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Lahore High Court Halts Punjab Revenue Authority (PRA) to take Coercive Actions Against Islamabad-Based Construction Firm

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Lahore High Court Halts Punjab Revenue Authority (PRA) to take Coercive Actions Against Islamabad-Based Construction Firm

Islamabad 01-07-2024: In a significant decision, the Lahore High Court, Rawalpindi Bench, has issued an interim order restraining the Punjab Revenue Authority (PRA) from taking any coercive measures against Pak Gulf Construction (Private) Limited, an Islamabad-based company managing the Centaurus project. The order, delivered by Mr. Justice Jawad Hassan, was issued in response to a petition challenging the compulsory registration of the company under the Punjab Sales Tax on Services Act, 2012.

Pak Gulf Construction had filed the petition under Article 199 of the Constitution, arguing that its business operations are confined to the Islamabad Capital Territory and thus fall under the jurisdiction of the Federal Board of Revenue (FBR). The petitioner contended that the PRA's action to register it under Section 27 of the Punjab Sales Tax on Services Act was beyond its jurisdiction.

Representing the petitioner, Hafiz Muhammad Idrees, ASC, emphasized that the company is already compliant with sales tax obligations under the Islamabad Capital Territory (Tax on Services) Ordinance and should not be subject to dual registration. The legal counsel for PRA, however, argued that compulsory registration is mandated under Section 25 of the Act, but acknowledged that deregistration could be pursued under Section 29.

The Court, after considering the arguments, directed the PRA Commissioner to treat the writ petition as a formal application for deregistration and to make a decision within four weeks. The Court emphasized that until a decision is reached, the PRA is barred from enforcing any coercive actions against the company, citing precedents set in the cases of Shell Pakistan Limited and Shaheen Merchant.

This ruling underscores the jurisdictional boundaries between provincial and federal tax authorities, providing temporary relief to businesses operating outside Punjab's territorial limits. The case will be closely watched by legal and business communities for its implications on inter-jurisdictional tax registration and enforcement practices.