Punjab Revenue Authority’s working declared illegal

LAHORE: The Lahore High Court on Monday nullified the appointment of chairman and members of Punjab Revenue Authority (PRA), while declaring all the administrative work of Authority since 2012 as illegal. Justice Mansoor Ali Shah issued a short order after hearing arguments on more than 300 identical petitions, challenging the formation of PRA and its orders. The judge allowed all these petitions and stopped the Authority from collecting any tax. The judge held that the Punjab Revenue Authority Act was promulgated in 2012 but it was not legalised by the assembly and instead the government issued an ordinance on November 22, 2015 to give protection to the Act. The ordinance was lapsed after three months on January 22 and had no legal value.

The counsels for petitioners submitted that the chairman and members of the PRA, instead of acting upon any law, had been issuing administrative orders to run the affairs and had been issuing notices for tax collection. Hamza H Rashid Advocate, on the behalf of three travel agencies, among others had submitted that they were shocked to receive a notice from the PRA, which stated that the Punjab government had levied sales tax on their services and they were are directed to get registered with the PRA, failing which a fine of Rs 50,000 would be imposed on them.

He termed the Section 3 of Punjab Sales Tax on Services Act 2012 as illegal and invalid and contrary to articles 2A, 8, 9, 17, 18 and 25 of the Constitution.He said the Punjab Sales Tax on Services Act, 2012 had been promulgated in the province with effect from July 1, 2012.

Hamza said that in the Second Schedule to the Punjab Sales Tax, services provided by travels agents and tour Operators were made subject to tax at the rate of 16 per cent, whereas neither the airlines nor the Haj and Umrah services had been included.

He said the first and second schedule of Punjab Sales Tax Act as far as it related to the imposition of service tax on travel agents and tour operators and any subsequent action taken by the PRA were unconstitutional, illegal, coercive and discriminatory without lawful authority, based on a policy mala fide in its spirit and were of no legal effect.

He said the imposition of tax would dramatically deplete the travel agencies’ business in Punjab as the said tax was not levied elsewhere and the travellers could approach any other travel agent outside the province to purchase a travel ticket.

According to the counsel , there had been immense development in the field of travel business and the travellers can purchase a ticket online no matter if the issuing authority is based in Punjab or otherwise doing business in Pakistan elsewhere or even outside the country. He said the travel agents were already registered with the FBR and had been paying 20 per cent as Federal Excise Duty and therefore the need to register with the PRA would elevate the administrative burden on the travel agents to file monthly return with the FBR and with the PRA at the same time.

He argued that the Punjab Sales Tax Act and the parts of its first and second schedule relating to the travel agents or tour operators should be declared illegal, incompetent and without lawful authority and also being discriminatory and against the fundamental rights of the petitioners.He also prayed to declare the notices issued by the PRA as well as its formation illegal.