Law: Sales Tax Act, 1990

Section: 7,3,14,71

(a) Sales Tax Act (VII of 1990)---Ss. 7, 3, 14 & 71---Sales Tax Special Procedures Rules, 2007, Chapter-III, R.3(1) & Chapter-XI, R.58H (2)---Determination of tax liability---Adjustment of input tax---Electric supply companies---Taxpayer, an electric supply company, was paying sales tax (output tax) on distribution/supply of electricity and were adjusting input tax---Revenue created demand on the ground that tax collected from the Steel Melters/Re-rollers, under R.58(H) of the Sales Tax Special Procedure Rules, 2007 through electricity bills, was wrongly adjusted by them against input tax as the tax was final discharge of tax liability of the Steel-Melters/Re-rollers and the taxpayer had just collected the same on behalf of department---Taxpayer contended that they were entitled to adjust input tax under S.7 of the Sales Tax Act, 1990 read with R.15 to Chapter III of Special Procedure Rules, 2007---No corresponding amendment having been made in Chapter III, dealing with Special Procedure for Electric Power Supplies, department's interpretation had no force and no restriction on adjustment of tax collected under R.58H was available in Chapters III or XI and the taxpayer were never declared as withholding agents under Sales Tax Special Procedure (Withholding) Rules, 2007, wherein it was specifically provided that tax withheld would be deposited by withholding agent through his monthly return and such collection should not be treated his output tax and department was estopped by its conduct because return filed electronically were based on pre-defined formula available on webpage of Federal Board of Revenue and formula was devised keeping in view the existing law and rules and that format of sales tax returns also support the contention of the taxpayer, as a payable amount by a registered person, even if there was a brought forward balance, was available for adjustment against such allegedly withheld amount---Validity---Tax envisaged under R.58H to Chapter XI of Sales Tax Special Procedure Rules, 2007 was in lieu of tax under S.3(1) of Sales Tax Act, 1990 and was not an output tax of the taxpayer/appellants---Taxpayers were entitled to adjust input tax…

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