CH. MUHAMMAD SHABBIR GUJJAR, MEMBER (JUDICIAL).--- Through this judgment, I intend to dispose of the above mentioned appeal which has been preferred by the appellant departme nt against Order-in-Appeal No, 83/2018 dated 26.2.2018 passed by the learned Collector of Customs (Appeals), Lahore.
2. Briefly stated the facts, as reported, are that Messrs Mubarak Vision, Lahore, have imported a consignment comprised of "Ophthalmic Surgical Knives" and filed GD No, LFPI-1-IC-1471 1 dated 17.11.2017 under PCT heading 9018.5000 claiming exemption of Sales Tax under S. No,52-A of Sixth Schedule to the Sales Tax Act, 1990. The consignment was imported for further supply to M/s Al-Shifa Trust Eye Hospital, Rawalpindi. During the course of 100% physical examination by the Custom Examination Authorities, the description and other assessment related particulars have been confirmed/verified, as per declaration in the GDs. The Appraising Officer refused the claim of benefit of Sales Tax Exemption under S. No,52A of the Sixth Schedule to the Sales Tax Act, 1990 vide order dated 18.1 1.2017. The operative part of the same is as under:-- "Their claimed benefit of Sixth Schedule is not acceptable in the light of purchase order uploaded in the system.
Benefit is only available in case of donation or goods imported by Non-Profitable Institutes by themselves".
3. Feeling aggrieved from the said order , the importer/respondent filed a 1st Review , which was rejected vide note dated 14.12.2017 "Review is regretted in the light of AO note as per assessment note". The importer filed 2nd Review before the Deputy Collector , the impugned order dated 19.12.2017, is reproduced as under:-- "Mr. Sakhi Muhammad appeared on behalf of the importer and his contentions were based on the written facts already submitted along with the review . The matter has been examined in the light of arguments put forward by the importer as well as the assessment staff. In view of the foregoing, it is concluded that the claimed exemption is not admissible because section 52A of the Sales Tax Act, 1990 deals with local supplies and imported items have been covered under section 52 of the, said Act. The intent of the legislature is clear to the fact the ophthalmic instructions have not been included in the exemption regime covered under PCT Heading 9938 and correspondingly included in section 52 of the Sales T ax Act, 1990. Assessment is accordingly finalized".
Feeling dissatisfied from the above said order , the importer filed the appeal before the learned Collector of Customs (Appeals), Lahore, who after hearing both the parties, accepted the same; hence the instant appeal filed by the appellant department before this Tribunal.
3. The learned counsel for the appellant department contended that the learned Collector (Appeals) has erred in the interpretation of Serial No,52A of Table-I of Sixth Schedule to Sales Tax Act, 1990, being for import when the bare reading of section 2(33) of the Sales Tax Act, 1990, amply defines the term "supply" precluding the imports. It is further contended that the impugned consignment having been imported by Messrs Mubarak Vision could not be given the benefit of further supply merely on the basis of purchase order , although there is no such express provision of exemption at import stage under the law. It is added that the importer imported the impugned goods and thereafter supplied the same to Messrs Al-Shifa Trust and then claim the sales tax exemption in subsequent sales tax return was beyond the scope of customs authorities at the time of import. Lastly , the learned counsel for the appellant prayed for the acceptance of the appeal as the learned Collector (Appeals) has erred in law by interpreting the Serial No,52A ibid.
4. Conversely , the learned counsel for the importer/respondent has supported the impugned order and contended that the learned adjudicating authority passed the impugned order after applying its legal mind. It is further contended that the local supply of the goods is separately and independently specified under Table-II of the Sixth Schedule to the Sales Tax Act, 1990, thus it is intent of the legislature to create an exclusive S. No,52-A for exemption of Sales Tax against the impugned goods imported by any importer and supplies to hospitals run by the Federal or Provincial Governments. Therefore, the impugned goods by virtue of exemption of sales tax to the Hospital eventually covered under S. No,52A ibid. It is added that the question of claim of sales tax exemption in subsequent sales tax return by the importer/ respondent after availing the exemption at import stage and the Hospitals being exempted from sales tax is after through/redundant and is denied. In support of his contentions, the learned counsel for the importer/ respondent referred a judgment reported as PLD 2014 Sindh 224, 2006 SCMR 129 and 2003 SCMR 1505 . The learned counsel for the importer prayed for the dismissal of the instant appeal.
5. Arguments have been heard. Record perused with the help of the learned couns el for the parties. It is important to re-produce the operative part of the impugned order-in-appeal, which is as under:-- "I have examined the impugned Final Assessment Order/Review Rejection dated 19.12.2017 as well as other documents presented by the appellant's advocate during proceedings and have found that the Deputy Collector and authorities below have not appreciated the legal position correctly . All of them have misread Serial No,52A of the Sixth Schedule to the Sales Tax Act, 1990 that it only deals with local supplies. Bare reading of the said schedule shows that two lists are available for claiming the exemption from Sales Tax. Table-I of said schedule covers the goods which are imported or supplied and Table-2 of said schedule deals with local supplies only. In this case the appellant has imported the surgical goods for onward supplies to M/s. Al-Shifa Trust. This arrangements has been done through an agreement between the appellant and M/s Al-Shifa Trust, duly supported by purchase order number 195 dated 03.10.2017.
In view of the above, there is not an iota of doubt that the impugned goods are meant for supplying to M/s Al-Shifa Trust and qualify for exemption of Sales Tax. The Table-I exempts the imported as well as local supplies from Sales Tax. If this exemption is granted only to imported or local supplies it would create distortion in Tax Policy which is not the intention of the Legislature. The up-shot of above discussion is that the imported goods qualify for Sales Taxes exemption in this case as said exem ption is available under Serial number 52A of Table to Sixth Schedule of Sales T ax Act, 1990. Hence this appeal is accepted".
The re-production of Serial number 52A of Table to Sixth Schedule of Sales Tax Act, 1990, is necessary to understand the question, which is as under:-- "52A Goods supplied to hospitals run by the Federal or Provincial Governments or charitable operating hospitals of fifty beds or more or the teaching hospitals of statutory universities of two hundred or more beds".
Section 13(1) of the Sales Tax Act, 1990 speaks that ---Exemption.---(1) notwithst anding the provisions of section 3, supply of goods or import of goods specified in the Sixth Schedule shall, subje ct to such conditions as may be specified by the [Federal Government], be exempt from tax under this Act".
6. I have examined the operative part of the impugned order passed by the learned Collector of Customs (Appeals), Lahore, Serial Number 52A of Table to Sixth Schedule of Sales Tax, Act, 1990 and section 13(1) ibid. The learned Collector of Customs (Appeals) Lahore, has correctly observed that the authorities below have not applied their judicious mind while holding that the present importer is not entitled to avail .the exemption of Sales Tax. All the above material of law, fully supports that the importer through an agree ment will made the supply of the imported goods to hospitals run by the Federal or Provincial Governments or charitable operating hospitals. In the present case, the importer/respondent through a valid agreement with M/s Al-Shifa Trust, duly supported by a purchase order No,195 dated 03.10.2017, made arrangements for the supply of impugned goods to a charitable Hospital, thus the exemption of Sales Tax under Serial Number 52A of Table to Sixth Schedule of Sales Tax Act, 1990 is available to the respondent. The learned counsel for the importer/respondent has also submitted some GDs which are available on the file, previo usly processed and cleared under S. No, 52A of Table to Sixth Schedule of Sales Tax Act, 1990 along with Treasur y Challans wherein the payment of Sales Tax is ZERO . In my opinion, this evidence also proves that the Department has never asked the importer of such like goods to pay the sales tax. I fully in agreement with the learned Collector of Customs (Appeals), Lahore, that the impugned goods are meant for supplying to Messrs Al-Shifa Trust and quality for exemption of Sales Tax.
7. In view of what has been observed above, the appellant department is not in a position to point out any illegality or infirmity in the impugned order-in-appeal passed by the learned Collector of Customs (Appeals), Lahore, the same is maintained and the appeal filed by it, is dismissed being devoid of any merits.