PESHAWAR: The Peshawar High Court has dismissed a petition of the Pakhtunkhwa Energy Development Organisation against the imposition of the Rs1.6 billion income tax on it by the Federal Board of Revenue on account of power generation from different units in 2011 and 2012.

A bench consisting of Justice Nisar Hussain and Justice Waqar Ahmad Seth observed that the petition was not maintainable as the petitioner had the remedy available to file an appeal before the Inland Revenue (appeal) commissioner before approaching the high court.

It also vacated a stay order issued last month through which the impugned FBR notice issued on Apr 21 was suspended and the FBR was stopped from recovering income tax in question.

The petition was filed by Pedo through its chief executive stating that the power stations owned by the provincial government were covered within the ambit of Article 165 of the Constitution and therefore, they’re not liable to be taxed.

Rules petition against FBR notice is not maintainable

The petitioner requested the court to declare as illegal and unconstitutional the said notice in respect of tax year 2011-2012 along with tax assessment order of the same date.

Neelum A. Khan, lawyer for the FBR, said the petition was not maintainable as under Section 127 of the Income Tax Ordinance 2001, any person aggrieved with the assessment made by the commissioner income tax had the right to file an appeal before the Inland Revenue (appeal) commissioner.

She said the petition was filed under Article 199 of the Constitution, which clearly stated that a person could approach the high court if any other suitable remedy was not available under the law.

The lawyer said the notice and tax assessment order was issued by the additional commissioner of Inland Revenue, Peshawar, following which the petitioner had challenged it before the additional commissioner, who had maintained the impugned notice and order.

She added that instead of filing an appeal with the commissioner (appeals) the petitioner approached the high court.

The petitioner’s lawyer said Pedo was previously called the ‘Sarhad Hydel Development Organisation’ by the virtue of the Sarhad Hydel Development Organisation Act, 1993, and was subsequently renamed as Pedo after amendment in the said Act in 2014.

He said by the virtue of Section 10(4) of the Act, the ultimate power of sanctioning or refusing to sanction any scheme by the organisation vested in the provincial government.

The lawyer said all power projects developed or being run by the Pedo were owned by the provincial government and therefore, they’re covered by the definition of the property of the provincial government as given in Article 260 of the Constitution.

He said under Article 165 of the Constitution, a provincial government should not, in respect of its property or income, be liable to taxation under the Act of Parliament or under Act of the Provincial Assembly of the Province in which that trade or business was carried on.

The lawyer said most hydel power stations owned by the Khyber Pakhtunkhwa government were located in Pata with the largest one in Malakand division.

Published in Dawn, June 30th, 2016