Law: Sales Tax Special Procedure Rules, 2007

Section: 58B(1)(iii)

Tagline Remand of matter to the Customs Appellate Tribunal for proper adjudication on the applicability of value-added tax exemption under Rule 58B(1)(iii) of the Sales Tax Special Procedure Rules, 2007. Summary This reference arose from a judgment of the Customs Appellate Tribunal dated May 4, 2023. The applicant, a contractor, imported steel to be used in providing construction services (in-house consumption) rather than for further supply or wholesale. The applicant argued that under Rule 58B(1)(iii) of the Sales Tax Special Procedure Rules, 2007, goods imported for the furtherance of taxable activity (construction) and not meant for subsequent supply are exempt from the payment of value-added tax. The Customs Appellate Tribunal, however, failed to adjudicate upon the applicability of the said rule, focusing instead on whether the Customs Department was competent to generate and recover income tax and sales tax demands. Acknowledging this gap in adjudication, the High Court set aside the impugned judgment and remanded the matter back to the Tribunal. The Tribunal was directed to consider the questions of law raised by the applicant, specifically the applicability of Rule 58B(1)(iii) to the facts of the case, and to issue a speaking order after giving both parties an opportunity to be heard. ORDER; BABAR SATTAR, J.- This reference arises from a judgment of the Customs Appellate Tribunal (“Tribunal”) dated 04.05.2023. The questions framed for our consideration were recorded in order dated 11.01.2024. We heard the learned counsels for the parties, who taken us through the relevant factual background. The learned counsel for the applicant submitted that the Tribunal essentially rendered a judgment on the question of whether or not income tax and sales tax demand could be generated and recovered by the Customs Department. He submitted that the actual question that related to the legality of the demand generated was whether in terms of rule 58B(1)(iii) of the Sales Tax Special Procedure Rules, 2007 (“Special Procedure Rules”), the goods imported by the applicant as a contractor, that…