A division bench of the Lahore High Court (LHC) here on Wednesday restrained the Federal Board of Revenue (FBR) from taking coercive measures against three sugar mills for recovery of "special excise duty" and directed it to file reply by June 14.

The bench issued this order in an intra court appeal filed by Ittefaq, Brothers and Ramzan sugar mills challenging an order of a single bench dismissing their petitions against the special excise duty.
Representing the sugar mills, Advocate Ijaz Awan pleaded that on June 29 2007 ministry of finance issued a notification relating to federal excise S.R.O. 655(I)/2007 whereby Special Excise Duty (one per cent of the value) was levied without having lawful jurisdiction.
He said the government wrongly exercised the powers conferred by section 3-A of Federal Excise Act, 2005. He argued that section 3-A was not part of federal excise Act, 2005 at the time and date when the impugned SRO was issued.
Awan further argued that the rate of the special excise duty had recently been enhanced from 1 to 2.5 per cent through an amending SRO on March 19, 2011 in pursuant to federal excise (amendment) ordinance, 2011. He said the FBR enhanced the rate of the duty ignoring the fact that basic notification of levying the excise duty was issued without lawful authority.
The counsel said the appellants (mills) was earlier also forced by the respondent collectorate and its officials with respect to the payment of allegedly due special excise duty on goods produced, manufactured, imported obtained fabricated by/prior to the cutoff date of July 1 2007 regardless of the fact that the special excise duty was not liable to be paid with retrospective effect.
But subsequently after filing of the writ petition the respondent authorities realised the fact and accepted plea of the appellants and issued a conceding clarification, he said and added that a single bench of LHC, however, had on May 13 dismissed the petition.
The counsel prayed that May 13 order of the single bench be set aside and appeal be accepted in the interest of equity and justice. He further prayed that the impugned notification with regard to levy of special excise duty be declared illegal and it also be declared that section 3-A of Federal Excise Act, 2005 amounts to double taxation.