COLLECTOR OF CUSTOMS, CUSTOMS HOUSE vs Messrs HIRA FAROOQ (PVT.)
This petition for leave to appeal was filed by the Collector of Customs against a High Court judgment that allowed the respondent's writ petition. The High Court had held that demanding sales tax on consignments, where letters of credit were opened prior to the withdrawal of a tax exemption notification, was without lawful authority. The respondent had opened fourteen letters of credit between February 1995 and February 1996, claiming exemption under S.R.O. No. 504(1)94. This exemption was subsequently withdrawn on April 4, 1996. Upon the arrival of the goods, the petitioners demanded sales tax, relying on Section 6 of the Sales Tax Act and Section 31-A of the Customs Act. The Supreme Court of Pakistan granted leave to appeal to consider this legal question, noting that similar questions had been admitted for consideration in a previous case, and ordered that this appeal be heard alongside those pending matters.
- Whether a sales tax exemption can be withdrawn retrospectively to affect consignments for which letters of credit were opened prior to the withdrawal of the exemption notification?
- Whether Section 31-A of the Customs Act 1969 applies to the recovery of sales tax under Section 6 of the Sales Tax Act 1990 where an exemption is withdrawn before the arrival of goods?
- Section 6, Sales Tax Act 1990
- Section 31-A, Customs Act 1969
ORDER
SALEEM AKHTAR, J.---The petitioners seek leave to appeal against the judgment passed by the learned Judge in Chamber allowing the writ petition filed by the respondent holding that demand for payment of sales tax from the respondent in respect of consignments where letters of credit have been opened before the withdrawal of the notification of exemption is without lawful authority.
2. The respondent had opened 14 letters for credit on various dates ranging between 16-2-1995 to 20-2-1996 for import of copper tubes, aluminium plane indoor/outdoor units and components. It claimed benefit of exemption from sales tax under the S.R.O. No. 504(1)94, dated 9-6-1994. This exemption was withdrawn on 4-4-1996. On arrival of goods the respondent claimed exemption from sales tax, but in view of section 6 of the Sales Tax Act, the petitioners insisted that the respondent was liable to pay the sales tax as section 31-A of the Customs Act was applicable to it.
3. Leave was granted to consider similar question in Messrs M.Y. Electronics Industries (Pvt.) Ltd. through Manager v. Government of Pakistan (Ministry of Finance), Islamabad and 5 others (1994 SCM R 2123). Accordingly leave is also granted in this case. The appeal should be heard alongwith the appeals arising out of the aforestated reported petitions.