Judgment reserved in Engro Elengy Suit by SHC

KARACHI: Justice Muhammad Junaid Ghaffar of High Court of Sindh on Friday reserved the judgment in a suit filed by Engro Elengy Terminal (Private) Limited.

The plaintiff challenged against refusal of exemption from custom duty and other taxes.

Today Barrister Makhdoom Ali Khan, counsel for plaintiff briefly addressed the court on maintainability of the petition submitting that after sovereign guarantee of concessions, government authorities cannot go back or deny the same to an investor. The project was considered vital for overcoming shortage of fuel supply/natural gas, which in turn has resulted in long hour power outages crippling the local industry. The counsel also submitted the synopsis of the arguments and citations, which was returned by the court to make it concise and compact.

Sohail Muzaffar and Masooda Siraj advocate, counsel for Pakistan Customs rebutting the arguments and challenging the maintainability of the suit relied on section 217 (2) of the Customs Act1969. This section bars proceedings before any court of law against “Assessment” made by a customs official. The petitioner has an alternative remedy of filing an appeal under section 193, they submitted adding that customs done nothing which could be construed as “acting beyond jurisdiction or law”. There was no mala fide in actions, as only six per cent income tax was demanded, the counsel submitted in their closing arguments. Pakistan Customs senior officers Syed Tariq, Nayyer Shafique, Liaquat Ali. Tariq Azi, Asad Alam and Dr Quddus appeared for the department today.

On previous hearing, counsel for plaintiff has argued 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 for FSRU is 15 years. He said that plaintiff entered into an “Operation in Service Agreement” with the concerned government agency and agreed to deposit a “Corporate Guarantee” in order to avail the benefit of zero zero-rated custom duty and other taxes.

Meanwhile according to sources National Accountability Bureau (NAB) has initiated an investigation into latest natural gas deal by government of Pakistan with Qatar. Sources said that on part of Pakistan government, Pakistan State Oil (PSO) was involved in the negotiations but it was to be unearthed that which company, government of Qatar or private concern is involved. There has been indications that gas deal is not between two countries, Pakistan and Qatar but between Pakistan government and a private company. The connection and partnership of former Senator Saif-ur-Rahman, close to present rulers is also being probed, sources said adding that high rate of purchase and a particular section in contract regarding change in value of gas per MMCF after 15 years has made the NAB suspicious. The deal involves wind fall money which would fly to offshore beneficiaries, sources in NAB believes.

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