Law: Khyber Pakhtunkhwa Finance Act, 2013

Section: 2 (47) (48), 19(1), 26(1), 86, Second Schedule

Law: Khyber Pakhtunkhwa Finance Act 2021

Section: 7

Khyber Pakhtunkhwa Finance Act (XXI of 2013)---

----Ss. 2 (47) (48), 19(1), 26(1), 86 & Second Schedule---Khyber Pakhtunkhwa Finance Act (XIII of 2021), S.7---Reference---Sales tax---Recovery---Amendment of law---Retrospective effect---Scope---Petitioner / withholding company was aggrieved of imposition of recovery of Rs.12,098,984/- as principal amount of sales tax, along with penalty and default surcharge---Validity---Allegation of not withholding amount of sales tax on receiving services against petitioner / withholding company related to the period prior to promulgation of Finance Act, 2021---Text of amendment Act (Finance Act, 2021) did not give any impression of its retrospective application and that the liability to pay sales tax on services was on the service provider---Recipient was only responsible to withhold the amount of sales tax at the rate specified in the Khyber Pakhtunkhwa Sales Tax on Services Special Procedure (Withholding) Regulations, 2015---Demand raised by authorities in terms of S. 30(3) of Finance Act, 2013 was illegal and without lawful authority--Before amendment of Finance Act, 2013 (through Finance Act, 2021) the authority was competent to issue a notification in official gazette to prescribe a special procedure for payment of taxes and further required any person or class of persons, whether registered or not for the purpose of Finance Act, 2013 to withhold full or part of tax charged for such a person or class of persons on the provision of any taxable services or class of taxable service and to deposit tax so withheld with government---Regulations were framed which envisaged that recipient of services should withhold sales tax on services and deposit the same in government head of account---During the period under consideration, liability upon withholding agent did not exist---Non-compliance of such Regulations was not visited with any penalty, albeit personal liability of withholding agent---Reference was disposed of accordingly.