G-B Chief Court stays collection of taxes at Khunjerab border

GILGIT: Issuing a stay order, the Gilgit-Baltistan Chief Court on Saturday restrained revenue authorities from collecting sales tax, income tax, and additional sales tax from importers and exporters of the region at the Sost border station.

The decision comes in response to a writ petition filed by the Gilgit-Baltistan Importer & Exporter Association, challenging the imposition of taxes which, according to them, violates existing exemptions granted to Gilgit-Baltistan.

The petitioners, represented by advocates Adnan Hussain and Waqas Ahmad, argued that several official memoranda and notifications exempt Gilgit-Baltistan from these taxes. They cited a 1996 notification by the Central Board of Revenue (CBR) suspending the collection of sales tax at the import stage for the then Northern Areas, now called Gilgit-Baltistan.

Additionally, they referenced a 2000 memorandum from the Kashmir Affairs Secretariat, a 2007 office memorandum, and a 2018 notification from the Gilgit-Baltistan Council, all of which reaffirm the region’s tax-exempt status.

The counsel for the petitioners contended that despite these clear directives, the Federal Board of Revenue (FBR) and Customs Collectorate have been unlawfully collecting taxes. This, they argued, constitutes a gross violation of the petitioners’ rights and disregards legal precedents set by higher courts.

Upon hearing the arguments, the Chief Court found the petitioners’ points compelling enough to warrant further judicial examination. The court admitted the petition for regular hearing and issued notices to the respondents. Significantly, it granted interim relief by restraining the respondents from collecting or deducting the disputed taxes from the petitioners at the Sost Station, Gilgit-Baltistan’s principal import-export hub, until the next hearing.

The court ordered the petition to be placed before it soon after the summer vacation for assignment to a Division Bench for onward hearing.

While talking to HUM News English, the Gilgit-Baltistan Importer & Exporter Association Deputy General Secretary Afsar Jan highlighted that according to the Supreme Court of Pakistan’s verdict in 1999, sales taxes and income taxes were not implemented in the region. “The Supreme Court categorically said that sales and income taxes cannot be collected from the region until the decision of constitutional rights of Gilgit-Baltistan,” he said.

He mentioned that these taxes were not being collected from the region until General Parvez Musharraf abrogated the constitution and imposed martial law, which led to the forceful implementation of these taxes in the KANA Division (Kashmir Affairs and Northern Areas).

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“Then we moved to courts and also reached out to relevant ministries, which provided some relief in terms of lower taxes,” he added.

However, he noted that authorities later withdrew these reliefs and started demanding 100 per cent taxes. He said that in 2021, some importers and exporters moved to the Gilgit-Baltistan Chief Court against GST, which ruled in their favour. However, he said, other taxes were still being collected, prompting the Gilgit-Baltistan Importer & Exporter Association to move to the Gilgit-Baltistan Chief Court once again. On this petition, the court issued a stay order, and a regular hearing will be held after summer vacations.

It is to be noted that earlier this month, G-B importers and exporters went on strike against the taxes that have suspended trade between Pakistan and China. According to them, the suspension of trade at the Khunjerab Pass, ongoing since April, has severely affected Gilgit-Baltistan’s economy, which is highly dependent on cross-border commerce.

While addressing a press conference in Gilgit, business leaders argued that the imposition of income and sales taxes contradicts existing exemptions and legal precedents. They claimed that consignments imported from China had been stuck at the Sost Dry Port since April due to Customs clearance issues.