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Petitioner: The Collector, Model Customs Collectorate & others VS Respondent: M/s. Naveena Industries Ltd. & others
Court Name: Sindh High Court Judge(s): Aqeel Ahmed Abbasi, Nazar Akbar Title:The Collector, Model Customs Collectorate & others vs M/s. Naveena
Industries Ltd. & others Case No.:Appeal No.263 of 2016 along with HCA Nos.264, 265, 266, 267, 268, 269, 270, 271, 272, 273, 274, 275, 276, 277, 278, 279, 280, 281, 282, 283, 284, 285, 286, 287, 288, 304, 305, 306, 321, 322, 338, 339 of 2016, HCA Nos.82, 83, 84, 85, 95 and 96 of 2015 Date of Judgment:2017-08-03 Reported As: 2017 SHC 299 Result: Appeal Allowed Judgment Aqeel Ahmed Abbasi, J: Through this common judgment, by consent of all the learned counsel, we intend to dispose of the above mentioned High Court Appeals, which require resolution of similar facts and decision on identical legal issue relating to maintainability of suit in view of statutory bar under a taxing statute. 2. Through High Court Appeal Nos.82 to 85 along with 95 & 96 of 2015, the appellants have impugned a common judgment and decree dated 02.02.2015 and 14.02.2015 respectively passed in Suit Nos.843, 907, 941 and 942 of 2014, whereby , learned Single Judge of this Court while formulating following three (03) issues for determination, has decided the same in favour of the respondents and against the appellant, which are reproduced herein below:- 1) Whether the suits are maintainable? 2) Whether the intravenous infusion (IV infusion) manufactured with low density polyethylene of pharmaceutical grade is a "pharmaceutical product" for purposes of the sales tax exemption under SRO 551(1)/2008 dated 11.06.2008? 3) What should the decree be? 3. High Court Appeal Nos.263 to 279 of 2016, have been filed against the comm on judgment dated 15.07.2016 passed in Suit No.44/2015 (Artistic Denim Mills v. Federal Board of Revenue and others) along with other Suits as detailed in the Appendix attached with the impugned judgment available at page 55, whereby , learned Single Judge of this Court while formulating two (02) issues for determination, has decided the same in favour of the respondents and against the appellants, which are reproduced herein below:- 1) Whether the suits are maintainable?
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2) Whether the plaintif fs are entitled for exemption from duties and taxes on the Import of generating sets, in terms of Schedule V of the Customs Act 1969 and Schedule VI of the Sales Tax Act, 1990?" 4. Whereas, High Court Appeal Nos.321 and 322 of 2017 have been filed against the common judgment dated 05.09.2016 passed in Suit No.1763/2016 (Umer Spinning Mills (Pvt.) Limited & others v. Federation of Pakistan and others) and Suit No.1875/2016 (Sunrays Textile Mills Ltd. v. Federation of Pakistan and others), whereby, learned Single Judge of this Court while formulating the following legal issues for determination has decided the same in favour of the respondents and against the appellant:- 1) Whether the suit is maintainable? 2) Whether the plaintif fs being spinners are entitled to claim benefit of SRO 1125(1)/2001 dated 31.12.201 1, as amended by two subsequent SROs (i) 154(1)/2013 dated 28.02.2013 and (ii) 491(1)/2016 dated 30.06.2016 while importing raw material for their spinning stage? 3) What should the decree be? 5. Since the learned counsel for the appellants in above cases have mainly argued on the legal objection as to maintainability of suit in view of specific bar in terms of Section 217 of the Customs Act, 1969, whereas, the learned counsel for the respondents have also made their submissions by supporting the impugned judgment on the issue of maintainability , therefore, we would like to dilate upon the legal issue of maintainability of suits, instead of recording our finding on merits of the claim of respondents regarding exemption of duty and taxes. There are three sets of HCAs arising from three different, however , combined judgments, passed in the suits filed by respondents, however , seeking similar relief i.e. benefit of subject SROs and exemption from duty and taxes. High Court Appeal Nos.82 to 85 of 2015 along with HCA Nos.95 & 96 of 2015 were taken up for hearing earlier in time. It will be advantageous to refer to the order dated 30.03.2015 passed in the aforesaid High Court Appeals, which contained the brief legal grounds agitated by the appellants while filing the aforesaid High Court Appeals relating to maintainability of Suits in terms of Section 217(2) of the Customs Act, 1969, which reads as follows:- "30-03-2015 M/s Masooda Siraj and Kashif Nazeer , advocates for Appellants 1. Urgency granted. 2. Office objection deferred. 3. Exemption granted subject to all just exceptions. 4&5. Through instant High Court Appeals, the appellants have impugned the common judgment and decree dated 02.02.2015 and 14.02.2015 respectively , passed in Suit Nos. 843, 907, 941 & 942 of 2014, whereby the learned Single Judge of this Court, while formulating following three issues for determination, decided the same in favour of respondents and against the appellants, which are reproduced herein below:- i) Whether the suits are maintainable? ii) Whether the intravenous infusion (IV infusion) manufactured with low density polyethylene of pharmaceutical grade is a "pharmaceutical product" for purposes of the sales tax exemption under SRO 551(I)/2008 dated 11.06.2008? iii) What should the decree be? Learned Counsel for the appellant at the very outset submits that the controversy raised by the respondents before the learned Single Judge in the aforesaid suits, was also agitated by some of the respondents before this Court through filing Constitution Petitions bearing No. 4804/2014, 3414, 3415, 3806 & 4493 of 2014, which were disposed of by a Division Bench of this Court vide consent order dated 18.11.2014, whereby , the petitioners were directed to raise all such factual as well as legal grounds in support of their claim for exemption from sales tax in respect of the raw material under dispute, which was to be decided by concerned Assessing Officer (not below the rank of Deputy Collector) of the respective Collectorate, who was further directed to decide the same through speaking assessment order(s) in respect of the consignments of the petition ers. Per learned Counsel, the determination regarding entitlement and claim of exemption from sales tax in terms of SRO 551(I)/2008 dated 11.06.2008 is the domain of the revenue authorities, which otherwise, was directed to be decided by the concerned officers vide aforesaid order passed by a Division Bench of this Court, however , such aspect of the matter has not
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been taken into consideration by the learned Single Judge inspite of the fact that such order was produced before the learned Single Judge for consideration. Learned Counsel for the appellants further contended that even otherwise, a suit is not maintainable in terms of Section 217(2) of Customs Act, 1969, which provides that "no suit shall be brought in any Civil Court to set-aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of tax made under the Customs Act, 1969". Per learned Counsel, the determination of tax liability of a person and to consider the claim of exemption from payment of tax or duty etc. is the domain of the revenue authorities under the relevant tax Statute including Customs Act, 1969, which provides complete mechanism and the authorities for determination of liability of duty and taxes, and in case of any grievance, complete hierarchy has been provided, whereby, an aggrieved person can file appeal before the statutory forums, whereas, provision for filing a reference before this Court is also available, therefore, per learned counsel, any intervention by the Court of Civil jurisdiction is beyond the scope and violative of the Scheme of a taxing Statute. Per learned counsel, even on merits, the respondents did not have any prima facie case for grant of exemption from sales tax, therefore, the impugned order has been passed without lawful authority, which may be set-aside. Contention raised by learned counsel for the appellant requires consideration. Let notice be issued to the Respondents to be served through first three modes of service for 21.04.2015. In the meanwhile, operation of impugned judgment and decree dated 02.02.2015 and 14.02.2015 respectively, shall remain suspended till next date of hearing." 6. Thereafter , notices were issued to the respondents, who filed their objections and the matter was adjourned from time to time, whereas, vide order dated 07.04.2017, passed by this Court in High Court Appeal Nos.263 to 279 of 2016, the aforesaid High Court Appeals were taken up for hearing by consent of the learned counsel for the parties along with similar High Court Appeals involving the identical issue regarding maintainability of Suits in view of specific bar provided under Section 217 of the Customs Act, 1969. 7. Similarly , High Court Appeal Nos.321 & 322 of 2016, arising from common judgment dated 05.09.2016 passed in Suit Nos.1763 and 1875/2016, were taken up for hearing in Court on 28.03.2017, when following order was passed:- "28.03.2017: Mr. Kashif Nazeer , advocate for the appellants. M. Ilyas Ahsan, Law Of ficer, Customs Department. 1. Deferred for the time being. 2. Granted subject to all just exceptions. 3-4. Instant High Court Appeals have been filed against the common judgment dated 05.09.2016 passed by the learned Single Judge of this Court in Suit No.1763 of 2016 (Umer Spinning Mills (Pvt) Limited & others v. Federation of Pakistan and others) and Suit No.1875 of 2016 (Sunrays Textile Mills Limited & others v. Federation of Pakistan and others), whereby , the suits filed by the respondents seeking declaration to the effect that the respondents being spinners are entitled to get the benefit of SRO 1125(i)/201 1 dated 31.12.201 1 as amended from time to time have been decreed in favou r of respondents. Learned counsel for the appellants at the very outset submits that the learned Single Judge formulated two (02) questions while deciding the suits, one relating to maintainability of the suits and the other relating to the claim of the respondents i.e. their entitlement to the benefit of SRO 1125(i)/201 1 dated 31.12.201 1 as amended from time to time, however , according to learned counsel, the learned Single Judge has not recorded any reasons on the issue relating to maintainability of the suit, and has been pleased to hold that since no ground in relation to maintainability of suit is raised, therefore, the issue of maintainability is scored of, therefore, no reasons are recorded, whereas at the same time, the learned judge has been pleased to hold that in view of various judgments of the superior Courts, the suit is maintainable. It has been further contended by the learned counsel for the appellants that taxation laws, including the Customs Act, 1969, are special laws, which provide a self-contained mechanism as well as forums for redressal of grievance in case of any adverse order passed by the authorities, whereas, according to learned counsel, such tax matter cannot be dragged in the normal civil Courts as it amount to depriving the relevant tax authorities to apply and interpret the
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relevant provisions of tax Statute, including Notifications and SROs, issued from time to time by the Federal Government or the F.B.R. for such purpose. Learned counsel for the appellants further argued that the bar provided in terms of Section 217 of the Customs Act, 1969, is required to be interpreted by this Court in such a manner that it may not frustrate the scheme of the Customs Act, 1969, so that timely collection of tax and duly shall not be unnecessarily delayed on account of procedural delay in civil Courts. In support of his contention, learned counsel for the appellants has placed on record copy of order dated 30.03.2015 passed by the Divisional Bench of this Court in HCA Nos.82, 83, 84 & 85/2015 along with HCA Nos.95 & 96 of 2015 in the case of Collector of Customs v. M/s. A.Z. Pharmaceutical Co. Ltd. and others, whereby, according to learned Counsel, under somewhat similar circumstances, Notices have been issued to the respondents and the operation of the impugned judgment and decree has been suspended. Contention raised by the learned counsel for the appellants requires consideration. Let notice be issued to the respondents to be served through first three modes for 11.04.2017, when instant High Court Appeals may be taken up along with aforesaid High Court Appeals. In the meanwhile, operation of the impugned judgment shall remain suspended till next date of hearing, however , the claim of the respondents seeking benefit of SRO 1125(1)/201 1 dated 31.12.201 1 as amended from time to time, shall be considered by the relevant authorities strictly in accordance with law without prejudice to the suspension of the impugned judgment in the instant cases." 8. Thereafter , High Court Appeal Nos.263 to 279/2016, arising from common judgment dated 15.07.2016 in Suit No.44/2015 (along with other connected Suits as detailed in the Appendix of impugned judgment at page 55) were taken up for hearing in Court on 07.04.2017, when following order was passed:- "07.04.2017: Ms. Masooda Siraj, advocate for the appellant(s). a/w. Mr. Zafar Hussain, advocate and M. Ilyas Ahsan, Appraising Officer (Legal), Customs Department. 1. To be complied with before the next date of hearing. 2. Granted subject to all just exceptions. 3-4. Through instant High Court Appeals, the appellants have impugned the common judgment dated 15.07.2016 passed by the learned Single Judge of this Court in Suit No.44/2015 (Artistic Denim Mills Ltd. v. Federal Board of Revenue & others ) as well as other suits as detailed in the appendix attached with the impugned judgment at Page:55, whereby , the learned Single Judge of this Court while formulating following two legal issues for determination has decided the same in favour of the respondents and against the appellants:- "1. Whether the suits are maintainable? 2. Whether the plaintiffs are entitled for exemption from duties and taxes on the Import of generating sets, in terms of Schedule V of the Customs Act 1969 and Schedule VI of the Sales T ax Act, 1990?' Learned counsel for the appellants at the very outset submits that "no suit shall be brought in any Civil Court to set-aside or modify and other passed, any assessment made, any tax levied, any penalty imposed or collection of tax made under the Customs Act, 1969." Per learned counsel, the determination of tax liability of a person and to consider the claim of exemption from payment of tax and duty etc. is the domain of the Revenue Authorities under the tax Statute including Customs Act, 1969, which provides complete mechanism as well as the authorities for determination of such liability of duties and taxes, and in case of any grievance, complete hierarchy has been provided, whereby, an aggrieved person can file appeal before the Statutory Forum including the forum of this Court in its reference jurisdiction as well as the forum of Hon'ble Supreme Court for final determination of any controversy relating to levy or imposition of tax and duty. Learned counsel for the appellants submits that under similar circumstances, the appellants have filed High Court Appeals No.82/2015 (and others), whereby, notices have been issued to the respondents and the operation of the impugned judgment and decree have been suspended. In support of her contention, learned counsel for the appellants has placed on record copy of order dated 30.03.2015 passed in the aforesaid High Court Appeal as well as order dated 28.03.2015 passed in High Court Appeal No.321/2016 (Collector of Customs & others v. M/s. Umer Spinning Mills Limited & others). Contention raised by learned counsel for the appellants requires consideration.
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Let notice be issued to the respondents as well as DAG for 11.04.2017 to be served through first three modes, when instant High Court Appeals may be taken up for hearing alongwith aforesaid High Court Appeals. In the meanwhile, operation of the impugned judgment and decree shall remain suspended till next date of hearing. However , the claim of the respondents seeking exemption from payment of duties and taxes on the Import of generating sets, in terms of Schedule V of the Customs Act 1969 and Schedule VI of the Sales Tax Act, 1990, shall be considered by the relevant authorities strictly in accordance with law without being prejudiced with the order of suspension of the impugned judgment and decree, in the instant High Court Appeals." 9. In all the aforesaid High Court Appeals after examining the contention of the appellants, while issuing notices to the respondents, the impugned judgment(s) and decree(s) were suspended by this Court, whereas, by consent of learned counsel for the parties, vide order dated 11.04.2017 passed by this Court in High Court Appeal Nos.263 to 279 of 2016, all the aforesaid High Court Appeals were directed to be taken up together and to be decided through common judgment, in view of the fact that identical ground regarding maintainability of Suit in terms of Section 217 of the Customs Act, 1969, was agitated by the appellants for determination by this Court. Above matters came up for hearing on several dates and were argued by all the learned counsel for the appellants as well as the learned counsel for the respondents mainly on the issue of maintainability of suits, and the appeals were finally heard and reserved for judgment on 04.05.2017. 10. Ms. Masooda Siraj Advocate, learned counsel appearing in some of the High Court Appeals, while leading the arguments on behalf of the appellants, has vehemently argued that the impugned judgments passed by the learned Single Judge of this Court, while exercising jurisdiction at original side, in the above Suits are without jurisdiction and lawful authority , as filing of Suit before any Court in terms of Section 217 of the Customs Act, 1969, is specifically barred. It has been contended by the learned counsel for the appellants that determination of tax liability of a person, and to consider the claim of exemption from payment of tax and duty etc. is the exclusive domain of the revenue authorities provided under the Customs Act, 1969, which provides a complete mechanism as well as the authority for determination and assessment of any liability of duty and taxes, whereas, in case of any dispute in this regard, complete hierarchy and the forums have also been provided, whereby , an aggrieved person can file appeal before such appellate forum, which also includes the forum of this Court in its reference jurisdiction under Section 196 of the Customs Act, 1969, as well as the forum of Hon'ble Supreme Court, for final determination of any legal controversy relating to levy or imposition and exemption from duty and taxes. It has been further contended by the learned counsel for the appellants that interpretation of any provision of law, rules or any Notification/SRO issued in respect of levy or exemption from duty and taxes by the Federal Government is the domain and responsibility of such taxation authorities as provided under the taxing statute, however , such dispute relating to determination or assessment of duty and taxes cannot be allowed to be agitated by filing a suit before the Civil Court, as has been done in the aforesaid cases, whereby , declarations have been sought to the effect that the respondents are entitled to exemptio n from payment of duty and taxes. Per learned counsel, a party cannot otherwise, be allowed to abandon a statutory forum provided under the special law for the purposes of assessment and determination of tax liability of a person, nor can be allowed bypass the appellate forum provided under the special law for redressal of grievance, as it would render the statutory forum and the remedy of appeal for redressal of grievance, as nugatory , and would not only amount to showing no confidence on such statutory forums, but it will also increase the unnecessary burden upon the Courts, which are already heavily burdened with large number of pending cases. It has been contended by the learned counsel for the appellants that in the impugned judgments, the learned Single Judges have failed to appreciate and examine the scope of Section 217 of the Customs Act, 1969, as well as the provisions of Section 9 CPC, whereby , the jurisdiction of a Civil Court has been specifically barred excluded in matters relating to determination of liability of duty and taxes under the Customs Act, 1969. It has been further contended by the learned counsel for the appellants that the matter regarding entitlement of exemption from duty and taxes or reduction in tax liability in respect of a person or establishment otherwise, includes scrutiny and determination of disputed facts by the specialized forums and the authorities provided under the taxing statutes, including Customs Act, 1969, hence, it does not fall within the domain of original civil jurisdiction of this Court particularly , in view of specific bar in terms of Section 217 of the Customs Act, 1969. It has been
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prayed by the learned counsel for the appellant that the impugned judgment(s) and decree(s) may be set-aside and the respondents may be directed to approach the relevant authorities and the forum provided under the Customs Act, 1969 for redressal of their grievance, if any, in accordance with law. In support of her contention, learned counsel for the appellants has placed reliance in the following case law:- 1. Federation of Pakistan and others v . Messrs Saman Diplomatic Bonded W arehouse ( 2004 PTD 1 189). 2. Collector of Central Excise, Karachi and another v . Syed Muzakkar Hussain and another ( 2006 PTD 219 ). 3. Malik Muhammad Saeed Vs. Federation of Pakistan and others, ( 2006 PTD 2167 ). 4. Messrs Shadman Cotton Mills Ltd. through Director Vs. Federation of Pakistan through the Chairman, Central Board of Revenue (Revenue Division), Islamabad and another (2009 PTD 193). 5. Ghani and Tayub (Pvt) Ltd., Karachi Vs. Federation of Pakistan through Secretary , Finance Division, Islamabad and 2 others ( 2010 PTD 817 ). 6. Messrs P.M. International through Special Attorney Vs. Federation of Pakistan through Secretary Revenue Division (F .B.R) and 3 others ( 2010 PTD 1293 ). 11. Mr. Kashif Nazir Advocate, learned counsel appearing on behalf of the appellants in HCA Nos.321 and 322 of 2016, while adopting the arguments advanced by Ms.Masooda Siraj, advocate, has further contended that suit in respect of determination of liability of tax or duty under the Customs Act, is not only barred in terms of Section 217 of the Customs Act, 1969, but also not maintainable in terms of Section 9 of CPC, which relates to jurisdiction of the Court to try all suits of civil nature, however , excepting suits of which their cognizance is either expressly or impliedly barred. According to learned counsel, the dispute agitated in the subject suits relates to interpretation and application of different SROs/Notification, whereas, the plaintif fs have sought a declaration to the effect that their consignments are exempted from payment of duty and taxes. However , acco rding to the learned counsel, determination and assessment of liability of duty and taxes is the responsibility of the custom authorities, as provided under the Customs Act, 1969, which is a special taxing statute, and such assessment or determination of duty and taxes cannot be considered as a dispute of civil nature as visualized in terms of Section 9 of Civil Procedure Code, 1908. According to learned counsel, Customs Act, 1969, is a special enactment, which contains its own charging provisions, as well as provisions relating to assessment and determination of duty and taxes in respect of any consignment imported by an importer , and also provides for a complete mechanism and the remedies for redressal of grievance by way of filing an appeal before Collector (Appeals) under Section 193 of the Customs Act, 1969 and before Customs Appellate Tribunal under Section 194 of the Customs Act, 1969, and also the forum of High Court under its refere nce jurisdiction in terms of Section 196 of the Customs Act, 1969, for determination of any question of law, whereas, leave to appeal is also provided before the Hon'ble Supreme Court in terms of Article 184 of the Constitution of Islamic Republic of Pakistan, 1973, for final determination of any dispute under the Customs Act, 1969. Whereas, according to learned counsel, there is no scope or application of the provisions of CPC in respect of disputes relating to assessment or determination of custom duty and taxes under the Customs Act, 1969. Per learned counsel, dispute relating to determination of liability of custom duty and taxes under the Customs Act, 1969, cannot be termed as a…
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