PESHAWAR: A two-member Peshawar High Court bench has requested the chief justice to constitute a larger bench for thoroughly examining the issue raised in around 30 petitions, challenging non-exemption of steel and ghee or cooking oil industries in erstwhile tribal areas from imposition of sales tax on electricity consumption.

The bench consisting of Justice Syed M Attique Shah and Justice Syed Arshad Ali decided to refer the matter to the PHC chief justice as it differed with an earlier judgment of the court on the same issue wherein it was held that the court had no jurisdiction to declare the relevant provision of the law ultra vires.

Through almost identical petitions the petitioners, which are registered companies in erstwhile Federally Administered Tribal Areas and Provincially Administered Tribal Areas, had challenged Entry No 152 in the 6th schedule of the Sales Tax Act, 1990, to the extent of excluding the grant of exemption in the sales tax on the consumption of electricity to steel and ghee/cooking oil industries.

An additional attorney general, Amir Javed, presented an earlier judgment of the high court wherein a similar relief was asked by the petitioners, however, the court had declined to grant the relief on the ground that a constitutional court had no jurisdiction to declare the law ultra vires to the Constitution.

Observes larger bench should thoroughly examine the issue

While differing with the earlier judgment, the bench quoted different judgments of the Supreme Court observing that the apex court had held that if any legislation, which offended any provision of the Constitution, would be ultra vires.

The bench observed that keeping in view the law, laid down by the Supreme Court, the petitions might be placed before the chief justice for constitution of larger bench so that the issue was thoroughly examined.

Several lawyers including Isaac Ali Qazi, Mufariq Shah, Sajeed Afridi, etc appeared for the petitioners and stated that before merger of Fata and Pata into Khyber Pakhtunkhwa through the Constitution (Twenty-Fifth) Amendment Act, 2018, the inhabitants of those areas were enjoying immunity from different taxes including sales tax.

They stated that the industrial units of Fata and Pata were enjoying immunity from the Sales Tax Act, 1990 because of its non-extension to those areas in view of Article 247 (3) of the Constitution.

They stated that the prime minister had made commitment at the time of passage of the Constitution (Twenty Fifth Amendment) Act that existing immunity/exemption of taxes would continue for another 10 years.

Isaac Ali Qazi pointed out that the federal government through the Finance Act, 2019, inserted entries No 151, 152 and 153 in the sixth Schedule to the Sales Tax Act, 1990.

He stated that through Entry No 151, the immunity/exemption was reiterated with procedure about how to avail that exemption.

However, he added under Entry 152, exemption of sales tax on electricity bills was granted to all industries except steel mills and ghee or cooking oil units of erstwhile tribal areas. Previously, he stated through an SRO NO 1212 issued on October 5, 2018, the exemption from sales tax on electricity boils was available for time bound up to Jun 30, 2023.

He argued that it was discriminatory on part of government to not include the steel and ghee or cooking oil industries in the exemption/immunity from sales tax on electricity bills.

The petitioners have requested the court to declare as discriminatory the respondents including the federal government, Federal Board of Revenue and others attempt to charge sales tax in any form on supply of electricity to the petitioners.

They also prayed that the exclusion clause in the Entry No 152 of the Sixth Schedule to the Sales Tax Act, 1990, may be declared as ultra vires to the constitution.

Published in Dawn, July 25th, 2022