Sindh High Court (SHC) has stayed the recovery of default surcharge on delayed payment of General Sales Tax (GST) from CNG stations and restrained the Federal Board of Revenue (FBR) and Sui Southern Gas Company (SSGC) to take coercive action against CNG stations in this regard.
A two-member bench of SHC comprising Justice Aqeel Ahmed Abbasi and Justice Abdul Malik Gaddi issued these orders in a constitutional petition filed by 34 CNG stations through Petroleum & CNG Dealers Association on behalf of CNG stations through Barrister Mohsin Kadir Shahwani.
The Ministry of Finance, the FBR, SSGC, Deputy Commissioner Inland Revenue (IR), Zone-III Large Taxpayer Unit Karachi and Manager CNG Billings SSGC have been made respondents. The petitioner impugned the recovery notices issued by SSGC in December 2018to recover the default surcharge in terms of section 34 of Sales Tax Act, 1990 for delayed payments received from CNG Stations on value added component. The said notices were issued in pursuant of recovery notices issued by FBR for recovery of default surcharge.
The counsel for the petitioner Barrister Shahwani contended that recovery notices were issued without establishing the willful default on part of petitioner. He submitted before the court that neither show cause notices was issued or any order was in terms of Section 34 with Section 11 of Sales Tax Act.
However, CNG stations have been treated as defaulters in respect of amount of sale tax, which amount has already been paid as per installments allowed by FBR itself through its letter dated December 02, 2015. The counsel argued that installments were allowed by FBR unconditionally within the time period allowed by FBR for such purposes, whereas, there was not default on the part of petitioners as such payment of sale tax was stayed by the orders of a division bench of SHC in an other constitutional petition.
The counsel submitted that petitioners have been threatened the disconnection of gas supply in case of non-payment and requested the court to issue restraining orders in this regard. The counsel also referred to various other cases in this regard.
The division bench in its order observed that contention raised by the counsel of the petitioners required consideration and ordered to issue notices to the respondents to submit their reply. The court restrained the respondents from taking any coercive action against the petitioners in this regard.