Law: Income Tax Ordinance, 2001

Section: 153

Law: Sales Tax Act, 1990

Section: 33,34,37,38

THIS ORDER PASSED BY: JAVED IQBAL, CHAIRMAN:---.--- This appeal is directed against order No. ST 144/2014 dated 25. 07. 2014 passed by Commissioner Inland Revenue Appeals (CIR-A) Islamabad. As per facts the registered person is a Private Limited Company and is doing the business of hotel and restaurant under the name and style of M/S HOTEL ORNATE (PVT) LTD. Previously the same business was being run by this registered person in the capacity of AOP with the same name having STRN 0701980128519. A raid was conducted on 04.09.2013 by Directorate of Intelligence and Investigation (Inland Revenue) Islamabad. They impounded the records and books of accounts. Inquiries were made u/s 38 of Sales Tax Act, 1990. They matched the data obtaining on registered persons record with Integrated Tax Management System (ITMS). According to their observation the taxpayer was filing NIL returns for the period from July 2009 to June 2013. They were of the view that the registered person had been regularly doing business and charging sales tax on room rent restaurant sales and other hotel related services but did not deposit the sales tax into government account by way of filing NIL returns. Accordingly show cause notice was issued asking the registered person to explain the reasons for nonpayment of sales tax as per fallowing details. Tax Period Sales as per record of M/S Hotel Ornate (Pvt) Limited Sales Tax payable 2009-10 9,207,223 1,473,156 2010-11 27,434,187 4,663,312 2011-2012 13,126,303 2,100,208 2012-2013 32,146,232 5,143,717 Total 81,915,945 13,380,893 The Registered person in its reply stated that amendment was made in section 153 of the Income Tax Ordinance, 2001 which envisaged that withholding tax would be treated as adjustable in the cases of limited companies whereas in the non company cases it was to be treated as full and final discharge. The Registered Person decided to take advantage of this amendment and started proceedings for its registration as limited company with the sales tax department. It was time taking process. Although NTN was allotted for income tax purpose but registration of the company with the sales tax department was delayed due to procedural…

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