Law: Constitution of Pakistan, 1973

Section: 25,153,157,165,173

Law: Electricity Act, 1910

Section: 3,4,5,6,7,8,9,10,11,21(2),21(3),22,23,27 ,clauses(1)to(XI)oftheSchedule

SALES TAX ACT, 1990 (VII OF 1990) Sections: 2(46), 8, 11(2), 19, 33 & 34 - Federal Excise Act, 2005 - Sections: 8, 12, 14 & 19 - Income Tax Ordinance: 2001, Sections: 122(5) & 122 (9) - Assessment of tax and recovery of tax not levied or short levied or erroneously refunded - Demand of excise duty & sales tax - Amendment of assessment - Recovery of tax, default surcharge & additional tax - Validity. FACTS Assessee is Pepsi Company Inc: - Granted franchise rights to Bottlers through agreement, annually executed between Pepsi and each Bottler - Under this Agreement, commitment of relevant Bottlers is to find local level advertising and marketing initiatives such as offering discounts to key customers entering into exclusivity arrangements with local restaurants, provision of free liquid and trade discounts etc: Advertising activities have no nexus, whatsoever, with value or price of concentrate which is totally independent and separate transaction. ARGUMENTS Submission of Pepsi is that in issuing impugned Show Cause Notices arbitrarily and unreasonably, Respondent No. 4 has acted beyond jurisdiction by making assertion that expenditure of advertisement is part of consideration for concentrate sold to Bottlers by Pepsi even though said expenditure is not incurred by Pepsi thus third party cost is being included in the value on which duty and Sales Tax is required to be paid. Respondent No. 4 alleges that advertising and marketing expenses incurred by Bottlers should have been added to cost of concentrate and thereby calculation of Excise Duty and consequent Sales Tax thereon, as according to said respondent, advertising and marketing expenses are part of consideration due for concentrate even though same pertains to activities not undertaken by Pepsi and are costs which should not have been incurred or paid by Pepsi. It has been alleged by Respondent No. 4 that Show Cause Notices issued to Pepsi franchisers had actually received cash payments as re-imbursement for advertising and marketing undertaken for and on behalf of Pepsi. Pepsi denies that it has ever received any payment from Bottlers for advertising and marketing undertaken by them. FBR…