KARACHI - In a landmark decision, the Supreme Court of Pakistan has set aside the tax demand created by the Federal Board of Revenue (FBR) against the Hub Power Company on the issuance of shares to the sponsors. Following the decision, the Company is entitled to a refund of Rs 1.9 billion.
In 1998, the FBR made assessments that the Company did not pay withhold tax at the time of issuance of shares to sponsors against project development costs incurred by them. Appeals filed by the Company before the Commissioner of the Income Tax and thereafter with the Income Tax Appellate Tribunal were decided against the Company. Against the decision of the Tribunal, the Company filed appeals before the Islamabad High Court, which were also decided against it in March 2012.
The Company filed further appeals before the Supreme Court of Pakistan. On April 17, 2014, the Supreme Court, while overturning the High Court decision, decided the case in favour of the Company. Against the decision of the Supreme Court, FBR filed review petitions which were dismissed by the Supreme Court.
According to a statement issued by the Hub Power Company, “We welcome the Supreme Court’s decision which comes as a relief to us and has further fortified our confidence in the judiciary. Throughout the legal proceedings over the last seventeen years, we have maintained that this transaction was not taxable and this judgment has clearly vindicated our position. Our commitment to Pakistan remains firm and we continue to align our corporate interests with the needs and strengths of the country.”