Retrospective effect

Citation Name : 2019 PTD 826 SUPREME-COURT
Side Appellant : MEMBER (TAXES) BOARD OF REVENUE PUNJAB, LAHORE
Side Opponent : QAISAR ABBAS
Fiscal/TAX statute---Retrospective effect---Scope---TAX /fiscal statutes operated prospectively and not retrospectively unless clearly indicated by the legislature---Retrospectivity could only be attributed to a statute where it was made explicit or could be inferred by necessary implication; it could not be presumed.

Citation Name : 2019 PTD 718 SUPREME-COURT
Side Appellant : SAMI PHARMACEUTICALS (PVT.) LTD.
Side Opponent : FEDERATION OF PAKISTAN
S. 19---Sales TAX Act (VII of 1990) S. 13(2)(a)---Principle enunciated by the Supreme Court in the case of Al-Samrez Corporation v. Federation of Pakistan (1986 SCMR 1917)---Scope---Effective rate of duty---Scope---Principle enunciated in Al-Samrez case provided that if an importer altered his position in reliance on an exemption notification (e.g., by entering into a contract or opening a letter of credit), he then acquired a vested right in the exemption to which he remained entitled even if the exemption itself stood withdrawn by the time the goods arrived in Pakistan.

Citation Name : 2019 PTD 718 SUPREME-COURT
Side Appellant : SAMI PHARMACEUTICALS (PVT.) LTD.
Side Opponent : FEDERATION OF PAKISTAN
Ss. 19 & 31A---Sales TAX Act (VII of 1990) S. 13(2)(a)---Exemption from customs duty and sales TAX under SRO No.575(I)/2006 dated 5.6.2006---Import of "Air Handling Units"---Certification by Engineering Development Board of Pakistan (EDB)---Procedure---Petitioner-company imported 'Air Handling Units' and sought concession on customs duty and exemption from sales TAX under SRO No.575(I) 2006 dated 05.06.2006 on the ground that the 'Air Handling Units' imported were of such specification that were not manufactured locally---[Per Faisal Arab, J (Majority view): Exemption from customs duty and sales TAX could not be claimed under SRO No.575(I)/2006 in case the item was either listed in the locally manufactured items notified through a Customs General Order (CGO) issued by the Federal Board of Revenue or certified by the Engineering Development Board of Pakistan (EDB) that the item in question was locally manufactured---In order to confirm whether exemption granted under SRO No.575(I)/2006 on an item was available or not one could take recourse to CGOs issued from time to time or seek certification from the EDB---Apart from seeking recourse to CGO, the need to seek certification from EDB seemed to have arisen as there was a strong possibility that a name of local manufacturer of a particular item may not have been updated in the CGO hence not reflecting the latest position of the local industry---Under SRO No.575(I)/2006, EDB had been entrusted with the function to certify whether an item was also locally manufactured which was done by gathering information from the local industry---Any person including the Customs Authorities could seek such certification---EDB's certification only confirmed a pre-existing position i.e. an item was or was not locally manufactured---In case EDB certified that imported item was also locally manufactured, exemption under SRO No.575(I)/2006 would be denied---After such certification the fact that a particular item may not have been listed in the CGO as a locally manufactured item would be of no legal consequence---Date on which certificate was issued by the EDB could not be taken as the date on which an item had become a locally manufactured item---Where a letter of credit was opened for import of an item which was already being locally manufactured and such pre-existing factual position was later certified by the EDB, it was good enough to disentitle an importer to claim exemption under SRO No.575(I)/2006---Timing of seeking certification from EDB would be immaterial in such circumstances---Only exception to this could be that the local manufacture of an item was so recent that it could not have been ordered from the local market when the letter of credit for its import was established---In such exceptional situation benefit granted under SRO No.575(I)/2006 could be availed---In absence of such an exception, the effect of certification in the affirmative by EDB would be that it confirmed that at the time when the importer opened the letter of credit in favour of a foreign supplier it was already one of the locally manufactured items and thus not entitling an importer to claim concession under SRO No.575(I)/2006---Where an item was required to be custom-built e.g. an item with the same technical specifications was required to be supplied with different dimensions not readily available in the local market even then exemption on such item could not be claimed where a local manufacturer was fully capable to supply it had an order been placed with him---In the present case, the Engineering Development Board of Pakistan (EDB) certified that the 'Air Handling Units' imported by the petitioner were also being manufactured by four local manufacturers with the same technical specifications---Moreover the petitioner sought certification from EDB on 14.3.2011 i.e. at the time when the consignment was in the process of being shipped to Pakistan, much after the letter of credit dated 9.9.2009 was opened---Petitioner was rightly denied the exemption from customs duty and sales TAX under SRO No.575(I)/2006]---[Per Munib Akhtar, J (Minority view): Language used in the SRO No.575(I)/2006 in specific context of "Air Handling Units" provided that the exemption was available only to units of "specifications which were not manufactured locally"---Such condition clearly recognized that Air Handling Units came in more than one type of specifications, of which some sorts only were being locally manufactured, thus, it required that the CGO to be issued by Federal Board of Revenue, or the certificate that could be issued by the EDB, had to list (or at any rate clearly relate to) the specifications of the "Air Handling Units" that were to be regarded as being locally manufactured---Only listing without more, "Air Handling Units" (with or without their PCT heading) in the CGO or the EDB certificate would be insufficient---For purposes of exemption/ concessionary notifications, the Customs General Order 11 of 2007 dated 28.8.2007 ('CGO 11') was the relevant CGO for the present case---Entry No. 504 of the CGO 11 listed two companies that locally manufactured Air Handling Units---For CGO 11 to apply the question was not whether either of the two companies manufactured "Air Handling Units" with the same specifications as those imported by the petitioner, rather, the true and correct question was whether the petitioner's "Air Handling Units" were of the specifications as listed in CGO 11, and manufactured by the two companies---Record showed that this was not the case---Furthermore the Al-Samrez' principle enunciated by the Supreme Court in the case of Al-Samrez Corporation v. Federation of Pakistan (1986 SCMR 1917) would apply to the present case---Certificate, issued by EDB on 1.4.2011, could not, as a matter of law and for purposes of SRO No.575(I)/2006 have any retrospective effect---As a certification that "Air Handling Units" of the sort imported by the petitioner were being locally manufactured, it could only apply prospectively from the date of its issuance---In considering whether the issuance of the EDB Certificate amounted to a "withdrawal" of the exemption under SRO No.575(I)/2006 within the meaning of S. 31A of the Customs Act, 1969, a restrictive view would have to be taken---When so considered there was no withdrawal of the exemption---Exemption ceased to apply in relation to the petitioner's goods when the certificate was issued by EDB on 1.4.2011, however, that was not, in the context of S. 31A, a withdrawal of the exemption; that could take place only as a result of an act of the authority issuing the same, which would have to be the Federal Government---Petitioner was entitled to the benefit of SRO No.575(I)/2006 in respect of the "Air Handling Units" for which the goods declaration was filed on 22.7.2011; this was so by an application of the Al-Samrez principle, which was not ousted or negated by reason of S. 31A of the Customs Act, 1969]---Petition for leave to appeal was dismissed in circumstances.