KARACHI: The Sindh High Court (SHC) has issued notices to the tax authorities and deputy attorney general on a constitutional petition filed by M/s Khawaja Enterprises against impugned recovery notice of Rs 834,678 under the head of withholding tax.
During the hearing, a two-member bench comprising Justice Aqeel Ahmed Abbasi and Justice Muhammad Arshad Khan directing them to file their respective para-wise comments and restrained them from enforce impugned recovery till the next date of hearing. The court also adjourned the hearing for February 22, 2017.
During the hearing, counsel for the petitioner submitted that pursuant to assessment order dated November 30, 2016 passed by deputy commissioner Inland Revenue Withholding Range A & B Zone-V in the case, the petitioner has filed an appeal along with stay application before the commissioner (Appeals-IV) Inland Revenue, which is pending disposal. However, according to the learned counsel, during pendency of such appeal, the respondent’s department issued a notice on January 16, 2017 under section 48 of the Sales Tax Act, 1990 for recovery of the disputed amount, which is subject matter of appeal before the Commissioner (Appeals).
The counsel further argued that a taxpayer, if aggrieved by an adverse order passed by the Inland Revenue authorities is entitled to seek remedy of appeal provided under the relevant statute by independent forum of appeal, therefore, the recovery proceedings, initiated by the respondent department, under the circumstances, are based on mala fide.
After the arguments, counsel restrained the tax department from enforce recovery and directed them to submit para wise comments for next date of hearing.
Earlier, counsel for the petitioner stated in its constitutional petition that petitioner is law-abiding citizen and doing its lawful business of manufacture and supply of textile chemicals. He added that officials of the tax department issued a show cause notice to the petitioner alleged that non-deduction of withholding sales tax accruing to a total amount of Rs834, 678.
Citing chairman Federal Board of Revenue (FBR), chief commissioner Inland Revenue Regional Tax Office-II and deputy commissioner Inland Revenue Withholding Range A & B Zone-V as respondents, it pleaded the court may declare that act of the respondent is illegal, mala fide and arbitrary.
The petitioner also pleaded the court may set aside impugned show cause notice and restrain them from taking any adverse action against it.
