Law: Sales Tax Act, 1990

Section: 2(12),2(35),2(41),3,3(1),3(1)(a),6,11,22 ,23,26,47

SALES TAX ACT, 1990 (VII OF 1990)---Sections: 2(12), 2(41), 3, 3(1), 3(1)(a), 6, 11, 22, 23, 26 - Scope of tax - Taxable activity - Taxable supply - Subject matter of federal and provincial laws - Failure to pay sales tax on acquisition of taxable goods - Imposition of tax, default surcharge and penalty - Tribunal, partly allowed appeal by holding that the goods consumed in the course of execution of construction were neither taxable nor constituted taxable supplies - Validity - Reference to High Court - FACTS Brief facts of the case are that a show cause notice was issued to respondent-taxpayer alleging therein certain discrepancies found during audit for the period i.e. July, 2005 to June, 2006, which culminated in passing of order-in-original dated 25.11.2008. Feeling aggrieved, respondent-taxpayer filed appeal before Collector (Appeals), which was disposed of vide order dated 23.01.2009, whereby imposition of tax was upheld, however, matter was remanded for re-calculation of exact tax by giving effect to exempt goods by devising a formula and component of penalty was foregone but default surcharge was held applicable as per law. Respondent-taxpayer tiled second appeal before learned Appellate Tribunal, which was partly allowed vide order dated 08.10.2011. Hence, this Reference Application. Through instant Reference Application under section 47 of the Sales Tax Act, 1990 (“the Act of 1990”), following questions of law, urged to have arisen out of impugned order dated 08.10.2011, passed by learned Appellate Tribunal Inland Revenue. Lahore Bench, Lahore:- a. Whether M/s Descon Engineering Limited violated provision of section 3(1) of the Sales Tax Act, 1990 by not paying sales tax on acquisition of taxable goods regardless of their further disposal? b. Whether on the facts and circumstances of the case, the ATIR was justified to hold that the goods consumed in the course of execution of construction were neither taxable nor constituted taxable supplies whereas the goods were fully taxable as they comprised of cement, welding electrodes, bajri, sand, pipes etc.? c. Whether with reference to the facts and circumstances of the instant case, the definition of…

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