PESHAWAR: The Peshawar High Court on Thursday declared illegal the order of the Federal Board of Revenue for the transfer of taxation-related matters of around 360 industrial units and companies of Khyber Pakhtunkhwa from the Regional Tax Office in Peshawar to the Large Taxpayer Unit (LTU) in Islamabad.

A bench consisting of Justice Ishtiaq Ibrahim and Justice Syed M. Attique Shah accepted 66 identical petitions filed by the Alpha Pipe Industries, Peshawar Electric Supply Company and other industries and commercial entities against the Aug 5, 2020, order by the FBR chief (IR-Formation) for shifting the jurisdiction for petitioners over income tax, sales tax, federal excise and other related matters from Peshawar RTO to Islamabad LTU.

The detailed judgement will be issued later.

Respondents in the petition were the federal government through the revenue secretary, FBR through its chairman, Peshawar RTO through its chief commissioner, and FBR chief (IR-Formation), Islamabad.

Accepts pleas of industries, firms against FBR order for change of jurisdiction

Several lawyers appeared for the petitioners and they included Ishaq Ali Qazi, Qazi Ghulam Dastagir, Ishtiaq Ahmad, Sheeraz Butt, Barrister Amirullah Khan and others.

The counsel said the FBR chief (IR-Formation) had issued the impugned jurisdiction order on Aug 5, 2020, declaring that it will take effect on Aug 10 the same year.

They said the order in question revised the jurisdictions of the chief commissioner and commissioner (Inland Revenue) and assigned the jurisdiction of different industrial units registered in KP to the LTU commissioner.

The lawyers said the jurisdictions related to income tax, sales tax and federal excise of a large number of industries, including that of the petitioners, were transferred to the LTU and after Aug 10, their cases for the purpose of assessment and refunds would be processed there instead of Peshawar RTO.

They said the FBR order didn’t provide reasons for the move.

The lawyers said the order was a discrimination against KP industries as the industries or units of the same nature functioning in other parts of the country were assessed in their respective RTOs.

They said neither the representatives of the Sarhad Chamber of Commerce and Industries nor their clients were given an opportunity of hearing on the matter.

The lawyers argued that the Sales Tax Act clearly gave the right of selecting jurisdiction to taxpayers.

They said many units operated in the sector throughout the country and if matters of only a few units were shifted to the LTU, it would be a broad discrimination.

The counsel said the government and tax collection authority were meant to facilitate taxpayers instead of creating obstacles in the smooth running of their business activities.

They contended that the FBR order didn’t explain for what purpose and on what basis their clients’ jurisdiction was changed from Peshawar RTO to Islamabad LTU.

The lawyers said if the placement of industry was necessary in the LTU, then the FBR should establish that unit in Peshawar for the industries of Khyber Pakhtunkhwa instead of transferring the matters of their clients to another LTU far away from their native business places.

Sheeraz Butt said he had filed a petition on behalf of Pesco.

He said while Pesco was a distribution company of KP, its tax matters had also been transferred to LTU, which was an injustice to it.

In Sept 2020, a bench headed by the then PHC chief justice, Waqar Ahmad Seth, had also accepted some of those petitions and pronounced a short order.

However, the detailed judgement wasn’t released as the chief justice first went down with coronavirus and then died in Nov 2020.

The bench was then tasked with hearing the petitions afresh.

Published in Dawn, April 7th, 2023