Messrs MASTER FOAM (PVT.) LTD. through Iftikhar Khan, Executive Director vs FEDERATION OF PAKISTAN through Secretary, Ministry of Finance and Economic Affairs, Islamabad and others
This matter arises from a petition for leave to appeal against the judgment of the Lahore High Court, which dismissed the constitutional petition filed by the petitioner-company challenging the levy of customs duties and sales tax on raw materials imported for its industrial unit in Azad Jammu and Kashmir. The core legal questions involve whether the Customs Act, 1969, and the Sales Tax Act, 1990, apply to Azad Jammu and Kashmir, whether section 3(b) of the Sales Tax Act, 1990, is repugnant to Item No.49 of the Federal Legislative List, and whether goods in transit to Azad Kashmir are subject to such taxes. Granting leave to appeal, the Supreme Court held that the propositions raised merit detailed consideration. The Court directed the petitioner-company to deposit arrears of duties and taxes if not already done, while ordering that future imported goods be cleared upon furnishing a bank guarantee for the payable duties and taxes, thereby establishing interim protection pending final adjudication.
- Are the Customs Act, 1969 and the Sales Tax Act, 1990 applicable to the territories of Azad Jammu and Kashmir?
- Whether section 3(b) of the Sales Tax Act, 1990 is repugnant to Item No.49 of the Federal Legislative List?
- Are goods in transit destined for Azad Jammu and Kashmir subject to the payment of federal customs duties and sales tax?
- Section 3(b), Sales Tax Act 1990
- Customs Act 1969
- Sales Tax Act 1990
ORDER
SH. IJAZ NISAR, J.---Leave is sought against the judgment dated 27-10-1998, passed by the Lahore Iigh Court, Lahore, whereby it dismissed the Constitutional petition filed y Messrs Master Foam (Pvt.)
Ltd., the petitioner herein.
2. The relevant facts are that the petitioner-company has set up an industrial unit in the Industrial Estate, Mirpur, Azad Jammu and Kashmir and imports various items of raw material for manufacturing foam products. On arrival of the goods at Karachi Port, the petitioner-company filed Bills of Entry showing that the imported goods were destined for its factory lnrated in Azad Kashmir. Nevertheless, the Customs and Sales Tax Authorities levied duties and taxes thereon.
3. The petitioner-company challenged the levy of duty and taxes by invoking the Constitutional jurisdiction of the Lahore High Court. The learned Judge in Chambers dismissed the writ petition filed by the petitioner-company by means of judgment dated 27-10-1998. Hence this petition.
4. It is, inter alia contended that section 3(b) of the Sales Tax Act, 1990, is repugnant to Item No.49 of the Federal Legislative List, and that he Customs Act, 1969, and the Sales Tax Act, 1990, are not applicable to the A territories of Azad Jammu and Kashmir. The goods in transit are not subject to payment of the taxes, it is maintained. Letter dated 30-5-1997 issued by the Central Board of Revenue (Sales Tax Wing) is also referred to show that the sales tax is not applicable to Azad Jammu and Kashmir.
5. Leave is granted to consider the aforementioned propositions.
Meanwhile, the petitioner-company is directed to deposit the arrears of duties and taxes with the Customs Authorities, if not already done. However, goods imported in future by the petitioner shall be cleared subject to furnishing bank guarantee to the extent of the duties and taxes payable in respect of the same. .