Law: Constitution of Pakistan, 1973

Section: 4

Law: Sales Tax Special Procedure Rules, 2007

Section: R.13(2)(b),14,14(1)

Law: Regulation of Generation, Transmission And Distribution of Electric Powers Act, 1997

Section: 31(2)

Law: Sales Tax Act, 1990

Section: 2(46),3,11,13

CONSTITUTION OF THE ISLAMIC REPUBLIC OF PAKISTAN, 1973 Article 4 A thing required by law to be done in a particular manner must be done in that manner or not at all. INTERPRETATION OF STATUTE No one should be prejudiced by an act of the State functionaries. Special law/procedure excludes the general law/ procedure. Decision given by a superior judicial forum is binding on the lower hierarchy. SALES TAX ACT, 1990 (VII OF 1990) Section 2(46), 3 & 13 Subsidy paid by the Government of Pakistan is not consideration received from the recipient of supply, being a compensation rather than revenue in nature, same cannot be brought under ambit of taxable supplies, the question of levy of sale tax on amount of subsidy received from Government does not arise.-Charges related to non-payment of sales tax on subsidy received from the Federal Government and on disposal of scrap. Succinctly facts of the case are lie in narrow compass emanating from the orders passed by both the authorities below that the adjudicating officer passed order in originals wherein aforesaid liabilities along with default surcharges and penalties were created. In appeal, the learned CIR(Appeals) upheld the treatment meted out by the adjudicating officer for the reasons and factors as embodied in the impugned order. It is evident that subsidy paid by the Government of Pakistan is not the consideration received from the recipient of the supply. As the subsidy provided by the Government is sort of compensation rather than revenue in nature, therefore, the same cannot be brought under the ambit of taxable supplies, under Section 2(46) of the Sales Tax Act 1990. Hence, the question of levy of sale tax on amount of subsidy received from Government does not arise. Subsidy granted by Government and any tax relating thereto cannot be collected from the consumers thus the contention of subsidy being taxable, is not tenable in view of basic philosophy of V.A.T.-It is evident that subsidy is universally considered to be a welfare measure taken by the State to keep down the prices and to ameliorate the hardship faced by the society and as pointed out by the Black's Law Dictionary, it may even take the form of tax…

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