PESHAWAR: The Peshawar High Court on Wednesday issued a stay order temporarily stopping the Khyber Pakhtunkhwa Revenue Authority (KPRA) from collecting sales tax on services from a plastic surgeon and sealing his private clinic.

A bench consisting of Justice Lal Jan Khattak and Justice Ishtiaq Ibrahim issued notices to the provincial chief secretary and KPRA officers for formal response to a petition of plastic surgeon Dr Habibullah Shah against the inclusion of medical practitioners and centres of cosmetic surgery in the schedule of the KP Sales Tax on Services Act, 2022, to collect five per cent sales tax.

The petitioner requested the court to declare that medical profession, medical practice, medical consultancy and cosmetic surgery don’t constitute a business or trade, so those practising them aren’t chargeable to sales tax.

He sought orders to strike down the Sept 23 KPRA notice issued to him about the compulsory registration of the Dr Habib Hair Transplant, Cosmetic & Plastic Surgery Clinic for sales tax collection on its services.

Seeks govt response to plea against sales tax law being applied to cosmetic surgery centres

The petitioner requested to stop the KPRA from bringing cosmetic surgery centres and clinics and hair transplant centres within the ambit of sales tax levy.

He also sought an interim relief requesting the court to suspend action on the impugned notice received by him, and order an immediate halt to the collection of the impugned sales tax.

Sajeed Khan Afridi and Tariq Afghan, lawyers for the petitioner, said that their client was a registered medical practitioner, who held MBBs and FCPS (plastic surgery) degrees and treated burns, skin cancer, soft tissue cancer, congenital anomalies and firearm injuries besides performing nose surgeries and hair transplant.

They said that the provincial government had promulgated the KP Sales Tax on Services Act, 2022, for ‘imposing, collecting and administering’ sales tax, so the KPRA served notices on a large number of doctors in the province.

The counsel said that the KPRA’s assistant collector (central region) had issued the impugned notice under Section 63(2) of the Act on Sept 23 to the petitioner for sealing of his business premises and served a compulsory registration order of “Dr Habib Hair Transplant, Cosmetic and Plastic Surgery Clinic” without giving the petitioner a hearing.

They contended that the medical profession was not a ‘business taking place in the course of economic activity’.

The lawyers argued that Section 3 of the Act provided for and describes ‘taxable services’ in the manner that a service listed in the second schedule of the Act provided by a registered person in the course of an economic activity.

They added that medical profession was neither a ‘practice in the course of an economic activity nor did it constitute a business or trade’.

The counsel insisted that the entry of the names of medical practitioners, plastic surgery centres, clinics or consultants to the Second Schedule appended to the Act violated the letter and spirit of the parent law i.e. the KP Finance Act.

Published in Dawn, October 6th, 2022