Law:

Section:

(a) Sales Tax Act (VII of 1990)--- ----Ss.2(37) & 8A---Tax fraud---Use of fake and flying invoices---Non-confrontation of specific allegations of tax fraud---Validity---Ingredients" of tax fraud i.e. "knowledge, dishonesty and fraud" was not specifically confronted---When negligence, as envisaged under S.8A of the Sales Tax Act, 1990 was not confronted, the taxpayer could not be absolved from the serious allegation on the basis of technicalities---Admitted fact of using fake invoices was sufficient to shift burden of proof on the taxpayer---Plea about practice of using flying invoices should not help the taxpayer---Though, tax was paid in National Exchequer against fake and flying invoices, even then same was prohibited under the law and its consequence was inadmissibility of adjusted input tax in addition to other penal consequences---Despite absence of specific allegations in terms of S.2(37) of the Sales Tax Act, 1990, there was sufficient material on record to shift burden of proof on the taxpayer. (b) Sales Tax--- ----Precondition of any adjudicating proceedings was to confront the taxpayer with specific allegations on the basis of available material---Mere mentioning of section of law in show cause notice was not sufficient. (c) Sales Tax-- ----Amount received as defaulted tax on threat of prosecution could not be termed an admission by the taxpayer. (d) Sales Tax Act (VII of 1990)--- ----S.8A---Joint and several liability of registered persons in supply chain .where tax unpaid---Status of supplier on website of Federal Board of Revenue---Scope---Registered person receiving taxable' supplies from another registered person should be careful about genuineness of the supplier, beyond apparent indicator like status of the supplier on website of Federal Board of Revenue---Prudent businessman receiving supplies from another registered person had to keep in mind the reputation of the supplier in market and was also required to ascertain about his physical existence as registered person making bona fide business transactions, after taking such precautions, registered person could absolve himself from the statutory obligation under S.8A of the Sales Tax Act,…

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