LAHORE: The Lahore High Court (LHJC) has held that the period for calculation of default surcharge on the sales tax deposited after the prescribed dates of payment, commences from the sixteenth day following the applicable due date of the relevant tax period and not from the sixteenth day following the end of the tax period prescribed under the Punjab Sales Tax on Services Act.
The court passed this order on a petition of M/s. Al-Rehman Hospitality (Pvt) against the decision of the appellate tribunal which upheld the decision of an assistant commissioner, Punjab Revenue Authority (PRA), imposing default surcharge amounting to Rs 2,486,219.
The court observed that the fiscal statutes are ordinarily to be interpreted according to their plain, natural and grammatical meaning, without adding words to, or subtracting words from, the statutory text.
The court also observed that the judicial function is to interpret and apply the provision as enacted, not to modify it on the assumption that a different formula would better protect public revenue.
The court said that the language of Section 49(2) of the Act, when read with Sections 2 (17) and 2 (44) of the Act, is sufficiently clear regarding the commencement of the period for calculation of default surcharge. No ambiguity arises which would justify substituting the departmental interpretation for the ordinary meaning of the provision, the court added.
The court said in the present case the record indicates that the assessing authority calculated default surcharge, reference to the dates immediately succeeding the prescribed payment deadlines.
The court observed that interpretation adopted by the department thus conflates the sixteenth day of the month with the sixteenth day following the due date, although these are manifestly different expressions. Such an exercise would amount to rewriting the statute rather than interpreting it, the court added.
The court said that the Commissioner (Appeals), while directing exclusion of the date of actual payment, did not correct the more fundamental error concerning commencement of the period of default.
The tribunal likewise maintained the computation on the premise that default surcharge became calculable immediately upon expiry of the payment deadline, the court added.
The court remarked that doing so, the tribunal failed to give effect to the distinction between the due date prescribed under Section 2 (17) of the Act and the commencement date expressly stipulated under Section 49 (2) of the Act.
The court allowing the application set aside the order of the appellate tribunal, Punjab Revenue Authority, along with the impugned orders.
The court referred the matter to the assessing authority for fresh computation of default surcharge, after verifying the applicable due date and actual payment date for each relevant tax period, strictly in accordance with the interpretation of Sections 2( 17), 2 (44) and 49 (2) of the Act recorded herein.
Copyright Business Recorder, 2026