SC says no coercive proceedings should be taken against KE

The Supreme Court on Monday issued notices to the secretary Cabinet Division, Ministry of Water and Power, chairman Federal Board of Revenue (FBR) and collector Customs for not deciding issue of payment of customs duty, sales tax and demurrage/port charges with K-Electric. Attorney General for Pakistan was also issued a notice through which he was asked to assist the court regarding the failure of the federal government to discharge its responsibility.
A three-member bench headed by Justice Umar Atta Bandial was hearing K-Electric petition against the Sindh High Court judgement. Justice Bandial questioned why the federal government has not decided the matter for the last 21 years. He said that no coercive proceedings should be taken against K-Electric. K-Electric was directed to submit 25% amount of the total liability i.e. Rs 321.733 million with respondent No.4 (collector Customs).
Arshad M Tayebaly, representing K-Electric, contended that a division bench of Sindh High Court has failed to address the basic controversy vis-à-vis the role of the respondents No. 1 & 2 who are under an obligation to resolve the dispute pertaining to Rs 321.733 million as per the decision of the ECC dated 19-05-1998 and the notification dated 07-09-2000.
Karachi Electric Supply Corporation (KESC) was granted exclusive licence by the National Electric Power Regulatory Authority under the provision of Regulation of Generation, Transmission and Distribution Act, 1997. It was privatised in November 2005 and K-Electric got its management in 2008 and amendment agreement was executed between the present management and the President of Pakistan on 13-04-2009.
It imported machinery/equipment for maintenance and up-gradation of its transmission and distribution system. The issue pertaining to the payment of customs duty, sales tax and demurrage/port charges etc arose apparently due to inability of Ministry of Water and Power, which was ultimately brought before the Economic Coordination Committee through summary dated 18-04-1998. The ECC took up the case on 19-05-1998 and decided that the issue of taxes, demurrage would be considered by a committee constituted by Ministry of Water and Power with the secretary communication and the chairman FBR its members.
The petitioner was alarmed and surprised to receive a recovery notice under Section 202 (1) of Customs Act, 1969 on 12-02-2007 inter alia raising demand by Respondent No. 4 of Rs 321.733 million shown to be outstanding against the petitioner. Tayebaly said since 2008, 15 letters have been written to the concerned authority, but the respondents have not resolved the issue.
The counsel said that the petitioner waited for the recommendation of the committee constituted by ECC and any decision of the ECC. However, the petitioner was shocked to receive a letter from Collector Customs on 30-12-2009 that the deadline for de-blocking i.e. 20-12-2009 has passed and the outstanding amounts were not paid. The demand of payment Rs 321.733 million was again raised through the notice that had to be paid within 10 days of the notice.
The "coercive and pressure tactics" applied by FBR and Customs are against the constitutional guarantees and hence illegal and ultra vires. The attitude of the respondent 2 in this matter has been completely negligent and irresponsible. No material steps have been taken by them till date for finalisation of the issue with ECC or its onward approval through Respondent No.1.
The uncalled-for and unwarranted blockage of the imports/exports of the goods/ consignments of the petitioners now and then in pursuance of the order dated 11-06-2014 has caused tremendous losses to the petitioner, which were approximately Rs 52 million on June 2014 and paid by it as demurrage/port charges. The respondents are jointly and/or severally obliged to refund this amount to the petitioner.
Therefore, the petitioner filed a suit against the respondents and sought the orders for suspension of the blockage order dated June 11, 2014 with further direction against the respondents for not taking any coercive action against the petitioner pursuant to the recovery notices. The court issued stay order restraining the respondents from taking any coercive action against the petitioner.
When the Supreme Court had directed the petitioner to deposit 50% of the total amount, they withdrew the suit. The High Court passed the order that the suit is dismissed as withdrawn, which was later on challenged before a division bench of SHC. The division bench "without looking into the merits" observed that the withdrawal of suit prima facie appears to be a consequence of the Supreme Court order and on 05-04-2019 dismissed it on the ground of non-maintainability. Being aggrieved of the SHC, the petitioner approached the Supreme Court. The petitioner prayed the apex court to declare that the Respondents No. 3 & 4 (FBR & Collector Customs) are neither justified nor entitled to demand Rs 321.733 million together with late payment charges from the petition in light of ECC decision dated 19-05-1998.