PROVINCE OF SINDH vs MULTILINE ENTERPRISES S — 2024 PLD 81 SUPREME-COURT

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PROVINCE OF SINDH VS MULTILINE ENTERPRISES S. 64a---Provincial Government tender for supply of imported tractors---Suit for recovery of advance income tax and sales tax paid by the supplier on import of tractors---Single Judge of the High Court dismissed the claim of supplier insofar as it related to the reimbursement of advance income tax at import stage at the enhanced rate, however, the claim for reimbursement of sales tax was sustained and decreed---Division Bench of the High Court dismissed both appeals filed by the supplier and the Provincial Government---Validity---Section 64a of the Sale of Goods act, 1930 applies only in relation to three types of taxes: central excise duty, customs duty and sales tax---Said section makes no mention of income tax, thus, section 64a does not apply to income tax---In such circumstances both the Single Judge and the Division Bench rightly disallowed the supplier's claim with regard to income tax---With respect to sales tax, Clause 26.1 of the general conditions appended to the contract stipulated that the contract was on DDP basis, i.e., Delivery Duty Paid---'DDP' is a term that is part of "Incoterms", which is a well known and established system in international trade---In respect of the contract in the present case eighth version, Incoterms 2010, was applicable---Contract on DDP basis is most favorable for the buyer in that almost all the risks, costs and tasks are to the account of the seller---This includes any duties or taxes payable---Thus, a contract on DDP basis maximizes the risks and responsibilities of the seller and minimizes those of the buyer---Given this distribution, it is hardly surprising that in the present case the Provincial Government chose to incorporate this term in the general conditions of its contract---Clause 26, and the requirement that the contract was on DDP basis, was a stipulation that was precisely within the contemplation of section 64a of the Sale of Goods act, 1930, i.e., it was an agreement between the parties as to what would happen if there was a change in the duties and taxes applicable after the contract had been entered into---That burden fell entirely upon, and was wholly and solely the responsibility of the supplier---Section 64a, on its own terms, did not have any application to the present case in such regard---Legal liability to pay the sales tax lay on the supplier, and clause 26 threw the financial burden also on it---Supplier therefore could not base a claim in these terms either---appeals were disposed with the result that supplier's suit failed in its entirety and was liable to be dismissed.

PROVINCE OF SINDH vs MULTILINE ENTERPRISES S — 2024 PLD 81 SUPREME-COURT

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