KARACHI: The Sindh High Court on Friday restrained the Federal Board of Revenue (FBR) from taking adverse action against over 50 companies, listed at Karachi Stock Exchange, in pursuance of its notices for payment of levy on services.
Headed by Justice Hassan Azhar Rizvi, a division bench had taken up the petitions filed by several companies which had moved the court against the FBR for imposing tax on services.
The bench issued notice to the respondents – the federal finance secretary, the chairman of the Federal Board of Revenue and deputy commissioner Inland Revenue – to file their respective replies to the petitions by August 10.
Advocate Rashid Anwar, who represented the petitioners, submitted that after the passage of the Eighteenth Amendment of the Constitution, the provincial legislatures have now sole authority to impose such a levy, and that the provincial legislature has enacted the Sindh Sales Tax on Services Act, 2011.
He stated that the federal authorities had no power to impose tax on service, despite the fact it was issuing show-cause notices to the petitioners, demanding levy.
The counsel told the judges that the deputy commissioner Inland Revenue had issued show-cause notices to the petitioners, asking them to explain as to why they have short paid federal excise duty on their services. Subsequently, the petitioners filed their replies to the notices, stating after the enactment of Sindh Sales Tax on Services Act, 2011 FBR had no jurisdiction to charge excise duty.
Later, the counsel added, the deputy commissioner Inland Revenue passed an order, directing them to pay excise duty.
The counsel argued that impugned order was illegal, unlawful and without jurisdiction while pleading with the judges to declare as illegal the act of FBR officials to demand tax on services. The court was further requested to permanently restrain FBR from imposing tax on services.
