ISLAMABAD: The matter pertaining to Rs 4 billion tax outstanding with Pakhtunkhwa Energy Development Organisation’s (PEDO) has landed in the Supreme Court, as the Khyber Pakhtunkhwa government challenged the orders of Peshawar High Court (PHC) with the plea to exempt the organisation from tax. On June 28, the PHC had dismissed the plea of PEDO, wherein it challenged various notices and orders of the Federal Board of Revenue (FBR) for tax, on the ground that an alternative forum was available to it by way of an appeal to the FBR’s Inland Revenue commissioner. PEDO, the provincial government’s entity, prepared a comprehensive plan for the development and utilisation of power and energy resources of the province. The said organisation has been running various power projects owned by the provincial government, which were mostly located in the Provincially Administered Tribal Areas (PATA). However, FBR has been claiming income tax of Rs 4 billion, outstanding to PEDO, but the KP government was craving for its exemption. After the dismissal of plea, the provincial government invoked a petition, through Barrister Wasim Sajjad, under Article 185 (3) of the Constitution in Supreme Court, making FBR, Peshawar Inland Revenue commissioner, and Enforcement Compliance additional commissioner respondents. “Income Tax Ordinance 2001, has not been extended to PATA till this day under article 247 (3) of the constitution. Thus, income, if any, without prejudice to the fact of ownership of the power station, was even otherwise not amenable to Income Tax Ordinance 2001,” stated the petition. The petition added that PEDO, on February 29 this year, received a notice from FBR in which it demanded information regarding audited accounts of PEDO from July 2015 to June 2016. PEDO, on this, clarified that it was a government organisation, under the control of KP Energy and Power Department, and that the revenue proceeds were ultimately received by the government. The petition stated that despite clarification, further notices were sent to PEDO in reply to which it was extensively clarified that the PEDO was wholly owned organisation of the provincial government. PEDO in reply further clarified that under section 49 of the ordinance, the provincial government was exempted from tax and PEDO, being a government organisation, was likewise exempted from tax, adding that PEDO received revenue from the power station of Malakand, Shishi, and Reshun situated in Malakand Division, which fall within PATA and were exempt from levy of taxes under Article 247 (3) of the Constitution. “Instead of objectively and dispassionately considering legal and constitutional objections of the petitioner (PEDO), the respondents (FBR) passed a provisional assessment order under section 122 (C) of the ordinance, demanding payment of tax,” the petition read, adding that although this was provisional assessment, nevertheless it was the submission of the PEDO that the income tax authorities had no jurisdiction, whatever, in the manner, even to pass an order of provisional assessment. The petitioner prayed before the top court to set aside the orders of PHC and grant exemption to PEDO from taxes. It is pertinent to mention that on May 29, the KP Finance Department had sent a letter to the Ministry of Finance and FBR chairman for exemption of tax, but the federal government declined the request. The letter also had proposed amendments in Income Tax Ordinance 2001, for including PEDO in the list of income tax-free entities, but the federal government also refused the proposal.