SH. AMJAD ALI, J.- This judgment shall dispose of five Constitutional petitions, namely, W.P. No. 1069/97, W.P. No. 1555/97, W.P. No. 2469/97, W.P. No. 730/98 and W.P. No. 731/98, brought by M/s. Tahseen (Pvt.) Ltd., involving common question of law and facts in respect of applicability of sales tax on the goods imported by the said Company.
2. Briefly, the facts leading to these petitions are that M/s. Tahseen (Pvt.) Ltd., Bhimber, Azad Kashmir, imported components of diesel engines from China through various letters of credit opened with the Union Bank Ltd, Brandreth Road, Branch, Lahore. These goods were imported for Rawalpindi Dry. Port via Karachi by presenting the bills of entry for warehousing to the Customs authorities at Karachi. The goods were thereafter trans-hipped to Rawalpindi Dry Port and then with the permission of the Dry Port authorities were warehoused at Bhimber (Azad Kashmir) working under the supervision of the Rawalpindi customs authorities. These goods were, however, charged to sales tax in accordance with section 3 of the sales Tax Act, 1990.
3. The petitioner's Company being aggrieved of levy of the sales tax on components of diesel engines imported by it has brought these five Constitutional Petitions claiming that, since the imported goods were to be used for manufacture of diesel engines at its factory at Bhimber situated within the territory of Azad Kashmir where the Sales Tax Act, 1990, is not applicable, sale tax cannot be charged thereon, it was thus urged that no sales tax could be levied On the goods the ultimate destination of which was Azad Jammu and Kashmir.
4. Mian Abdul Ghaffar, Advocate, the learned counsel representing the petitioner, contended that sales tax under Section 3(1 )(b) of the Sales Tax Act, 1990, can only be levied on the goods which are imported into Pakistan but not on the goods which are imported for Azad Jammu & Kashmir.
He was of thus of the view that the goods which are imported for the purpose of use in Azad Kashmir may be brought through any port of Pakistan shall deemed to be goods in transit for Azad Jummy & Kashmir, in this connection, he referred to the goods imported by Afghanistan through Pakistan but those were not subject to sales tax. in support of his contentions, he relied upon Federation of Pakistan v. Jamaiuddin and others (1996 SCM R 727), wherein the Supreme Court had held that where the- goods are transhipped to Afghanistan in accordance with the Transit Trade Agreement and the protocol appended thereto, customs law relating to the importation would not be applicable.
5. Learned counsel further referred to various opinions of the Law Division, Government of Pakistan, wherein it was confirmed that territory of Azad Jammu & Kashmir has not yet been annexed with Pakistan nor the Sales Tax Act, 1990, enforced in Pakistan has been made applicable in that territory. The learned counsel also contended that it was a case of great hardship that once the goods imported by the Company are subjected to sales tax at the time of import under the Sales Tax Act, 1990, and again the sales tax is charged on*its manufactured goods in accordance with law enforced by the Government of Azad Jammu & Kashmir, in this way, the same goods are liable to double taxation for which no refund was allowed, it was also claimed that several representations were made and in this regard Kashmir Affairs, Northern Areas State and Frontier Regions Division, Government of Pakistan, had also recommended for exemption from levy of sales tax on import of goods to be used in Azad Jammu & Kashmir, but no action has been taken by the Government of Pakistan o provide any relief to the manufacturers located in Azad Jammu & Kashmir. On the other hand, imports made in the Northern areas where too the Sales Tax Act, 1990, was not applicable, no sales tax is charged on the goods imported from China at Sust Border.
6. Mr. Farhat Nawaz Lodhi, Advocate, the learned Legal Advisor, Customs Department, claimed that the goods imported by the petitioner company are imported in Pakistan and were thus liable to payment of Sales Tax in accordance with section 3 of the Sales Tax Act, 1990. He explained that the goods imported by the petitioner's company land either at Karachi or Rawalpindi and are warehoused at Bhimber where warehousing facilities have been provided by the customs authorities of Pakistan, and for the purpose of ex- bonding, approval if also accorded by the customs authorities at Rawalpindi, in this connection, he referred to Messrs Flying Board and Paper Products v. Central Board of Revenue, Government of Pakistan Islamabad, and 3 others (PLD 1996 Lah. 718), wherein a Division Bench of this Court relying upon two judgments of the Supreme Court in Pakistan Textile Mill Owners Association, Karachi and 2 others v. Administrator of Karachi and 2 others (PLD 1963 SC 137) and East and West Steamship Co. v. The Collector of Customs and others (PLD 1976 SC 618) had held that the expressions 'import 'and export' shall have to be taken in ordinary and natural meaning which is bringing in and taking out. The learned Legal Advisor thus contended that when the goods land at Karachi or Rawalpindi, notwithstanding that such goods are thereafter transported to Azad Jammu & Kashmir, Northern Areas or any other country, those will be subject to levy of sales tax under the provisions section 3 of the Sales Tax Act, 1990.
7. The Sales Tax is levied under the provisions of section 3 of the Sales Tax Act, 1990, which for facility of reference is reproduced below:- "3. Scope of tax.-{1) Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of twelve and a half per cent of the value of-
(a) taxable supplies made up Pakistan by a registered person in the course of furtherance of any taxable activity carried on by him; and
(b) goods imported into Pakistan.
(2) Notwithstanding the provisions of sub-section (1)
(a)
(b)
(c) taxable supplies specified in the Third ^Schedule shall be charged to tax at the rate of twelve and a half per cent of the retail price which along with the amount of sales tax shall be legibly, prominently and indelibly printed. or embossed by the manufacturer on each article packet, container, package, convert or label, as the case may be.
(b) taxable supplies specified in Fourth Schedule shall be charged to tax at the fixed rate specified therein till the 30th June, 1998; Provided that a person whose supplies fall under this clause may opt for paying sales tax at any other rate applicable to such supplies under this section subject to the condition that he shall not be allowed to adopt fixed tax scheme unless a notice of his intention to adopt such scheme is given to the Collector three months prior to such adoption.
(3) The liability to pay the tax shall be,
(a) in case of supply of goods in Pakistan, of the person making the supply, and
(b) in the case of goods imported into Pakistan of the person importing the goods.
(4) The Federal Government may, in addition to or in lieu of levying and collecting the tax under sub-section (1), levy and collect such fixed amount of tax on any goods to be payable by any registered person or class of registered persons, supplying such goods or class of goods, in such mode, manner and time, and subject to such conditions and limitation as it may specify by a notification in the Official Gazette."
8. For the present controversy the relevant provisions of the above quoted section 3 are clause (b) of sub-section (1) and clause (b) of sub-section (3) thereof.
Under these provisions, sales tax is leviable at the rate of 12 Va percent on the goods imported into Pakistan and payable by the person importing such goods. There is no denial that the goods imported by the petitioner enter Pakistan at Karachi or Islamabad/Rawalpindi. The goods may be later on transported to Azad Jammu and Kashmir, but the fact remains that for the first time such goods enter territory of Pakistan and not that of Azad Jammu and Kashmir. Section 3 of the Imports and Exports (Control) Act, 1950, defines the term "import" to be 'bringing into Pakistan'. This definition is without any qualification or rider and is most relevant for the purposes of import, it even does not exclude the goods which are later on transhipped to any other territory country. The transhipped goods or goods in transit to any other territory may be allowed exemption levy of any tax or duty but such goods will not loose the character of their import through Pakistan.
9. The same is the position in the case of goods in transit of Afghanistan. The goods imported by Afghanistan are for all intent and purposes of the Import and Export (Control) Act, 1950, are imported in Pakistan and are then transhipped to Afghanistan. These are exempt from levy of any import duty or other taxes in accordance with the Afghan Transit Trade Agreement, in view thereof, the dictum of honourable Supreme Court laid down in Federation of Pakistan and others v. Jamal- ud-Din and others (1996 SCMR 77.7) is not applicable in the instant case, in the said case it was actually held that the goods-imported for transit to Afghanistan under the Afghan Transit Trade Agreement could not be detained or confiscated by the Customs authorities in pursuance of any direction of the Central Board of Revenue as such directions were exclusively in the domain of the Ministry of Commerce, Government of Pakistan.
10. it was also rightly pointed out by the learned Legal Advisor that the petitioner's Company cannot claim exemption from levy of sales tax by presumption, in Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others ( 1992 SCM R 1652), it was held that the exemption from payment of tax cannot be claimed as of a right, as it was discretionary with the Government under the provisions of the relevant law. Even the letter addressed by the Federal Ministery for Kashmir Affairs, Northern Areas & States and Frontier Regions, Government of Pakistan, for exemption of levy of income tax and sales tax leviable on the goods imported for Azad Jammu & Kashmir to the Finance Minister, in fact, contradicts the claim of the petitioner's Company that the goods imported by it were not liable to levy of sales tax. Unless the Government of Pakistan specifically accords exemption ' to the goods imported by the petitioner through Pakistan from charging of the sales tax, such goods will be subject to levy of sales tax. The territory of Azad Jammu & Kashmir has not formally been annexed with Pakistan, as its future status is to be determined in accordance with the wishes of the people of State of Jammu and Kashmir through democratic method of free and fair plebiscite as envisaged by UNCIP Resolutions adopted from time to time. Further, till the plebiscite is held the territory known as Azad Jammu & Kashmir liberated by Pakistan shall be under the governance and control of Government of Pakistan as envisaged in the UNICP Resolutions and more clearly explained in the Ajaz Jammu and Kashmir Interim Constitution Act, 1974. Meaning thereby, that it cannot be treated at par with Afghanistan which is an independent country and competent to enter into a transit agreement with Pakistan for transit of its goods through Pakistan and exemption of taxes and duties which are otherwise leviable thereon. Likewise, if for Northern Areas specific exemption from sales tax has been allowed on the import of goods, the same exemption cannot ipso facto be applicable to the goods imported for Azad Jammu and Kashmir imported through Pakistan.
11. Since under the law, the sales tax is leviable on the goods entering in Pakistan, may be for the purpose of transhipment to any other state or territory, the goods imported by the petitioner will be subject to levy of sales tax notwithstanding their ultimate destination being Azad Jammu & Kashmir unless, as stated above, such goods are specifically exempted from levy of such tax by Government of Pakistan in exercise of its statutory powers.
12. in view of the above discussion the Constitutional petitions brought by the petitioner's company assailing the levy of sales tax on the goods imported by it are devoid of any merit and are accordingly dismissed with no orders as to costs.