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SHC suspends Rs 59.9m tax recovery notice against M/s Mondelez Pakistan

KARACHI: The Sindh High Court (SHC) has suspended the impugned recovery notice of Rs 59.953 million as federal excise duty in respect of the services for the tax year 2010 to 2014 issued by tax authorities to the petitioner M/S Mondelez Pakistan (Private) Limited.

While hearing the petition, a two-member bench, comprising Justice Munib Akhter and Justice Abdul Malik Gaddi also sought comments from the secretary of the Ministry of Finance, Sindh Revenue Board chairman, FBR chairman, Large Taxpayers Unit (LTU) Inland Revenue (IR) deputy commissioner, deputy attorney general as well as Sindh assistant advocate general on May 27, 2016.

Earlier, petitioner’s counsel stated that petitioner’s company was a part of world’s largest snack companies and it has been paying sales tax on services under the Sindh Sales Tax Act, 2011, on the value of its franchise. However, on December 23, 2015 officials of the tax authorities issued a show cause notice for covering tax year 2010 to 2014 and alleged that the petitioner had committed “violation of the Federal Excise Act, 2005 and amount of Rs 59,953,799 as federal excise duty is recoverable along with default surcharge.

According to the petitioner, levy of the federal excise duty against the petitioner in respect of services of which it has already been taxed by the Provincial authorities, and which tax has been duly paid by the petitioner.

Counsel for petitioner argued that impugned demand notice over federal excise duty, illegal, mala fide and unjustified. Petitioner pleaded the SHC may set aside impugned demand notice and restrain them from taking any coercive action against the petitioner.

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