Law: Sales Tax Act, 1990

Section: 40(2),40C(2)

Law: Sales Tax Rules, 2006

Section: 150ZF

SALES TAX ACT, 1990 (VII OF 1990)--Section: 40(2) - Sales Tax Rules, 2006, Rule: 150ZF - Sales Tax General Order No. 8 of 2022 - Searches under warrant - S.T.G.O, dated 18.01.2022 - Addendum dated 26.04.2022 - notice dated 16.05.2022 and letter dated 18.05.2022 from FBR to the Chief Commissioners to ensure compliance with requirements of S.T.G.O - Validity -

FACTS

The record shows that a tri-partite agreement was executed on 11.03.2022 between the petitioner, the F.B.R. and respondent No.3 (consortium of Authentix Inc., AJCL (Pvt.) Ltd. and MITAS Corporation) under which the petitioner, as a manufacturer and importer of tobacco, having registration with the F.B.R. agreed to participate in the track and trace initiative and to implement the track and trace system. The responsibilities of the petitioner are set out in clause 2 of the said agreement, which included the provision and installation of a tax stamper or stamping/conveyor system. Furthermore, the petitioner was obligated to provide to respondent No. 3 with a forecast setting out the number of Unique Identification Markings (tax stamps) required for the following quarter not later than 15 th of December, March and September each year. The petitioner was also required to place an order by means of Management Information System that manages ordering, payment and invoicing with respect to each order of tax stamps. Since FBR had attached the petitioner�s bank accounts, payment to the manufacturers of tax stampers was delayed because of which, compliance could not be made within the stipulated timeline.

ARGUMENTS

Learned counsel for the petitioner submitted that the petitioner, in compliance with its obligations under clause 2(a)(xiii) of the tri-partite agreement, placed an order for four tax stampers from two different manufacturers prior to the execution of the said agreement; that the said order was placed in February, 2022 i.e., prior to the execution of the tri-partite agreement; that since the F.B.R. had attached the petitioners bank accounts, payment to the manufacturers of tax stampers was delayed; that on 18.01.2022, the F.B.R. issued S.T.G.O. notifying that no tobacco products shall be allowed to be removed from the production site, factory premises or manufacturing plant without affixation of tax stamps/unique identification marking with effect from 30.04.2022; that this date was subsequently extended to 20.05.2022 vide addendum dated 26.04.2022; that the deadline of 20.05.2022 is restrictive in nature and the petitioners failure to abide by the said deadline may be met with coercive action; that respondent No.3 has not been able to deliver tax stamps to the petitioner; that if the petitioner is not able to meet the deadline for the installation of the tax stampers, it would not be allowed to remove any manufactured products from its factory; and that the said restriction would cause irreparable loss to the petitioner as well as to the national exchequer. Learned counsel for the petitioner prayed for the writ petition to be allowed in terms of the relief sought therein.

DECISION

(a) The mere fact that the petitioner could not pay the manufacturer of the tax stamper due to the petitioner�s accounts being attached by the F.B.R. for reasons that are not before this Court cannot furnish a plausible ground to relieve the petitioner from its contractual obligations - The deadline for the implementation of the track and trace system is 20.05.2022. For this Court to allow the petitioner to sell tobacco products without the affixation of tax stamps beyond 20.05.2022 would be tantamount to nullifying the S.T.G.O. dated 18.01.2022. The mere fact that the petitioner could not pay the manufacturer of the tax stamper due to the petitioners accounts being attached by the F.B.R. for reasons that are not before this Court cannot furnish a plausible ground to relieve the petitioner from its contractual obligations to have all the necessary equipment installed at its premises so as to ensure the implementation of the track and trace system by the deadline of 20.05.2022.

(b) No plausible explanation was given for the delay in filing writ petition only one day prior to deadline for implementation, hence dismissed in limine - The petitioner chose to file the instant writ petition on

19.05.2022 i.e., one day prior to the deadline for the implementation of the track and trace system for tobacco sector. No plausible explanation was given for the delay in filing of the instant petition given the fact that the extended dead line of 20.05.2022 had been imposed through addendum dated 26.04.2022. In view of the above, I do not find any merit in the instant petition, which is dismissed in limine. Office is directed to transmit a copy of this order to the Chairman, F.B.R.

Sales Tax Act (VII of 1990)---

----S.40C(2)---Sales Tax Rules, 2006, R.150ZF---Sales Tax General Order No.8 of 2022 dated 18.01.2022---Manufacturer/Importer of Tobacco---Track and Trace System, implementation of---Deadline as per S.T.G.O. dated 18.01.2022 and the addendum dated 26.04.2022---Scope---Petitioner (manufacturer / importer of tobacco having registration with the F.B.R.) agreed to participate in the track and trace initiative and to implement the track and trace system---Petitioner filed constitutional petition for setting-aside of the S.T.G.O. dated 18.01.2022; the addendum dated 26.04.2022 as well as Notice and letter from the F.B.R. to all concerned Chief Commissioners to ensure compliance with the requirements of the said S.T.G.O. dated 18.01.2022---Validity---Deadline for the implementation of the track and trace system was 20.05.2022---Allowing the petitioner to sell tobacco products without the affixation of tax stamps beyond the deadline (20.05.2022) would tantamount to nullifying the S.T.G.O. dated 18.01.2022---Mere fact that the petitioner could not pay to the manufacturer of the tax stamper due to its (petitioner's) accounts being attached by the F.B.R. was not a plausible ground to relieve the petitioner from its contractual obligations to have all the necessary equipment installed at its premises so as to ensure the implementation of the track and trace system by the deadline of 20.05.2022---Even otherwise, the present constitutional petition was instituted (on 19.05.2022) one day prior to deadline for the implementation of the track and trace system for tobacco sector---No plausible explanation was given for the delay in filling of the present constitutional petition given the fact that the extended deadline of date had been imposed through addendum dated 26-04-2022---Constitutional petition, being merit-less, was dismissed in limine, in circumstances. Usman Jillani for Petitioner.