KARACHI: The Sindh High Court (SHC) directed the Federal Board of Revenue (FBR) chairman on Wednesday to file a specific reply in a set of petitions impugning the imposition of additional customs duty on the automobile industry.

A two-judge constitutional bench of SHC headed by Justice Agha Faisal said that prima facie, the inconsistency of initial positions taken by the departments concerned and the subsequent contradictory remedial measures were the issues the government should have resolved.

“Since the same was not done therefore repeatedly the matter was referred to the executive domain, however, no resolution appeared in sight”, it added.

Around 100 petitions were filed between 2019 to 2024 in the SHC by the automobile manufacturers. They submitted that pursuant to Automotive Development Policy 2016-21, certain concessions/exemptions were extended to attract investment and notifications were issued in this respect in 2016 by the Ministry of Industries and Production and finance and revenue divisions notifying a five-year tariff plan on customs duties in respect of matters covered under the policy.

However, they asserted that seven per cent additional customs duty was imposed through a SRO subsequently issued in 2019 and such imposition was in excess of the ceiling guaranteed and had been imposed without the earlier concession having been withdrawn or modified.

Citing various judgements of apex court, the counsel for petitioners insisted that the concession/exemption in respect of duties encompassed each of the three constituents under Section 18 of the Customs Act, 1969 and therefore, the impugned SRO was unlawful.

The bench noted that the Supreme Court has taken notice of litigation clogging the docket of the courts on account of unmerited litigation attributable to acts/omissions of the exchequer.

In the light of last order, the chairman FBR has designated two officials, who appeared on Wednesday before the bench and argued that the concession/exemption/ceiling was only with respect to the customs duty and not any other constituent of Section 18 of the Customs Act.

Published in Dawn, February 27th, 2025