PESHAWAR: A Peshawar High Court bench has announced unlawful the imposition of different taxes on electricity bills of industrial units in the erstwhile Fata, ruling that the sectors are not liable to any tax, which was not there prior to the enactment of Constitution ( Twenty-Fifth Amendment ) Act. Justice Roohul Amin Khan and Justice Nasir Mahfooz accepted around 25 petitions filed by steel mills from tribal districts and announced them immune to taxes , including advanced income tax , sales tax , extra tax , further tax , further tax and various other duties in electricity costs granted to them after the merger of tribal places with Khyber Pakhtunkhwa .
The bench ruled that to avail tax immunity, the petitioner was not needed to obtain any tax exemption certificate as provided under Section 159 of the Income Tax Ordinance. Guidelines residents are not liable to some tax that didn’t exist before the 25th Constitutional Amendment The court had heard petitions in April. Shumail Ahmad Butt , legal adviser for the petitioners , declared the Tribal Areas Electric Supply Company ( Tesco), under supervision and control over the Govt Ministry of Power and Peshawar Electric Supply Company ( Pesco ), provided electrical power in the erstwhile Fata, whereas petitioners being its consumers were continually paying electricity bills of their industrialized units .
He declared for January 2019, the Tesco had posted power bills of the petitioners wherein unprecedented heavy and exorbitant amount under the heads of income tax, sale tax, FC surcharge, extra tax, and further tax, have been charged without lawful justification. The lawyer declared after the enactment of the Constitution ( Twenty-Fifth Amendment ) Act, 2018, Article 247 of the Constitution was omitted and relevant changes to Article 246 of the Constitution were made and Fata and Pata were merged with KP.
He declared the Economic Coordination Committee of the federal govt had approved tax exemptions and bonuses for the residents of former Fata and Pata for a period of 5 years to facilitate the common consumers and domestic consumers of electricity. The lawyer declared various SROs were granted by the federal government whereby profits and gains derived by individuals, an association of persons and organizations of former Fata were exempted from various taxes for 5 years with effect from Jun 1, 2018, to Jun 30, 2023.
The bench ruled that undisputedly , SROs under conversation had been granted under section 53( 2 ) of Income Tax Ordinance , which not only empowered the Federal Board of Revenue ( with the approval of Federal Minister-in-charge ) to exempt any class or classes of persons specified in the second Plan from payment of tax , but also empowered the Federal Government to exempt anyone from the operation of any provision of the Ordinance . It added that the provision of Income Tax Ordinance manifested that exemption from tax or exemption from the operation of any provision of the Income Tax Ordinance, might be permitted to anyone who falls within the domain of FBR and liable to pay tax.
“Needless to mention that Section 235 of the Income Tax Ordinance, whereby advance tax may be gathered on account of electricity usage, has been made not applicable by the SRO No1213 to the combined areas. Likewise, vide SRO No1212, all types of sales tax recoverable under Sale Tax Act, 1990, have not been made applicable and the residents of the combined places have been exempted from whole of the sales tax on a supply made until June 30, 2023,” the court ruled.
“Looking fairly at the preamble of the SROs and language utilized therein , one can reach an irresistible conclusion that the Federal Government, after merger of Fata into the settled place, had decided that tax laws shall be applied phase-wise to the defunct Fata within a transition period of 5 years ,” it observed adding that instead of tax exemption, the inhabitants of the defunct Fata were given ‘exemption from applicability of provision of payment of tax’ .
The courtroom ruled that the petitioners had not been exempted from tax payable under the related provisions rather they had been exempted from applicability of the declared provisions. It observed that ‘exemption from payment of tax’ was a concession, while ‘exemption from applicability of a provision of Ordinance’ was an absolute immunity. “In case of exemption, the tax-payer shall need an ‘Exemption Certificate’ while in case of immunity from the provision of Ordinance, it shall be deemed that the Ordinance is not applicable to tax-payer,” it observed.