KARACHI: The Sindh High Court (SHC) on Tuesday allowed the petition of an importer of cellular mobile phones, declaring the show-cause notice issued to it by the Federal Board of Revenue (FBR) for payment of Rs 130.58 million additional taxes unlawful.
Justice Sajjad Ali Shah, who headed a division bench, announced the verdict disposing of the petition filed by Digicom Trading (Pvt) Limited against t he FBR for demanding additional taxes.
The petitioner, importer of cellular mobile phones under the brand name Q Mobiles, submitted that it had paid sales taxes on its various consignments at import stage under the SRO 460(I)/2013. Nevertheless, it was issued a show-cause notice dated May 28, 2014 for payment of additional taxes amounting to Rs 130. 58 million.
Through the show-cause notice, the counsel for the petitioner said, the FBR authorities have demanded one percent additional tax under the Finance Act in addition to sales tax paid by the petitioner. The petitioner had discharged its liabilities at the import stage, whereas, the sales tax on the supply stage is to be deducted and paid by the company on every new sale or activation of SIM card, argued the counsel.
In response to the petition, the federal law officer submitted the comments of the FRB officials explaining that the additional tax is being levied under the Section 3(I) (A) of the Finance Act and it has nothing to do with the above-mentioned SRO as the petitioner supplies goods to unregistered persons, hence, it is liable to pay one percent additional tax.
In the judgment, the judges held that the petitioner has discharged its liability of sales tax at the import stage by complying with provisions of the SRO. They ruled that the show-cause notice was issued without any lawful authority and jurisdiction and is hereby quashed.
