Law: Sales Tax Act, 1990

Section: 7,8,11,11(2),45A,73

Law: Income Tax Ordinance, 2001

Section: 122(4)

SALES TAX ACT, 1990 (VII OF 1990) Sections 7 & 8 It is not necessary that goods should be an integral part of taxable supply. The input tax adjustment is allowed where the registered person have purchased different goods from supplier which is ultimately directly or indirectly used for taxable activities.-The Taxation Officer without discussing any of invoices and without identifying the goods or services purchased disallowed the input tax adjustment, whereas the AR has claimed that the registered person have purchased the different goods from the supplier which is ultimately directly or indirectly used for the taxable activities. In this context he has relied upon a of the Lahore High Court reported as (PTCL 2018 CL. 348). For the ease of reference it would be appropriate to reproduce the relevant extract: "From the above it follows that in order to determine whether input tax is admissible in a particular case it has to be seen whether the goods were used in relation to the taxable supplies. It is not necessary that they should be an integral pan thereof. Once a registered person establishes that the goods in respect of which he claims input tax adjustment were used for the purpose of taxable supplies as aforesaid, he would be entitled to the adjustment unless the Federal Government has issued a notification under Section 8(1)(b) to disallow the same." It has been established without any shadow of doubt that the Adjudication Officer has failed to follow the dictum laid down by the superior courts. Therefore, we have no hesitation to allow the input tax adjustment. Sections 7, 8 & 73 Since the registered person claimed input tax adjustment on the purchases against those suppliers who were active taxpayer and also that the payments were made in compliance to Section 73, therefore, there was no justification for denial of adjustment of input tax.--It is the submission of the learned AR that the appellant made purchases from active suppliers against valid sales tax invoices and the payments were made in compliance to the provisions of Section 73. In this behalf, complete record was placed before the assessing authority but he failed to consider the same.…

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