Law: Sales Tax Act, 1990

Section: 2(37), 3, 3, 3(9), 6, 7, 11(3), 22, 22, 22, 23, 26, 33(11), 34(1)(c), 73

  Brief Facts   1.    Background of the Appeal The registered person, M/s Samad Sons Electric Store, Lahore, filed a sales tax appeal (STA No. 1406/LB/2021) against the appellate order dated 03.05.2021 passed by the Commissioner Inland Revenue (Appeals-IX), Lahore. The CIR(A) had annulled the assessment order dated 21.10.2020 under Section 11(3) of the Sales Tax Act, 1990, and remanded the matter for fresh proceedings after providing proper opportunity of hearing. 2. Initial Allegations and Assessment  Scrutiny of sales tax returns for July 2018 to June 2019 showed null business activity, while the income tax return for the same period reflected supplies of Rs. 9,532,807/-. The Assessing Officer treated this as suppression of sales involving sales tax of Rs. 1,620,577/- and further tax of Rs. 190,656/-. After repeated non-compliance with notices, an ex-parte order was passed under Section 11(3), creating the demand along with default surcharge and penalties under Sections 33(5) and 33(11). 3. Taxpayer’s Defense The registered person contended that: Proper opportunity of hearing was not provided and service of notices was not proved. As a Tier-2 retailer, it was chargeable to tax under Section 3(9) through electricity bills, and applying the normal 17% rate plus further tax on income-tax-declared supplies was illegal. The CIR(A) erred in remanding the matter instead of deciding the grounds on merits. 4. CIR(A) Decision The CIR(A) annulled the assessment order for failure to demonstrate valid service of notices and non-provision of reasonable opportunity of hearing, and remanded the case with directions to ensure proper service, verify the registered person’s stance, and pass a speaking order. 5. Tribunal Proceedings Heard on 16.06.2026. Despite service of notices, none appeared for the registered person. The matter was decided ex-parte on the available record. The Departmental Representative supported the orders of the authorities below. 6. Tribunal’s Findings The CIR(A) correctly held that valid service of notices and proper opportunity of hearing were not established, rendering the ex-parte assessment…