Plea of sugar mills Stay against special excise duty

LAHORE, June 1: A Lahore High Court division bench on Wednesday restrained the Federal Board of Revenue from taking coercive measures against three sugar mills for recovery of “special excise duty” and directed it to file a reply by June 14.

The bench comprising Justice Umar Ata Bandial and Justice Asad Munir issued this order on an intra-court appeal filed by Ittefaq, Brothers and Ramzan sugar mills challenging an order of a single bench which dismissed their writ petition against the special excise duty. The three sugar mills belong to the Sharif family.

Representing the sugar mills, Advocate Ijaz Awan pleaded that on June 29, 2007, the Ministry of Finance issued a notification relating to federal excise SRO 655(I)/2007 whereby Special Excise Duty (one per cent of the value) was levied without having lawful jurisdiction.

He said the government wrongly exercised the powers conferred by section 3-A of Federal Excise Act 2005. It was not part of the Act at the time and date when the impugned SRO (notification) was issued as it was inserted subsequently through an act of parliament, he said.

Advocate Awan further argued that the rate of the special excise duty had recently been enhanced from 1 to 2.5 per cent through an amending SRO on March 19, 2011 pursuant to Federal Excise (Amendment) Ordinance 2011. He said the government (FBR) enhanced the rate of the duty ignoring the fact that basic notification of levying the excise duty was issued without lawful authority.

The counsel said the appellants (mills) were earlier forced by the respondent to pay special excise duty on goods produced, manufactured, imported, obtained prior to the cutoff date of July 1, 2007 regardless of the fact that the special excise duty was not liable to be paid with retrospective effect.

After filing of the writ petition the respondent authorities realised the fact and accepted plea of the appellants and issued a conceding clarification, he said and added that a single bench of the LHC had on May 13 dismissed the writ petition.

The counsel prayed that May 13 order of the single bench be set aside and appeal be accepted in the interest of equity and justice.

He further prayed that the impugned notification with regard to levy of special excise duty be declared illegal.

The bench after hearing the arguments stayed the recovery of the special excise duty and sought replies from the FBR and other respondent authorities.