Judgement comes days after SC issued stay order on collection
PHOTO: FILE
The SRO included goods such as like hot rolling steel, flat rolled products of alloy steel, tubes, pipes, wire of iron and dairy products. The order was set aside on grounds of being issued without lawful authority.
Justice Shahid Karim of the LHC struck down the SRO imposing regulatory duty on import of goods that fall under the PCT Code of the first schedule on the petition moved by Global Steel.
The Federal Board of Revenue (FBR) in October last year had the SRO in question approved that saw duty imposed on a number of items, a move meant to increase the government’s tax revenue and control a surging import bill.
In response, a petition was filed at the Sindh High Court that declared the legal amendment, which had given the finance minister powers of imposing regulatory duty, unconstitutional and scrapped the duty levied on more than 356 items.
However, the SC temporarily allowed the government to continue collecting regulatory duty, providing a sigh of relief to the FBR whose potential revenues of Rs90 billion were at stake.
Now, the company, Global Steel, challenged SRO No. 1035 (1)/ 2017 whereby the ‘regulatory duty’ was imposed in the LHC.
“The SC’s interim order is not binding on the LHC,” said Dr Ikramul Haq, a SC advocate and tax expert. “However, the provincial court’s decision will not affect duties collection as the SC has already given a stay order.”
The company through its counsel Advocate Muhammad Afzal Awan argued that the FBR had imposed ‘regulatory duty’ on import of various steel items vide its Serial No 444 to 458 of SRO No. 1035 (1)/ 2017.
It contended that question arose by the new SRO that whether approval of federal minister in charge for levy of ‘regulatory duty’ on imported goods was competent enough under the Constitution of Pakistan, 1973.
The company’s counsel presented the copy of the SRO approved by the ministry, and showed its content wherein it was stated, “the board, with approval of the Federal Minister-in-charge is pleased to levy regulatory duty on import of goods specified in column (3 ),”.
The counsel said that the federal minister was not empowered to approve issuance of notification to impose regulatory duty and this act was illegal, unlawful and without lawful authority, hence, the impugned notification is liable to be quashed.
The counsel contended that regulatory duty can only be imposed to regulate an uncertain market and not to collect additional taxes, or to take away in this garb any reasonable profit that the company might make.
Published in The Express Tribune, March 28th, 2018.
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