LAHORE: The Lahore High Court on Thursday directed Federal Board of Revenue (FBR) to furnish a written reply to a petition challenging increase in advance tax on marriage halls and also stopped it from taking coercive measures against the defaulters.
Justice Shahid Jamil Khan issued this order on the petitions of several owners of the marriage halls, hotels, commercial lawns and clubs challenging amendment in section 236D of the Income Tax Ordinance 2001 under Finance Act 2018.
During the hearing, the judge expressed concern over levy of a fixed amount of advance tax on small and big functions. Lead counsel of the petitioners, AK Dogar, argued that Article 18 of the Constitution guaranteed that every citizen had the right to conduct lawful trade or business and no law could be enacted to abridge or deny the fundamental right of freedom of trade and business.
He said the Supreme Court in number judgments ruled that if any law is promulgated in derogation of fundamental rights it would be void because at the cost of fundamental rights guaranteed in the Constitution the executive is not empowered to frame a policy.
He contended that the previously every person running a business of marriage halls, hotels or lawns was required to pay advance tax at the rate of five per cent of the bill under section 236D of the income tax ordinance.
However, he said, this section had been amended by introducing a proviso, which stated that the advance tax shall be payable in big cities at the rate of Rs 20,000 per function. The counsel pleaded that in any case even if the bill was lower the owner of a marriage hall shall still have to pay Rs20,000 per function. He argued that the advance tax could be legally payable on percentage basis and its amount could not be fixed.
The counsel requested the court to declare the amendment made in section 236D of the income tax ordinance in the rate of advance tax as without lawful authority and void being inconsistent with fundamental right of trade and business. Justice Khan directed the FBR to submit a detailed reply by Aug 28 and also stopped it from taking action against those halls defaulting on the advance tax.