Business, Taxation

Grace period: Taxpayer’s contention accepted on LHC’s intervention

The tax department on the intervention of Lahore High Court has accepted the contention of the taxpayer that the grace period of 30 days for payment of tax provided in the demand notice cannot be curtailed.

The background facts are that in the case of Mukhtar Feeds, Faisalabad, a demand notice under section 137(2) was served on 20.06.2017 requiring payment within 7 days of the receipt of demand notice. On curtailment of period of 30 days provided in the statute, the taxpayer filed a writ petition before the Lahore High Court challenging the curtailment for which there was no enabling power with any authority. During the hearing, the attending counsel urged that the period has been curtailed by the assessing officer at the behest of the commissioner to attach the bank accounts of the petitioner for recovery. On that, the court ordered that no coercive recovery measures would be adopted and directed the chief commissioner regional tax office Faisalabad to decide through a speaking order whether the period can be curtailed and till such speaking order the recovery proceedings would remain stayed.

Shahid Jami, counsel of the petitioner appeared before the chief commissioner and referred to the provision of section 137(2) wherein there is a fixed period of 30 days with no power to curtail the same as evident from the below text: “(2) Where any tax is payable under an assessment order or an amended assessment order or any other order issued by the commissioner under this Ordinance, a notice shall be served upon the taxpayer in the prescribed form specifying the amount payable and thereupon the sum so specified shall be paid within 30 days from the date of service of notice.”

The counsel further apprised the chief commissioner that the statutory period was curtailed by the assessing officer on the illegal direction of the commissioner (withholding) who has become personal with the taxpayer as evidenced by audio recording. On that the chief commissioner has passed an order and has directed the commissioner (withholding) to amend the period of seven days mentioned in the demand notice to 30 days and no recovery measure in the meanwhile.