KARACHI: High Court of Sindh (SHC) will hear a petition on March 29, filed by Modern Plastic Industries and 30 other industrial units licensed in Karachi Export Processing Zone (KEPZ) challenging the imposition of GST (General Sales Tax) at import stage.
Arshad Tayebaly advocate representing the petitioner maintained that the petitioners have made huge amounts in KEPZ in terms of EPZA Ordinance 1990 and are engaged in import of raw material, process and export 100 per cent of the produce however through impugned sub-section (8) (a) (i) of Section 3 of the Finance Supplementary Act 2022, Entry No 102 of Sixth Schedule of Sales Tax Act 1990 the exemption from GST has been withdrawn unilaterally in violation of law and rules of EPZA 1980.
The counsel for petitioner further contended that investors made huge investment in view of different SROs issued by the federal government from time to time including SRO 881(1)/80 dated 23-08-1980 whereby exemption from payment of taxes, including Income Tax, Sales Tax and Customs Duty has been granted to the industrial undertaking in the EPZ. The abrupt and unilateral decision by the government is unlawful and contradictory to the SRO referred above, the counsel for petitioner industries added.
The counsel also raised the plea of discrimination on ground that identical exemption is available to the investors in Gwadar Free Zone and withdrawal is to adversely affect the business of the petitioners making their product in-competitive. He argued that provisions of Sale Tax Act are not attracted at the import stage and Sales Tax will be payable when the product/goods leave EPZ to Tariff Area.
The court was informed that 700 containers are lying at the port and respondent including EPZA and Collector Customs MCC Export (Port Muhammad Bin Qasim) are not allowing the release of such consignments without payment of GST. The petitioner are not registered with the Sales Tax Department and thus there is no mechanism provided to make payment of such amount, counsel for petitioner submitted praying to the court to declare the impugned Amendment and withdrawal of exemption as illegal, un-lawful.
The bench on Jan 21 when petitions was heard for the first time ordered issuance of pre-admission notice to Deputy Attorney General and other respondents.
The petition is now fixed for hearing on March 29 and likely to be decided.