MUHAMMAD NAEEM ANWAR, J. This single order in instant petition shall also decide the connected petitions tabulated at the end of this order, as a common question of law and facts is involved in all these petitions.
2. The petitioners, in all these five petitions, have invoked the constitutional jurisdiction of this Court under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 (the Constitution), with almost similar prayer, that: "Considering the above submissions, it is therefore, respectfully prayed that on acceptance of this petition, this Hon'ble Court:- i) Declare that the exemption certificate in view of SRO 1213 (1) 2018 dated 05.10.2018 and subsequent judgment dated 24.11.2020 & 25.11.2020 of this Hon'ble Court is to be issued on one time basis valid upto 30th June, 2023; ii) Declare that non-issuance or absence of exemption certificate u/s 159 ibid in no case shall affect the right of exemption from sales tax under Entry No.151 of Sixth Schedule of the Sales Tax Act, 1990; iii) Direct the Respondents that in absence of exemption certificate u/s 159 ibid, the petitioner imports for the purpose of levy of Sales Tax be treated in accordance with Entry No.151 ibid for exemption of sales tax; iv) Declare that Circular No.13 of 2021 dated 26.03.2021 is void ab-initio for being confiscatory and in conflict with earlier and specifically judgments dated 24.11.2020 & 25.11.2020 of this Hon'ble Court and procedure laid down by the legislature under Entry No.151 ibid; v) Direct the Respondents to refund the exempt taxes and paid by the petitioner due to stuck up created by the impugned instrument/circular for non-issuance of exemption certificate; and vi) Direct the Respondents to issue delay detention certificate caused by the delay due to the aforesaid impugned ultra vires instruments.
3. Brief but essential facts giving rise to institution of these petitions are that the petitioners of their respective petitions are running their businesses/ industries, within the erstwhile Provincially Administered Tribal Area (PATA) by manufacturing/selling/purchasing different kinds of goods being registered with Federal Board of Revenue (FBR); that after 25th amendment in the Constitution, S.R.Os No.1212 (1)/2018 (Sales Tax) and No.1213(1)/2018 (Income Tax) both dated 05.10.2018 were issued, on the basis of which, finally Entry No.151 in the Sixth Schedule of the Sales Tax Act, 1990 was made, whereas clauses No.146 in Part-I & 110 in Part-IV of the Second Schedule to the Income Tax Ordinance, 2001, were inserted, whereby the Federal Government avowedly resolved that the erstwhile FATA/PATA shall remain exempt from the tax leviable under the Sales Tax Act, 1990 as well as under Income Tax Ordinance, 2001; that earlier when aforesaid SROs were not being implemented by the respondents in letter and spirit, the owners of the industries of erstwhile PATA approached to this Court through W.P No.5655-P/2018 decided on 23.01.2019 and W.P No.1881/2019 decided on 03.04.2019, wherein this Court held that petitioners are not liable to pay any tax which was not applicable prior to 25th Amendment Act, 2018, however, when the respondents were still denying exemption from income tax otherwise payable u/s 148 of Ordinance ibid on import of raw-materials to the erstwhile PATA, which was set at naught by this Court vide judgments dated 24.11.2020 in W.P No.442-M12020 by declaring that such exemption from income tax leviable, at import stage, is though available, however, subject to exemption certificate u/s 159 of the Income Tax Ordinance, 2001. It is evident that SRO No.1213(1)/2018, as interpreted by this Court in aforesaid judgments, the verification of place of business was the only consideration for issuance of exemption certificate u/s 159 of Ordinance ibid but now the respondents through various instruments, such as Circular No.13 of 2021 dated 26.03.2021 have imposed further requirements and procedure of previous business in such a manner that the petitioners have to go through audit for every consignment before getting exemption for further import and by virtue of these delaying tactics, respondents confiscate the valuable time of petitioners valid upto 30th June, 2023 and that because of not having the exemption certificate, they are being compelled to pay sales tax and income tax, which are otherwise by virtue of Entry No.151 ibid and SRO No.1213(1)2018 dated 05.10.2018 and judgments of this Court are exempted, thus, the petitioners being highly dissatisfied and deeply aggrieved of the inaction, omissions and illegal acts/instruments of the respondents have constrained to invoke the constitutional jurisdiction of this Court through these petitions.
4. When put on notice, the concerned respondents submitted their parawise comments, wherein they have refuted the claim of the petitioners on several legal objections.
5. All these petitions were filed by M/s Yousaf Ali, Asad Ayaz & Muhammad Usman Advocates, from whom, Mr. Asad Ayaz Advocate appeared on the previous date i.e., 08.03.2022, when ad-interim order was passed. Today, learned counsel for petitioners despite proper service did not appear without any plausible and reasonable cause. Report reflects his service in the following terms: Apart from learned counsel, the petitioner of W.P No. 258-M/ of 2022 namely, Suhail Akhtar served with the notice by Mr. Ikhtiar Ali, Process Server, whose report duly verified on oath is available on record but none appeared for any of the petitioners for the reasons best known to them. Even otherwise, the point agitated by the petitioners through their respective petitions has already been decided therefore, the arguments of the learned Counsel for respondents heard and record perused.
6. Before analyzing the controversy involved in all these petitions, it would be apt to have a look on the statute, whereby after 25th Amendment in the Constitution of Islamic Republic of Pakistan 1973, vide Finance Act, 2019, certain amendments were made in Sales Tax Act, 1990, whereby Entry No. 151 was inserted in Sixth Schedule, which reads as under: "151. (a) Supplies; and (b) imports of plant, machinery, equipment for installation in tribal areas and of industrial inputs by the industries located in the tribal areas, as defined in the Constitution of Islamic Republic of Pakistan,- as may till 30th June, 2023, to which the provisions of the Act or the notifications issued thereunder, would have not applied had Article 247 of the Constitution not been omitted under the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018): Provided that, in case of imports, the same shall be allowed clearance by the Customs authorities on presentation of a post-dated cheque for the amount of sales tax payable under the Sales Tax Act, 1990, and the same shall be returned to the importer after presentation of a consumption or installation certificate, as the case may be, in respect of goods imported as issued by the Commissioner Inland Revenue having jurisdiction: Provided further that if plant, machinery and equipment, on which exemption is availed under this serial number, is transferred or supplied outside the tribal areas, the tax exempted shall be paid at applicable rate on residual value."
By the insertion of Entry No. 151 in the 6th Schedule of the Sales Tax Act, 1990, vide Finance Act, 2019, a mechanism was provided for availing exemption from the sales tax on import of goods, which were meant for its consumption in FATA, which was assailed by the trade community of erstwhile FATA through Writ Petition No. 2009-P/2020, which was disposed of by this Court on 24.11.2020, with the following observation: "a) The profit and gain/income of the present petitioners from their business activities solely limited within the territorial limits of erstwhile FATA is immune from payment of income tax, during the life of SRO N. 1213(1)/2018 dated 05.10.2018. b) The import of the Present Petitioners for home consumption (industrial units located at erstwhile FATA) is not liable to the impost of income tax. c. The present petitioners are required to obtain exemption certificate u/s 159 of the Ordinance from the Commissioner Inland Revenue/FBR for availing the said exemption. d. The Commissioner shall grant the exemption certificate to the Petitioners if they fulfil the required criteria as provided in SRO No. 1213(1)12018 dated 05.10.2018".
7. Pursuant to the above, the FBR vide CUSTOMS GENERAL ORDER NO. 01 of 2021-04-09 dated 25th February, 2021, issued a notification, which reads as under: "GOVERNMENT OF PAKISTAN (REVENUE DIVISION) FEDERAL BOARD OF REVENUE C.No. 2(2)/L&P/2004 Islamabad, the 25th February, 2021 CUSTOMS GENERAL ORDER NO. 01 OF 2021.
SUBJECT: AMENDMENTS IN CUSTOMS GENERAL ORDER NO.12 OF 2002 DATED 15.06.2002.
The Federal Board of Revenue is pleased to direct that the following further amendments shall be made in Customs General Order No. 12 of 2002 dated the 15th June, 2002, namely: - In the aforesaid order, after paragraph 116, the following new paragraph shall be inserted, namely: - "117.PROCEDURE FOR CLEARANCE OF GOODS IMPORTED BY INDUSTRIAL UNITS OF ERSTWHILE FATA/PATA.
In order to ensure safe and secure transportation of the raw material imported under SROs 1212(1)/2018 & 1213 (1)/2018 both dated 5th October, 2018, which grants exemption of leviable Sales Tax and Income Tax at import stage, if imported by industrial units, located in erstwhile FATA/PATA, following procedure is prescribed in respect of goods/raw materials imported thereof: -
(i) On importation of goods/raw materials intended for use in industrial units availing the afore- referred benefits, TP will be filed at Karachi.
(ii) Goods will be transported through bonded carriers only;
(iii) The goods and raw materials shall be cleared at the nearest dry port i.e., Azakhel and Peshawar;
(iv) The containers/vehicles carrying goods/raw materials meant for consumption in these industrial units shall be monitored in terms of Tracking and Monitoring of Cargo Rules, 2012 from Karachi to Peshawar and then to factory premises;
(iv) The industrial units availing the exemption shall be subjected to annual audit regarding input and output and other parameters to be determined by the Directorate General of Post Clearance and Internal Audit".
Sd/--- (Wajid Ali)
Secretary (Law & Procedure)."
8. It is important to note that for release of stuck-up consignments of FATA/PATA, another circular was issued on 1st March 2021, which reads as under: "Government of Pakistan Revenue Division Federal Board of Revenue Inland Revenue C.No.7(1) TIPU/IR/2020 Islamabad, the March 1, 2021 Circular No. 09 of 2021 -- Operations (Inland Revenue/Customs)
Subject: Mechanism to be adopted for the release of Consignment of FATA/PATA Residents Stuck-up at the Karachi Ports A meeting was held under the Chairmanship of the Chairman, FBR with Inland Revenue-Operations and Customs Operations Wings to sort out the issues of imported goods of FATA/PATA residents stuck-up at Karachi Ports, Consumption/Installation Certificates, Postdated Cheques and Exemption Certificates under Section 148 of the Income Tax Ordinance, 2021.
2. After thorough deliberations between the Chairman, Member (IR Operations) and Member (Customs-Operations) following mechanism was devised for the release of consignments of FATA/PATA residents stuck- up at the Karachi Ports: -
(i) The stuck-up containers are to be released by Customs authorities against Postdated Cheques
(PDCs) and sent to their destination (FATA/PATA) under standard tracker mechanism.
(ii) The Collector Customs (Enforcement & Compliance), Peshawar, will issue detention orders of the raw materials effective from day the consignment reaches the manufacturing premise of importers.
(iii) The importer/manufacturer will be responsible to take the import documents alongwith detention order to the CIR Corporate Zone, RTO, Peshawar and make arrangements to have the manufacturing premises/raw material/machinery/goods imported verified.
(iv) The CIR Corporate Zone, RTO, Peshawar will be liable to verify/undertake physical visit as conducted by the importer/manufacturer to the manufacturing premises where the goods are kept under detention, and allow the raw material to be consumed/utilized in writing.
(v) The CIR, Corporate Zone, RTO, Peshawar will ensure the monthly stock-taking of the raw materials to consumed in the production of manufactured goods by these manufacturing units.
This stock-taking will facilitate in issuance of the Consumption Certificate under S. No. 151 of the Sixth Schedule of the Sales Tax Act, 1990.
(vi) The residents of FATA/PATA will apply for tax exemption certificates under section 159 of the Income Tax Ordinance, 2001 for the import of raw material/machinery in light of the Honorable Peshawar High Court, Mingora Bench (Dara-ul-Qaza), Swat's decision dated 24.11.2020. 3.
Commissioner Corporate, RTO, Peshawar and Collector Customs (Enforcement & Compliance), Peshawar would keep a close liaison to successfully implement the laid down mechanism.
Sd/--- Dr. Nasser Janjua Chief (IR-Analysis)."
9. Both the above referred circulars/orders were challenged before this Court vide Writ Petition No. 5105-P of 2021 titled "M/s Apallo Plastic and Chemicals (Pvt) Ltd, Vs. Government of Pakistan Through, Federal Secretary, Finance and Revenue Division, Islamabad and others" which came up for hearing before this Court on 09.02.2022, wherein to the extent of Circular No.9, it was held that "The perusal of Circular No. 09 dated 01.03.2021 would show that it was a onetime arrangement for the release of stuck up goods at Karachi Port destined for erstwhile tribal area and even the learned counsel for the Revenue has agreed that this dispensation was one time and is no more applicable to the regular import of the present petitioners, therefore, the grievances of the present petitioners against the said Circulars are unfounded." Insofar as the circular dated 25.02.2021 is concerned, it was held in said judgment by this Court that: "We have closely perused the said provisions which deal with the manner and mode of filing of declaration of goods, assessment of liabilities and clearance of the imported goods for home consumption. It is the contention of the present petitioners that it is the discretion of the importer either to release the goods at Karachi Port or for that matter, the Dry Port, Peshawar, however, through this Circular No. 01 the said discretion has been taken away from the petitioners. These arguments of the learned counsel for the petitioners have not impressed us. Sections 79, 80 and 83 of the Customs Act, 1969 deals with the release of goods on its import and this procedure is equally applicable at the Customs Port Karachi as well as Custom Dry Port, Peshawar. Since the present petitioners are enjoying immunity from the payments of duties and taxes, therefore, in order to protect the State interest i.e., leakage of Revenue, the Federal Board of Revenue, through Circular No. 01 has provided a mechanism for the transportation of goods from Port at Karachi to its onward destination where the industrial unit is situated. Therefore, condition No.(i) to (iv) provides for the safe and supervised transportation of goods which are exempt from payment of duties and taxes. As far as the assertion of the learned counsel for the petitioners that since the petitioners have provided a post-dated cheque against the duties and taxes, therefore, this method of transportation is a futile exercise for the Revenue and will only complicate the process of import/transportation. These arguments of the learned counsel for the petitioners are equally unimpressive. The purpose of depositing the security is that the importer shall ensure to the Revenue that the goods imported would be consumed in the erstwhile FATA, however, in this regard, there is no mechanism that how the Revenue would supervise that indeed the imported goods are consumed in the erstwhile FATA. Condition No. (i) to (iv) of Circular No. 01 dated 25.02.2021 are meant to ensure that the said transportation of goods from Karachi to the Industrial Unit situated is fool proof and is not being mis-utilized."
10. It is pertinent to mention here that petitioners are aggrieved of the Circular No. 13 of 2021 pertaining to the "Procedure for issuance of exemption certificate for import of industrial input/machinery by FATA/PATA-Resident Tax Payer" providing a mechanism for issuance of exemption certificate, which was followed by Circular No.3 of 2022 dated 10.08.2021 providing applicability to Circular No. 9 of 2021 and Circular No. 13 of 2021, but later on through Circular No. 4 of 2022 dated 14th August 2022 not only Circular No. 3 was done away with immediate effect but a time bound mechanism was provided for revocation of detention order issued by the Collector Custom Peshawar within the period of sixty days in case an application filed by the importer and if no such application was filed, within five days of receipt of detention order, CIR shall issue a speaking order within seven working days excluding the defaulting manufacturer / importer from the concessions put fourth through other circulars. Likewise, through circular No. 13 of 2021, CIR was also bound down for issuance or rejection of exemption certificate within seven working days of the receipt of application. Furthermore, if the exemption certificate is not issued or it is rejected by the CIR, the Tax Payer shall within seven working days apply to CIR, RTO for redressal of his grievances and the same shall be addressed within seven days of the receipt of application in his Office.
11. Insofar as the prayer of the petitioners that, in view of SRO 1213 (1) 2018 dated 05.10.2018 in juxtaposition with the judgment dated 24.11.2020 & 25.11.2020 of this Court exemption certificate is required to be issued on one time basis valid upto 30th June, 2023 is concerned, in W.P No. 2009- P/2020 titled "M/s. Dawood Steel Fabrication through Mr. Muhammad Aurangzeb Vs. Federation of Pakistan and others", this Court on 24.11.2020, has held that: "(c) The present petitioners are required to obtain exemption certificate u/s 159 of the Ordinance from the Commissioner Inland Revenue/FBR for availing the said exemption.
(d). The Commissioner shall grant the exemption certificate to the petitioners if they fulfill the required criteria as provided in SRO No. 1213(1)/2018 dated 05.10.2018."
Likewise, in W.P No. 442-M/2020 titled "M/s. Hadi Khan Silk Mills and others Vs. Government of Pakistan through Secretary Finance and others", decided on 24.11.2020, this Court has held that: "(a) that individuals and association of persons resident in the areas of erstwhile FATA or PATA shall be exempt from levy and imposition of advance income tax payable under section 148 of the Income Tax Ordinance at import stage, till the period mentioned in Clause 146 of Part-1st of Second Schedule to the Ordinance;
(b) that for seeking exemption from payment of advance income tax under section 148 of the Ordinance at import stage, the petitioners shall have to seek exemption from the levy thereof, under section 159 of the Ordinance."
In both the judgments referred to above, this Court has considered clause 146 of 2nd Schedule Part I of Income Tax Ordinance, 2002, which reads as under: "(146). Any income which was not chargeable to tax prior to the commencement of the Constitution (Twenty-fifth Amendment) Act, 2018 (Act No. XXXVII of 2018) of any individual domiciled or company and association of persons resident in the Tribal Areas forming part of the Provinces of Khyber Pakhtunkhwa and Baluchistan under paragraph (d) of Article 246 of the Constitution with effect from the 1st day of June, 2018 to the 30th day of June, 2023 (both days inclusive)."
But this clause has been omitted by the Finance Act 2021, which was inserted by notification No. SOR 1213(1)/2018 dated 05.10.2018. So, clause No.146 of 2nd Schedule Part I is no more the part of the statute being omitted by the Finance Act, 2021. Similarly, section 148 of the Ordinance (reference whereof was in the operative part of the judgment of this Court rendered in W.P No.442- M/2020) has also been omitted by Finance Act, 2020 and Entry No.151 of the Sixth Schedule of Sales Tax Act, 1990 has been inserted which deals with sales tax at import stage, thus, for seeking exemption from payment of income tax, the petitioners shall have to seek exemption u/s 159 of Chapter X Division IV of the Income Tax Ordinance, 2001. Hence, the prayers at serial No.(i), (ii), (iii) & (iv) in term of Circular No.13 of 2021, issued on 26th of March, 2021 read with the judgments of this Court tendered in W.P No.442-M/2020, W.P No.1219-M/2019 and W.P No.2009-P/2020, is, misconceived.
12. Adverting to the prayers at serial No. (v) & (vi) in consonance with Circular No. 4 of 2022, Operations, Inland Revenue, bearing No. C. No. 7(1) TIPU/IR/2020/205371-R Islamabad dated 14th December 2021, whereby the condition of acquiring Installed Capacity-Determination Certificate
(ICDC) has been done away, these prayers have become infructuous.
13. In view of aforesaid discussion, this as well as connected petitions, tabulated at the end, have no merits, thus, all these petitions are dismissed.
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