Awami Tractor Scheme exemption case; Rs490 million payable by Supreme Court stuck up for past many years

KARACHI: The judiciary is suppose to help the government in ensuring revenue in litigation cases that were decided in favour of department, but in Awami Tractor Scheme an amount above Rs490 million of tax authorities is pending with the Supreme Court for the last several years.
According to details made available to Customnews.pk, the application for repayment the amount in the Awami Tractor Scheme was pending with the apex court. Recently, the court repaid an amount of Rs3.73 million to Appraisement Collectorate. However, revenue involved in respect of Port Qasim Collectorate Rs385.36 million rest of the amount i.e. Rs110.08 million pertained to the Appraisement Collectorate.
Awami Tractor Scheme was introduced in 1994 under which the Agriculture Development Bank of Pakistan was authorized to import 20,000 tractors in the first phase without payment of duty and taxes. Subsequently, on June 03, 1996 as a budgetary measures policy was retrieved and tractors were made chargeable to customs duty at 10 percent and sales tax at 18 percent.
M/s. Fecto Belarus imported 6,981 Belarus Tractors in the second phase in 1996 under the scheme. When the tractors arrived no notification exempting tractors was in the field. Therefore, customs duty at 10 percent and sales tax at 18 percent was chargeable.
M/s Fecto Belarus filed a writ petition in the Lahore High Court which was dismissed. In the intra court appeal, High Court decided the case in the favour of the importers allowing duty and sales tax free import of tractors under Awami Tractor Scheme. The Federal Board of Revenue (FBR) filed an appeal in the Supreme Court of Pakistan against the decision of Lahore High Court.
Meanwhile, the tractors were released by the orders of the Supreme Court against the bank guarantees and the amount of taxes involved to the tune of Rs493.46 million were accrued in the shape of bank guarantee.
The apex court decided the case in favour of tax authorities. The duty and taxes secured from the company in the shape of bank guarantee were enchased. Subsequently, the importers filed review petition before the Supreme Court of Pakistan. The apex court through its detailed judgment on February 19, 2001 accepted the contention of the importers and upheld the orders of the Lahore High Court meaning thereby the benefit of exemption of customs duty, sales tax and other levies was extended to the importers for importation of the tractors.
On the orders, the importers filed refund claim of customs duty and sales tax amounting Rs493.46 million which was recovered by the collectorate through the encashment of bank guarantee.
The FBR declined the refund on the ground that the importers had passed on the incidence of duty and taxes to the end consumer hence the importers is not entitled for refund of customs duty and sales tax. The importers filed contempt application. During the hearing of contempt application, the court ordered to deposit the impugned amount with the registrar of the Supreme Court of Pakistan, who will invest the same in some profitable scheme. The orders of the court were complied and the amount was deposited.
Subsequently, the apex court decided the matter in favour of the FBR on May 11, 2005 and held that since the importers had passed on the incidence of duty and sales tax to the end consumer, they are not entitled for refund. The collectorates filed application on May 14, 2005 for withdrawal of the amount of Rs493.46 million that was deposited with the registrar of Supreme Court.
The Supreme Court registrar invested the amount in the Islamic Investment Bank and the bank had shown its inability to pay back the same. The Supreme Court itself enquired the matter and referred the case to the NAB who had undertaken the investigation in the matter and all the directors of the bank along with the registrar of the Supreme Court were sending to behind the bars.
The FBR authorities are unaware about the investigation proceedings and recovery, however, the Supreme Court repaid Rs3.73 million to the revenue board and still over Rs390 million is payable by the Supreme Court.

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