LAHORE: The Lahore High Court has allowed a challenge of the Faisalabad Electric Supply Company (Fesco) against a condition by an appellate tribunal of the Punjab Revenue Authority (PRA) to deposit one-third of disputed amount of withholding tax to get a stay against the recovery.

The Fesco through its counsel pleaded that the power to grant stay is unhindered and the same cannot be circumvented by imposing the impugned condition.

The PRA objected to the maintainability of the disco’s petition on the ground that an alternate remedy of filing tax reference before the LHC was available under section 67A of the Punjab Sales Tax on Services Act 2012 against the impugned conditional order.

It argued that the impugned order, being interlocutory (interim) in nature, was not amenable to jurisdiction under Article 199 of the Constitution.

In his verdict, Justice Raheel Kamran observed that without a disputed, there is no remedy of appeal provided in the Act against an interlocutory order passed by the appellate tribunal.

However, he maintained, if any order is passed by the tribunal in flagrant violation of law, in the absence of an alternate remedy, the same may be assailed by an aggrieved party in the jurisdiction of the high court under Article 199 of the Constitution.

The judge noted that the PRA appellate tribunal is the first extra-departmental/independent forum for adjudication of disputes regarding tax liability under the law.

He said historically, the high courts have been staying recovery of any tax demanded by the concerned revenue authorities till decision of appeal before at least one extra-departmental forum.

Justice Kamran observed that the condition to compel deposit of the tax amount determined by the department pose a number of problems.

He said such construction of the law would render redundant the authority of the appellate tribunal to stay recovery of the tax.

He added that the requirement of deposit of tax in such a manner before determination of liability by the first independent forum may be treated as unreasonable restriction on the right of access to justice and fair trial right embodied in Article 10A of the Constitution.

Regarding the case in hand, the judge observed that while imposing the condition of deposit of one third of the tax for granting a stay against the recovery of the remaining amount, no reason has been advanced by the tribunal.

He said the impugned condition has been evidently imposed in a slipshod manner that hardly shows any application of mind and fulfillment of the requirements prescribed in the law.

“It can, therefore, be safely concluded that the impugned condition qua deposit of 1/3rd amount of tax has been foisted arbitrarily, without lawful authority and the same is of no legal effect,” Justice Kamran ruled, allowing the petition of the Fesco.

The judge set aside the impugned condition and remanded the matter to the appellate tribunal with a direction to decide the appeal of the petitioner afresh within 90 days.

Published in Dawn, October 13th, 2024