In a decision impacting businesses that import firefighting equipment, the Sindh High Court (SHC) has ruled that such equipment qualifies for exemption from customs duties and sales tax at the import stage.
The case involved a company that imported firefighting and lightning equipment and claimed exemption under a specific regulation (SRO No. 41(I)/2009). However, the Customs Department denied the exemption.
The crux of the dispute hinged on the definition of “capital equipment” within the regulation. The company argued that firefighting equipment fell under this category and therefore qualified for the tax exemption.
The Customs Department countered that the equipment didn’t qualify as “machinery” under the SRO’s definition. They further argued that even if it did, an update to the regulation in 2019 meant the exemption wouldn’t apply to these specific imports.
The SHC disagreed with both arguments. The court acknowledged the ambiguity surrounding the machinery definition but noted that the equipment could be considered “capital equipment” independent of that classification.
Key Takeaways
- Firefighting equipment imports in Pakistan can be exempt from customs duties and sales tax under SRO No. 41(I)/2009.
- The Sindh High Court considers firefighting equipment to be “capital equipment” for the purpose of this tax exemption.
- The decision clarifies the applicability of the regulation to previously imported equipment.
Impact
This judgement is a significant win for companies importing firefighting equipment in Pakistan. It provides much-needed clarity on tax regulations and reduces the overall cost of acquiring this essential safety equipment.
Looking Forward
While the court’s decision settles this specific case, it’s advisable for businesses to stay updated on any further developments or revisions to the SRO regulations to ensure they are claiming all applicable tax exemptions.
