Audi, BMW, and Porsche Pakistan in courts against SRO1035(1)/2017- Here is what you need to know

• Ali Laghari


• 3 Nov 2017

The government of Pakistan issued SRO1035 (1) /2017 on 16, October 2017 and the reason for its issuance according to the government was to stop the devaluation of the rupee. Through this SRO government changed the regulatory import duties on many of the imported products varying from machinery to groceries—a total of 731 products. With the issuance of new SRO, the import duty on imported vehicles also changed, which created a lot of ambiguity and buzz in the local car market.

RELATED: Dissecting the new regulatory import tax on automobiles in Pakistan

Many deciphered the SRO differently according to their wishful thinking and knowledge, and we at PakWheels also decoded the SRO. We wrote a full-fledged article on the SRO and explained in detail what this SRO is all about. Some faction of people were maliciously spreading rumors that government has imposed new regulatory import duty on all new and used imported vehicles. However, after going through the SRO carefully, one can see that the regulatory import duty was changed for only new (zero-meter) imported vehicles.

The new SRO has been challenged in the Honourable Courts by Audi, BMW, and Porsche Pakistan. The respective brands import new cars in the country. Audi and BMW Pakistan have argued that SRO 1035(1)/2017 is malafide. Similarly, Porsche argued that the SRO is wholly invalid in both letter and spirit and is also harming and damaging the business.

BMW and Audi Pakistan have filed a case in Sindh High Court while Porsche Pakistan in Lahore High Court. BMW and Audi Pakistan filed under article 199 of the constitution of Pakistan, 1973. And on the following grounds (few are mentioned below).

• That the provisions of sub-section (3) of section 18 of the Act, 1969, is ultra vires the Constitution, and are liable to be struck down.
• That the rate of regulatory duty imposed under the impugned notification is disproportionate, exorbitant and extortionate.
• That the issuance of the impugned Notification dated 16.10.2017 is in violation of Article 18 and 25 of the Constitution, which requires protection of free trade.
• That the unlawful delegation of the legislative power to executive authority is not violative of the Constitution of Pakistan.

Porsche Pakistan’s spokesperson told us that this is the first time that the court has accepted a petition. He told us that if they win the case in the court, all the regulatory import duty which they would pay under new SRO shall be reimbursed to them. He further asserted that government is discouraging legal businesses due to illegal and invalid SRO it is issuing. We pay tax, GST and all other taxes and do business through legal channels but still, we get harsh and inappropriate policies from the government, which is not good at all, he added. Porsche Pakistan’s spokesperson also said that this SRO is against the Federation of Pakistan, and it was promised in auto policy 2016-2021 that the import duties will not be increased further.

Porsche has gone one step ahead and filed petition on the grounds that this whole SRO is invalid and argued that,

• The learned counsel for the petitioner lays a challenge to the SRO No.1035 (1)/2017 dated 16.10.2017. According to the learned counsel, the issuance of this notification offends the judgement of the Supreme Court of Pakistan in Messr Mustafa Impex Karachi & others v. Government of Pakistan through Secretary Finance, Islamabad and others (PLD 2016 Supreme Court 808) as also that the duties levied through this notification are expropriatory and offends the fundamental right of trade and business and treaty in the Constitution.

As mentioned above, according to Porsche’s spokesperson, this is the first time a petition has been accepted by Court, and that petition was filed by Porsche. The respondent shall file a reply in court on 30.11.2017. Moreover, it would be worth mentioning here that according to C.M.No.01/2017 (Any duty to be paid by the petitioner shall be subject to the final outcome of this petition)– in simple terms if Porsche Pakistan win the case regulatory import duty will be reimbursed, if otherwise, then they will not be getting any compensation from the government.  Porsche’s Case No is W.P.No.97255/2017.

Let’s wait and see what happens. Share your thoughts in the comment section below.