SHC dismiss suits filed by Pharmaceutical companies Packing material not exempted from Sales Tax holds court

KARACHI: Justice Muhammad Junaid Ghaffar of High Court of Sindh has dismissed more than a dozen identical suits filed by pharmaceutical companies including Getz Pharma and others The petitioner challenged the action of Pakistan Customs denying exemption of Sales Tax on packing material.

The suits involved a common legal controversy that as to whether the import of packing material used in the manufacturing  of pharmaceutical products / finished drugs is entitled for exemption from sales tax as a “raw material” in the terms of Entry No.105 of the 6th Schedule to the Sales Tax Act, 1990 (“Act”).

Following is the text of detailed judgment:

” Since a legal question is involved, therefore, facts of each Suit are not being discussed, except that all of them have imported various consignments which have been claimed as “raw material”, and Customs department has refused to grant exemption from sales tax on all such imports against Entry No.105 of the 6th Schedule to the Act, on the ground that these are “packing material” and not entitled for such exemption as it is only available to “raw materials”. On various occasions in these Suit(s) ad-interim order(s) were passed for release of all such consignments against appropriate surety / security, including either furnishing of Bank Guarantee with the department / Nazir of this Court, or deposit of the amount with the Nazir of this Court.

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