ORDER SHEET

IN THE HIGH COURT OF SINDH AT KARACHI

 

Suit No.1980 of 2015

 

Engro Fertilizers Ltd.

Versus

Pakistan Standard & Quality Control Authority & another

 

Date

Order with signature of Judge

 

1. For hearing of CMA 6402/16

2. For hearing of CMA 6403/16

3. For hearing of CMA 6404/16

4. For hearing of CMA 14926/15

 

Dated: 27.04.2016, 28.04.2016

 

Mr. Osman A. Hadi for plaintiff.

 

Mr. Mukesh Kumar for PSQCA a/w M/s. Irshad Ali Ansari Director Legal PSQCA.

 

Mr. Salman Talibuddin, Addl. Attorney General along with Mr. Abdul Qadir Leghari, standing counsel for defendants No.2.

 

Mr. Kashif Nazir for intervener/proposed defendant.

 

Majid Ali, Assistant Director Agriculture Department.

 

-.-.-

 

Muhammad Shafi Siddiqui, J.-   Plaintiff  has filed this suit challenging the SRO 75(KE)/2015 to be void and of no effect.

          Counsel for the plaintiff submits that on 21.10.2015 this Court was pleased to pass orders against defendants that no coercive action be taken against the plaintiff in pursuance of the impugned notification. Through the listed application i.e. CMA No.14926/15 the plaintiff is seeking restraining orders against the defendants in pursuance of SRO 75(KE)/2015. In pursuance of CMA No.6402/16 plaintiff is seeking to implead the Collector of Customs (Import), Karachi Port as party/ defendant No.3. Through CMA No.6403/16 plaintiff is seeking restraining orders against the proposed defendant No.3 i.e. Collector of Customs (Import) from interfering with the plaintiff’s clearance of the fertilizer in the light of impugned SRO under challenge as it does not relate to the custom duties and taxes. The 4th application i.e. CMA No.6404/16 is again for impleading the Province of Sindh through the Secretary, Agriculture Department as party to the proceedings. In substance the plaintiff through one of the listed application i.e. CMA No.14926 seeking release of its consignment by suspending SRO No.75(KE)/2015 on the ground that it amounts to imposition of tax under a particular nomenclature on importers which is not permissible. It is claimed that the defendants are not empowered under the statutory rules as well as the Constitution of Islamic Republic of Pakistan, 1973 from imposing such tax/payment on the import of quality standard fertilizer. Learned Counsel submits that if such tax was to be imposed it must be done in a manner provided under Article 73 of the Constitution and cannot be done simply through a statutory regulatory order. He has further submitted that it is beyond the legislative competence of the federation as the subject is not provided in the 4th Schedule of the Constitution of Islamic Republic of Pakistan leaving the subject of fertilizer to fall in each individual province which has already taken the initiative and have promulgated effective legislation. They further submit that in the alternative it cannot be considered as fee as no service in this regard is being provided to the plaintiff. Learned Counsel submits that despite interim order referred above the custom authorities are not releasing the consignment since Pakistan Standard & Quality Control Authority in pursuance of the SRO 75(KE)/2015 is required to inspect and test the consignment and services for their quality specification and characteristic during use and for import and export purposes and hence in terms of section 14 of the PSQCA VI of 1996 it prohibits manufacturing, keeping stock and sale of articles (products) which do not confirm with the Pakistan standard. Learned Counsel has relied upon Sindh Fertilizer Control Act, 1994 which enables the authority to regulate the sale, distribution and use of fertilizer and fertilizer material in the manner prescribed in the Sindh Fertilizer Control Act, 1994. Since this is a provincial subject the Federal Government competently cannot legislate and if there was any earlier legislation it ceases to have its effect after  the 18th Amendment in the Constitution of Islamic Republic of Pakistan. Learned Counsel has relied upon the case of Mirpur Khas Sugar Mills reported in 2013 MLD 433.

Learned Counsel for the defendant on the other hand submits that this issue of import and export is ably covered in terms of entry No.27 which empowers the federation to deal with the subject. He relied upon entry No.3 which relates to external affairs implementing treaties and agreement and since Pakistan is one of the signatory of Convention in relation to the standard and quality of goods and since being signatory of International Organization of Standardization, Pakistan is affiliated through Pakistan Standard Quality Control Authority and hence federal government is competent to legislate on the subject in maintaining the quality standard either for import or for export. Copy of International Organization of Standardization is also placed on record. He submits that this fertilizer is not the agriculture product but provides an aid in obtaining agricultural produce, hence the fertilizer itself cannot be generalized to come within heading or definition of agricultural produce. He submits that under the Export Policy Order, 2013 the subject items are included in the list and in terms of the Policy, Section 5 of which relates to prohibition and restriction, the Federal Government has made the import of goods subject to the national quality standard or regulation which list is specified in appendix-N. Appendix-N by virtue of SRO 345(1)/16 in pursuance of Import Export Control Act, 1950 was amended to include the subject goods i.e. dynomonium phosphate, single super phosphate, triple super phosphate and urea as part of appendix-N and hence are being regulated by PSQCA.

I have heard the learned counsel for the parties and pursued the material available on record.

This suit involves applicability of SRO 75(KE)/2015 and its financial implications. The Quality Control Authority, Government of Pakistan has issued letters to the Chief Collector Customs that in pursuance of the subject SRO issued by the Federal Government under section 8(ii) of Pakistan Standard & Quality Control Authority Act (Act VI of 1996) inspection and testing of the products and services for their quality, specification and characteristic during use and for import/ export purpose and Section 14 of Pakistan Standard & Quality Control Authority Act (Act VI of 1996) prohibits the manufacturing, keeping in stock and sale of the articles which do not confirm with Pakistan standard and hence in terms of above SRO and the Import Policy Order Paragraph 5(b)(ii) the import of goods shall be subject to the aforesaid SRO.

This argument of plaintiff is inconceivable since it is not a custom duty therefore the custom authority is not competent to charge this amount at the import stage. Any tax levied at the time of import is chargeable at the time of clearance at source, be it a cess under challenge/income tax/sales tax, hence the argument in this regard in my view is not tenable.

While deciding applications under order XXXIX rule 1 & 2 CPC it is to be kept in mind that these are interlocutory measures which are being taken while the suit would remain pending. The principles to decide the controversy finally are different than those which apply while deciding the application as an interim measure. The financial aspects, which are substantially involved in this suit, are also to be kept in mind while deciding the applications for interim injunction.

Suspension of the subject SRO would mean the plaintiff would get away not only with the prescribed test as required under the subject SRO but also get away with the payment of charges thereunder. Once the goods are cleared after suspension of the SRO, the goods would be cleared and perhaps sold in the market therefore at this stage the financial aspect of the matter are to be kept in mind. As and when the issue would be finally decided it may be determined as a financial liability on the subject goods and hence apart from the prima facie case, balance of inconvenience and irreparable loss are also kept in mind.

The Hon’ble Supreme Court in the case of Federation of Pakistan v. Aitzaz Ehsan reported in PLD 1989 SC 61 has decided while dealing the matter in an identical situation that unless the law is finally decided or held to be ultra vires for any reason it should have its normal operation. In the instant case the plaintiffs has not challenged Pakistan Standard & Quality Control Authority Act (Act VI of 1996) itself; it has only challenged the subject SRO which was issued by the Federal Government in exercise of powers conferred by section 8(ii) of Pakistan Standard & Quality Control Authority Act (Act VI of 1996). When the Act itself is not challenged the SRO issued thereunder is also deemed to be validly promulgated as long as it is not finally struck down for any reason whatsoever. It indeed is a case argued by plaintiff that PSQCA ceases to have its effect and hence any notification such as one impugned here, but the Act itself is not impugned.

The Hon’ble Supreme Court in CP No.1796 of 2013 has also suspended operation of an ad-interim order passed by learned Division Bench of this Court whereby the provisions of Income Support Levy Act, 2013 had been challenged and by way of an ad-interim measure the operation of the said law was suspended and the petitioners were allowed to file their tax returns manually, however the same was not approved by the Hon’ble Supreme Court. In the instant case the order sought to be obtained is of such nature that not only the SRO but implications under the Act would be suspended which Act itself is not challenged by the plaintiff.

However in view of consideration of the arguments raised by the learned counsel for the plaintiff I dispose of the subject applications under order XXXIX rule 1 & 2 CPC (CMA No.14926 of 2015) and application 94 CPC (CMA No.6403 of 2015) with the observation/ direction that the authority may act in pursuance of the subject SRO however, as has been agreed/suggested by Mr. Salman Talibuddin, though opposed by plaintiff’s counsel, that till disposal of the suit the amount of fee, as claimed by the authority be deposited with the Nazir of this Court before the subject goods after inspection be released by the customs authority. Order accordingly.

Before parting I may observe that at an interlocutory stage this being not a petition or an appeal but an interlocutory application a detail discussion of the factual aspects of the matter and the Pakistan Standard & Quality Control Authority Act (Act VI of 1996) itself may prejudice case of the either parties.

In view of the above discussions, the applicants i.e. Collector Customs (Import) and Province of Sindh appear to be necessary party and even otherwise no counter-affidavit appears to have been filed. Accordingly their respective applications bearing CMA No.6402 and 6404 of 2016 are allowed. Amended title/plaint be filed within one week.

 

Dated: 09.05.2016                                                            Judge