Law: Sales Tax Act, 1990

Section: 3,7,7A,8B,11,73

(a) Sales Tax Act (VII of 1990)--- ----Ss. 11, 7, 8B & 73---Assessment of tax or recovery of tax not levied or short levied or erroneously refunded---Tax liability, determination of---Transactions not admissible---Scope---Adjustable input tax---Subsequent suspension of registration of supplier---Effect---Department, during audit proceedings, concluded that registered person had illegally adjusted inadmissible input tax against invoices issued by suspended unit---Validity---Registered person did hold valid sales tax invoices duly incorporated in supplier's sales tax return and summary statement for the relevant tax period---Subsequent suspension of registration did not disentitle the buyer from his lawful right of input tax in respect of invoices issued when the supplier was registered and active person unless, those invoices were specifically declared fake through speaking order and had direct nexus with the suspension---Invoices, in the present case, had no direct nexus with the subsequent suspension of registration of the supplier and registered person had also transacted all payments to his supplier through banking channel by complying with the mandatory provisions of S. 73, Sales Tax Act, 1990---Input tax could not be denied to the registered person merely for the reason that the supplier was subsequently suspended---Appeal was accepted, show cause notice and consequent orders of both the authorities below, being devoid of substance, were set aside. Commissioner Inland Revenue v. Messrs Amtex Limited, Faisalabad 2016 PTD 1695 and Commissioner Inland Revenue v. Messrs Al-Zamin Textile Mills (Pvt.) Ltd., Faisalabad 2018 PTD 986 ref. (b) Sales Tax Act (VII of 1990)--- ----S. 11---Assessment of tax or recovery of tax not levied or short levied or erroneously refunded---Issuance of show cause notice---Vague allegations---Non-specification of material particulars---Effect---Department conducted audit of registered person's sales tax records which resulted into certain discrepancies on the basis of which show cause notice was issued---Commissioner Inland Revenue (ACIR) passed sales tax order-in-original---Being dissatisfied and aggrieved by the said order…

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