PESHAWAR: A leading internet and TV service provider has moved Peshawar High Court against levy of 19.5 per cent sales tax on internet-based cable TV services by amending Khyber Pakhtunkhwa Sales Tax on Services Act, 2022.

The company M/S Cyber Internet Services operating under the brand name StormFiber has filed a petition, challenging the amendments made in KP Sales Tax on Services Act, 2022, through KP Finance Act, 2025, stating that the same was unconstitutional and unfair.

The petition, filed through Advocate Nouman Muhib Kakakhel, includes as respondents KP government through its chief secretary, KP Revenue Authority (KPRA) through its director general and secretaries of law and finance departments.

The petitioner said that it was a leading fibre to home (FTTH) internet and television service provider, operating since 1996, holding multiple licences from Pakistan Telecommunication Authority (PTA) and Pakistan Electronic Media Regulatory Authority (Pemra) including for Internet Protocol Television (IPTV) and traditional cable services.

Petitioner terms amendments in relevant law discriminatory, unconstitutional

The petitioner requested the court to declare the impugned amendment as unconstitutional and void to the extent it levied 19.5 per cent sales tax on cable TV services provided by telecommunication service providers.

The petitioner stated that there were two kinds of TV services in Pakistan -- Cable TV Distribution Service (CATV) and Internet Protocol Television (IPTV) -- which were regulated by Pemra.

It said that CATV referred to traditional television services, which transmitted content via cable infrastructure, whereas IPTV delivered content over internet, offering on demand viewing and interactive features.

The petitioner claimed that with the support of another company it provided CATV through a license duly issued by Pemra.

It stated that initially under KP Sales Tax on Services Act (STSA) two per cent sales tax was imposed on CATV, whereas 19.5 per cent was levied on internet-based TV services.

The petitioner contended that amendments were made in STSA through KP Finance Act, 2025, through which the tax ambit was drastically widened and an enhanced and discriminatory rate of 19.5 per cent was imposed upon the petitioner company and other similarly placed cable TV providers, who also provided other telecommunication services.

In contrast to that, the petitioner stated, the TV cable operators, who happened to have the same licence as that of the petitioner but did not provide other telecommunication services, were levied with five per cent of the tax after the impugned amendment.

The petitioner contended that the amendment that increased the rate of sales tax on Cable TV Distribution Services (CATV) provided by telecommunication service providers to 19.5 per cent, while keeping the same service at only five per cent for traditional cable operators holding identical Pemra licences was discriminatory.

It contended that the new tax regime violated constitutional guarantees of equality and fairness, particularly under Articles 4, 8, 18, 25, and 77 of the Constitution of Pakistan.

It said that the amendment was “discriminatory, unreasonable, and ultra vires” to KP STSA, which based taxation on the nature of the service rather than the identity of the service provider.

“The impugned amendment shifts the taxation basis from the service provided to the identity of the service provider, which is contrary to the legislative intent of the parent Act,” the petitioner maintained.

The company contended that the tax hike unfairly penalised technologically advanced providers offering integrated services like internet, TV and telephony, commonly known as “Triple Play Services.”

Advocate Nouman Muhib Kakakhel submitted that such an arbitrary classification discourages innovation and modernisation in the digital economy, effectively creating a dual taxation regime for identical services.

He said that that taxation policy couldn’t be used to penalise technological evolution, as doing so infringed upon the freedom of trade and business guaranteed under Article 18 of the Constitution.

Published in Dawn, November 10th, 2025