The High Courts of Sindh and Lahore have granted stay order to 41 companies of Sindh and 3 companies of Punjab in the matter of Sales Tax on Manpower Service Providers. Under promulgation of Sindh Sales Tax on Services Act 2011, a Sales Tax on services was imposed at the rate of 15 percent on Labour & Manpower supply.
The powers were then delegated to Sindh Revenue Board whereby SRB has been empowered to change and impose the rate of tax. SRB amended rules in a manner where gross amount was taken to determine Sales Tax. At the same time, Punjab Revenue Authority had issued notices demanding payment of Sales Tax on gross amount of invoices of service providers under the Punjab Sales Tax on Services Act 2012.
Vice President Employers Federation of Pakistan (EFP) Zaki Ahmed Khan informed that the EFP was inundated with complaints from Manpower, Labour Service Providers and companies using contractors. Thus due to the concerted action of EFP and its team of legal advisors, the Honourable High Courts stayed the illegal collection of Sales Tax on gross invoices. The EFP legal counsels presented strong and solid arguments praying for restraining these government organizations from demanding Sales Tax on gross amounts.
Zaki Ahmed Khan disclosed that manpower suppliers will continue to make payments of Sales Tax as per law as existed prior to the impugned amendment till the next hearing. He added that enlightened companies and manpower & labour suppliers are determined to formalize the contract system but, unfortunately, roadblocks and arbitrary amendments are made to thwart the documentation of the economy. He hailed the decision of the learned High Courts and hoped that more labour suppliers and companies would co-operate in helping documentation of economy.-PR
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