Law: Sales Tax Act, 1990

Section: 11(4),13,33(5),33(7),48,57A,57B,SerialNo .48 oftheSixth Schedule

THIS ORDER PASSED BY: SHAHID MASOOD MANZAR, JUDICIAL MEMBER ------------------- The above titled appeal has been filed at the instance of Registered Person against Order No.St-908/2016 dated 25.07.2016 passed by the learned Commissioner Inland Revenue (Appeals-II), Islamabad. The Registered Person contested the appeal on the following grounds:- "1. That the impugned Order-in-Appeal dated 25.07.2016 passed by the learned Commissioner Inland Revenue (Appeals), Regional Tax Office, Islamabad and impugned Order-in-Original dated 28.03.2016 passed by the Inland revenue Audit Officer, WHT-Unit-VI, withholding Zone, Regional tax Office, Islamabad is bad in law, on facts and in the circumstances of the case. 2. That the Respondent erred in disallowing the exemption available to the appellant. The appellant being the Grant in Aid Organization and work through funding of the Government of Japan, hence as per clause 48 of sixth schedule of the Sales Tax Act, 1990 (hereinafter "the Act"), read with section 13 of the Act is exempted from the sales tax and the same has been clarified by Federal Board of Revenue through letter having reference F.No.3(4)Int.Taxes/08/150923-R dated 26.10.2011. (copy of FBR clarification dated 26.10.2011 is attached as "Annexure A"). 3. That the Respondent No. 2 has misinterpreted the above referred clarification dated 26.10.2011 by extending withholding of tax to the withholding of sales tax, actually that withholding of tax refers to the withholding of income tax. It is needless to mention here that if the appellant is granted exemption from sales tax then it means sales tax will not be charged on supplies made to it. If sales tax will not be charged then how the appellant can withhold sales tax? 4. That the Responded No. 2 accepted the above referred clarification to the extent of supplies of goods and excluded charge of not withholding sales tax on goods as framed through show cause notice dated 12.02.2016. While the Respondent No.2 has erred in holding that sales tax should have been withheld on services provided to the appellant. 5. That the Respondent No.2 has erred in holding that the services have been subject to sales tax from 1st July…

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