On Thursday, the Sindh High Court (SHC) restrained Sindh Revenue Board (SRB) from collecting sales tax on services from China Ocean Engineering Construction General Bureau (COECG), which is engaged in the construction of Karachi K-2 and K-3 Nuclear Power Plant Intake & Outfall Structures Project.
A division bench of SHC headed by Justice Aqeel Abbasi, after hearing the arguments made by Bakhtawar Bilal Soofi upon a petition filed by Pakistan Atomic Energy Commission (PAEC) along with COECG, directed SRB to submit its reply on the next hearing and restrained SRB from taking any coercive measure against the petitioners.
The petition involves the interpretation of Article 165 of the Constitution which encapsulates the doctrine of inter-governmental immunity and prevents any province from charging tax on the “income and property of the Federal Government”. Bakhtawar Bilal Soofi argued that the doctrine of intergovernmental immunity bars the provincial SRB from charging or levying any tax on the income or property of the federal government including its instrumentalities and any such tax that operates to burden the performance, or discharge, of any sovereign functions of the state including the production of nuclear energy is impermissible under the law.
It was also argued that the Province of Sindh and the SRB have no authority under Article 142(a) of the constitution read with Item Nos. 18, 58, 59 (Part-I) and 4 (Part -II) to legislate on and charge collect, levy any tax on the generation, production of nuclear energy and the generation of electricity therefrom. The services of the petitioners are directly in respect of production of electricity from nuclear energy, which falls outside the residual purview of the provincial legislature’s competence.
The matter has been adjourned for filing of reply by the Province of Sindh and the Sindh Revenue Board.
