KARACHI: The Sindh High Court (SHC) has restrained the Tax Department from recovering federal excise duty from the Indus Motor Company Limited.
The court took this action on a constitutional petition filed by the company against a show cause notice issued by tax authorities.
While the hearing of petition, a two-member bench, headed by Justice Aqeel Ahmed Abbasi, also directed the tax authorities and deputy attorney general of Pakistan to file their respective comments for third week of February 2017.
During the hearing, counsel for the sectary revenue division and deputy commissioner audit unit-02 zone-01 of the Large Taxpayer Unit, sought time to submit para-wise comments on the petition. Therefore, the court adjourned the hearing and continued interim order which was passed by this court on the last hearing.
On last date of hearing, court had restrained the tax authorities from recovering the federal excise duty.
Earlier, counsel for the petitioner stated that deputy commissioner audit unit-02 zone-01 of the Large Taxpayer Unit issued the show cause notice to the petitioner to pay federal excise duty (FED) on royalty fee/ technical fee on account of franchised services. The counsel argued that federal respondents cannot recover FED in the rendering or provision of services, therefore, the impugned show cause notice is illegal and unconstitutional.
Citing Sectary Revenue Division, Chairman Federal Board of Revenue, Deputy Commissioner Audit Unit-02 Zone-01, Large Taxpayer Unit and Chairman Sindh Revenue Division as respondents, the petitioner pleaded the court to declare that act of the respondents as illegal, mala fide and arbitrary.
It also pleaded the court may set aside impugned show cause notice and restrain them from taking any coercive action against the company.
