PESHAWAR: Peshawar High Court has declared that Federal Excise Duty (FED) couldn’t be imposed on green leaf and handstemmed tobacco unless it has been processed and converted by a green leaf threshing (GLT) unit.
A bench consisting of Justice Syed Arshad Ali and Justice Mohammad Faheem Wali disposed of 14 petitions filed by some tobacco growers, tobacco companies and GLT units, challenging the levy of FED on hand-stemmed tobacco, sealing of warehouses and godowns of some of the petitioners and confiscation of ‘un-manufactured’ tobacco and machinery present therein.
The bench issued multiple directives in its 29-page detailed judgement wherein it discussed threadbare different provisions of the FED Act, 2005, and its applicability to manufactured and un-manufactured tobacco.
The court directed relevant authorities to release the seizedtobacco, vehicles, equipment and records and de-seal the premises and machinery forthwith.
However, it directed where authorities maintained that any seized stock had been processed by a GLT unit, they could retain the identified goods for up to 15 days to pass a reasoned order after providing the affected party an opportunity of hearing.
The bench also set aside showcause notices and orders issued to the petitioners to the extent that they sought to impose FED on handstemmed, stemmed or green leaf tobacco not processed through a GLT unit. The court also set aside compulsory registration notices issued on the ground that handstemming constituted manufacturing, while clarifying that authorities could initiate fresh proceedings if material established that a person was operating a GLT unit. Granting relief to petitioners, the bench ordered the release of 3,375-kg ofhand-stemmed tobacco and the vehicle, belonging to one of the petitioners M/s Pak Hills Tobacco Company, while setting aside the FED demand.
The court also set aside the showcause notice demanding FED of Rs123.992 million from a petitioner M/S Royal Tobacco Company. It ordered that its godowns should be de-sealed and the 628,145-kg of hand-stemmed tobacco and 130,000kg of green leaf tobacco should be released.
However, the bench maintained that if the respondents assert that any goods seized from the petitioner were not hand-stemmed tobacco but unmanufactured tobacco processed and converted by a GLT unit, the competent authority should, within 15 days of the receipt of that judgement and after affording the petitioner concerned an opportunity of hearing, pass a reasoned order identifying such goods by quantity and description and stating the material on which that finding rested.-Bureau Report