950811

LHC stays recovery of

import duty, ST on

private power plant

RECORDER REPORT

LAHORE: The Lahore High Court has stayed the recovery of Customs duty and sales tax on the machinery which had been imported for erection of a private power production unit.

These orders were passed by the LHC, (Rawalpindi Bench) while admitting a writ petition moved by Aamer Fayyaz Sheikh on the behalf of Koh-e-Noor Genertek Limited, challenging the imposition of sales tax and custom duty on their imported consignments.

It was submitted by the petitioners counsil Mohammad Akram Raja that the federal government had announced a power policy through whcih a number of fiscal incentives and tax concessions had been offered to the investors desiring to invest in private power production units.

Accepting these offers the petitioners established a company under the title of 'Koh-e-Noor Genertek Limited'. Arrangement for local as well foreign investments had been made for this unit. The petitioner also entered into a contract with a Hong Kong based firm, Tomen Corporation, for the supply of machinery for the project and in this regards a Letter of Credit was opened by Prime Commercial Bank.

When these equipments and machinery were shipped for Pakistan, the petitioner came to know that the federal government through another SRO had withdrawn this tax relaxation.

It was submitted that under the new amendment which had been made through the said SRO, only those private power production units which had entered into different electricity sales contracts with Wapda and KESC had been allowed to enjoy this tax holiday.

Challenging the imposition of sales tax the counsil submitted that in accordance with the provision of the Constitution, "sales tax can be imposed on the sales and purchases of goods imported, exported, produced, manufactured and consumed. He said that for levy of sales tax there must be a sale while the said machinery has been imported for erection of a unit which would cater for the company's own power requirements. Since there was no matter relative to any sale with this machinery, no sales tax could be impose on it, the counsel submitted.

Citing federal government, Central Board of Revenue and Collectors Customs, Lahore and Karachi, as respondents.

The Counsel submitted that this incentive was partially withdrawn only from those who wanted to cater to their own power needs. Terming it a sheer discrimination and violative to the fundamental rights of the petitioner under Article 199 of the Constitution, it was prayed that action on the said SRO amending the previous one might be stopped.

The learned judged of the LHC while admitting this petition for regular hearing observed: "Since there was a force in the points raised by the petitioner, the petition admitted for regular hearing."

The court has also issued notices to all the respondents and has directed the petitioner to submit post-dated cheque of equivalent amount till the final disposal of the case.