LAHORE: The Lahore High Court’s Rawalpindi Bench has set aside proceedings initiated by the Punjab Revenue Authority (PRA) in a sales tax dispute involving Fauji Wind Energy, ruling that the authority had no lawful jurisdiction over services linked to wind power operations located in Sindh.
The dispute arose after PRA alleged that the company failed to withhold Punjab Sales Tax on services received between July 1, 2014, and June 30, 2015. The notice cited payments exceeding ₨3.05 billion and an alleged tax liability of ₨488 million.
A division bench allowed the company’s sales tax reference and quashed the show-cause notice issued on June 15, 2016, the order-in-original and the appellate tribunal’s order dated February 25, 2025. The court declared the proceedings illegal and without lawful authority.
The bench held that the services in question were received and consumed in Sindh, where the wind power project operates, and therefore fell outside the territorial jurisdiction of Punjab’s tax authorities.
In reaching its conclusion, the court referred to earlier decisions, including a case involving Fauji Cement Company Limited and another concerning Rahat Café and other eateries in Rawalpindi. However, the court noted that those cases were decided on different legal grounds.
In the Fauji Cement matter, the issue related to the procedural basis adopted by PRA under Section 52 of the Punjab Sales Tax on Services Act, 2012, rather than territorial jurisdiction. The dispute focused on whether the authority had invoked the correct legal provision and fulfilled mandatory prerequisites for recovery action.
In the Rahat Café litigation, the Rawalpindi Bench had set aside recovery notices issued to several eateries after finding that the assessments were based on assumptions and that the petitioners were not provided adequate opportunity to respond. The court’s ruling in that case centred on lack of due inquiry, not jurisdictional overreach.
