LAHORE, June 13: The provincial excise and taxation department on Friday informed the Lahore High Court that the federal government had granted the status of industry only to tourism and not to the hotel business.

The department was responding to a petition against the notice it had served on the Pearl Continental hotel for recovering property tax to the tune of Rs20 million.

The court, however, issued notice to the excise and taxation director general, demanding explanation regarding the authority under which the taxation officer concerned had issued orders for the confiscation of hotel’s assets on tax payment default.

The court extended the stay against the tax recovery and assets confiscation notices till June 16.

The petitioner has been arguing that the prevalent criteria of charging the tax on the basis of room rental charges is inappropriate.

Responding to the petition, the income tax authorities claimed that businessmen, traders and government officials were the major source of revenue for hotels like the PC. The income generated by providing accommodation to tourists was only a small fraction of the total hotel business, they maintained.

The tax department representative further argued that ceremonies like marriages, birthday parties were also being hosted by the petitioner, and by no definition these could be counted among tourism-related activities. He justified the levy of property tax saying that assessment was made in accordance with the Punjab Urban Immovable Property Tax Act 1958.

The respondent denied the petitioner’s argument that no rebate was granted while charging the tax. It claimed that the petition was not maintainable as the hotel had not filed a revision appeal with the tax department and had directly moved the court.

The petitioner’s counsel, Ali Sibtain Fazli, maintained that the hotel business enjoyed the status of industry under the Hotel and Restaurant Act. He contended that under this act, every person staying at the hotel was to be regarded as a tourist. He alleged that the respondent was wrongly justifying the imposition of tax liability at commercial rates, which were not applicable to an industry.