Law: Sales Tax Act, 1990

Section: 2,7,8,8(1)(b),11(2)

SALES TAX ACT, 1990 (VII OF 1990)----Sections: 2, 7, 8, 8(1)(b) & 11(2) - Federal Board of Revenue Act, 2007, Section: 4(L)(a) & (k) - Constitution of Pakistan, 1973. Articles 4 & I0A - Assessment of tax and recovery of tax not levied or short levied or erroneously refunded - Determination of tax liability - Tax credit not allowed - Input tax denied - Show cause notice - Constitutional Petition -FACTSThrough this constitutional petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 (the �Constitution�), the Petitioners have impugned show cause notice dated 02.07.2021 and subsequent notice dated 16.08.2021 issued by Respondent No.4 under section 11(2) of the Sales Tax Act, 1990 (the �1990 Act�).ARGUMENTSMr. Raza Imtiaz Siddiqui, Advocate contended that pursuant to the aforesaid judgment of the learned Division Bench, the Respondents have proceeded with the matter but wrongly interpreted relevant provisions of 1990 Act, input sales tax on supply of the equipment to their other plant and decided the case against them twice.In rebuttal. Mr. Raza Imtiaz Siddiqui. Advocate contended that neither the Petitioners are contributing to the taxable supply nor they have any nexus with the taxable supply, therefore, they arc entitled to the relief sought for.DECISIONDeduction of input tax for the purpose of taxable supplies from output tax. In view of the above provisions of the "Act�, the case law relied by the parties and especially prayer (iv) made by the Petitioner, let a certified copy of this petition along with all the annexures be sent to the Respondent No.4 to decide the matter regarding constitution of a team of the qualified/expert persons to attain an on-site/physical verification clarifying the fact whether the items, on which input tax has been claimed by Petitioner No. 1, has been done strictly as per provisions of 1990 Act or not. The said team then, if made, will visit the manufacturing premises of Petitioner No. 1 in order to verify each and every invoice under the relevant heading so as to conclude whether the goods thereunder have been used for the purpose of taxable activity or making of taxable supply…