The Lahore High Court (LHC) on Wednesday set aside the suo motu powers of the Federal Board of Revenue (FBR) to collect sales tax from the business community without registering them under the Sale Tax Act, 1990, and Sale Tax Rules, 2006. A two-member bench consisting of Justice Sajid Mahmood Seithi and Justice Muzammal Akhtar Shabir announced the verdict by upholding the judgement of the tax tribunal of the LHC on petitions moved by SK Steel Mills and others.
The court held that the FBR could not collect sales tax from any businessperson without registering them. “The FBR will register the business community as taxpersons and then proceed for collection of sale tax under Section 3 of the Sale Tax Act, 1990,” the court remarked.
Representing the petitioners, Advocate Ajmal Khan argued that the business community of the country was fighting for justice for the past nine years. He said that in order to achieve tax collection targets, the FBR had been collecting sales tax from the business community without registering them and without giving any notice of recovery to them. He said this practice of the FBR was tantamount to harassing the business sector, which was already paying huge taxes and duties to the government.