ISLAMABAD: The Supreme Court said the exemptions (customs duty, sales tax, and withholding tax) are to be granted and regulated in terms of consistent policies for sound reasons.
A three-judge bench, headed by Chief Justice Umar Ata Bandial upheld the December 1, 2021 Peshawar High Court (PHC)’s judgement authorising customs rebate for hybrid electric cars imported up to 2017 on the grounds that any notification that disturbs a vested right or creates a new liability cannot be applied retrospectively.
The federal government, vide SRO 499(I)/2013 dated 12-6-2013, exempted customs duty, sales tax, and withholding tax on import of hybrid electric vehicles (HEVs) falling under PCT Code 87.03. During the audit, the Deputy Collector Customs (Import) Dry Port, Model Customs Collectorate, Peshawar observed that used Hybrid Suzuki, Hustler, Wagon-R, Mazda, Cross-over, Suzuki IGNIS were cleared illegally on 50 per cent exemption of duty and taxes in terms of SRO 499(I)/2013 dated 12-6-2013.
The department; therefore, issued show cause notices to the importers and Customs Clearing Agents under section 32 (3A) of Customs Act 1969 read with Section 3(1) of Imports and Exports (Control) Act, 1950, Section 3(1) (b) of Sales Tax Act, 1990, Section 148 and 182 of the Income Tax Ordinance, 2001 and section 33(5) of Sales Tax Act, 1990.
After submission of replies, the Deputy Collector Customs (Adjudication) through Order-in-Original upheld the show cause notice. The respondents preferred appeals to the Collector of Customs (Appeals) but all appeals were dismissed. The respondents, thereafter, approached the Customs Appellate Tribunal and the appeals were allowed. The petitioner aggrieved by the Tribunal order filed a Customs Reference against before the PHC, which dismissed all Reference applications.
The judgment said that in the case of Pakistan through Chairman FBR and others Vs Hazrat Hussain and others (2018 SCMR 939), this Court held that the power of granting exemptions is discretionary, it is equally true that the said power cannot be exercised in a discriminatory manner.
Similarly, in the case of Mathuram Agrawal Vs State of Madhya Pradesh (AIR 2000 SC 109), the Court held that the intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. “Equally impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute.”
The judgment noted that in the present state of affairs, exemption of customs duty, sales tax and withholding tax on Import of Hybrid Electric Vehicles (HEVs) falling under PCT Code 87.03, specified in column (2) of the Table to the extent as specified in column (3) in terms of SRO 499 (I)/2013, dated 12.6.2013 could neither be denied nor circumvented on the basis of subsequent circular dated 5.10.2018, issued by the Assistant Collector of Customs.
The Court said it is a well settled exposition of law that if the taxpayer is entitled for exemption in plain terms of notification, then the department could not deny the benefit of an exemption which was intended for the benefit of the taxpayer so it should be construed accordingly.
The judgment said that according to well-settled canons and rules of interpretation laid down by the superior Courts time and again, the indispensable and imperative sense of the duty of the Court in interpreting a law is to find out and discover the intention of the legislature, and then endeavour to interpret the statute in order to promote or advance the object and purpose of the enactment.
The Statutory Regulatory Orders (SRO) requires purposive interpretation or construction which complements its effect to the purpose by following conscientious and exact meaning.
Copyright Business Recorder, 2023