Law: Sales Tax Act, 1990

Section: 7,45A

Sales Tax Act (VII of 1990)---Ss. 7 & 45A---Determination of tax liability---Adjustment of input tax against purchases---According to information available with Federal Board of Revenue, such purchases were not declared in the sales tax return of the supplier---Bank statement and copies of cheques/ demand drafts/pay orders were provided in response to show-cause notice and claimed that payment to supplier was made through bank in terms of S.73 of the Sales Tax Act, 1990---Clearance of cheques was not reflected in the bank statement---Complainant was required to provide sales tax return of the supplier, which he did not do---Order-in-original was passed for payment of tax along with penalty---Complainant contended that valid invoices were issued by the supplier and the payment was made through bank; that bank statement and copies of invoices were not considered on merits; that requirement to produce sales tax return of the supplier was uncalled for; that such document ought to have been obtained directly from the supplier instead of compelling the complainant; and that orders-in-original were passed without considering the evidence or going for independent verification, which was tantamount to maladministration---Validity---Inland Revenue Officer observed that cheques/demand drafts/pay order were not reflected in the bank statement---Taxation Officer should have verified the transactions directly from the bank which had not been done---No verification of purchases was made from the supplier and instead order-in-original was passed arbitrarily---Such act of passing orders-in-original was tantamount to maladministration---Federal Tax Ombudsman recommended that Federal Board of Revenue direct the Chief Commissioner to invoke jurisdiction under S. 45A of the Sales Tax Act, 1990, to pass a fresh speaking order, as per law. FINDINGS/RECOMMENDATIONS DR. MUHAMMAD SHOAIB SUDDLE (FEDERAL TAX OMBUDSMAN).---This complaint is filed against unlawful order-in-original dated 13-7-2012. 2. According to the Department, the complainant adjusted input tax of Rs.381,088 during tax period 12 of 2011 against purchases made from the supplier namely Messrs ICI Pakistan Limited. As…

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