In pursuance of a news item published in daily Mohasib Gilgit regarding illegal import and registration of non-custom paid (NCP) vehicles in Gilgit-Baltistan from province of Khyber Pakhtunkhwa via Chitral and Kohistan, report was called from Excise and Taxation Department of Gilgit-Baltistan which has been submitted by the Deputy Director Excise and Taxation Department as under: "NO. E&T-MISC-1(3)/2008 GOVERNMENT OF GILGIT-BALTISTAN DIRECTORATE OF EXCISE & TAXATION GILGIT-BALTISTAN Dated 5th November, 2010 To The Registrar Supreme Appellate Court Gilgit-Baltistan, Gilgit.
SUB: S.M.C. No, 11/2010 (Taxation/Entrance of NCP/Theft Vehicle)
Kindly refer to S.M.C. No, 11/2010 dated 5th November, 2010 on the subject cited above. The submission of this department is as under:--
1. Reference to a query of the Hon'ble Chief Judge of the Apex Court pertaining the establishment of Excise & Taxation (E&T) Department, in Gilgit-Baltistan, the E&T Department was established vide Notification No, 13-2/2001/NA-II date 26th November, 2004 (copy attached vide F/A)
2.The E&T department started independently functioning in 2009.
3. Prior to the establishment E & T department, Police Department was working as Motor Registering Authority (MRA) and was functioning under Motor Vehicle Ordinance and Rules 1970 extended to Gilgit-Baltistan vide Notification No, RRG.HC.NIF-3/75 dated 22'1 March 1975 (copy attached vide F/B) and The West Pakistan Motor Vehicles Ordinance, 1965 vide Notification No, NA- 4(1)/80 dated 27th February 1990.
4. The E&T department is functioning under laws as referred above verily extended to the region from time to time, and is not following Rules and amendments made by any Province.
5. Now after promulgation of Empowerment and Self Governance Order 2009, the Gilgit-Baltistan Legislative Assembly is empowered to legislate on imposition of taxes under 4 Schedule (38) read with Article 47(2) (b) of the Order. The Legislative Assembly can make their own provincial motor vehicle rules, which process shall commence shortly. Provincial Rules already in practice in other provinces. Once GB provinces Motor Vehicles Laws are enacted by the legislative assembly then the ambivalent situation related to NCP vehicles and stolen vehicles can well be cleared off.
6. This legislation is pressing need of the time since a status like that of province has been given to the region. It is further pleaded that supporting Laws and Rules may further legally strengthen the Excise Department; thereby Excise Police can efficiently perform its routine road checking campaigns against token tax defaulters and illegal/stolen vehicles. Strengthening Excise Police by adopting relevant laws and amendments the writ of Government and rule of law can well be maintained in spirit.
7. So far as indexation of NCP vehicles is concerned, the department has not itself, as has previously been pleaded, started the computerized record management rather followed the practice adopted by the Police Department after taking over complete record related to motor vehicles from Police Department, and also complying the orders of the then Chief Secretary vide Letter No, F&R-A-(68)/2007 dated 23R1 February 2009 (copy attached vide F/C). The only. objective behind this temporary indexation is to provide identity to these thousands of identity less vehicles and to curtail the risk of these vehicles being used for terrorist activities and disturbing law and order situation. This up to date record of NCP vehicles can help law enforcing agencies in case of any untoward situation happens involving such a vehicle. If the indexation is stopped it will amount to let them ply freely and will become a jungle law. Furthermore, this data can also be used for future legalization/regularization if considered by customs authorities.
Submitted for perusal please. Deputy Director Excise & Taxation Department Gilgit-Baltistan"
2. The perusal of report would show that NCP Vehicles are brought into the territory of Gilgit- Baltistan in an unlawful manner with implied permission of Government of Gilgit-Baltistan and the Custom Department Government of Pakistan. This Court having considered the Illegal entry of vehicles into Gilgit-Baltistan without payment of Custom Duty leviable under Customs Act, 1969, a serious violation of law and a matter of Public Importance relating to the enforcement of Fundamental Rights of the people of Gilgit-Baltistan as mentioned in Part 11 of Gilgit-Baltistan (Empowerment and Self Governance) Order, 2009. In exercise of power under Article 61 of the above Governance Order, read with enabling provision of the law and Constitution of Pakistan, proceeded to issue notice vide Order dated 04-11-2010 to the concerned authorities for determination of the questions firstly, whether Excise and Taxation Department can lawfully register a NCP vehicle under Motor Vehicles Ordinance, 1965 and secondly, what is legal status of vehicles imported into the territory of Gilgit-Baltista" without payment of Custom Duty and is not an act of evasion of Custom Duty under Customs Act, 1969. The Order dated 04-112010 is reproduced hereunder: - "The Deputy Director Excise & Taxation Department Government of Gilgit-Baltistan states that Excise Department was established 'by the Government of Northern Areas Now Gilgit-Baltistan by an Executive order in 2004 but this department started functioning in 2008. The Department in exercise of power under Motor Vehicle Ordinance, 1965 read with Motor Vehicle Rules, 1970, is responsible for the registration of vehicles and receipt of token tax etc and that the amendments made by the provinces in this ordinance are not applicable in Gilgit-Baltistan. The Deputy Director states that non-custom paid vehicles are not registered by the department rather for the purpose of maintaining the record of such vehicles temporary numbers are issued to the owners of these vehicles and that he cannot explain that under what law the entry of non-custom paid vehicles is allowed in Gilgit-Baltistan and for what reason the Custom or Police Department as the case may cause no interference in the illegal import of NCP vehicles in GilgitBaltistan. He stated that entry, of a vehicle into Gilgit-Baltistan without payment of custom duty or other taxes is considered smuggling of vehicle or it is stolen vehicle.
The learned Advocate General has submitted that there is no order/notification of Government of Pakistan or Provincial Government for permission of entry of non-custom paid vehicles in Gilgit- Baltistan rather these vehicles are brought in Gilgit-Baltistan without lawful authority and despite the fact that Customs Act, 1969 is applicable in Gilgit-Baltistan, Custom department except the import of goods from China Boarder is not taking care of smuggling of NCP vehicles in the areas.
The learned Advocate General stated that under the law this is duty of Police and Custom Department to check illegal entry of non-custom paid vehicles in Gilgit-Baltistan and Excise Department must not allot temporary numbers to such vehicles and authorize the same to be used as private or public transport. He added that all those facilities which are available to custom paid vehicles are being enjoyed by these vehicles without payment of any tax or fee which is open discrimination in terms of Article 17 of Gilgit-Baltistan (Empowerment and Self Governance) Order 2009, whereas the submitted that owners of Custom paid Vehicles pay all taxes including registration Fee, etc. livable under the law without any extra facility.
The learned Advocate General on Court query has not been able to explain that under what law non-Custom paid Vehicles are used by Government Departments and Government officials in private and official capacity and also has not been able to satisfy us that how without providing the basic necessities of life, in terms of fundamental rights, the Government can levy taxes in exercise of power under Article 48 of Gilgit-Baltistan (Empowerment and Self Governance) Order, 2009 read with Article 77 of the Constitution of Pakistan.
The above issues being of extreme public importance, would require proper examination in the light of relevant provision of law. Therefore, we direct that Chief Secretary in consultation and coordination with KA&GB Division, Government of Pakistan and with the assistance of Secretary Law, Secretary Finance and Secretary Excise and Taxation will submit concise statement through Advocate General in the matter and Secretary CBR will direct to Collectorate of Custom concerned to submit comments and also assist the Court on the subject. The Attorney General for Pakistan may assist the Court in the matter or depute a senior Deputy Attorney General well conversant with law on the subject to assist the Court. The President Chief Court Bar Association and President Supreme Appellate Court Bar Association will appear as Amicus Currie.
The I.G. police and representative of the Chief Secretary with instructions and Deputy Director Excise and Taxation shall appear on 08-11-2010 and apprise the Court on the following questions:-- (1)That why not the further entry of non-custom custom paid vehicles in Gilgit-Baltistan is stopped.
(2)The law under which the. Government. Departments and officials use non-custom paid vehicles and if, there is no law why the illegal use of these vehicles without regularization though proper legislation be not stopped. Under what law the Excise and Taxation Department is. maintaining the record of non-custom paid vehicles and issue temporary Numbers and why not this practice be stopped.
(4) Whether the function of Custom Department in Gilgit- Baltistan is only confined to the extend of import of China goods and has no concern with Non Custom Paid vehicles in Gilgit-Baltistan.
Civil Misc No 01/2010 'I ne applicant states that for use of NCP vehicles he was allotted temporary No NCP-02-HNR-1 by Excise Department which was subsequently withdrawn without any intimation or notice and was allotted to another person.
The Excise Officer states the above number was allotted to one Danish Ali prior to its allotment to the applicant and that matter will be settledby him with the consent of parties.
In view thereof the applicant will continue use of above number already allotted to him, unless he voluntarily forego the claim. This C.M. stand disposed of.
3. The Secretary, Excise and Taxation Department Gilgit-Baltistan in pursuance of the Order of this Court submitted report as under: "Sub: S.M.C. No, 11/2010. (NCP/THEFT VEHICLES ETC. The following laws/acts and ordinances (valid lists attached vide flag A, B, C) pertaining to Excise and Taxation had since been extended to the Northern Areas now Gilgit-Baltistan (GB) but' the implementation agency was not having existence till the year 2009.
1. The West Pakistan Motc vehicle Ordinance, 1965
2. The Motor Vehicle Taxation Act
3. The Excise Act.
2. The process of establishment of Excise & Taxation (E&T) Department in GB was initially taken up by the Chief Secretary GB vide Letter No, ALA-2 (21) 2001 dated 14th March 2006 (Flag D) for taking care of illegal/stolen vehicles. However, later on it was annexed with the new provincial package and included as a department in the Gilgit-Baltistan Rules of Business, 2009 declaring Deputy Director Excise and Taxation as Head of the Department.
3. The Chief Secretary (CS) GB in response to the Prime Minister Secretariat Notice on illegal Vehicle Business in NA, received through KANA division Letter No 7 (10)/2003 NA-II dated 17th December 2007 (copy missing)., mentioned the inevitability of E&T department in GB to curb business of illegal vehicles in the region vide the Chief Secretary office letter as referred above. The CS in his letter elaborated that Police Department GB cannot take cognizance of Excise & Taxation cases especially NCP vehicles matters except under the traffic laws and proposed immediate establishment of Excise & Taxation Department in GB. In response to the CS letter, the Prime Minister Secretariat via KANA division letter vide F.No,7-10/2003-NA411 dated 3rd May 2006 (copy attached vide flag E) asked to submit an organogram along with financial implication for establishment of E&T Department in GB. Subsequently a proposal for establishment of the department was sent to KANA vide Secretary Finance Letter No, F&R-A-1 ' (37)/2004 along with financial implication. On account of the correspondences thereof, the Department of E&T came into being and started functioning in the year 2009 on proper lines.
4. Soon after establishment of E&T department, a meeting was held under the chairmanship of CS dated 23rd February 2009 wherein it was decided to make the department fully functional and the Inspector General Police (IGP) was directed to ensure shifting of entire record related to motor vehicle registration (MVR). The Police Department complying the instructions shifted all MVR record from all district Police offices to Excise offices and from 151 April 2009 the E&T department took over entire affairs of motor vehicle related matters as per Motor Vehicle Ordinance, 1965, in Gilgit- Baltistan.
5. The Excise & Taxation is a provincial subject in all provinces of Pakistan and the departments functioning under the Provincial Governments are part and parcel of the respective provincial setup. On the same analogy the Excise & Taxation Department was established in Gilgit-Baltistan to manage, collect and explore new avenues of revenues for the provincial Government. Some groups of people, in Gilgit-Baltistan, mix this up with the Central Excise Act, which was once extended to the then Northern Areas and later on was withdrawn by the Federal Government. The Excise & Taxation Department Gilgit-Baltistan has no connection with the Central/Federal Excise neither it has the mandate or competency to manage or collect any federal taxes in the province.
Its mandate is limited to collection and management of provincial taxes levied competently by the Gilgit-Baltistan Provincial Assembly. Under the new provincial setup of Gilgit-Baltistan the Excise and Taxation is the only department to inject financial resources for any future local budgeting by the provincial Government. Hence, the Excise & Taxation Department is as essential and legal as any other provincial department working under the provincial Government of Gilgit-Baltistan.
JUSTIFICATION FOR NCP INDEXATION:
6. It is clarified that the Excise and Taxation Department neither enjoys the authority nor perusing to register the Non-Custom Paid Vehicles. The Excise and Taxation Department is only maintaining a record of such vehicles till any clear directives to deal with such vehicles as Section 23 of MVO 1965 provides that.....no vehicles shall be allowed to be driven unless a vehicle carries a registration mark displayed in the prescribed manner. These vehicles, on the other hand, cannot be allotted registration mark "in the prescribed manner" neither can be left unidentified keeping in view the present fragile security situation of the region in general and the city in particular.
Presently, there is no clear policy to deal with NCP vehicles, it is why the E&T Department has been printing a DISCLAIMER on the temporary indexation documents being issued to the acclaimed owners, which reads; (copy attached vide flag L)
'THIS DOCUMENT BEARS NO LEGAL. VALUE. IT IS ISSUED ONLY FOR MAINTENANCE OF RECORD, INDEXATION AND IDENTIFICATION OF OWNERSHIP OF NCP VEHICLES. ITS VALIDITY IS LIMITED TO THE DECISION BY THE CBR AND THE GOP REGARDING THE LEGAL STATUS OF TH NCP VEHICLES.'
7. This disclaimer was properly vetted by the Law Department and approved by the Chief Secretary in a meeting held under his chairmanship vide minutes of meeting held on 7th Feb. 2009 at Flag F.
8. Gilgit-Baltistan had become a safe haven for Non-Custom Paid/Illegal/Stolen vehicles much to the embarrassm ent of those who are in possession of genuine and registered vehicles and are paying revenue to the Government. The local administration and law enforcing agencies of GB seemed devoid of a policy for dealing with the problem mainly due to the peculiar constitutional status of the region. The smuggled vehicles usually brought from Khyber Pakhtun Khwa (KPK) via Kohistan district and from Chitral via Shandoor Pal- Presently more that 10,000 identities less NCP vehicles are plying in Gilgit-Baltistan which are prone to be used by criminals to disturb the law and order situation of the region. Lack of legal ownership documents is also creating problems for the local administration. These vehicles consume more of the POL quota of the Gilgit-Baltistan, use roads more than the registered vehicles do and pollute the environment, but in return these contribute nothing as revenue. In the past years GB administration confiscated all such vehicles but later on released allowed by the Home Secretary vide office order No, SOH-15/202(CNP) dated 24th April 2003 (F/G). In compliance of Court orders. ;The Prime Minister Secretariat took serious notice of this via KANA division Letter F. No,7-10/2003- NA.III dated 3rd May 2006 (F/F) and asked immediate inquiry in this regard.
9. An inquiry committee was then constituted comprising Secretary Finance, Secretary P&D and Secretary. Home and Law Northern Areas who not only endorsed the decision of releasing and allowing NCP vehicles in NAs on the basis of its constitutional status but also recommended to allot temporary NCP numbers to counter any unlawful activity carried out on such vehicles. The findings of the committee (Flag/ H and Flag I) then sent to KANA and after a long correspondence Excise and Taxation Department came into existence. But the basin for which the NCP vehicle were then allowed persists even after establishment of this department that is 'PECULIAR CONSTITUTIONAL STATUS OF THE REGION'. The Excise and Taxation Department is not in a position to change the legal status, however, it is endeavoring hard to deliver best under the prevailing situation. The Excise and Taxation Department is only following the decisions taken by the Administration in this regard Prior to establishment of E&T two important meetings held in this regard to frame a policy on NCP vehicles.
1. A meeting under the chairmanship of the Chief Secretary was held (Minute's of the Meeting attached vide Flag .1) on 12th October 2006. 'It was decided in the meeting that police department win collect the data of NCP vehicles from all districts of Gilgit-Baltistan and they will be renumbered. in their respective Police Station for record purpose only. It was also decided that CBR will be contacted if there is any special package in the pipe line for NCP vehicles plying in GB.
Besides this, it was also decided to conduct raid on lifted/stolen vehicles, thereafter.
2. On 27th October 2007 another meeting (minutes attached vide flag K) was held under the Chairmanship of Home Secretary wherein the following recommendations were given:-- Indexation of NCP vehicles Fee Charge Indexation Number plate indexation 11.It was also decided that once indexation process: is completed possibility of banning trade of un-indexed vehicles will also be examined to declare import of such vehicles into the then NAs illegally and a cut out date be given, and also decided that after expiry of cut out date operation would be launched. Moreover with a proper record maintained, a case thereby will be taken up with 'customs authorities. The Centra1 Board of Revenue (CBR) had already exhorted the GB administration that they may be well prepared to give one time amnesty to the NCP vehicles on two conditions; firstly, entrance of such vehicles is totally forbidden, and secondly, it is also ensured that the total benefits goes to the people of GB.
12.Meanwhile, Excise and Taxation Department came in to being and all the MVR record was shifted from Police Department to district E&T offices, gradually. The Excise Department re- numbered all such vehicles keeping in view certain flaws in the record maintained by the Police.
The indexation policy was not properly implemented, therefore, people used to display numbers of their own choices. Influential individuals started displaying green numbers plates.-Members of Legislative Assembly and GB Council are still displaying numbers of their respective constituencies with green background. The E&T devised an up-to date system for regional management of NCP vehicles keeping in view any future consumption of the record (sample attached vide F/L). The main purpose of this record maintenance was to scrutinize and to differentiate between NCP and stolen vehicles and to identify in case of an incident/accident. They are always susceptible to create law and order situation on the one hand and cannot be accounted for violations of traffic rules due to their peculiar status, on the other hand. The E&T department has so far indexed nearly 6000 NCP vehicles in all districts of GB.
13.Till any decision, clear directives regarding the disposal of NCP vehicles the Excise and Taxation Department proposes a nominal fee on NCP vehicles, for various reasons. The NCP vehicle's have been foaming on the roads, consume more POL quota of Gilgit-Baltistan for which the Government is paying subsidy, use Government roads infrastructure more that the registered vehicles do and pollute environment but contribute nothing to the Government exchequer. The NCP vehicles also advance unhealthy competition in public transport and carriage business, as the NCP vehicles are very low in cost as compared to custom paid transport vehicles. Additionally, there is no registration fee, no token renewal fee, and no route permits prescribed for these vehicles. Besides, for violation of traffic rules these vehicles even can not be fined as they possess no documents thus doing business without any responsibility to the State. Resultantly, their owners enjoy low costs of doing transport business as compared to the owners of registered transport companies thus goading the owners of legal transporters to switch over to NCP vehicles. Unfortunately, the system itself is inducing the legal vehicles owners to shift to NCP vehicles. This trend further augments the NCP vehicle business.
14.Till any decision, clear directives regarding the disposal of NCP vehicles the Excise and Taxation Department proposes a legalized mechanism to index such vehicles so as to document the particulars of the vehicles for ascertainment of its status and ownership and to make it contribute some revenues to the public exchequer. The NCP vehicle owners would be bound to get the vehicles indexed with Excise and Taxation Department and pay a reasonable fee as cost of documentation. The will further be bound to get their vehicles tested for fitness on yearly basis and pay some fee for fitness certificates. The vehicles would be indexed after thorough examination and acquiring NOC from central data of CPLC or Anti Car Lifting cells of down country. In this way these vehicles would not only have a temporary identity documents but would also get fined on violation of traffic rules. Commercially operating vehicle would be issued with route permits to bring their cost of business closer with legally operating vehicles. The fee so collected will be deposited into Government treasury, directly.
15.The main aspects of this legislation based indexation would be (a) a provincially devised temporary legal cover for NCP vehicles within the jurisdiction of GB, (b) a eradication of stolen vehicles business (c) revenue generation and, most importantly, (d) in future a case could be taken up with the Federal Government for temporary permission of our indexed vehicles to down country under carnet-d-passage/Temporary Importation of Motor Vehicle Rule, 1979 under Section 219 of Customs Act, 1969 (IV of 1969) if the Gilgit-Baltistan region is considered beyond the constitutional jurisdiction of Pakistan. 16.The GB Legislative Assembly is empowered to legislate on imposition of taxes on vehicles under Fourth Schedule (38) read with Article 47(2)(b) of GB Empowerment and Self-Governance Order, 2009. The imposition of local taxes/cess on NCP vehicles will create no legal complication as this documentation 'fee, fitness and processing fee do not fall under any category of federal taxation. Furthermore, Section 41 of Motor Vehicle Ordinance, 1965 provides for "devising special rules and procedures for registration of any class, or type or category of motor vehicles, or motor vehicle belonging to a specified class of persons. The Government may also appoint special registration for such motor vehicles'.
17.As regards stolen vehicles this indexation process would clearly separate the stolen/snatched vehicles which could then easily be impounded. A special legislation for disposal of stolen vehicles is also required on the lines of KPK province. In past various stolen vehicles were confiscated in Gilgit-Baltistan but later on the acclaimed owners got released them on superdari from Court and now such vehicles are being used under legal cover. This is a discouraging factor for the anti-car lifting, agencies as these vehicles do possess fake documents and their verification from the issuing authorities is a long and hectic process. The acclaimed owners take advantage of this delay and get their vehicles released from Courts.
Submitted for perusal and consideration please."
4.In continuation of proceedings the order was passed on 08- 11-2010 as under:--
1. ........
2. ........
3. ........
4. The Secretary Law, Acting IGP, Deputy Director Excise and Taxation and Official of Custom Department having appeared before the Court have explained the position as under.
5. Mr. Hafiz-ur-Rehman Secretary Law and Prosecution Department Government of Gilgit-Baltistan has stated that the illegal import of non-custom paid vehicles in Gilgit-Baltistan is a federal subject under the control of Federal Board of Revenue Islamabad and Excise and Taxation Department of Government of Gilgit-Baltistan for the purpose of maintaining the record of these vehicles for allied reason register NCP vehicles with the temporary numbers without charge of registration fee etc. and that Government of Gilgit-Baltistan having no domain or control over the affairs of Custom Department has no mechanism to stop the smuggling of Non-Custom Paid vehicles in Gilgit-Baltistan. The Law Secretary, however conceded that the Home Department of Government of Gilgit-Baltistan through Police being responsible to maintain law and order situation can certainly prevent the entry of stolen and unregistered vehicles in Gilgit-Baltistan and it is the duty of Inspector General of Police to establish Police Check Posts at all entry points to stop illegal entry of stolen and unregistered vehicles in Gilgit-Baltistan. He added that a proper policy is also required to be framed in respect of NCP vehicles already registered with Excise and Taxation Department Gilgit-Baltistan.
6. It is stated that NCP Vehicles are also in the official use of Government Departments and officials Agencies in Gilgit-Baltistan and despite the open smuggling of these vehicles in terms of Section 2 of Customs Act, 1969, the Custom Department has not taken any step to stopped the smuggling of NCP Vehicles.
7. The learned Advocate General has pointed out that NCP vehicles are hired by the Government Departments on contract by calling tenders without any distinction of Custom Paid or Non-Custom Paid vehicles, but factually non-custom paid vehicles are engaged by the Official Agencies, and Government Departments in an unauthorized manner and that this unlawful engagement of NCP vehicles for official use apart from extra burden on the exchequer has also increased the crime rate in the region and has encouraged theft of vehicle.
8. The Secretary Law and Advocate General Gilgit-Baltistan having conceded the illegal status of NCP Vehicles in Gilgit-Baltistan have stated that without strict application of Customs Act, 1969, this is difficult. to stop the illegal import of NCP vehicles in Gilgit-Baltistan.
9. Deputy Director Excise and Taxation Department of Gilgit- Baltistan in pursuance of the order dated 4.11.2010 passed by this Court has submitted written reply, wherein it is stated that the record of non-custom paid vehicles with temporary numbers is maintained only for allied purposes to trace out the owner, if the vehicle is found involved in a Crime or is misused in any other manner and that the indexation of NCP vehicles was started in the light of decision taken by a committee headed by Home Secretary, Government of Northern Areas on 02.11.2007, wherein it was decided as under: - It was recommended that all the Non-Custom Paid (NCP) vehicles in NAs may be indexed for the purpose of maintenance of record and date. It was further recommended that the Superintendent of Police of the concerned district (according to the address of the owner of vehicle) should be made overall responsible for indexation of NCP vehicles, however, Tehsildar (LR) or any Magistrate designed by the Deputy Commissioner will represent the D.0 officer in the Process. It was also recommended that the indexation may be carried out in the entire NAs simultaneously, on production of NCP papers and an affidavit by the owner of the vehicle to the effect that the vehicle is no stolen nor required from any criminal cases in any Court of law. The officer of the Superintendent of Police will open a new indexation branch/Cell with a representative of the Depu8ty Commissioner office sitting in the Cell. The SSP Gilgit will propose and submit indexation papers/documents format for approval.' This committee also decided that trade on unindexed NCP vehicles would be declared illegal.
10. The excuse for temporary registration of NCP vehicle is not plausible and continuation of this practice would amount to grant licence for illegal entry of non-custom paid/unregistered and stolen vehicles in Gilgit-Baltistan.
1. Apparently, the Custom Department and official agencies alongwith the various Departments of Government of Gilgit-Baltistan are impliedly party of the illegal business of import, of NCP vehicles in Gilgit-Baltistan and evasion of Government taxes, therefore, the practice of Registration of NCP Vehicles by the Excise & Taxation Department of Government of Gilgit-Baltistan with temporary Nos, without payment of token tax or registration fee etc and officials use of these vehicles in any manner being not justifiable in Law, would amount to give legal cover to illegal business and unauthorized import of NCP Vehicles in Gilgit-Baltistan. Consequently, we hold that Excise & Taxation Department Gilgit-Baltistan has no authority under the law to maintain official record of NCP Vehicles and issue temporary numbers to these vehicles. Instead it is the duty of Custom Department, Government of Pakistan and Police Department, Government of Gilgit-Baltistan to prevent the illegal entry of non-custom paid and un-registered stolen vehicles in Gilgit-Baltistan.
12.The acting IGP Gilgit-Baltistan present in Court has given assurance, that the order of this Court along with the instructions of Government on the subject will be implemented in letter and spirit and with the approval of competent authority, Police Check Posts on all entry points shall be immediately established to stop the illegal and unauthorized entry of stolen and unregistered vehicles in Gilgit-Baltistan.
13.Mr. Ehsan Ali a local Advocate at this stage submitted that levy of Custom duty is not function of the Provincial Government of Gilgit-Baltistan, therefore, problem of illegal entry of NCP vehicles will not be solved without the intervention of Federal Government. Mr. Shahbaz Khan, another local Advocate has submitted that the revenue, if any, to be collected on NCP Vehicles already registered with Excise & Taxation Department, is right of Government of Gilgit-Baltistan.
14.The issue before the Court relates to the illegal entry of stolen and unregistered vehicles (NCP) in Gilgit-Baltistan and not levy of sales tax or custom duty or any other tax and all these matters being related to policy decision can be taken up with the appropriate Government at proper stage.
15.The Deputy Superintend and Inspector of Custom Department have not been able to explain the Policy of Custom Department of not placing restriction on import of Non-Custom Paid vehicles in Gilgit-Baltistan. Whereas Deputy Collector Custom has sent a written request for time to seek instruction on the policy of department in respect of illegal import of Non-Custom Paid vehicles in Gilgit-Baltistan. This is a matter of national importance, and, Federal Board of Revenue, may submit comments and also depute a senior officer well conversant with the matter to assist the Court.
16.The Customs Act, 1969 is certainly applicable in Gilgit- Baltistan and unless as an exemption in the Custom Duty etc is given by the Federal Government on import of vehicles in GilgitBaltistan, the entry of Non-Custom Paid vehicles in Gilgit-Baltistan is smuggling of vehicles in this area in terms of Section 2(s) of the Customs Act, 1969. The smuggling within the meaning of this Section is nothing but importation or exportation of goods secretly without payment of Custom Duty, therefore, no exception can be taken by the Custom Department to the illegal import of NCP vehicles in Gilgit-Baltistan. This is legal and constitutional obligation of FBR to take necessary measures to prevent the smuggling of NCP vehicles in Gilgit-Baltistan by establishing the Custom Check posts on entry points of KKH and Chitral roads leading to Gilgit-Baltistan. The FBR, if consider necessary, may also entrust the function of Custom Officers under Section 6 of Customs Act, 1969, to Police Department of Gilgit-Baltistan by designation for assistance of Custom Department.
17.Gilgit-Baltistan is under the administrative control of Federal Government of Pakistan with provincial setup under Gilgit-Baltistan (Empowerment Self Governance) Order, 2009 and people of GilgitBaltistan by virtue of Citizenship Act, 1951 are Citizens of Pakistan and laws of Pakistan have overriding effect on the laws of Government of Gilgit-Baltistan in terms of Article 95 of GilgitBaltistan (Empowerment and Self Governance) Order, 2009. Consequently, unless the application of a Federal Law is specifically excluded from operation in Gilgit-Baltistan no departure can be made to the federal laws and the Customs Act, 1969 would be applicable in Gilgit-Baltistan without any distinction. This is not understandable that for what reason the Custom Department except China Border has not bothered to operate in remaining part of Gilgit-Baltistan and failure of Custom Department not to control the illegal entry of Non-Custom Paid vehicles in Gilgit-Baltistan would amount implied permission of smuggling of these vehicles in this area at the cost of evasion of Custom Duty. The regular import of NCP or stolen vehicles in Gilgit-Baltistan without intervention of Custom Department and other official agencies may result in serious crimes and terrorism and also create a situation of lawlessness in the region.
18.In consequence to the foregoing discussion, and the legal position of the matter, we may direct as under:-- a. The Chief Secretary, Government of Gilgit-Baltistan will take necessary steps for legislation by the appropriate forum in the Federal Government for regularization of non-custom paid vehicles which have already been registered with temporary numbers by the Excise and Taxation Department Gilgit-Baltistan b. The Excise & Taxation Department Gilgit-Baltistan while exercising power under Motor Vehicle Ordinance, 1965 (without amendment made by the provinces) shall not allot temporary registration number to any NCP Vehicle or any other vehicle which is not already registered in any Province of Pakistan or Islamabad Capital Territory. c. All Departments of Government of Gilgit-Baltistan and Official Agencies will stop official engagements of Non-Custom Paid vehicles, and in future, will not enter into hire/purchase agreement of such vehicles. d. The finance department of Government of Gilgit-Baltistan and AGPR will not allow payments on such contract of hire/purchase of NCP vehicles, except the payments on existing contracts of hire/purchase during the current financial year. e. The FBR will regulate the custom law in proper manner in Gilgit-Baltistan, to control the illegal entry of unregistered/non-custom paid vehicles and may if consider necessary, entrust the power of Custom Officer to the Police Department for the assistance and co-operation of Custom Department. f. The Chief Secretary Gilgit-Baltistan will 'take up the matter with the Chairman of FBR for regularization of NCP vehicles and allied matters and also to stop the illegal entry of NCP vehicles in Gilgit-Baltistan. g. The Chairman FBR may direct for physical verification and checkup of NCP vehicles on the basis of record of Excise and Taxation Department of Government of Gilgit-Baltistan and finalize the matter within three months, with direction to the concerned Collectorate of Custom to establish the Custom Check posts at all entry points. to regulate the checking of NCP vehicles in Gilgit-Baltistan with the help of local Police and Excise and Taxation Department, Government of Gilgit-Baltistan.
19. Subject to all just exceptions, the Chief Secretary, Government of Gilgit-Baltistan in compliance of this order may issue necessary instructions to the Concerned Departments for the appropriate action in accordance with law. The matter shall be re-listed for further proceedings after winter vacation.
5. In consequence to the direction of this Court the Chief Secretary Gilgit-Baltistan issued instruction to the Home and Excise and Taxation Departments of Government of Gilgit-Baltistan for appropriate action to prevent illegal entry of NCP Vehicles into the territory of GilgitBaltistan and also taking up the matter regarding framing of a regular policy in respect of NCP Vehicles with the Collectorate of Custom Islamabad. The compliance reports were accordingly submitted by the concerned authorities and in, the light thereof, the Order was passed on 14/03/2011 as under: - "Learned Advocate General has submitted that with reference to the letter addressed to the Chief Secretary by the Collectorate of custom Islamabad, the collector custom has taken necessary steps for regularization of NCP Vehicles already indexed with Excise and Taxation Department, Government of GilgitBaltistan by 8th November 2010 and matter is under consideration with the concerned authorities in Federal Board of Revenue, therefore, reasonable time is required to complete the process. The learned Advocate General also informed the Court that after 8th November 2011 no NCP Vehicles has been index by the Excise and Taxation Department of Gilgit- Baltistan and that the official engagement of these vehicles is also been stopped under the directive issued by the Chief Secretary except the vehicles which have already been engaged on the basis of hire purchase contract during the current financial year interims of direction No, 6 of the order dated 8-11-2010 of this Court. He has also stated that Collectorate of Customs Islamabad has informed that, proposal is under active consideration for the establishment of Custom Check post at entry points at Basha, Babusar and Term Shandoor whereas the DIG police Mr. Muhammad Ali Khan informed that check post of police has been established on the above points. However the DIG has explained that on each posts the police contingents under the supervision of an A.S.I has been deputed and that no vehicles is allowed to inter in to the territory of Gilgit-Baltistan from these points. The learned Advocate General has also explained that NCP Vehicles already index with Excise and Taxation Department are of total No, 9555, the list of which has already been provided to Excise Department for further necessary action in compliance with the order of this Court. The steps taken by the Government of Gilgit-Baltistan and the Chief Secretary for the implementation of the order of this Court are satisfactory and the action regarding establishment of police check post at entry points is also steps towards the prevention of entry of NCP vehicles into the territory of Gilgit-Baltistan. The Excise Department also has complied with the orders of this Court but the process for regularization of NCP vehicles already index and further policy for the import of the vehicles into the territory of Gilgit-Baltistan and the decision regarding ratio of duty to the paid on such vehicles has shown no progress.
The question relating to the policy regarding charge of duty on the import of the vehicles is matter which is to be decided by the competent authority in the Federal Government and after the decision of the same the Federal Board of Revenue should take necessary steps for its finalization within the shortest possible time. The matter relating to the implementation of the order of this Court with respect to the Customs Act, 1969 and the existing law already applicable in Gilgit- Baltistan there is no need of any approval by any other authority in the Federal Government or in the Government of Gilgit-Baltistan. The Custom Department (the collectorate of Custom Islamabad) is already operating in the area under Customs Act, 1969 and superintendent of Custom is already functioning. Deputy Collectorate office is also in existence in Sost at China Boarder, therefore, there is no justification in delaying the establishment of Custom check posts at Basha, Babusar and Terru Shandoor which are the entry points of smuggled vehicles in the territory of Gilgit-Baltistan the Collector Custom, Collectorate of Custom Islamabad is directed to take necessary steps for establishment of posts at the above points by 30th March 2011. The I.G. Gilgit- Baltistan will insured that at police check post no officer below the rank of Inspector is posted and instead of placing bearers on the road proper check post should be established. The I.G. may insure that no case of smuggled vehicles or attempt to smuggled vehicles in to the territory of Gilgit-Baltistan is left unregistered by the concerned police and the check posts. It is responsibility of the police to register the case and handover the matter to the Custom Department for further action accordance with law.
The matter relating to the subsidy on Custom Duty, on the import of vehicles in Gilgit-Baltistan in view of special character of the area and the regularization of vehicles already index with Excise and Taxation Department should be finalized by the concerned authorities in the Federal Government within three weeks. The order of this Court may be sent to the chairman Federal Board of Revenue for necessary action and compliance before the next date. The case is accordingly adjourned to 2nd week of April, 2011.
The D.I.G present in Court will supply list of smuggled vehicles deducted by the concerned police at the check post after 8th November 2010. This is an important matter relating to the benefit of Government of Gilgit-Baltistan as well as Federal Government and also the rights of public in general, therefore, we direct that on the next date Collector Custom, Collectorate of Custom Islamabad either should appear in person or depute responsible officer who is well conversant with the matter and should be represented in the proper manner. The Attorney General for Pakistan shall depute a deputy Attorney General for Pakistan to assist the Court after seeking instruction from the Federal Board of Revenue and concerned quarters in the Federal Government."
6. The Collector, Model Custom Collectorate, Government of Pakistan, Islamabad in pursuance of the order of this Court sent a reference to Member Custom, Federal Board of Revenue, Islamabad vide letter dated 29-03-2011 as under: - "GOVERNMENT OF PAKISTAN MODEL CUSTOM COLLECTORATE 24, G-9/11, ISLAMABAD C. No, V Cus CDGINCP/2010/3050 Dated: 29- 03-2011 The Member (Customs), Federal Board of Revenue, Islamabad.
Subject: SUPREME APPELLATE COURT GILGIT-BALTISTAN'S ORDER NO. SMC 11/2010 REGARDING NON- CUSTOMS PAID VEHICLES PLYING IN GILGIT-BALTISTAN.
Kind attention is drawn towards this Collectorate's earlier No, V-CUS CDG/NCP/26/2010/2142 dated 03-03-2011 on the subject cited above (Annex-A)
2. In its earlier communication referred to above the Collectorate had apprised the Board about the Supreme Appellate Court's subject order and had suggested both short and long term measures to comply with the honourable Court's directions. The Court held a hearing on the 14th of March 2011 in the subject Suo Motto Case and has passed further instructions vide an order dated 14.03.2011 (copy enclosed as Annexure-B). Briefly, the proceedings and the orders of the Court are as under:-- a. During the hearing on the 14th of March, the Collectorate informed the Court of the actions already taken in pursuance of the Court's subject order. Briefly those are: i. Retrieval of record form the ETO Office Gilgit. ii. Liaison and meeting held with the Chief Secretary of Gilgit-Baltistan to agree upon the actions required to be taken by the administrative of Gilgit-Baltistan, the Collectorate and the Federal Board of Revenue. iii. Request to the Board, encompassing both short and long term measure, for sanctioning of posts and budget enabling this Collectorate to effectively implement the Customs Act in the province of GilgitBaltistan. b. The DIG Police (Gilgit-Baltistan), Mr. Muhammad Ali Khan during the hearing informed the Court that police check posts had already been established at the entry points to the province namely, Basha, Babusar and Shandoor the Collectorate had also suggested creation of Customs Check posts at the same places vide its letter dated 03-03-2011. c. The Court now vide its order dated 14-03-2011 has directed the Chief Secretary Gilgit-Baltistan to directly 'take up the matter of regularization of NCP vehicles with the Chairman FBR'. The Court has also taken a serious view of the non-operation of the Collectorate in Gilgit-Baltistan or prevention of illegal entry of NCP vehicle and has observed that this inaction poses a serious threat to the law and order situation of the province. d. The Court has ordered that compliance report of its orders may be submitted by 30th of March and the next date of hearing in the instant case has been fixed for the 6th April, 2011.
3. In view of the above and in continuation of its earlier letter the Collectorate requests that the Board may approve establishment of there Customs check posts at locations mentioned at para 8(iii) of the Collectorate's letter dated 03-03-2011. At the same time the collectorate may also be provided with the necessary budget to operationalize these check posts. In the interim period the Collectorate intends to post its existing staff of he locations and would seek logistics support from the Chief Secretary Gilgit--Baltistan's Office in order to comply with the Court's directions. FBR is also requested to contemplate approving both the short and long term measures suggested by this Collectorate vide letter dated 03.03.2011.
Encl. (as above) (IMTIAZ AHMED KHAN) COLLECTOR PH; 051-9106029"
7. In consequence to the direction of this Court FBR Islamabad deputed Mr. Imtiaz Ahmed Khan Collector Custom to appear before the Court as representative of FBR and he having produced the copy of the letter referred above, informed the Court that Custom officials have been deputed at entry points of check posts Basari (KM) NIAF Babusar and Shandur Ghizer to prevent the illegal import of NCP vehicles in Gilgit-Baltistan. The steps taken by the collector of custom Islamabad as explained by him in the Court and mentioned in the letter referred above for prevention of illegal import of Non-Custom paid vehicles into Gilgit-Baltistan are quite satisfactory and appreciateable.
The similar arrangements has been made by the IG Police, Gilgit-Baltistan to check the illegal entry of NCP Vehicles into Gilgit-Baltistan.
8. The Collector Customs has submitted that in the past due to certain administrative reason and financial problem, the Custom Act, 1969 could not be effectively enforced in Gilgit-Baltistan to prevent the illegal entry of NCP Vehicles in Gilgit-Baltistan from Khyber Pakhtun Khwa but now the Federal Board of Revenue in pursuance of the Order of this Court taking serious notice of the matter has issued instructions to the Custom Department for enforcement of Custom Act, 1969 in letter and spirit in Gilgit-Baltistan and in compliance thereto, the necessary arrangement has been made to stop the entry of unpaid Custom Duty Vehicles into Gilgit-Baltistan.
9. The Collector Custom has added that the regularization of NCP vehicles already indexed with Excise and Taxation Department Government of Gilgit-Baltistan and concession in payment of Custom Duty on import of used/reconditioned vehicles by the bona fide resident of Gilgit-Baltistan and by the Civil and Military Government officials posted from down country in Gilgit-Baltistan, is a matter relating to policy decision by the Federal Government. and FBR is not final authority to give approval of concession in custom duty rather the Federal Government on the recommendation of FBR may approve the policy of concessional duty and as per his instruction, the matter in respect of concession in Custom Duty for lawful import of vehicles into Gilgit-Baltistan and regularization of NCP vehicles already brought into Gilgit-Baltistan consideration with FBR, Islamabad.
10.The learned Deputy Attorney General acknowledging the position explained by the Collector Custom has submitted that the Order of this Court in the matter will be given effect in letter and spirit and that in view of the peculiar circumstances of Gilgit-Baltistan, Federal Government principally may have no objection to the grant of concession in payment of custom duty on import of used vehicle by bona fide resident of GilgitBaltistan and Civil and Military Government officials posted from down country to stop the smuggling/import of non custom paid vehicles into Gilgit- Baltistan from Khyber Pakhtunkhwa. The Collector Custom and Deputy Attorney General have submitted that non custom paid vehicle is a smuggled vehicle in terms of definition of "smuggling" under Section 2(s) of Customs Act, 1969 and cannot be registered under Motor Vehicles Ordinance, 1965. It is conceded by the Collectors Customs and Deputy Attorney General that since Customs Act, 1969 by all means is applicable in Gilgit-Baltistan and Custom Department is also operating at Such on China Border, therefore, no exception would be taken in payment of Custom Duty on NCP Vehicles brought into Gilgit-Baltistan from Khyber Pakhtun Khwa.
11.The Learned Advocate General Gilgit-Baltistan has . submitted that before enforcement of Gilgit- Baltistan (Empowerment and Self Governance) Order, 2009 the laws of Pakistan were being made applicable in Gilgit-Baltistan by issue of the notification by the Federal Government of Pakistan and after enforcement of Gilgit-Baltistan (Empowerment and Self Governance) Order, 2009, the position has been changed and laws of Pakistan can be made applicable in Gilgit-Baltistan with the approval Council of Gilgit-Baltistan.
12.Mr. Amjad Hussain an advocate and member Council of Gilgit-Baltistan with permission has addressed the Court in representative capacity and submitted that no doubt the matter relating to the regularization of NCP vehicles and permission to import the vehicles into Gilgit-Baltistan on payment of concessional Custom Duty is a policy decision within the compass of Federal Government of Pakistan but according to the distribution formula of federal revenue to be collected from Gilgit-Baltistan settled between Government of Pakistan and the Council of Gilgit- Baltistan, 80% of the duty/taxes collected by Federal Government from territory of Gilgit-Baltistan would go to the consolidated fund of the Council and 20% to the Federal Government but this formula is not being followed. as a result of which Council of Gilgit-Baltistan is not getting its share in the revenue collected as federal taxes on import and export under the trade policy of Federal Government, therefore, a direction may be given for payment of the share of the Council of Gilgit- Baltistan in revenue to be collected by the Federal Government from Gilgit-Baltistan.
13.The question involved in the present petition relates to the illegal import of NCP Vehicles in Gilgit- Baltistan from Khyber Pakhtunkhwa and regularization of such vehicles on payment of concessional Custom duty and also framing of a policy concession in Custom Duty for import of vehicles in lawful manner instead of illegal import/smuggling of the vehicles. The matter in respect of the distribution of the revenue to be collected by Federal Agencies as federal taxes from the territory of Gilgit-Baltistan is concerned with Counsel of Gilgit-Baltistan and Mr. Amjad Husain who is Member of the Counsel if so desire may raise this issue before the Council which is the proper forum and holds authority to take up the matter with Federal Government as the Prime Minister of Pakistan is also Chairman of the Council of Gilgit-Baltistan which is the controlling authority of the affairs of Gilgit-Baltistan. This Court is not supposed to dilute upon the function of Council or interfere in the affairs of Council and Legislative Assembly of Gilgit-Baltistan rather this Court in exercise of the power of judicial ,review as final abiter in judicial matters of Gilgit-Baltistan may interpret Gilgit-Baltistan (Empowerment and Self Governance) Order, 2009 or any other law of Gilgit-Baltistan or laws of Pakistan as are applied in Gilgit-Baltistan. 14.The answer to the question relating to the application of the laws of Pakistan in Gilgit-Baltistan without express consent of Council of Gilgit-Baltistan raised by the learned Advocate General has been given in the Judgment of this Court in the case titled All Gilgit-Baltistan Workers vs. Federation of Pakistan reported as 2010 GBLR 01 wherein it has been held as under: "The IR Act, 2008 has been extended to the hole of Pakistan and in plain meanings it would also be applicable to the Northern Areas, notwithstanding the fact that Northern Areas as such constitutionally is not included in territory of Pakistan by virtue of Article 1 of Constitution of Pakistan but factually it is an integral part of the Federation of Pakistan for all practical purposes and is directly governed by the Federal Government of Pakistan therefore, it can safely be said that Northern Areas is defacto territory of Pakistan and laws of Pakistan may not ipso facto be applicable but the Government of Pakistan is obliged either to extend the federal laws beneficial to the Northern Areas by issuing a formal notification or enact the law for public welfare and interest.
Article 95 of Gilgit-Baltistan (Empowerment and Self Governance) Order, ' 2009 provides as under:
95. Order to override other laws, etc.--(1) The provision of this Order shall have effect notwithstanding anything contained in the provisions of any law for the time being in force except that in case of conflict between the laws of Pakistan and the laws framed under this Order, the laws of Pakistan shall prevail. (2) No Court, including the Gilgit-Baltistan Supreme Appellate Court and the Gilgit-Baltistan Chief Court, shall call into question or permit to be called into question, the validity of this Order or an Act to amend it.
15.The plain reading of this article would show that the laws of Pakistan without express exclusion from operation in the territory of Gilgit-Baltistan by the competent authority, are applicable in Gilgit-Baltistan by implication. The territory of Gilgit-Baltistan is not directly governed by the Constitution of Pakistan rather it being impliedly part of territory of Pakistan by virtue of Article 1 (2)
(d) of the Constitution of Pakistan is being governed by the Legal Framework Order, Gilgit-Baltistan (Empowerment and Self Governance) Order, 2009, deemed to have been issued under Article 258 of the Constitution of Pakistan and consequently, unless a specific law of Pakistan is not expressly excluded from operation in Gilgit-Baltistan by the Council of Gilgit-Baltistan, the concept of general exclusion may not be correct.
16.Be that as it may, Gilgit-Baltistan (Empowerment and Self Governance) Order, 2009 is a legal framework Order for Gilgit-Baltistan and having the status of sub-constitutional document, governs the internal affairs of Gilgit-Baltistan. The laws of Pakistan may not override this fundamental law of the territory of Gilgit-Baltistan except in the matter which are specifically governed by the federal laws and are under direct control of Federal Government or in case of any conflict of governance order with laws of Pakistan, therefore, the administrative Orders, notifications and circulars etc issued by the Federal Government of Pakistan in connection with the affairs of Federal Government may not ipso facto applicable in Gilgit-Baltistan, unless are specifically made applicable to this special territory by the authority of Council of Gilgit-Baltistan.
The people of Gilgit-Baltistan by virtue of Pakistan Citizenship Act, 1951 are citizen of Pakistan and being citizen of Pakistan are entitled to hold the National Identity Card and Passport of Pakistan, and mere fact that a bona fide resident of Gilgit-Baltistan has been described as citizen of Gilgit- Baltistan in Article 2(n) of Gilgit-Baltistan (Empowerment and Self Governance) Order, 2009 for internal purposes would not change his status as citizen of Pakistan and also the territory of Gilgit- Baltistan would not acquire status of independent state rather it is sovereign part of Pakistan which is governed by a Legal Framework Order deemed to be issued under Article 258 of the Constitution of Pakistan in the same manner in which a province of Pakistan is governed by the Constitution of Pakistan.
17. In view of the legal status of the territory of Gilgit-Baltistan and of the people of Gilgit-Baltistan, the exemption from Federal Taxes in Gilgit-Baltistan is not automatic without express order of Federal Government and consequently the question relating to the extension of Customs Act, 1969 to the territory of Gilgit-Baltistan and implied exemption in payment of Custom Duty on the goods on which duty is chargeable under the Customs Act, 1969 is not debatable and we hold that by all means Customs Act, 1969 being applicable in Gilgit-Baltistan the Government of Pakistan may with appropriate modification and concession in Custom duty enforce the Customs Act, 1969 in this special territory of Gilgit-Baltistan without any distinction.
18. The expression smuggle has been defined under Section 2(s) of the Customs Act, 1969 as under: "smuggle" means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in force, or evading payment of customs-duties or taxes leviable thereon,-- (i)gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and psychotropic substances; or (ii)manufactures of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which, in each case, exceed [fifty thousand rupees] in value; or (iii)any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs-station.] and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly;"
19. Customs Area has been defined under Section 2 (i) of Customs Act, 1969:-- "Customs-area" means the limits of the Customs-station specified under Section 10 and includes any area in which imported goods or goods for export are ordinarily kept before clearance by the Custom Authorities;
20. Goods have been defined in clause (1) as under: - "goods" means all movable goods and includes- (i)conveyances, (ii)stores and materials, (iii)baggage, and (iv)currency and negotiable instruments;
21. Smuggling is nothing but importation or exportation of good secretly or clandestinely without payment of Custom duty and Clause (s) of Section 2 of the Customs Act, 1969 relates to the good specified therein and other goods notified by Federal Government. The goods which are not notified by Government of Pakistan or specified under Section 2(s) ibid would fall within the ambit of prohibited goods and the import of such goods is an offence of smuggling under Customs Act, 1969 with consequence of confiscation of goods in addition to any other penalty provided thereunder.
22. The Custom Duty chargeable under Customs Act, 1969 is a Tax in terms of Article 77 of the Constitution of Pakistan leviable under the authority or an Act of Parliament and importation of goods on which custom Duty is Chargeable without payment of Duty is smuggling .and smuggled goods are liable to confiscation under Customs Act, 1969. The territory of Gilgit-Baltistan is sovereign part of Pakistan and Customs Act, 1969 being applicable to this territory, the import of motor vehicles into Gilgit-Baltistan without payment of Custom Duty directly or indirectly is smuggling. The Custom Duty is leviabel under Section 18 of Customs Act, 1969 which provides as under:-
18. Goods dutiable.--(1) Except as hereinafter provided, customs duties shall be levied at such rates as are prescribed in the First Schedule or under any other law for the time being in force on,-- (a)goods imported into Pakistan; (b)goods brought from any foreign country to any customs station, and without payment of duty there, transshipped or transported for, or thence carried to, and imported at any other customs station; and (c)goods brought in bond from one customs station to another.
(2)No export duty shall be levied on the goods exported from Pakistan.
(3)The Federal Government may, by notification in the official Gazette, levy, subject to such conditions, limitations or restrictions as it may deem fit to impose, a regulatory duty on all or any of the goods imported or exported, as specified in the First Schedule at a rate not exceeding one hundred per cent of the value of such goods as determined under section 25 [or, as the case may be, section 25A].
(4)The regulatory duty levied under sub-section (3) shall -- (a)be in addition to any duty imposed under sub-section (1) or under any other law for the time being in force; and (b)be leviable on and from the day specified in the notification issued under that sub-section, notwithstanding the fact that the issue of the official Gazette in which such notification appears is published at any time after that day.
(5)The Federal Government may, by notification in the official Gazette, levy an additional customs-duty on such imported goods as are specified in the First Schedule, at a rate not exceeding thirty-five per cent of value of such goods as determined under section 25 or, as the case may be, section 25A: Provided that the cumulative incidence of customs-duties leviable under sub-sections (1), (3) and
(5) shall not exceed the rates agreed to by the Government of Pakistan under multilateral trade agreements.
(6)The additional customs-duty levied under sub-section (5) shall be,-- (a)in addition to any duty imposed under sub-sections (1) and (3) or under any other law for the time being in force; and (b)leviable on and from the day specified in the notification issued under that sub-section, notwithstanding the fact that the official Gazette in which such notification appears is published at any time after that day.
23. The Customs Act, 1969 is a taxing statute and Section 18 is the charging provision, whereas, Section 19 of this statute relates to the exemption in duty. The Custom duty has not been defined in Customs Act, 1969 and according to the dictionary meanings, Custom Duty is of the species of revenue which has been defined as tariff payable, subject matter of the duty. The Custom duty is leviable on goods imported in Pakistan or brought into Pakistan from foreign countries as specified in first and second schedule to the Customs Act, 1969 or under any other law for the time being in force. The Custom Duty under Section 18(1) is a statutory duty to be charged at the prescribed rates. Whereas regulatory duty is imposed under Sub Section (3) of said Section which is in addition to any duty levied under subsection (1) or any other law for the time being in force by a separate notification. The examination of the above provision of Customs Act, 1969 would show that unless the payment of Custom duty leviable under Section 18(1) and regulatory duty under Section 18(3) is specifically exempted under Section 19 of the Customs Act, 1969, the duty is chargeable on the goods. Section 19 ibid provides as under: - "19. General power to exempt from customs-duties.- (1) The Federal Government], subject to such conditions, limitations or restrictions, if any, as it thinks fit to impose, may, by notification in the official Gazette, exempt any goods imported into or exported from Pakistan or into or from any specified port or station or area therein, from the whole or any part of the customs-duties chargeable thereon and may remit fine, penalty, charge or any other amount recoverable under this Act:-- (1)[ OMITTED (2)A notification issued under sub-section (1) shall be effective from the day specified therein, notwithstanding the fact that the issue of the official Gazette in which such notification appears is published at any time after that day.
(3)Notwithstanding anything contained in any other law for the time being in force, including but not limited to the Protection of Economic Reforms, 1992 (XII of 1992), and notwithstanding any decision or judgment of any forum, authority or Court, no person shall, in the absence of a notification by the Federal Government published in the ,official Gazette expressly granting and affirming exemption from customs duty, be entitled to or have any right to any such exemption from or refund of customs duty on the basis of the doctrine of promissory estoppel or on account of any correspondence or admission or promise or commitment or concessionary order made or understanding given whether in writing or otherwise, by any Government department or authority."
24. The Federal Government in exercise of its power under Section 19 of Customs Act, 1969 read with enabling provision of Constitution and the law may grant exemption or give concession in payment of Custom Duty by way of a special Order/notification in respect of the specified goods or any other notified goods on such terms and condition as may be deemed proper and frame a policy/rules governing the concessions/exemptions. The territory of Gilgit-Baltistan is extensively a hard area where public transport is neither readily available nor it is reliable for convenient travelling. The PIA Flights from Islamabad to Gilgit/Skardu are usually not available due to bad weather and also are not affordable by common citizens belonging to middle class as well as Civil and Military officers posted in this area from down country. These lower income groups are facing genuine problem of travelling between Islamabad and Gilgit/Skardu and vise versa. The Government Departments, Institutions and Organizations due to the financial constraint also cannot afford heavy duty on import of vehicles for official use and engage private vehicles on hire purchase basis with heavy burden on exchequer. The special circumstances and peculiar situation of Gilgit-Baltistan would demand the Federal Government for exercise of power under Section 19 of Customs Act, 1969 in favour of grant of special concession in the Custom duty leviable under Section 18 of Customs Act, 1969 on the import of used vehicles in Gilgit- Baltistan. This special concession for Gilgit-Baltistan on one hand will close the door of illegal import of vehicles to this territory and on the other hand will reduce the financial burden of Government of Gilgit-Baltistan on engagement of private vehicles on hire purchase basis and will also be a source of Government revenue. The Federal Government of Pakistan may taking into consideration the circumstances leading to the evasion of Custom Duty in bulk and perpetuation of illegal practice of import of NCP vehicles in Gilgit-Baltistan may take effective step to stop this practice and may also extend a favour to the bone fide resident of Gilgit-Baltistan and civil and military officials posted from down country who belong to lower income groups for import of used vehicles on concessional custom duty for the personal use and also give this concession to the Government departments for import of vehicles for official use. This policy of concessional duty may also be extended to vehicles already brought into the territory of GilgitBaltistan and registered with Excise and Taxation Department to avoid any discrimination and complication.
25.The Collector Custom and learned Deputy Advocate General having conceded the legal position have submitted that to prevent the practice of bringing NCP Vehicles into the territory of Gilgit-Baltistan in violation of Customs Act, 1969, the framing of a policy for regularization of NCP Vehicles registered with Excise and Taxation Department, Government of Gilgit-Baltistan and import of the vehicles on payment of concessional duty will discourage the evasion of Custom Duty.
26.Gilgit-Baltistan is extremely hard and high mountainous area. The landslides on road are usual, and Jeeps are more convenient and successful for the travelling in this area. The special relaxation exemption or concession in Custom. Duty on the import of used/recondition Jeeps/Cars in this specified territory will certainly ensure safe and dependbale travelling on the roads in this hilly area and will also solve the transport problem. The import of old/used vehicles (Jeeps/Cars) into Gilgit-Baltistan on concessional duty shall be i special concession and a facility as of necessity of lower income groups including Civil and Military Officials and also the Departments of Government of Gilgit-Baltistan apart from Federal or Provincial Organizations and institutions.
27.In view of the special status and the attending circumstances of the area of Gilgit-Baltistan, the Federal Government may consider the approval of policy for import of used/reconditioned vehicles (Jeeps and Cars) in to the specified terirtory of Gilgit-Baltistan on concessional duty and notwithstanding the order dated 8.11.2010 or subsequent order if any, may also apply this policy for regularization of all NCP vehicles in Gilgit--Baltistan without any classification or distinction of registered or unregisterea NCP vehicles with Excise and Taxation Department Government of Gilgit-Baltistan. The regularization policy must ensure equal treatment to all in the light of principle of equality to avoid any discrimiantion, and we in modification of the order passed on 8.11.2010 or a subsequent order if any direct accordingly.
The Chairman FBR may initiate the process for firming of uniform policy/rules for regualrization of all NCP vehicles in Gilgit-Baltistan without any distinction and for import of used/reocnditioned Cars/Jeeps on the basis of concessional custom duty for approval of the Federal Government in exercise of power conferre dunder Section 19 of the Customs Act, 1969 readiwth Section 3(1) of the Import and Export (Control) Act, 1950 and import policy of the Federal Government for specified territory of GilgitBaltistan as a special case on basis of eligibility criteria as under:-- a) Bona fide resident of Gilgit-Baltistan; b) The Civil and Military officials/Government servant posted from down country in Gilgit-Baltistan for private use. c) The Government Department and official agencies/ institutions for official use.
The minimum period of posting of Civil and Military officials in Gilgit-Baltistan, not less than one year.
The maximum age for importation of used/reconditioned vehicles (Jeeps and Cars etc.) which is, beneficial to low income groups and Civil and Military officials in Gilgit-Baltistan.
28.The Chairman FBR may direct for completion of process of preparation of the policy in question on priority for final approval by the Government of Pakistan before the next annual budget.
29.In the light of direction given, conclusion drawn and recommendation made herein above, the proceedings in this matter stand concluded. The Copy of this order shall be sent to the Chairman FBR Islamabad and Chief Secretary Gilgit-Baltistan for implementation. The Collector Custom will inform the final decision of Government in the matter to the Registrar of this Court for four perusal in Chamber.