Law: Sales Tax Act, 1990

Section: 3,6,7,11(2),26,33(1),(2),(5),(6),(11),(B ),(C),(13),(19),(21),37A

Law: Sales Tax Rules, 2006

Section: 57(5)

Sales Tax Act (VII of 1990)--- ----Ss. 3, 6, 7, 11(2), 26, 33(1), (2), (5), (6), (11), (B), (C), (13), (19), (21) & 37-A---Convention on the Privileges and Immunities of the United Nations, S.7---Sales Tax Rules, 2006, R.57(5)---Sales Tax, recovery of---Show cause notice---Zero rating---Supply to diplomatic missions---Principle of substantive compliance---Applicability---Show cause notices were issued to appellants for making supplies Diplomatic Mission which withheld 1/5th of the sales tax whereas, appellants were charged for failing to pay 4/5th of the sales tax---Validity---United Nations including its subsidiary organs were exempted under S. 7 of Convention on the Privileges and Immunities of the United Nations from all direct taxes and customs duties in respect of articles imported or exported for its official use---Such tax exemption privileges were obtained for United Nations vendors, the vendor authorized the mission to deduct from vendor's invoices any amount representing such taxes or duties charged by the vendor the Mission---Payment of such corrected invoiced amounts would constitute full payment by the Mission---Amount demanded was allowed to be recovered from appellants invariably, they had to knock at the door of the Mission which would in turn, approach to Economic Affairs Division of Federal Government for exemption---Mission by virtue of R.57(5) of Sales Tax Rules, 2006 could approach Economic Affairs Division---For post-facto regularized supplies in terms of Sales Tax Rules, 2006, ipso facto qualified the appellant supplies were exempted or zero rated---If once the supplies were found exempted from tax leviable under the Statute, then any procedural lapse for availing exempt were condonable by virtue of principle of substantive compliance---Supplies made to the Mission being privileged organization, were zero rated within the meaning of relevant provision of law---Appellate Tribunal Inland Revenue annulled the order of assessment as the same was illegal and without lawful jurisdiction---Appeal was allowed in circumstances. Government of Pakistan v. Muhammad Ashraf and others PLD 1993 SC 176 and Northern Bottling Co. v. The Federation of…

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