Law: Sales Tax Act, 1990

Section: 3,8(1)(h),8(1)(ca),8A,25,47,73

Summary: The Federal Tax Appeal allowed the department’s appeal, held that the High Court and ATIR erred in treating legal questions as factual, and restored the original order disallowing the respondent’s input tax adjustments for building materials and other disputed claims for periods July–Dec 2013. The Court found input on cement/steel barred by Section 8(1)(h) and S.R.O. 450(1)/2013, and also held statutory conditions in Sections 8(1)(ca), 8A and 73 (treasury deposit and mandatory banking channel) independently rendered the claims inadmissible; concessions by departmental representatives did not bind the Court. Core points: Appeal granted; High Court and ATIR orders set aside and original assessment (O-N-O) restored. Main legal issue: whether input tax on building materials (cement, steel) was admissible. Court: immovable construction does not generate taxable output; input on goods permanently attached to immovable property is barred. S.R.O. 450(1)/2013 (effective during the tax periods) excluded cement and steel from input adjustment. Sections 8(1)(ca) and 8A require supplier’s tax actually deposited in treasury; nil-filer or non-deposit breaks chain of admissible input. Section 73 requires payment through prescribed banking channel from business bank account; non-compliance independently disallows input. ATIR/High Court wrongly characterized the issues as factual; interpretation of statutory exclusions and banking/deposit conditions are questions of law. Concession by departmental counsel before lower fora does not estop the Court from deciding questions of law. Result: input tax disallowance (demand Rs. 22,758,773 plus penalty) reinstated; questions of law answered in favour of the Revenue. Law and section Law Section Effect in this case Sales Tax Act, 1990 Section 3 Charging provision; tax applies to goods, not immovable property. Sales Tax Act, 1990 Section 8(1)(h) Bars input tax on goods permanently attached to immovable property, including building materials. Sales Tax Act, 1990 Section 8(1)(ca) Input tax is inadmissible unless the supplier’s tax has actually been deposited in the treasury. Sales Tax Act, 1990 Section…