FAUJI CEMENT CPLA DISMISSED BY SUPREME COURT, GOVT TO GET MILLIONS IN TAX EXEMPTION CASE

KARACHI: A bench of Supreme Court of Pakistan comprising Justice Munib Akhtar and Justice Mazhar Ali Akbar Naqvi refused leave to appeal and dismissed a petition filed by Fauji Cement against judgment of High Court of Sindh in a tax exemption case.

As a result, litigation which Supreme Court termed “protracted” finally ended after more than two decades and government coffers will get over 300 Million rupees in taxes.

It noted that matter pertained to the determination that whether the machinery and plant imported are manufactured locally. The bench also noted that a fact finding committee was formed to examine the said issue and that whether the tax exemption was applicable. The bench perusing the case record also noted that Customs Appellate Tribunal also ruled against the petitioner Fauji Cement.

Sincew the finding of the fact were all against the petitioner in so far as is presently relevant and since no question of law relation theretoor arising out of the same was taken by the petitioner in its tax reference before the High Court ( of Sindh), the question fails before us and cannot be entertained. Leave is refused and the petition stands dismissed, the apex court judgment said.

Shafqat Mahmood advocate appeared for the petitioner while Pakistan Customs was represented by Muhammad Khalil Dogar advocate before the apex court while at SHC Khalid Rajpar advocate represented Pakistan Customs.

Earlier in March 2021, a custom appellate bench of High Court of Sindh dismissed the Special Special Customs Reference Application (SCRA) and a connected petition involving a huge amount of rupees 800 million.

The bench held that SHC Customs bench in its Reference Jurisdiction under section 196 of the Customs Act 1969, cannot decide the factual aspects, which in the instant case has been decided against the Applicant by the forums below  that the goods were  being manufactured locally at the relevant time, including from the date of invoice. Khalid Rajpar Advocate appeared for the respondent department while Applicant Fauji Cement was represented by Mayhar Kazi Advocate.

Brief crux of the case is that M/s Fauji Cement had imported machinery under SRO 484(I)/1992 dated 14.05.1992 (exemption available for such machinery which are not manufactured locally). The imported consignments contain various items which were manufactured locally as confirmed by the FBR vide letter dated 09.05.1996.

The amount of 15.80 million was adjudicated vide ONO No.02/1997 dated 16.02.1997. The importer filed appeal before the FBR / CBR against the aforesaid ONO. The FBR decided the appeal against the importer, being aggrieved the importer preferred the appeal before the Appellate Tribunal which was also rejected by the Appellate Tribunal. The importer again filed appeal bearing No.66/1998 before the High Court of Sindh against the Order of Appellate Tribunal. The Honourable Appellate Tribunal dismissed the appeal. The importer filed CPLA before the Apex Court, Leave to appeal was granted and filed Civil Appeal which was decided by the Honourable Supreme Court vide Order dated 07.03.2014 in Civil Appeal No.1801/2005. After the matter of SRO 484(I)/1992 finally settled by the Honourable Supreme Court and hold that the claim of importer for exemption under SRO 484(I)/1992 is not admissible. In pursuance of aforesaid Order dated 07.03.2014 passed by the Honourable Supreme Court, the Department issued a Demand Notice dated 28.03.2014 in continuation of demand dated 31.12.1999 for the outstanding payment. M/s. Fauji Cement made payment of Rs. 15 Million which was encashed on Green Challan dated 30.08.2018 in compliance of Honourable Supreme Court’s Order dated 07.03.2014 in Civil Appeal No.1801/2005.

The importer instead of making payment filed Suit No. 517/2014 before the Honorable High Court against aforesaid Demand Notice. The Honorable High Court suspended the Demand Notice vide Order dated 31.03.2014. The suit was heard by the Honourable High Court passed the Order dated 18.04.2018 as under:-

“At the very outset, Mr. Salman Talibuddin, Additional Attorney general has given a proposal that the Plaintiff may be called upon to deposit the amount mentioned in the Paragraph -14 of the Suit Rs. 15,797,423/- and amount mentioned in the Paragraph-21 i.e. Rs. 337,227,068/- and for the balance amount claimed by the department in sum of Rs. 455, 062,962/- plus surcharge to the date, the Plaintiff may approach Tax Department for its determination in accordance with law.”

Subsequently, the importer withdrawn the suit and filed CP No.D-5576/2018 before the Division Bench of Honourable High Court of Sindh. The Collectorate raised objection with regard to maintainability of instant petition on the ground that petitioner had filed a Suit No. 517 of 2014 in respect of same subject controversy. After the proceeding in CP No.5576/2018 disposed of the petition vide Order dated 30.08.2018 which is reproduced as under:-

“As regards the recovery of Rs.337 million, which is subject matter of SCRA No. 548/2014, respondents are directed not to enforce such recovery till further orders, which may be passed by this court in SCRA No.548 of 2014 on the next date of hearing whereas, office is directed to fix the said SCRA in court in the first week of October 2018 at 11.00 a.m. when learned counsel for the parties are directed to come prepared with the matter, which may be finally heard and disposed of at Katcha Peshi stage on the next date.

Petition stands disposed of in the above terms alongwith pending applications”, the bench ordered deciding the case against which the instant CPLA was filed before the apex court.

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