Law: Sales Tax Act, 1990

Section: 3,3(3A),7,8,8(1)(ca),8(1)(d),10,11,11(2) ,11(3),21,45B,73

Law: Constitution of Pakistan, 1973

Section: 23,24

CONSTITUTION OF THE ISLAMIC REPUBLIC OF PAKISTAN, 1973 Articles 23 & 24 Any sub-constitutional limitation restricting a buyer from deducting input tax from output tax impinges on rights to property (input tax) guaranteed to a taxpayer under the Constitution (Articles 23 & 24) and must successfully filter through the test of Constitutionality. It is not of least importance to say that there is free competition in market where buyers and sellers are separate, unrelated and independent players, transacting with each other at arms-length. Once payment is made to supplier through proper banking channel, as requisitioned under section 73 of the Act, buyer has no control over supplier. Buyer has no means to police supplier to ensure that payment made is also duly deposited in government exchequer. Supplier is not a puppet of buyer and does not dance to his tune. Right of input tax is a substantive and inalienable right of the buyer which cannot be denied to him on subsequent default of the supplier. Any such expectation or obligation cast upon buyer in a market where there is free and fair competition defies reasonability and logic. Under scheme of the Sales Tax Act, 1990, a taxpayer always enjoys 'proprietary interest' in deduction of input tax from output tax. Input tax is property of buyer which is paid to supplier so that the same can be deducted at time of supply of goods by the buyer. Any sub-constitutional limitation restricting a buyer from deducting input tax from output tax impinges on rights to property (input tax) guaranteed to a taxpayer under the Constitution (Articles 23 & 24) and must successfully filter through the test of Constitutionality. INTERPRETATION OF STATUTE An executive order and notification, which is detrimental or prejudicial to the interest of a person imposing liability or obligation cannot operate retrospectively however, an executive order and notification which confers a benefit or right can be given retrospective effect. SALES TAX ACT, 1990 (VII OF 1990) Section 3 Prime liability to pay sales tax is on the supplier under section 3(3)(a) and can be shifted to the buyer only by way of a notification under section 3(3A)…