Law: Sales Tax Act, 1990

Section: 2(16),3,6,22,26,33,34,36(1)

Law: Federal Excise Act, 2005

Section: 3A,4,5,8,14(1),19,33(1),33(5)

[Sales Tax Act, 1990 (VII of 1990)]......Sections 3,6, 26, 33, 34, & 36(1) - Federal Excise Act, 2005, Sections 3A, 4, 5, 8, 14(1), 19 & 33(1)5 - SRO 655(1)/2007, dated 29-6-2007 - Recovery of Tax not levied or short levied or erroneously refunded - During comparison of Sales Tax returns with Income Tax returns for years 2007-08 and 2008-09, it was found that registered person declared less amount of Sales Tax in its Sales Tax returns and failed to declare Sales Tax of certain amount in Sales Tax returns, thus did not deposit amount of Sales Tax which was considered to be recoverable along with default surcharge and penalty - Taxpayer also failed to pay 1% Special Excise Duty during period from July, 2007 to June, 2009 which was also found recoverable along with default surcharge and penalty - Taxpayer deposited amount of Sales Tax for the period from July, 2008 to January, 2009 and thus default surcharge u/s 34 of Sales Tax Act was still recoverable - Taxpayer filed its Sales Tax return for period from July, 2008 to May, 2009 on 30-06-2009 and failed to file its Sales Tax return for September, 2007 and June, 2009 which attracted Penalty under Sales Tax Act - Show Cause Notice was issued to taxpayer and on finding his explanation unsatisfactory, Asstt. Commissioner passed Impugned Order for recovery of Tax, Excise Duty along with default surcharge and penalty - Validity - Whether manufacturing activities can be outsourced either fully or partly, in close location or distinct location - Held yes - Whether factors compelling to decentralize or outsource manufacturing activities completely or any part thereof is usually cost effectiveness, requiring specialized skill, availability of processing equipments, convenient location, favourable terms of contract or utilization of own performing capacity in more projecting activities and depend on other exigencies of decision making - Held yes - Whether in instant case, material was provided by customer (raw or semi-furnished), defined jobs performed by taxpayer and return of goods to Customer for further processing packing, sale etc: Held yes - Whether provision of Section 2(16) of Sales Tax Act defining…

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