ISLAMABAD -  The Pakhtunkhwa Energy Development Organisation (PEDO), a provincial government power producer company, said that the Federal Bureau of Revenue (FBR) has no authority to impose and collect tax from it.

The company on Saturday moved the Supreme Court against the Peshawar High Court verdict. The PHC 28-06-16 had turned down the PEDO writ petition and directed it to approach Commissioner Income Tax under Section 127 of the Income Tax Ordinance, 2001.

The petitioner contended that the organisation is wholly owned by the provincial government and under Section 49 of the Ordinance, the KP government is exempted from tax, therefore the PEDO being a government organisation is likewise exempted from the tax.

The petition stated that the organisation receives revenue from the Power Station of MalakandIII, Shishi, and

Reshun situated in Malakand Division which fall within the Provincially Administered Tribal Areas (PATA) and are exempted from levy of taxes under Article 247(3) of the Constitution.

The PEDO through advocate Wasim Sajjad has filed the appeal in the Supreme Court under Article 185 (3) of the Constitution, and made Chairman FBR, Chief Commissioner Inland Revenue, Regional Tax Office Peshawar, Additional Commissioner Inland Revenue, Enforcement & Compliance Zone – III, RTO Peshawar and Officer Inland Revenue as respondents.

The counsel said that under Section 176 of the Ordinance his client received a notice from the FBR which demanded information regarding Audited Accounts from 01.07.2015 to 30.06.2016. He said they clarified that it was a government organisation under control of Energy and Power Department of the provincial government, and that the revenue proceeds were ultimately received by the government of Khyber Pakhtunkhwa.

It said instead of objectively and dispassionately considering legal and constitutional objections, the respondents passed a Provisional Assessment Order under Section 122 (C) of the Ordinance, demanding payment of tax. Although this was Provisional Assessment, nevertheless it was the submission of the petitioner that the Income Tax Authorities had no jurisdiction, whatever, in the manner, even to pass an Order of Provisional Assessment.

The petitioner said in these circumstances it filed a writ petition challenging the various notices and orders passed against it on the ground that the respondents had no jurisdiction, whatsoever, in the matter. However, the PHC on June 28, 2016 dismissed their petition as being not maintainable and directed to avail the alternative remedy by filing appeal before the commissioner under Section 127 of the Ordinance.

The PEDO counsel said that the company was generating electricity from Malakand-III and as sales tax laws were not extended to Malakand Division. He said the power station was owned by the provincial government under Article 165 of the Constitution, as a result, they were not liable to pay taxes.

He stated that under Article 165 (1) of the Constitution, Parliament cannot impose tax on the property or income of a provincial government, adding that the PEDO was accountable to the provincial government which was running various power projects, mostly in Provincial Administered Tribal Areas (PATA).