Pakhtu-nkhawa Energy Development Organisation (PEDO) Peshawar Saturday challenged Peshawar High Court (PHC) verdict before Supreme Court, which turned down the Organization's petition urging cancellation of the Federal Board of Revenue (FBR) notice under Section 176 of the Income Tax Ordinance 2001 issued to the generation company. Filing the appeal in the matter under Article 185 (3) of the Constitution, the PEDO Chief Executive Officer made the FBR through its Chairman, the Chief Commissioner Inland Revenue, Regional Tax Office Peshawar, Additional Commissioner Inland Revenue, Enforcement & Compliance Zone - III, RTO Peshawar and Officer Inland Revenue as respondents.
In June 28, 2016, the PHC had dismissed the PEDO petition on the grounds of maintainability while issuing directives to the Organisation to invoke the Income Tax Commissioner jurisdiction which the court declared a proper forum for remedy in the matter.
Filing the appeal before the apex court, senior advocate Wasim Sajjad, counsel for the appellant raised a number of questions of law for the court consideration in the case, submitting whether the High Court was justified in refusing to exercise jurisdiction under Article 199 of the Constitution on the ground that an alternative remedy was available by way of Appeal under Section 127 of the Income Tax Ordinance 2001 (The Ordinance)?.
He further said whether the remedy of Appeal under Income Tax Ordinance was available as no appeal is provided under that Section to an Order passed under Section 122 (C) of The Ordinance, adding whether the petitioner can be compelled to accept the Order under Section 122 (C) of the Ordinance when the submission of the petitioner was that the income tax authorities had no jurisdiction in the matter?
Wasim Sajjad also raised a question of law to be determined by the apex court saying, "Whether it was not fit and appropriate that the High Court should have itself determined the legal questions involved in the case instead of sending the petitioner to a functionary of the Income Tax Department in the facts and circumstances of this case?"
Counsel for the PEDO had contended before the PHC' Division bench that the FBR issued a notice to his client for the payment of taxes amounting to Rs 2.5 billion for two years whereas the FBR also sent recovery officers to the concerned banks for recovery of the amount. The counsel alleged the FBR officials had threatened his client's banks with stringent action and succeeded to get bank drafts in favour of the FBR.
The PEDO counsel informed the PHC his client company was generating electricity from Malakand-III and as sales tax laws were not extended to Malakand Division hence, the recovery from his client was illegal and unconstitutional.
The company's lawyer further told the PHC that once the amount was recovered from his client bank account, it would take years to get it back and that would overburden the provincial kitty. He said the power station was owned by the provincial government under Article 165 of the Constitution. As a result, they were not liable to pay taxes.
He apprised the PHC that under Article 165 (1) of the Constitution, Parliament cannot impose tax on the property or income of a provincial government, adding that the PEDO was accountable to the provincial government which was running various power projects, mostly in Provincial Administered Tribal Areas (PATA).