PESHAWAR: A Peshawar High Court bench on Friday issued a stay order against the recovery of income tax from a ghee mills in the erstwhile Provincially Administered Tribal Areasin the wake of the region’s merger with Khyber Pakhtunkhwa.

Justice Ikramullah Khan and Justice Mohammad Ayub Khan issued the order on a petition filed by an erstwhile Pata-based cooking oil and ghee industry, which contended that the federal government had promised to grant tax exemption to the people of Fata and Pata for at least five years after the region’s merger with KP.

The bench issued notices to the respondents, including Federal Board of Revenue chairman, Peshawar income tax commissioner, the Peshawar customs collector and others, asking them to respond to the petition separately until the next hearing to be fixed afterward.

Issues notices to FBR, income tax commissioner on matter

The petitioner, Lal Oil and Ghee Mills Limited local in Sakhakot area of Malakand, has prayed the court to declare that it is not liable to pay the income tax on the consignments meant for its industrial unit situated in the defunct Pata in light of the dispensation promised at the time of the passage of the Constitution (31st Amendment) Act, 2018, and that any demand made by the government in this respect is illegal and unlawful.

It also asked the court to order the FBR, income tax commissioner and customs authorities to clear its consignment without charging income tax on import of raw material or ghee material and its business in Pata.

Shumail Ahmad Butt, lawyer for the petitioner, said the customs authorities had stopped consignments of raw materials of his client demanding millions in advance taxes on the ground that special status of Pata had been abolished through a constitutional amendment.

He said until the passage of the 31st Constitutional Amendment, the Sales Tax Act 1990 and Income Tax Ordinance 2001 were not extended to Fata and Pata by the president of Pakistan, the customs authorities at ports of entry were refrained from charging the income tax and sales tax on any consignment intended for the industrial concerns located in tribal areas.

The lawyer said it was on record that when the 31st Amendment was put to approval before the KP Assembly on May 27, it was a precondition set by most MPAs that an assurance from the federal government be sought regarding at least 10 years exemption to Fata and Pata from taxes.

He said in compliance with the FBR’s SRO, the consumers of Pata and Fata had ordered consignments for consumption in the then tribal areas but on arrival, the respondents refused to clear them.

The lawyer said his client submitted an application with the FBR explaining the entire matter but the latter issued an order on his application regretting the issuance of exemption certificate under Section 148 of the Income Tax Ordinance 2001 for the import of raw material of edible oil.

Published in Dawn, October 6th, 2018