The Civil Aviation Authority (CAA) of Pakistan has escalated its ongoing tax dispute with the Federal Board of Revenue (FBR) to the Supreme Court, involving a claim exceeding Rs. 50 billion. This legal move comes after the Sindh High Court directed both parties to resolve the matter amicably, which the CAA has declined to do.
Key Points of the Dispute
- Tax Payment Requirement: The FBR is expecting a payment of Rs. 9.5 billion from the CAA for advance income tax by September 25, which is critical for the FBR to meet its monthly revenue target of Rs. 1.2 trillion.
- Legal Proceedings: The CAA's petition to the Supreme Court follows its previous challenge in the Sindh High Court, which ruled that as a state-owned enterprise, the CAA should resolve its disputes through the Alternate Dispute Resolution Committee (ADRC) or federal cabinet.
- Claims of Tax Exemption: The CAA argues that it is entitled to an income tax exemption based on provisions in the Civil Aviation Act, 2023, and the Pakistan Airports Authority Act, 2023, which explicitly exempt these entities from taxes. However, the FBR contends that these acts do not override the Income Tax Ordinance of 2001.
- Government Departments' Tensions: This escalation highlights growing rifts between federal government departments, as the Ministry of Law supports the CAA’s claim for exemption while the FBR insists on tax recovery.
