RAWALPINDI: The Lahore High Court’s (LHC) Rawalpindi bench, on Wednesday, disposed of a petition by the Strategic Plans Division (SPD) against show cause notices issued by the Punjab Revenue Authority (PRA) for recovery of tax.

Justice Jawad Hassan allowed both entities to resolve the dispute through mediation.

The court noted that the Alternative Dispute Resolution (ADR) system in Pakistan had been influenced by the need to alleviate the overburdened judicial system, adding that ADR aimed to provide more efficient, cost-effective and amicable dispute resolution alternatives.

According to the SPD, they are aggrieved by the “impugned notices” issued by the PRA imposing an “unlawful” levy of provincial sales tax on services. Therefore, it says, the same be declared as illegal and having been issued without lawful authority.

Ahmar Bilal Soofi, counsel for the SPD, contended that PRA could not impose sales tax on SPD as it had no jurisdiction.

PRA objected to the maintainability of these petitions by submitting that the “impugned noti­ces” had been issued as per law. The PRA’s lawyer arg­u­ed that mere issuance of a notice or a show cause notice was not an adverse order, and a petition under Article 199 of the Consti­tution would not be competent.

Justice Hassan onoted that issuance of show cause notice was not an adverse order. He observed that “a show cause notice served to a taxpayer must encompass all essential facts and clearly outline the alleged actions or inaction by the taxpayer”.

However, since the counsel for the PRA and the SPD had agreed upon settlement of the dispute through mediation under the ADR Act, the court disposed of the petition with the observation that that the representative of the petitioner “shall appear” before the PRA who shall proceed ahead with the mechanism of ADR in accordance with law and guidelines of the Supreme Court of Pakistan.

Published in Dawn, May 30th, 2024