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Tag: Sindh High Court

  • SHC dismisses petition challenging SRB show cause

    SHC dismisses petition challenging SRB show cause

    KARACHI: Sindh High Court (SHC) has dismissed a petition filed by Hum Network Limited for a grant of relief against a show cause issued by the Sindh Revenue Board (SRB).

    A division bench of the SHC in a case C.P.No.D-3735 of 2016, observed: “We are of the considered view that instant petition is misconceived and not maintainable for having been filed on mere issuance of show casue notice, which prime facie does not suffer from any jurisdictional defect or patent illegality, whereas, the objections raised by the petitioner through instant petition can be agitated before the statutory forums while submitting the response/reply to the impugned show cause notice in accordance with law.”

    Accordingly, the petition has been dismissed. The bench has also made reference to its short order issued on February 12, 2019, in the following terms:

    “For reasons to be recorded later, the instant petition is dismissed along with the listed application for being not maintainable. The petitioner may, however, be at liberty to raise all such legal and factual grounds before the respondent, including the ground of jurisdiction, which shall be considered and decided by the respondents strictly in accordance with law, whereas, an opportunity of being heard shall be provided to the petitioner before passing any adverse order against the petitioner.”

    Hum Tv Network, the petitioner, is a public limited company operating satellite TV channels engaged in the business of production, advertisement, entertained and media marketing, had challenged a show cause notice issued by an official of the SRB before the SHC on the ground that the same was malafide, illegal and was issued without jurisdiction and lawful authority.

    The show cause notice was issued by the official of the SRB under Section 23(2) read with Section 23(1A) of the Sindh Sales Tax on Services Act, 2011 for the periods from July 2011 to June 2012, July 2012 to June 2013, July 2013 to June 2014 and July 2014 to June 2015.

    The petitioner prayed that the show cause notice was issued without jurisdiction and lawful authority, as the notice issuing officer belonged to Unit-21 Commissioner-IV, had not jurisdiction over the case as the authority over ‘Withholding of Sindh Sales Tax Act’ was with the Assistant Commissioner (unit-22).

    The petitioner had also raised objection that in absence of any audit proceedings or inquiry pending against a registered persons, impugned notice cannot be issued.

    The counsel for the respondents (SRB) argued that the constitutional petition was not maintainable against Show Cause Notice as the same had not suffer from any jurisdictional defect or patent illegality.

    The SHC was informed that the petitioner had been given plenty of time on request of extension for reply. But the petitioner instead giving reply preferred to approach the court.

    SRB extends last date for sales tax payment, return filing
  • SHC declares income tax on undistributed profits as unconstitutional

    SHC declares income tax on undistributed profits as unconstitutional

    KARACHI: Sindh High Court (SHC) on Friday declared levy of tax on undistributed profits under Section 5A of Income Tax Ordinance, 2001 as unconstitutional and set aside all the show cause notices and demand notices issued by the tax authorities under the section.

    A division bench of the SHC ordered in Sapphire Textile Mills Limited vs Federation of Pakistan & Others: “insertion of Section 5A in the Income Tax Ordinance, 2001, including amendments theretho from time to time, does not fall within the parameters delineated per Article 73 of the constitution of Pakistan, 1973, hence, the provision impugned is found to be ultra vires of the constitution, and is hereby struck down.”

    It ordered further that as a consequence, any show cause / demand notices or constituents thereof, seeking enforcement of Section 5A of the Income Tax Ordinance, 2001, are hereby set aside.

    A large number of taxpayers filed petition before the higher court seeking relief against action initiated by Federal Board of Revenue (FBR).

    The petitioners challenged the Section 5A of the Income Tax Ordinance, 2001, which was initially inserted in the Ordinance through Finance Act, 2015 and amended through Finance Act, 2017, ostensibly in order to induce certain public companies to distribute dividends among their shareholders.

    In original form, as inserted through Finance Act, 2015, the tax was levied upon the reserves of a company. However, post Finance Act, 2017 the levy befell upon accounting profit before tax of a company.

    The petitioners requested the court to declare the provision as unconstitutional. The plain reading of Section 5A suggests that it amounts to double taxation, as income received or taxed in the same hand ceases to be income.

    It is submitted: “the regulation of companies is undertaken inter alia vide the Companies Act, 2017, being special in nature, and any attempt at such regulation by inserting penal provisions into the Ordinance routed through a money bill, was prima facie unmerited.”

    Counsel for the respondents submitted: “5A did not amount to double taxation as it contemplated an independent levy.”

    It was argued that 5A identified a class to be taxed, hence, could not be considered discriminatory.

    It was concluded that the legislature had ample power to regulate economic behavior and 5A was merely one specie of exercise of such power.

    The court observed that 5A of the Ordinance amounts to legislation, not contemplated in the Constitution to be undertaken vide a money bill. “In such a scenario no rationale has been articulated before us to justify the regulation of companies behavior, pertaining to dividends, to be effected vide a money bill, within the mandate of Article 73 of the Constitution, while abjuring the regular legislative process.

    “Therefore, it is our deliberated view that section 5A of Income Tax Ordinance, 2001 cannot be sustained on the constitutional anvil; hence, could not be construed to have legal effect.”

  • SHC dismisses petition challenging KE privatization

    SHC dismisses petition challenging KE privatization

    KARACHI: Sindh High Court (SHC) has dismissed a constitutional petition that has challenged the privatization of K-Electric, the power distribution company.

    In a note sent to Pakistan Stock Exchange (PSX) on Monday, K-Electric Limited said that the court had dismissed constitutional petition bearing No. D1511-2012 titled as KESX Labour Union and Others vs. Federation of Pakistan and others’ along with related petitions on January 21, 2020, whereby the court had dismissed the said petition through which the privatization of the K-Electric Limited was challenged.

    The judgment was announced in the open court. However, the certified copy of the afore-noted judgment is still awaited, K-Electric said.