PESHAWAR: The vice chancellor of Fata University has moved the Peshawar High Court against income tax deducted from his salary and of other varsity employees, stating that the businesses and persons serving in the erstwhile tribal areas have been exempted from levy of taxes.

The vice chancellor, Prof Dr Jehanzeb Khan, has requested the high court to declare as illegal the demand of income tax from him and other employees by the government and also to declare it in conflict with an SRO issued in 2018 in this regard.

The petition is filed through advocate Saifullah Muhib Kakakhel and Nouman Muhib Kakakhel.

The petitioner stated that the erstwhile Fata was merged with Khyber Pakhtunkhwa through the Constitution (Twenty-Fifth Amendment) Act, 2018, and in order to give breathing space to the people of those areas for entering into tax regime, a tax immunity was maintained.

Urges court to declare tax levy in conflict with an SRO issued in 2018

He stated that exemption from applicability from levy of income tax was given to individuals, associations of persons and companies living or working for gain in erstwhile Fata from June 1, 2018, to June 30, 2023, by virtue of an SRO issued in 2018.

The petitioner pleaded that to avoid abrupt applicability of taxes in the defunct Fata, as its concept was alien to the inhabitants, and to move them from a century-old system into the constitutional tax regime prevalent in the settled areas, the said SRO was issued on July 23, 2018, whereby four major changes were made in the tax regime for providing tax exemption.

He stated that the eligibility of exemption given in the said SRO included: Business in defunct Fata shall be registered with the field officer by Sept 30, 2018; the person owing business must be a bona fide resident of defunct Fata; the earning of the person must be from the locality of defunct Fata; and, the registered office of the business concern be situated in those areas.

The petitioner contended that he wrote various letters to the authorities for extended benefit of the said SROs to him as he not only rendered services and earned in defunct Fata but also spent the money therein.

He stated that the exemption from applicability of the provisions of The Income Tax Ordinance, 2001, was declared as “an absolute immunity” by a judgement of a division bench of this high court in a judgment reported in 2019.

He stated that in a similar case of levy of income tax in defunct Fata, the PHC had declared that the petitioners were not liable to pay any tax which was not applicable prior to the Constitutional (Twenty-Fifth Amendment) Act, 2018 and declared the same to be in violation of the said SRO.

The petitioner contended that the Fata University was created by virtue of the KP Universities Act, 2012, and was located in erstwhile Fata.

He contended that the university enjoyed financial autonomy and it generated its own revenue in shape of University Fund, thus it was a company/ association of persons as defined in the Income Tax Ordinance, 2001.

The petitioner stated that employees of the university were paid from the university fund and since they reside either on the university premises or nearby, the same amount was spent therein.

Published in Dawn, January 16th, 2023