shopping bags to Afghanistan. Learned Judges of the High Court dismissed the petitions vide their impugned judgment holding that the exemption granted by the Government could well be withdrawn by it and the principle of promissory estoppel was not attracted. It was further held that the impugned notification affected all the exporters of plastic shopping bags to Afghanistan and as such there is no question of any discrimination qua the petitioners.
3. Mr. S.M. Zafar, learned counsel appearing in support of C.P. No.281/1995 has submitted that the respondents in their parawise comments submitted in the High Court stated in para. 14(i) that "the notification in respect of shopping bags exporting to Afghanistan has been issued because .There was a great deal of misuse of so-called export. The border stretch-over between Pakistan and Afghanistan' is mostly uncontrol on various points. Goods exported into Afghanistan are clandestinely brought into Pakistan. This situation has been exploited by the manufacturers. Firstly, they get the refund of customs duty and sales tax on the gods exported to Afghanistan, secondly, they receive these goods tax free. In this situation Government is to incur loss in revenue. Therefore, the export of the plastic shopping bags had the same problem as narrated above". Learned counsel has contended that the rationale/justification for issuing the impugned notification stands negated by the position explained in the letter dated 18-10-1994 addressed by the Collectorate of Customs and Central Excise, Peshawar to Chief Customs Tariff; Central Board of Revenue, Islamabad. He has drawn our attention to para. 5 of the said letter wherein it is stated that "it is fact that there is considerable consumption of plastic bags in Afghanistan as it is an item of general use. This item is unlike some of the items imported in transit having no sizable market in Afghanistan. Many .Items exported to Afghanistan or imported under transit in Afghanistan, when smuggled back are regularly seized by the anti-smuggling squads of this Collectorate. However, no seizure of plastic bags has been affected, indicating that the item is consumed inside Afghanistan".
The precise contention of the learned counsel is that the withdrawal of concession has no valid basis and in any case withdrawal of concession from one particular industry or in respect of one particular item militates against the Constitutional safeguard against discrimination.
4. Contentions raised by the learned counsel need consideration. Leave to appeal is accordingly granted in both the petitions. The interim stay orders already issued in both the cases shall continue in force pending the final disposal) of the appeals.