The Lahore High Court has directed the National Tax Council (NTC) to resolve a dispute between the Punjab Revenue Authority (PRA) and the Sindh Revenue Board (SRB) over the taxation of stockbroking services within two weeks. The dispute arose when Lahore-based stockbrokers, already paying sales tax in Punjab, received additional tax demands from Sindh because their transactions were executed through the Pakistan Stock Exchange’s central trading system in Karachi.
The central legal question is whether the location of the service provider, the customer or the trading platform determines which province has the right to collect sales tax. The petitioners argued that the same services should not be subjected to taxation by two provinces. They further requested that, if the NTC determines that Sindh has the taxing right, the tax already deposited in Punjab should be transferred rather than recovered again from taxpayers.
The Court has not decided which province is entitled to collect the tax. Its direction requires the NTC to examine the competing claims and issue a written decision after hearing the relevant parties. The outcome may clarify the treatment of services involving operations across provincial boundaries, an issue relevant to businesses operating in multiple provinces.