Law: Sales Tax Act, 1990

Section: 11(2)

Sales Tax Act (VII of 1990)--- ----S. 11(2)---Assessment of tax---Agreement---Claim of input tax was restricted to the extent of 20% of the value of exported goods and disallow the balance---First Appellate Authority's direction to allow adjustment of input tax as claim of registered person was based on consumption of packing material in exports---Department contended that the agreement was executed between the Collector and Association of Confectionery voluntarily and was binding upon the .contracting parties; and claim of input adjustment, being in excess of 20% limit had been rightly disallowed---Registered person contended that agreement relied upon was not of binding nature because it was not reduced into a statutory instrument---Validity---Appellate Tribunal dismissed the appeal of the department; and directed the concerned officer to allow the adjustment of input tax to the registered person because the same could not be denied on the basis of an agreement which was enforceable under the law. Messrs Crescent Re-rolling Mills's case 2005 PTD 2436; Messrs Mehmood and Co. v. Assistant Collector Sales Tax Lahore and others 2005 PTD 72 and 2007 PTD 47 rel. ORDER MUNSIF KHAN MINHAS (JUDICIAL MEMBER).---This appeal has been filed by the Revenue against the order of the Collector(Appeals) Faisalabad, dated 18-6-2008. The revenue feels aggrieved by the observation of the Collector (Appeals) to the effect that the Assistant Collector (Refund) Sales Tax and Federal Excise, Faisalabad was not justified to restrict the claim of input tax made by the registered person to the extent of 20% of the value of the exported goods and disallow the balance. 2. The facts of the case, in brief, are that the registered person, a private limited company is engaged in the business of manufacturing and export of confectionery items. Through a show-cause notice dated 28-11-2007 the Assistant Collector Sales Tax and Federal Excise, Faisalabad, confronted the registered person with the disallowance of input tax of Rs.523,772 claimed during the tax period April, 2007. At the adjudication stage, the registered person produced evidence regarding the admissibility of adjustment of input…

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