ISLAMABAD, Feb 5: The Supreme Court on Tuesday reserved its judgment on the petition of Fecto Belarus, which demanded that as an interim measure Rs480 million should be paid, and if the final decision of the court was against it, the company would return the money.
The counsel for the company stated that the company would not provide any bank guarantee, but would only give an undertaking that if the court decided the case against, it would return the money to the government.
Barrister Khalid Anwar, counsel for Fecto Belarus, stated the company was at the verge of bankruptcy, and if the refund amount was not released, it would go into liquidation.
Advocate Abdul Hafeez Pirzada, who was on general adjournment on medical grounds, came to represent his client, Central Board of Revenue.
Attorney General appeared on court notice to explain if the legislature had the powers to make enactments for nullifying the judgment of the court.
The case relates to the refund of sales tax worth Rs480 million to the company by the Central Board of Revenue which was collected after withdrawing the exemption on the import of tractors under the Awami Tractor Scheme.
A Supreme Court bench headed by the former chief justice Saiduzzaman Siddiqui, had first rejected the appeal of the company. Another bench of the Supreme Court, headed by the sitting Chief Justice Shaikh Riaz Ahmad, had reversed the judgment by accepting the review petition.
The apex court had directed the CBR to refund the sales tax which it had received from the company. After calculating the impact of the Supreme Court judgment, the CBR came to the conclusion that it would have to pay Rs480 million to the company.
When the department did not comply with the judgment, a contempt of court petition was filed. During the pendency of the contempt petition, the government issued two ordinances to nullify the impact of the judgment.
Attorney General Makhdoom Ali Khan stated that the court should first determine if the burden was passed on the customers or not. In case it is established that the burden is passed on the customers, the petitioner had no right to get itself enriched unjustly.
The question of validity of ordinance would arise only if the burden is not passed on the customers. In case the court came to the conclusion that the ordinance does not apply, there would be no occasion to question the vires of the ordinance.
Central Board of Revenue has taken the position that if the incidence of sales tax was passed on to the consumer, the refund of the same could not be claimed.
The SC bench consisted of Justice Shaikh Riaz Ahmad, Justice Iftikhar Muhammad Chaudhry, and Justice Qazi Mohammad Farooq.