KARACHI: A division bench of the Sindh High Court directed high officials of customs department that till next date of hearing, no adverse action may be taken against the petitioner in respect of subject controversy on a constitutional petition filed by M/s Al-Karam Towel Industries against respondents are not accepting 10% tax credit under section 65b of the income tax ordinance 2001.
On 31 December, 2020 Taimoor Ali Mirz Advocate appears before the court for petitioner and submits that petitioner is a private limited company engaged in manufacturing and export of terry towels and imported plant and machinery for installation in the industrial unit, and claimed tax credit for investment in terms of section 65B of the income tax ordinance, 2001 as it stood on June 30, 2019.
He further submits that petitioner has already made investment and purchased the machinery pursuant to aforesaid un-amended statutory provisions as stood as on June 30, 2019, however, through finance act, 2019 an amendment has been made in sub-section I whereby, proviso has been added to the effect that “ provided that for the tax year 2019 the rate of credit shall be equal to five percent of the amount so invested” whereas, in sub-section 2 of the section 65B, another amendment has been made, whereby, period up to June 20121 has been reduced to June 2019, whereas, respondents intend to apply such amendment retrospectively even in cases where such investment has already been made.
He further argues that the right accrued in favor of the petitioner, who mad investment on the basis of prevailing statutory provision, has been withdrawn retrospectively, according to the learned counsel, the impugned amendment and its retrospective application in this regard is ultra-rives to the constitution and the judgments of the Supreme Court in the case of Molasses Trading & Export vs Federation of Pakistan and others (1993 SCMR 1905) and also the case of Gulshan Spinning Mills Limited & others vs Government of Pakistan and others (2005 PTD 259).
It has been further contended by the learned counsel for the petitioner that the petitioner is under legal obligation to furnish its return by Dec 31, 2020 as per law as it existed prior to impugned amendments to be applied prospectively, however, e-portal computer system of respondents is not accepting 10% tax credit under section 65b of the income tax ordinance 2001.
After the hearing, the court issued notices to the customs officials and fixed the date after four weeks along with other connected petitions on the subject.
