The Association of Card Payphone Operators (ACPO) has informed the Sindh High Court that the Central Board of Revenue (CBR) has allegedly started recovery proceedings from the payphone card operators in violation of the court order.
Sources disclosed here on Friday that the issue of charging of withholding tax on the selling of prepaid calling cards was highlighted in a writ petition filed by ACPO.
The association claimed that the CBR has not only started issuing notices to the ACPO members, but in certain cases initiated audit of these operators. This is against the interim order, which bars the tax authorities from taking any coercive measure against ACPO members.
On the complaint, a divisional bench of Sindh High Court has directed the CBR to maintain status quo, sources added.
Abdul Hafeez Pirzada and Bilal Sufi appeared on behalf of the association. However, CBR's legal representative requested the court for more time.
Next hearing on the issue will be held on May 18, to judge whether the payphone companies are liable to collect tax in terms of section 236(1)(b) of the Income Tax Ordinance 2001 or not.
The erroneous placement of ACPO within the ambit of section 236(1)(b) of the income tax ordinance 2001 is described as the real bone of contention. The section allows CBR to charge 10 percent withholding tax from the pre-paid calling card sellers, whereas ACPO claims that it is providing services as telephone subscribers and are not engaged in selling of pre-paid cards.
The association claimed that in the given contract signed between ACPO and Pakistan Telecommunication Authority (PTA), there is no mention of any article mandating ACPO to pay such taxes.
Income tax department is pressing ACPO to pay withholding tax on the lame pretext by subjecting the given section to twisted interpretation, as against the standard one.
The row can be put to an end once for all, if the authorities declare that ACPO does not fall under the section 236(1)(b), otherwise it will continue to damage the business and investment climate in the country.
ACPO opined that payphone operators were administered under a different legal regime as compared to pre-paid calling card sellers. The card payphone operators were only telephone subscribers, who were already paying income tax under the existing billing system.
"They already make the payment of advance income tax in terms of section 236(1)(a) of the Income Tax Ordinance, by virtue of the fact that they are subscribers to all the lines for which a corporate bill is raised", sources maintained.
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