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LHC stops collection of fixed sales tax from lawyers

LHC stops collection of fixed sales tax from lawyers

LHC stops collection of fixed sales tax from lawyers

LHC has stopped collection of fixed sales tax from lawyers.

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RAWALPINDI: The Lahore High Court (LHC) has barred the collection of Rs 6,000 fixed monthly General Sales Tax (GST) in the electricity bills from lawyers.

The LHC Rawalpindi bench heard the matter on the petition filed by Lahore High Court Rawalpindi Bar Association over the collection of sales tax from lawyer’s chambers.

Justice Tariq Saleem Shaikh declared illegal the move to impose general sales tax up to six thousand rupees on electricity bills from lawyer’s chambers.

The bench said the collection of GST in electricity bills has been nullified and the amount should be returned to the lawyers. The court observed that lawyers are not the retailers or shopkeepers on whom sales tax is applicable.

The federal government through Finance Bill 2022-23 imposed fixed regime tax on the shopkeepers through electricity bills. The bench noted that under Clause 3(9) of the proposed act, sales tax was applicable only on retailers and the decision was issued in haste to recover the amount.

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The court further ordered that the wrongly collected sales tax be returned to the lawyers. It directed the petitioner to submit the complete of addresses, CNIC or NTN number, bar license number and electricity connection reference number of the lawyers to the Commissioner Land Revenue for rebates.

The court stated that under the Sales Tax Act, 1990, this tax is collected only from retailers or as a fixed tax in the electricity bills from the persons under Section 181-A of the Income Tax Ordinance 2001.

According to the law, the persons who supply goods of daily use and necessity to the public are in the category of retailers.

The court noted that lawyers provide legal services to their clients, thus the supply of goods does not fall within the act, and therefore sales tax is applicable to lawyers nor can be collected. It said the bills for July should be rectified.

 

 

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