Law: Sales Tax Act, 1990

Section: 73

Interpretation – Levy regarding Federal Excise Duty on Ghee and Cooking OilSummary of the JudgmentThis is a consolidated judgment addressing multiple tax references filed by the petitioner-department (likely the tax authority) against orders of the Appellate Tribunal Inland Revenue, Islamabad. The core issue is whether the respondent companies, which operate Ghee and Oil manufacturing units in the erstwhile Provincially Administered Tribal Area (PATA), are liable to pay Federal Excise Duty (FED) under the Federal Excise Act, 2005.Key Questions of LawThe court identifies two key questions:Pre-Finance Act, 2019: Were the respondents' economic activities subject to FED before the Finance Act, 2019?Post-Finance Act, 2019: After the Finance Act, 2019 (which added the Oil and Ghee sector to the Second Schedule of the Act of 2005), are the respondents liable to pay FED?Facts of the CaseThe respondent companies operate in the erstwhile PATA.The respondents argue that the Act of 2005 was never extended to PATA before the 25th Amendment to the Constitution. Therefore, their activities were not subject to FED.The petitioner-department argues that the Central Excises and Salt Act, 1944 was extended to PATA in 1945. Therefore, the respondents are liable for FED even if the Act of 2005 wasn't initially extended.Show Cause NoticesThe show-cause notices demanding FED payment are divided into two periods:July 2017 to June 2019: The Oil and Ghee sector was not subject to FED during this period until the Finance Act, 2019. Also, the Act of 2005 was not extended to PATA until the 25th Amendment.Post-Finance Act, 2019: The Oil and Ghee sector was subject to FED after the Finance Act, 2019, until the entry was omitted by the Finance Act, 2021.Scope and Application of the Act of 2005Section 3 of the Act of 2005 is the charging section, levying FED on goods produced/manufactured in Pakistan, imported into Pakistan, or goods from non-tariff areas brought to tariff areas, if those goods are specified in the First Schedule of the Act.Sections 4, 6, and 7 deal with filing returns, payment of duties, and input tax adjustments (the latter applying to goods in the Second Schedule).The…

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