Law: Sales Tax Act, 1990

Section: 7(1),47,73

SALES TAX ACT, 1990 (VII OF 1990) Sections: 47 ,  73 - Certain transactions not admissible - Non-compliance with the requirements of section 73 - Input tax adjustment - Disallowance - Passing of order for the recovery of the principal amount along with default surcharge and penalty - Order set aside penalty of Rs. 5000. Upheld by the Appellate Tribunal and input tax adjustment allowed - Validity - Reference to High Court - FACTS Mr. Ibrar Hussain, representative of respondent No.2 has not opposed the application for the restoration of the captioned reference. For the grounds taken in the application for the restoration of the captioned reference, the same is allowed and the captioned sales tax reference is restored to its original number. ARGUMENTS The questions of law framed by this Court vide order dated 20.05.2009 are as follows:- “a) Whether Section 73 of the Sales Tax Act is mandatory or procedural and violation of this Section is illegal and is not the irregularity and procedural defect? b) Whether the respondent No.2 violated the provisions of Section 73 read with Section 7(1) of the Sales Tax 1990 and the input adjustment was liable to be disallowed Penal surcharge and the penalty is legal and justified. c) Whether after admitting before Collector appeal that the payment of purchases were made in cash and not through the bank instrument as required U/S 73 of the Sales Tax 1990 amounts to admitting/confessing the charge framed in the show cause notice and whether any appeal lies in the higher forum after admission by the respondent No.2.” DECISION (A.) Payment had not been made in accordance with the requirement of section 73 of the 1990 Act, therefore, Assistant Collector disallowed the input tax adjustment - In the case at hand, it is an admitted position that respondent No.2 (M/s Rasuls) had adjusted input tax amounting to Rs.39,977/- in August, 2005 and June, 2006 but the payment had not been made in accordance with the requirements of Section 73 of the 1990 Act. Therefore, the Assistant Collector (Adjudication), Islamabad vide order in original dated 01.01.2008 had disallowed the input tax adjustment of Rs.39,977/-. Respondent No.2’s appeal…

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