AJK High Court suspends POS requirement for hotels, guest houses

MUZAFFARABAD: The Azad Jammu and Kashmir High Court (AJKHC) on Thursday suspended the Inland Revenue Department’s move to make the Point of Sale (POS) system mandatory for hotels and guest houses in Azad Jammu and Kashmir and restrained the authorities from enforcing the measure.

The order was issued by Justice Shahid Bahar during proceedings on a petition filed by the Azad Kashmir Hotels and Guest Houses Association.

During the hearing, counsel for the petitioners Barrister Kamran Ilyas Raja argued that hotels and guest houses in AJK have not been granted the status of an industry, and therefore the POS system could not be applied to them. He told the court that the POS mechanism is mainly designed for factories, warehouses and businesses engaged in the production or sale of taxable goods, whereas hotels, guest houses and restaurants are entities that provide services.

Raja further submitted that although taxes may be levied on the hotel and hospitality sector under the relevant laws, the POS system does not apply to such establishments in AJK under income tax and service-sector related laws. He argued that hotels and guest houses do not manufacture or sell taxable goods, but instead offer hospitality and accommodation services, and therefore cannot be treated as industrial units or commercial warehouses.

After hearing the preliminary arguments presented by the petitioners’ counsel, the court suspended the Inland Revenue Department’s orders that had made installation of the POS system compulsory for hotels and guest houses.

Association welcomes court order

Azad Jammu and Kashmir Hotels and Guest Houses Association Chairman Raja Ilyas Khan welcomed the court’s decision and said it had raised the morale of those linked to the hotel and hospitality sector.

He said hotel business owners would now work harder to increase their income and contribute more taxes to the national exchequer without the imposition of the POS system. He also thanked the AJKHC and said the ruling had come at an important time, as the tourism season had already started.

The case centres on whether the POS system, as introduced by the Inland Revenue Department, can be extended to businesses in the hospitality sector in AJK. The petitioners maintained before the court that the legal framework governing income tax and service-related taxation in the region does not make the system applicable to hotels and guest houses.

With the latest order, the implementation of the Inland Revenue Department’s directive has been halted for now, pending further proceedings in the matter.