Page 256 - InterloopAnnualReport2020

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

For the year ended June 30, 2020

29.1.1 Honourable Sindh High Court in its decision dated September 17, 2008 declared the imposition of
infrastructure cess before December 28, 2006 as void and invalid. However, the Excise and Taxation
Department filed an appeal before the Honourable Supreme Court of Pakistan. The Honourable Supreme
court of Pakistan had disposed off the appeal with a joint statement of the parties that during the pendency of
the appeal, another law i.e. fifth version came into existence which was not the subject matter of the appeal
hence the case was referred back to High Court of Sindh with right to appeal to Supreme Court. On May
31, 2011, the High Court of Sindh had granted an interim relief on an application of petitioners on certain
terms including discharge and return of bank guarantees / security furnished on consignment released up to
December 27, 2006 and any bank guarantee / security furnished on consignment released after December
27, 2006 shall be encashed to extent of 50% of the guaranteed or secured amount only with balance kept
intact till the disposal of petition. In case the High Court upholds the applicability fifth version of law and its
retrospective application, the authorities are entitled to claim the amounts due under the said law with the
right to appeal available to petitioner. In the light of interim relief the Group has paid 50% of the amount of
Infrastructure cess. Imports of the Company are being released against 50% payment of Infrastructure cess
to Excise and Taxation Department and furnishing of bank guarantee of balance amount.

The Government of Punjab imposed Punjab Infrastructure Development Levy in terms of the Punjab
Infrastructure Development Cess Act, 2015 (the Act) read with PRA Notification No.PRA/IDC/2015 dated May
16, 2016 and PRA order No.PRA/Orders.08/2015 dated May 23, 2016. The Company being aggrieved filed
writ petition vide WP No.24536 of 2016 before Honorable Lahore High Court challenging the constitutionality
of the Act. The Lahore High Court on July 28, 2016 granted interim relief for clearance of goods subject to
payment of 50% of the disputed amount and upon furnishing of a bank guarantee for the balance of 50% of
the amount.

Both the above referred cases are pending litigation before respective Honorable High Courts. The case
of Sindh High Court has been fixed after summer vacation, i.e August 01, 2020 whereas case filed before
Honorable Lahore High Court has been adjourned without any next date.

The full amount of Infrastructure cess forms component of cost of imported items and provision recorded in
books. Bank guarantees furnished regarding imposition of infrastructure cess have been disclosed in note
– 33.1 to these consolidated financial statements.

29.2 The investments out of provident fund have been made in accordance with the provisions of section 218 of
the Companies Act, 2017 and conditions specified thereunder.

2020 2019
(Rupees ‘000) (Rupees ‘000)

29.3 Workers’ profit participation fund
Balance as on July 01, 2019 285,500 210,828
Interest on funds utilized in the group’s business 2,815 21,425
288,315 232,253
Less: paid during the year (288,315) (232,068)
– 185
Add: allocation for the year 112,527 285,315
Add: capitalized in Denim division 1,050 –
113,577 285,315
113,577 285,500

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