LAHORE: The Lahore High Court on Friday suspended notices for the recovery of agriculture income tax issued to hundreds of individuals for the period prior to promulgation of the Finance Act 2013.

Justice Ayesha A. Malik issued the stay order on petitions challenging the tax recovery notices for the year 2012 by the district collector of the Punjab government.

The judge also directed the district collector, Federal Board of Revenue, and federal and Punjab governments to submit their replies.

Lead counsel for the petitioners Advocate Muhammad Ajmal Khan argued that the district collector of the provincial government had no powers to collect the agriculture income tax for the period prior to promulgation of the Finance Act, 2013.

He said the government inserted Section 3-B in the Punjab Agricultural Income Tax Act 1997 giving retrospectively effect, which was a violation of settled tax laws and statutes.

He pointed out that all tax laws envisaged that any amendment to the law would have prospective effect, but not retrospective. However, he said, the government had been issuing notices for the tax recovery to the petitioners while relaying and misinterpreting a Supreme Court judgment.

The counsel argued that Section 3-B of the Punjab Agricultural Act, 1997, was promulgated through the Finance Act, 2013, however the recovery was being sought in respect of the period prior to promulgation of that section.

He further argued that the agriculture income was exempted under the provisions of the Income Tax Ordinance, 2001.

After hearing the arguments, the judge suspended the tax recovery notices and directed the FBR district collector and other respondents to submit their replies till June 26.

Published in Dawn, May 11th, 2019