SHC orders conditional release of two PIA planes

KARACHI: The Sindh High Court (SHC) on Thursday ordered Federal Board of Revenue (FBR) to release two impounded planes that has been acquired by Pakistan International Airlines (PIA) on wet lease, if it furnishes bank guarantee equal to the amount claimed by FBR.

Justice Munib Akhtar, who headed the single bench of SHC, issued this order on a lawsuit filed by PIA against FBR that has impounded its two aircraft over non-payment of sales tax.

The court directed PIA to furnish bank guarantee equal to the amount claimed by FBR for clearance of planes to the satisfaction of Nazir of the court, who later shall issue appropriate certificate for release of aircrafts.

Plaintiff through its attorney Asim Rauf, submitted that PIA entered into aircraft lease agreement with Travel Services KFT on 21 March 2014 and acquired two A-230 aircraft on wet lease.

Asim stated that PIA filed goods declaration of two planes on 28 March 2014 with FBR. PIA was informed that FBR was going to levy the sales tax on the two aircraft, which were leased out to PIA.

He said that no sales tax is payable in respect of Section 3(1)(b) of the Sales Tax Act 1990, since the sales tax is payable only on the sale of goods and here aircraft had been acquired on lease.

He said that since the lease agreement had been in operation, rent was payable for two planes on daily basis. If aircraft are not made operational, PIA would have to incur losses for the days in which aircraft was not used for commercial travel.

He said that air aircraft are urgently needed to alleviate the operation difficulties faced by national carrier. He requested the court to declare the act of FBR impounding planes, acquired by PIA on lease, illegal and direct it to release the aircraft impounded by it.

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