ABS & Co has successfully represented the Punjab Revenue Authority before the Lahore High Court, Rawalpindi Bench, in proceedings concerning the levy of Punjab Sales Tax on Services on the sale of plots by a housing society. The Court upheld the statutory framework governing the taxation of housing development services and dismissed the challenge to a tax liability exceeding PKR 91 million.
The matter arose from Sales Tax Reference No. 30 of 2026, filed by M/s University Town (Private) Limited, challenging the decision of the Appellate Tribunal, Punjab Revenue Authority, which had upheld Punjab Sales Tax on Services amounting to PKR 91,304,734 in respect of the sale of plots within the housing scheme.
The appellant relied principally upon Association of Builders and Developers of Pakistan v. Province of Sindh and others (2018 PTD 1487 Sindh), contending that the transactions did not attract Punjab Sales Tax on Services. It also challenged the applicability of Serial No. 15 of the Second Schedule to the Punjab Sales Tax on Services Act, 2012, read with Section 3 of the Act.
On behalf of the Punjab Revenue Authority, ABS & Co successfully argued that the reliance placed on the cited precedent was misplaced and distinguishable on both facts and law. The firm further demonstrated that, when read harmoniously, Sections 3, 6, 7, 10, and 18 of the Punjab Sales Tax on Services Act, 2012 clearly establish that services rendered by housing societies in connection with the development and sale of plots fall within the taxable scope of the legislation.
The appellant also argued that the taxable value should exclude areas designated for roads, parks, mosques, and other common amenities. ABS & Co successfully relied upon Dynast Associates v. Additional Commissioner, Punjab Revenue Authority (STR No. 13 of 2020), in which it was held that such common facilities form an integral part of a housing scheme and cannot be excluded for taxation purposes. It was further submitted that these objections related to factual determinations and did not disclose any violation of the Punjab Sales Tax on Services Act, 2012.
The Lahore High Court dismissed the Sales Tax Reference, upheld the decision of the Appellate Tribunal, Punjab Revenue Authority, and sustained the tax liability of PKR 91,304,734. The judgment reinforces the legal position regarding the applicability of Punjab Sales Tax on Services to housing development activities and provides important guidance on the interpretation of the statutory framework governing such transactions.
This matter was argued by Maaz Ul Mulk, Associate, with support from Usman Jillani, Partner at ABS & Co.
