MUZAFFARABAD: The Azad Jammu and Kashmir (AJK) High Court on Thursday granted status quo relief to nine major hotels and restaurants in Muzaffarabad that had challenged the Central Board of Revenue’s (CBR) campaign to enforce installation and integration of Point of Sale (POS), digital invoicing and electronic monitoring systems in the hospitality sector.

Justice Syed Shahid Bahar, the senior puisne judge, passed the order while hearing a writ petition filed under Article 44 of the AJK Interim Constitution, 1974 by nine hotels and restaurants operating in Muzaffarabad, and fixed May 21 for further proceedings.

Represented by Barrister Kamran Ilyas Raja, the petitioners contended that they were not opposed to lawful taxation of hotel and hospitality services, but challenged the CBR’s attempt to extend the POS and electronic monitoring regime to hotels under Section 40C of the Sales Tax Act, 1990, and Chapter XIV-A of the Sales Tax Rules, 2006.

The petition argued that Section 40C was framed primarily in the context of production, sales, clearances, stocks and taxable goods, and could not automatically be applied to service providers without explicit statutory authority.

It further maintained that the service sector in AJK was separately governed under the AJK Sales Tax (Tax on Services) Act, 2001, and that subordinate legislation, including Rules 150ZA, 150ZB and 150ZC, could not enlarge the scope of the parent statute.

The petitioners also questioned the legal basis for extending the impugned regime to hotels, arguing that the authorities had failed to identify any notification, SRO, circular or gazette instrument authorising such application.

They sought declarations that the POS enforcement regime, insofar as it applied to hotels and hospitality businesses, was without lawful authority, and prayed that the authorities be restrained from sealing premises, imposing penalties or taking coercive action except strictly in accordance with law.

After the preliminary hearing, the judge granted status quo in favour of the petitioners, effectively providing interim protection against “coercive enforcement measures” until the next hearing.

Published in Dawn, May 8th, 2026