Law: Income Tax Ordinance, 2001

Section: 236(1), 236(3)

Case Summary The High Court dismissed multiple Income Tax References holding that the taxpayer was not liable to collect advance tax under Section 236(1) of the Income Tax Ordinance, 2001 on the sale of prepaid units. The Court affirmed that liability to collect tax on such transactions did not exist for the relevant tax years (2003–2006), and upheld the Lahore High Court’s interpretation that later amendments introducing such liability could not apply retrospectively. Tagline  Advance tax collection — Prepaid units vs. prepaid cards — No liability under unamended law — Amendment not retrospective — References dismissed. ORDER; Babar Sattar, J:- Through this order we will decide I.T.Rs. No.32, 33, 38 and 40 of 2009. These references have arisen from judgments of the Tribunal which have upheld the judgments of Commissioner (Appeals) holding that there could be placed no liability for collection of advance tax in terms of section 236(1) of the Income Tax Ordinance, 2001 (“ITO”), on the respondent taxpayer. It is the contention of the learned counsel for the tax department that the respondent taxpayer was liable to collect advance income tax in terms of Section 236(1) of the ITO as sale of units was akin to sale of prepaid cards and there was no significant distinction between the two. Learned counsel for respondent No.2 has drawn our attention to the law laid down by the Lahore High Court deciding the question that arises in the instant references in Commissioner of Income Tax v. Messer Beeps and Bells Communication (Pvt.) Ltd. (2014 PTD 1419), wherein the Lahore High Court held that the liability to collect tax in…