PEDO’s sales tax: PHC restrains FBR from recovering levy

PESHAWAR: Peshawar High Court restrained the Federal Board of Revenue from recovering income and sales taxes from Pakhtunkhwa Energy Development Organization accounts for generation of power from its different units in 2011 and 2012.

The bench, comprising PHC Chief Justice Mazhar Alam Khan Miankhel and Justice Roohul Amin, was hearing a petition filed by PEDO on Tuesday. The court was informed FBR issued a notice to PEDO for payment of tax amounting to Rs2.5 billion for two years.

PEDO’s counsel Shumail Ahmad Butt stated that FBR has also sent its recovery officers to banks concerned for recovery of the said amount. He said PEDO was generating electricity from Malakand III but as sales tax laws were not extended to Malakand division, the recovery was illegal and unconstitutional.

Moreover, he maintained tax could not be levied on generation of electricity and requested the bench to restrain FBR from recovery. He said once the amount was recovered then it would take years to get it back that would overburden the provincial kitty. The bench, after hearing the arguments, accepted the plea and restrained FBR from recovery of sales and income taxes.

Meanwhile, the case was also fixed before another bench comprising Justice Waqar Ahmad Seth and Justice Qaiser Rasheed. The bench also restrained FBR from recovery of the said taxes from the accounts of PEDO and issued notices to the respondents and sought reply from them.

Earlier, Butt told the court the power station was owned by the provincial government, therefore under article 165, the government was not liable to pay the taxes.

He adopted that the provincial government owned all power projects being run or developed by PEDO and under Article 260 of the Constitution of Pakistan they fall under the definition of property of provincial government.

He said the organisation was accountable to the provincial government that was running various power projects mostly in Provincially Administered Tribal Areas.

Published in The Express Tribune, June 22^nd, 2016.