Court hearing: PIA to deposit guarantee for leased aircraft

No sales tax on aircraft imported on wet lease, says plaintiff’s lawyer.

KARACHI: The Sindh High Court (SHC) directed the national flag-carrier to deposit guarantee equal to the sales tax claimed by the Federal Board of Revenue for the two leased aircraft on Wednesday.

Pakistan International Airlines had approached the high court against the Federal Board of Revenue (FBR) and others for claiming sales tax on the two aircraft leased by it.

The plaintiff’s lawyer, Naveedul Haq said his client, the national flag carrier whose two aircraft with respect of which goods declarations have already been filed, are urgently needed in order to alleviate the operational difficulties faced by it.

The issue, the lawyer explained, is that the said aircraft have been imported on wet lease and, therefore, no sales is tax payable for these aircrafts in the terms of Section 3(1)(b) of the Sales Tax Act 1990 because the tax is payable only on the sale of goods. While in this case, the aircraft are being leased, he added.

On the other hand, the lawyers representing the FBR and the Chief Commissioner Large Taxpayers’ Unit controverted this claim.

The bench ordered the PIA to give bank guarantee for the sales tax that is being claimed by the defendants to the satisfaction of the SHC Nazir, and once the bank guarantee is in place, the Nazir shall issue appropriate certificates.

On request of the lawyers for the FBR and Chief Commissioner Large Taxpayers’ Unit, the bench set April 28 for the next hearing.

Published in The Express Tribune, April 4^th, 2014.

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