PHC stays recovery of tax, arrears in power bills from CNG stations

PESHAWAR: The Peshawar High Court has stayed recovery of Advance Income Tax and arrears in electricity monthly bills from Compressed Natural Gas (CNG) stations in Khyber Pakhtunkhwa.

A single bench of Justice Syed Arshad Ali issued the stay order in a writ petition filed by All Pakistan CNG Association through its KP chapter. The bench also issued notice to Federal Bureau of Revenue (FBR), directing it to submit reply in the writ petition before the next hearing.

During the hearing, the petitioner's lawyer submitted before the court that almost two years had passed and respondents, including Ministry of Petroleum and FBR, had brought certain amendments to the sections 234-A and 235 of the Income Tax Ordinance, 2001 through promulgation of Finance Act, 2017.

He submitted that FBR very cleverly to nullify the effect of the earlier judgments passed in the matter, also issued a Circular No. 04 of 2017 (Income Tax) on September 6, this year. The lawyer said despite clear directions of this court, the respondents because of their mala fide intentions, were not deciding the applications of the members of petitioner Association for exemption certificates.

He stated respondent Commissioner Inland Revenue through a letter on November 7, 2017 intimated to respondents Peshawar Electric Supply Company chief executive and its manager commercial that the claim of exemption/refund from advance tax under Section 235 of the Income Tax Ordinance, 2001 made by the CNG Stations cannot be entertained.

The Pesco manager commercial has communicated to all concerned to start recovery of advance tax from CNG stations in their respective jurisdictions forthwith and recover arrears through monthly electricity consumption bills.

The lawyer said the Pesco had warned of disconnection of supply of electricity to the CNG stations in case of non-payment of the advance tax and arrears. He said the act of the respondents was illegal and against the law. He prayed that the impugned demands of arrears of advance income tax on monthly electricity bills of the member stations and consequent actions for recovery of such demands were liable to be reversed and set aside.

The petitioner claimed in the light of the earlier judgment, the impugned demands of arrears of advance income tax on electricity bills under Section 235 of the Income Tax Ordinance, 2001 were illegal, unlawful, without lawful authority and thus of no legal effect. It was prayed that respondents shall refrain from recovering arrears of advance income tax through monthly electricity consumption bills from the CNG stations Association members.