Law: Sales Tax Act, 1990

Section: 3,7,40,46

SALES TAX ACT, 1990 --- Section 3 ---- Collector of Central Excise and Sales Tax has no authority to fix production capacity of a unit -- On the basis of a report of Superintendent of Directorate of General of Inspection & Training (Customs, Central Excise and Sales Tax), Lahore, the Deputy Collector, Customs, Central Excise and Sales Tax, Gujranwala, came to know that the registered person had taken an illegal adjustment of input tax against fixed sales tax payable on the goods manufactured and cleared by him under the capacity taxation fixed by the Collector, Lahore, whereby no adjustment of Excise Duty and Sales Tax was admissible to the manufacturer of paper and paper board products working in capacity taxation. On the basis of these reported facts, the registered person was served with a show cause notice. Collector (Adjudication), who by appreciating the following line of arguments:--- The crucial point in the subject case is fixation of capacity by the Collector which according to the learned counsel was beyond jurisdiction as he was not empowered/ competent to any such act whereby he could fix the production capacity of a unit. Ordered vacation of the show cause notice. The instant departmental appeal being devoid of any legal substance does not merit acceptance by us on the following grounds:- With regard to the issue of capacity tax, admittedly, there is no any enactment or Notification issued by the Government in the field of Central Excise Duty or Sales Tax, authorizing the Collector to fix production capacity of a unit. The vacation of the show cause notice by the Collector (Adjudication) being in accordance with Law, does not call for any interference at our end. Section 7 Input tax adjustment is a statutory right of a registered person which cannot be defeated by the orders of the Collector of Central Excise and Sales Tax. Section 40 Visit of the Superintendent of Directorate of General of Inspection & Training alongwith staff at business premises of registered person without warrant obtained from judicial Magistrate is illegal. Section 46 Filing of appeal before the Tribunal by Additional Director on behalf of Sales Tax Department is…

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