KARACHI: The Peshawar High Court has directed the federal government to take appropriate steps ensuring that persons carrying on business in Federally Administered Tribal Area (FATA) and Provisionally Administered Tribal Area (PATA) are rendered immunity from the payment of taxes under Income Tax Ordinance, 2001 and the Sales Tax Act, 1990 as the said statutes have not been extended to the said areas.
However, the Court ruled that the Board shall obtain postdated cheques for the payment of taxes at import stage under the Act and the Ordinance, as security, for goods destined for utilization and consumption in FATA or PATA.
These post-dated instruments shall be returned to the petitioners upon production of consumption certificates duly issued by the concerned commissioners. However, it would be the responsibility of the importers to approach the authorities for the issuance of consumption certificates.
The Court in its judgment regarding 15 different petitions seeking declaration that imports to FATA and PATA are not liable to income tax and sales tax.
Peshawar High Court also directed the federal government to take necessary steps to formulate a uniform policy for seeking securities from the persons importing goods for its consumption and utilization in FATA or PATA, so that the immunity provided under the Constitution is not abused and in case the imported goods are utilized or sold outside the said area, then the revenue of the State is recoverable from the securities, so provided.
Till the decision is taken by the federal government regarding the security mechanism, the Board shall obtain from the petitioners postdated cheques for the payment of taxes at import stage under the Act and the Ordinance, as security, for goods destined for utilization and consumption in FATA or PATA.
The importers/petitioner had submitted that they had to import raw material for consumption in their units and machinery for upgrading and updating of their units, which in view of Article 247 (3) of the Constitution cannot be subject to Taxes leviable either under the Income Tax Ordinance, 2001 or under the Sales Tax Act, 1990.
But, the Customs authorities bent upon to charge payment of aforesaid taxes and refused to submit to the Constitution.
The high court after detailed deliberation declared that the advance tax charged on import is not payable by petitioners importing goods for its utilization and consumption in FATA and PATA. The Court also declared that sales tax charged is not payable by importers importing goods for its utilization or consumption in FATA or PATA.
Through this judgment, the Court disposed of 15 petition filed by M/s Taj Packages Company, M/s Taj Woodboard Mills, M/s Sher Steel Furnace & Re-rolling Mills, M/s Universal Steel Mills, M/s A.K Tariq Foundry, M/s Mohmand Moulding Works, M/s Alhaj Foundry and M/s Pearl White Packages.