The Supreme Court has held that the Islamabad High Court (IHC) lacked jurisdiction, and should not have entertained the writ petitions pertaining to Sales tax laws enacted by the four provinces of Pakistan (Punjab under PRA, Sindh under SRB, KPK under KPRA, and Balochistan under BRA) and only the High Court of the said province can interpret the law.

Talking to reporters on this landmark order, Waheed Shahzad Butt, who is representing the petitioner in the lower forum including High Court, informed that in a landmark order Supreme Court has finally decided the fate of litigation at IHC regarding provincial sales tax chargeable under Sindh Sales Tax on Services Act, 2011, Punjab Sales Tax on Services Act, 2011, Khyber Pakhtunkhwa Finance Act, 2013, and Balochistan Sales Tax on Services Act, 2015.

Waheed further added that the services provided by the petitioner company to the OGDCL were taxable under Section 3(2) of the Sindh Sales Tax on Services Act, 2011, Section 3(2) of the Punjab Sales Tax on Services Act, 2012, Section 3(2) of the Baluchistan Sales Tax of Services, 2015 and Section 19(2) of the Khyber Pakhtunkhwa Finance Act, 2013, and consequently the liability to pay the sales tax on services was rendered on the OGDCL being the person receiving the services, however, litigation has been preferred before IHC.

The Supreme Court order states that Pakistan is a Federation comprising four provinces and the Islamabad Capital Territory. The Constitution provides a High Court for each province and, subsequently, the IHC was established. Each province can enact laws with regard to their respective territories, and only the High Court of the said province can interpret them.

Therefore, the said four provincial laws could only have been interpreted by the High Court of the province in which they had been enacted, and not by the IHC.

Admittedly, the petitioner did not carry out any of the cementation works in the ICT, nor was the applicability and/or interpretation of a Federal law required, which may have required consideration by the Islamabad High Court.

It is further added by Waheed Shahbaz Butt that it is a well-known canon of law that the parties cannot by agreement confer jurisdiction upon any court when otherwise the court has no jurisdiction. The Constitution of Pakistan grants provinces the authority to legislate and administer sales tax laws within their respective jurisdictions.

These provincial sales tax laws are separate from Federal taxation (known as the Sales Tax Act, 1990) and are governed by provincial authorities like PRA, KPRA, BRA, and SRB. The distribution of legislative powers between the federal and provincial governments is clearly defined in the Constitution, and it is imperative that all government agencies, including the FBR, operate within the confines of this constitutional framework.

Source: Pro Pakistani