GILGIT: The income tax, sales tax and additional sales tax collected by revenue authorities on goods imported from China through the Khunjerab Pass is illegal, the Gilgit-Baltistan Chief Court declared on Friday.

The court stopped the Federal Board of Revenue (FBR) and Customs from collecting these taxes.

The order was issued by Justice Raja Shakeel Ahmed on a petition filed by GB Importers and Exporters Association president Muhammad Iqbal through his counsel.

The trader challenged the taxes collected at the Sost Dry Port on Chinese goods imported through the Khunjerab Pass.

Judge notes region is exempt from taxes on imported items

The petitioners said the FBR, through a 1996 notification — which is still operational — had suspended the collection of sales tax on imported goods in GB.

He also referred to the subsequent orders by the GB Council Secretariat in Islamabad, the Ministry of Kashmir Affairs and Gilgit-Baltistan and the GB law department, which declared the region exempt from these taxes.

Still, the FBR and Customs were “illegally” collecting these taxes in violation of their authority, the petitioner pleaded.

Following the proceedings, Justice Ahmed issued a short order and admitted the petition for regular hearing.

He noted that GB was indeed exempted from all kinds of taxes, and the issue has been decided by courts in the past.

The petition will now be fixed for hearing after summer vacations.

While talking to Dawn, Advocate Adnan Hussain, one of the petitioner’s lawyers, said federal and regional authorities had issued several notifications exempting GB from sales tax, income tax, and additional sales tax.

Additionally, the region’s chief court has already decided that GB is exempted from these taxes.

“Despite [these] exemptions, FBR has been illegally collecting and deducting the taxes from GB traders on imported items from China at Sost Dry port,” he added.

Mr Iqbal, the petitioner, said GB traders were ready to pay the custom duty and other taxes, but they will continue their struggle against “all illegal taxes at Sost Dry port”.

The discontent among GB traders over these taxes has already resulted in numerous strikes and halting of trade activities in the region since April, with the latest strike earlier this month.

Earlier in June, the GB Assembly also passed a resolution demanding the federal government stop collecting taxes on goods imported from China through the Khunjerab Pass.

Published in Dawn, July 21st, 2024