Law: Sales Tax Act, 1990

Section: 3,3(1)(d),3(7),6,7,8,8A,8(1)(ca),11,11(4 A),16,19

Law: Federal Excise Rules, 2005

Section: 14,40A(4)

SALES TAX ACT, 1990 (VII OF 1990) Sections: 3 11 - Sales Tax Rules. 2006, Rule: 25 - Federal Excise Act, 2005, Sections: 3, 3(1)(d), 6, 7, 8, 16 19 - Federal Excise Rules, Rule: 14 - SRO. No. 660(I)/2007, dated 30.06.2007 - SRO. No. 490(I)/2004, dated - SRO. 550(I)/2006. dated 05.06.2006 - Assessment of tax and recovery of tax not levied or short levied or erroneously refunded - Appellant engaged in the supply of taxable services - Apportionment of input tax - Recovery of Federal Excise duty on account of excess input tax claimed by appellant - Disallowing input tax by CIR(A), considering interest income/profit on debt as exempt supplies - Imposition of penalty and surcharge - Confirmation by CIR(A) - FACTS/GROUNDS: The appeals, pertaining to tax periods November 2009 to October 2010; January to December 2010 and January to December 2011 were filed on various grounds related to jurisdiction, disallowance of input tax of sales tax and federal excise duty. ARGUMENTS The learned Authorized Representative of the appellant first argued on jurisdiction of the DCIR and stated that there are a number of case laws which support the position that an order under section 11 can only be passed by the Commissioner, which are squarely applicable to the facts of the case. The matter of jurisdiction has been challenged in Supreme Court. We therefore feel that at this stage it is not appropriate to give opinion by this forum as the decision of Supreme Court will have overriding effect not only in this case but also in all other cases. The s of Apex Court shall be binding on both the parties and shall prevail. Therefore, subject to that we are taking up the appeal on facts and merits without touching upon the matter of jurisdiction raised by AR. In respect of merits of the case the AR submitted that the DCIR disallowed the legitimate input tax claimed by the appellant. The DCIR at the time of passing of the order erred in treating the mark-up income as exempt income, which resulted in only a fraction of input tax being allowed to the Bank. The AR strongly contended the understanding of the DCIR on two issues (i) that interest income is a service, the AR referred to the decision…

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