[Dawn 25 April, 2019]

LAHORE: 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 Sales Tax Act 1990 and Sales Tax Rules 2006. A two-member bench comprising Justice Sajid Mahmood Sethi and Justice Muzammal Akhtar Shabir announced the verdict upholding the judgment of a tax tribunal of LHC on the petitions moved by SK Steels Mills and others.

The court barred the FBR from collecting sales tax from the business community and ordered to register the business community as taxpayers to collect sales tax under Section 3 of the Sale Tax Act 1990.

Representing the business community, Advocate Ajmal Khan argued that the businesses were fighting for justice against FBR’s suo motu powers for the last nine years. He said the authority was collecting sales tax from the business community without registration. The FBR approaches without giving any notice of recovery to the businesses in order to achieve its tax collection targets, he added.

The counsel said FBR was harassing the business community which was already paying huge taxes and duties to the government.

The court directed the FBR to first register a businessperson and then apply Section 3 of the Sales Tax Act. It further termed collection of tax from unregistered members of the business community as unlawful.