Notices to PMTA, LDA over Rs19b tax on metro train

LAHORE: Punjab Revenue Authority (PRA) has issued show cause notices to the Punjab Mass Transit Authority (PMTA) and Lahore Development Authority (LDA) for not depositing total Rs19.4 billion taxes against the services they acquired for Orange Metro Line.

According to the law, the LDA and PMTA both are prescribed withholding agents of PRA. But none of them have been withholding and depositing the due sales tax from May 2016 to June 2018 to the PRA.

According to the notice issued to the PTMA by the PRA, the PMTA was not withholding and depositing taxable amount of Rs12.9 billion against services received from China Railway Corporation during May 2016 to June 2018. Punjab Revenue Authority has issued show cause notices to Lahore Development Authority (LDA) and Punjab Mass Transit Authority (PMTA) both prescribed withholding agents of PRA for not withholding and depositing the due sales tax from May 2016 to June 2018.

PMTA has been issued notice for not withholding and depositing taxable amount of Rs12.9 billion against services received from China Railway Corporation during the May 2016 to June 2018. On the basis of the facts, the PMTA is charged with violation of the provision of section 14 and 19 of Punjab Sales Tax on Services Act 2012. The PRA questioned that why not default amount along with surcharge with penalties recovered from the PMTA. According to the notice served to the LDA, it had received taxable services from various contractors but neither withheld the Punjab Sales Tax nor made payment of due taxes to provincial exchequer as prescribed under Section 14 and 19 of the Punjab Sales Tax on Services Act 2012. The LDA has been asked to present its reply for not withholding and depositing sales tax worth Rs7.2 billion against payments made to different contractors for civil works done in respect of Orange Line Metro Train.

The notice stated that the LDA was required to withhold and deposit the sales tax from taxable services. According to the record available with the PRA, LDA received taxable services during the tax period from May 2016 to June 2018 but failed to deposit the amount of sales tax Rs7.2 billion to the Punjab government.

Both PTMA and LDA have been given 10 days to reply to the show cause notices preventing PRA from not recovering the Rs19.4 billion amount along with the fine else the same shall be recovered.

According to Punjab Sales Tax rules, both companies were bound to withhold and deposit the said sales tax amounts from the payments given to different contractors under section 14 and 19 of the Punjab Sales Tax on Services Act 2012 and were found violating different provisions of the act; therefore, PRA under section 52 of Punjab Sales Tax Act is being forced to make the recovery of the taxes.