PESHAWAR: The Peshawar High Court on Thursday declared illegal the order of the Federal Board of Revenue for the transfer of taxation-related matters of around 200 industrial units of Khyber Pakhtunkhwa from the Regional Tax Office in Peshawar to the Large Taxpayer Unit (LTU) in Islamabad.

Chief Justice Waqar Ahmad Seth and Justice Mohammad Naeem Anwar accepted 16 identical petitions filed by Alpha Pipe Industries and several other industrial units against the Aug 5 order by the FBR chief (IR-Formation) for shifting jurisdiction for petitioners over income tax, sales tax, federal excise and others from the Peshawar RTO to the Islamabad LTU.

The bench will release the detailed judgment later.

Last month, the high court had issued a stay order suspending action on that order.

Detailed verdict on joint petition of industrial units to be released later

Respondents in the petition were the federal government through the revenue secretary, FBR through its chairman, the Regional tax Office Peshawar through its chief commissioner, and chief (IR-Formation), Islamabad.

Ishaq Ali Qazi, Qazi Ghulam Dastgir and other lawyers for the petitioners said the FBR chief (IR-Formation) had issued the impugned jurisdiction order on Aug 5 declaring it will take effect on Aug 10.

They said the order in question revised the jurisdictions of the chief commissioner and commissioner (Inland Revenue) and assigned the jurisdiction of different industrial units registered in KP to the LTU commissioner.

The counsel said the jurisdictions related to income tax, sales tax and federal excise of a large number of industries including that of the petitioners were transferred to the LTU and after Aug 10, their cases for the purpose of assessment and refunds would be processed there instead of the RTO, Peshawar.

They said the FBR order didn’t provide reasons for the move.

The lawyers said the order was a discrimination against KP industries as the industries or units of the same nature functioning in other parts of the country were assessed in their respective RTOs.

They said neither the representatives of the Sarhad Chamber of Commerce and Industries nor their clients were given an opportunity of hearing on the matter.

The lawyers argued that the Sales Tax Act clearly gave the right of selecting jurisdiction to taxpayers.

They said many units operated in the sector throughout the country and if matters of only few units were shifted to the LTU, it would be a broad discrimination.

The counsel said the government and tax collection authority were meant to facilitate taxpayers instead of creating obstacles in the smooth running of their business activities.

They contended that the FBR order didn’t explain for what purpose and on what basis their clients’ jurisdiction was changed from the RTO Peshawar to the LTU Islamabad.

The lawyers said if the placement of industry was necessary in the LTU, then the FBR should establish that unit in Peshawar for the industries of Khyber Pakhtunkhwa instead of transferring the matters of their clients to another LTU far away from their native business places.

Published in Dawn, September 25th, 2020