ISLAMABAD: Lahore High Court (LHC) has expressed serious concern over the performance of the Appellate Tribunal, Punjab Revenue Authority, Lahore (Tribunal) and observed that the tribunal has not conducted any reconciliation/rendition of transactions to determine the liability of the withholding agent.
In this regard, the two-member Multan Bench of the LHC has issued a judgment in tax reference (PRA) number 3 of 2025 here on Monday. The LHC has annulled the order of the Appellate Tribunal, Punjab Revenue Authority, Lahore.
On behalf of the company, the cases were pleaded by advocates Naveed Sikandar, Imran Ghazi, and Waheed Shahzad Butt.
Sec 52 of Punjab ST law: No amendment, thus no proceedings against WHT agent: LHC
“The Tribunal, being a fact-determining forum, after affording opportunity to see the other side, is obligated to examine each and every transaction and determine the element of taxability and amount of tax payable, and once this exercise is conducted, it (Tribunal) shall proceed to determine the liability of the withholding agent. We are afraid that no such reconciliation/rendition of transactions was carried out by the Tribunal”, LHC stated.
According to the LHC judgement issued by a two-member bench, the case of the applicant (company) is that questions variously raised before the Appellate Tribunal, Punjab Revenue Authority, Lahore (‘Tribunal’) were neither appreciated nor decided, and an order under reference was passed without proper application of judicial mind.
The applicant company submitted that invoking section 14(3) of the Punjab Sales Tax on Services Act, 2012 (Act) retrospectively, merely to support the claim of the department, is an error apparent.
The alleged liability was established in the context of section 52 of the Act, but without appreciating that the effect of limitation extended subsequently, by virtue of legislative fiat, could not be extended to substantiate proceedings – first and second questions of law reflect the aforesaid concerns, LHC said.
After hearing learned counsel, it transpired that in essence the real dispute is whether liability for payment of withholding tax –proceedings were initiated against the applicant, and was treated as a withholding agent, on the premise of alleged failure of the applicant to collect/deduct and deposit tax on services, accrued and payable under the Act in lieu of receipt of taxable services.
It is not disputed that figures, claimed to be the consideration paid in lieu of the services received by the applicant, were lifted/identified from the audited accounts of the applicant – existence of audited accounts and financial position reflected therein is not disputed but precise objection is that accumulated figures mentioned in the accounts, in respect of the service(s) and alleged to be a taxable service under the Act, need to be reconciled to ascertain that which of the services are covered under the scope of the Act, rates applicable on qualified services and determination of liability upon scrutiny of each and every transaction.
Copyright Business Recorder, 2025
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