Home Business Car enthusiasts rejoice as SHC slashes import duties on cars

Car enthusiasts rejoice as SHC slashes import duties on cars

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The Sindh High Court has nullified the SRO (Statutory Regulatory Order) 1035 (1) issued by the government of Pakistan and has ordered to revert back the Regulatory Duty on imported items in its original form. The Sindh High Court (SHC) on 1st February, 2018 declared a legal amendment, which had given the finance minister powers of imposing regulatory duty unconstitutional and scrapped the duty levied on more than 356 items, putting the federal government in a tight spot.

The SHC made the Supreme Court’s “Trichotomy of Power” 2016 judgment the base line for declaring the amendment to the Customs Act 1969 through the Finance Act 2017 unconstitutional.

The judgment will come into effect in 30 days, giving the government a month’s notice to appeal against the verdict. Until then, it will be considered a suspended judgment. Importers and consumers alike are rejoicing at this verdict.

The SRO had been contested in a lawsuit filed by BMW, Audi Pakistan, Mercedes and Porsche against the unfair levies. In October 2017, the government of Pakistan had issued SRO 1035(1)/2017 and increased the Regulatory Duty on 731 imported items including automobiles, steel and groceries items, which was dealt a huge blow to auto enthusiasts. At that time, it was said that the government had devised this SRO to give further leverage to local producers and bar the devaluation of the rupee.

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Due to the SRO, the prices of imported items surged, including the prices of new imported automobiles. Audi, Mercedes, BMW and Porsche jacked up prices of their variants. Audi raised the price of its Q7 variant from Rs.16.5m to Rs19.5m and of Q5 from Rs.13.56m to Rs.15.2m.

After the issuance of the SRO, new car importers such as BMW, Audi and Porsche Pakistan filed the case in Sindh and Lahore High Courts and urged the courts to revert this SRO as it was against the spirit of the auto policy 2016-21 devised by the former premier and was harming their businesses.

This is a great step, initiated by international importers” Malik Sajawal, Secretary of Islamabad Auto Dealers Association spoke to GVS. “There are other ways to give leverage to local players such as incentivizing them to improve the quality of their products”, he said.

Five months into the lawsuit, the Sindh High Court has declared the SRO ultra vires, essentially meaning that the authority which has issued the SRO has no such power to issue SROs and the regulatory duty on imported items have been reverted back to what it was before October, 2017.

According to the SROs, vehicles which had been included for the purpose of levying regulatory duty included new sport utility vehicles 1801 cc to 3000 cc, RD 50 percent; Old and used sport utility vehicles 1801 CC to 3000cc, RD 60 percent; new cars and jeeps 1801 cc to 3000 cc, RD 50 percent; old and used cars and jeeps 1801 cc to 3000 cc, 60 percent; new cars and jeeps above 3000cc, RD 50 percent; old and used cars and jeeps above 3000 cc, RD 60 percent; new sport utility vehicles above 2000cc, RD 50 percent; old and used sport utility vehicles above 2000 cc; RD 60 percent; new all terrain vehicles (CBU), 50 percent; old and used all terrain vehicles, 50 percent, etc.

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The judgment will come into effect in 30 days, giving the government a month’s notice to appeal against the verdict. Until then, it will be considered a suspended judgment. Importers and consumers alike are rejoicing at this verdict. “The SRO was against the very spirit of the auto policy. Auto importers all over Pakistan were under duress and businesses were suffering. This is a great step, initiated by international importers” Malik Sajawal, Secretary of Islamabad Auto Dealers Association spoke to GVS. “There are other ways to give leverage to local players such as incentivizing them to improve the quality of their products”, he said.


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