Law: Sales Tax Act, 1990

Section: 2(33),3(1A),3(5),7,8,8B,8(1)(h),8(1)(i), 26(5)

Law: Customs Act, 1969

Section: 79,81,104,Chapter87oftheFirstSchedule

THIS JUDGMENT DELIVERED BY: AYESHA A. MALIK, JUSTICE:---.--- This common judgment decides the instant petition as well as connected Petitions detailed in Schedule "A" appended with the judgment as all Petitions raise common questions of law and facts. 2. The Petitioners challenge the vires of Section 8(1)(h) and (i) of the Sales Tax Act, 1990 ("Act") being ultra vires to the Constitution of Islamic Republic of Pakistan, 1973. The Petitioners contend that they are engaged in various different businesses, are taxpayers who are registered with the sales tax department and are entitled to input tax adjustment in terms of Section 7 of the Act. They are aggrieved by Section 8(1)(h) and (i) of the Act as input tax adjustment has been done away on goods having direct nexus with the taxable activity of the registered person. This is contrary to the provisions of the Act and the substantive right of input tax adjustment under Section 7 of the Act. It is also against the fundamental rights of the Petitioners to do their business and reduce investments. 3. Learned counsel for the Petitioners argued that the right to claim input tax adjustment from output tax of goods having a direct nexus with taxable supplies is a substantive right of a registered person and any deviation will enhance their liability and is also confiscatory in nature. The impugned provisions of the Act have denied adjustment on the goods mentioned in sub section 8(1)(h) which are essential components of taxable activity. Learned counsel explained that input tax adjustment has been denied on goods used in, or permanently attached to, immovable property, such as building and construction materials, paints, electrical and sanitary fittings, pipes, wires and cables which are directly involved in the taxable activity. The counsel explained that the upkeep and maintenance of their factories involve the use of construction material, paints electrical and sanitary fittings, pipes, wires and cables which should be allowed for the purposes of input tax adjustment as they have a direct nexus with the taxable activity. In terms of Section 8(1)(i) no input tax adjustment has been given against vehicles falling in…

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