PHC suspends collection of tax from tribal districts steel mills

PESHAWAR: In a move which favours industrialists, the recovery of sales tax from steel mills located in the erstwhile Federally administered tribal areas (FATA) was suspended by Peshawar High court (PHC) on Wednesday.

The order was issued by a two-judge bench of PHC comprising Justice Roohul Amin Khan and Justice Naeem Anwar while hearing a writ petition filed by steel mills owners. The Federal Board of Revenue (FBR) was restrained from collecting sales tax and notices were issued to both federal and provincial governments to submit replies to the petition till next hearing of the case.

The petition was filed through a senior lawyer of Supreme Court of Pakistan Ishaq Ali Qazi. While arguing before the bench, the lawyer said that due to its economic backwardness the federal government has declared former FATA and the Provincial Administrated Tribal Area a tax-free zone for five years.

But despite clear cut directives, the federal government has 17 per cent sales tax on the electricity bills of steels mills in tribal Districts. The lawyer further said that in the provincial budget for 2018-19, the government has also imposed sales tax on the steel mills which is against the rules. He added they the high court’s in its past rulings has already directed the federal government not to impose taxes on the industries in tribal districts.

After hearing initial arguments in the case the bench has directed the federal and provincial government to submit a reply to the petition. Meanwhile, until the court decides the case, the bench has stayed sales tax imposed by the government on steel mills in tribal districts.

Since the sale tax has been imposed by the government; the industrialists association of tribal districts is in protest. On July 1, they have set up a protest camp in Bara and blocked the road for traffic against the imposition of tax on industries situated in tribal districts. The association said that former FATA has been given relief in federal excise duty as well as sale taxes due to its economic backwardness.  Therefore, the federal and provincial government cannot impose such taxes on industries.