LHC Declares Punjab Revenue Authority (PRA) Illegal, Sets Aside All Appointments

LHC Declares Punjab Revenue Authority (PRA) Illegal, Sets Aside All Appointments

The Lahore High Court declared the functioning of Punjab Revenue Authority (PRA) illegal, setting aside appointments of its chairman and members.

The Punjab government had constituted the PRA under Punjab Revenue Authority Act, 2012 as a body under administrative control of the provincial finance department to collect general sales tax (GST) on services.

In a short order, Justice Syed Mansoor Ali Shah declared the PRA Act 2012 illegal because it was not approved by the Punjab Assembly. The government had issued another ordinance on Nov 22, 2015 to give protection to the Act, which, too, lapsed after expiry of its three-month life on Jan 22.

Justice Shah passed this order on over 200 petitions filed by different companies challenging composition of the PRA and its notices. The judge allowed all petitions restraining the authority from collecting taxes.

“All notices/orders issued by the Punjab Revenue Authority for the recovery of general sales tax are, hereby, set aside,” the judge wrote in the order.

The petitioners had submitted that chairman and members of the PRA instead of abiding by the law had been issuing administrative orders to run affairs of the authority and issuing notices for tax collection. They said appointment of the chairman and other members were made in violation of merits and not in a transparent manner.

The petitioners also challenged Section 3 of Punjab Sales Tax on Services Act 2012 for being illegal and invalid and contrary to Articles 2A, 8, 9, 17, 18 and 25 of the Constitution. They further assailed rules of the PRA and notices for recovery of tax.

One of the counsels representing a travel agency stated that in the Second Schedule to the PST Act, services provided by travels agents and tour operators were made subject to tax at the rate of 16 percent. Whereas, neither airlines nor Hajj and Umrah were subjected to the tax, he added.

The lawyer said imposition of sales tax shall radically reduce travel agency business in the province as the tax was not levied in other provinces and travellers could approach agents outside the province to purchase a ticket.

Most of the petitioners argued that without ignoring the fact that they were already registered with the Federal Board of Revenue (FBR) and had been paying 20pc as federal excise duty, the need to be registered with the PRA would elevate administrative burden on them to file monthly return with the FBR and as well as PRA.

They had asked the court to declare the notices issued by PRA illegal as well as the formation of the authority being illegal.


This news was previously published in DAWN and it is being republished here with permission

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