Law: Sales Tax Act, 1990

Section: 8(1)(i), 11(2), 11E, 45B

    Brief Facts   1. Background of the Appeal M/s Punjab Industrial Estate & Development Company (the taxpayer) filed an appeal before the Appellate Tribunal Inland Revenue, Lahore, against the appellate order dated 28.11.2025 passed by the Commissioner Inland Revenue (Appeals-I), Lahore (CIR(A)), who confirmed the tax demand of Rs. 13,319,832 raised by the Assessing Officer under Section 11E of the Sales Tax Act, 1990. 2. Initial Assessment and Show Cause Notice The Assessing Officer observed that the taxpayer had claimed input tax pertaining to vehicles and issued a show cause notice under Section 11(2) of the Sales Tax Act, 1990, indicating intentions to disallow the said input tax in terms of Section 8(1)(i) of the Act. The taxpayer submitted a response to the notice, which the Assessing Officer found unsatisfactory, and consequently passed the impugned order raising the tax demand. 3. First Appellate Authority's Decision The taxpayer filed an appeal before the CIR(A), who confirmed the order passed by the Assessing Officer. Aggrieved by this decision, the taxpayer filed the instant appeal before the Tribunal. 4. Taxpayer's Contentions The taxpayer's Authorized Representative (AR) contended that the Assessing Officer, without confronting the taxpayer with the rebuttal of its response, directly passed the impugned order, which constituted a violation of the fundamental right to a fair trial under Article 10A of the Constitution. It was further argued that to initiate proceedings, there must be some information available with the officer to allege non-compliance, and shifting the entire burden onto the taxpayer from the very initiation of proceedings is against the law. 5. Tribunal's Findings The Tribunal observed that the right to a fair opportunity of being heard is an inviolable entitlement of the taxpayer. It noted that after receiving the response to the show cause notice, the Assessing Officer did not confront the taxpayer with the rebuttal; rather, the rebuttal was directly communicated through the impugned order under Section 11E – an approach that is manifestly unjust and procedurally flawed. The correct…