Engro Elengy duty, taxes exemption case, final arguments on Feb 26

KARACHI: Justice Muhammad Junaid Ghaffar of High Court of Sindh on Friday adjourned the hearing of a suit filed by Engro Elengy Terminal (Private) Limited against refusal of exemption from custom duty and other taxes until Feb 26.

The bench earlier heard arguments by Barrister Makhdoom Ali Khan for the plaintiff, Sohail Muzaffar and Masooda Siraj advocate, counsel for Pakistan Customs. The counsel for plaintiff submitted that whether the Advance Income Tax can be collected on the day Goods Declaration is filed. Tracing the sovereign guarantees by the Government of Pakistan to the prospective investors in the field of Liquefied Petroleum Gas (LPG), the counsel submitted that to meet the shortage of Natural Gas for domestic consumption including power generation and in vehicles as cheap fuel, the government announced many incentives. He said that plaintiff imported a Floating Storage Regasification Unit (FSRU) and claimed the benefits of tax holiday for five years besides zero rated import of LPG terminal or equipment and machinery, he submitted.

The counsel referred to and relied upon the decision by the Economic Coordination Committee (ECC) and SRO;s issued pursuant to ECC decision. He said that under a Time Charter Party, time period for FSRU is 15 years. He said that plaintiff entered into a “Operation In Service Agreement” with the concerned government agency and also agreed to deposit a “Corporate Guarantee” in order to avail the benefit of zero zero rated custom duty and other taxes.

To a query by the bench, Barrister Makhdoom Ali Khan said that exemptions are available if the goods are on imported cum export basis adding that his terminal is a floating one and can go back whenever government so desires and thus falls within the Import cum export criteria entitled to exemptions.

Sohail Muzaffar Advocate for Pakistan Customs in his counter arguments said that demand raised by the department for 5 per cent duty as well as income tax and advance income tax are justified and covered under Customs Act 1969. He said that zero-zero rated theory is not applicable in this case. He also questioned the maintainability of the suit, the bench later put of hearing until Friday next when the counsel for plaintiff would argue the last point of ‘jurisdiction’.

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