Law: Sales Tax Special Procedure Rules, 2007

Section: 20,20(2)(C)

SALES TAX SPECIAL PROCEDURE RULES, 2007 Rule: 20 20(2)(C) - Levy and collection of sales tax - Recovery of tax arrears through utility bills - Validity - Constitutional Petition -  FACTS Petitioners in this and connected petition are aggrieved of charging arrears of tax in utility bills for natural gas against a column titled; “Arrears/Aging”. It is admitted position that the impugned arrears are of tax and not of natural gas. ARGUMENTS Learned counsel for petitioners submits that impugned recovery of arrears is in absence of any prescribed procedure and determination of tax. In response, it is apprised that order dated 14.02.2019 is passed by the Commissioner Inland Revenue (“CIR”), during proceedings of this petition, therefore, recovery of tax arrears, through utility bills, stands justified. Perusal of this order reveals the relevant facts. The petitioner’s entitlement to tax concession (under SRO 1125(I)/2011 dated 31.12.2011) at the rate of zero percent was determined through STGO No.81 of 2017 dated 08.05.2017. However, inadvertently, this concession of not charging sales tax on supply of natural gas was allowed before issuance of the STGO. As per the order by Commissioner, ibid, the tax not charged before issuance of the STGO is being recovered through the utility bills without referring to any provision of law. DECISION (A.) Provision under tax statute - Provisions under a taxing statute are divisible into three categories; charging, assessment and recovery. For recovery of tax, as arrears or otherwise, it should be determined, by invoking assessment provisions. If the determination brings the transaction within the mischief of charging provisions, the tax can be recovered by adopting the procedure prescribed under relevant recovery provisions, which may be regular or special. (B.) Recovering tax arrears through gas bills without lawful authority - The impugned practice is declared illegal - The column titled “Arrears/Aging” through which tax arrears are recovered, is meant for arrears supply of natural gas. Even if, after amendments in the special procedure, law authorizes to recover tax arrears through bills, it has to be through an independent…

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