Law: Sales Tax Act, 1990

Section: 2(37), 7, 8, 21(1), 26(1)

     Brief Facts   1.    Background of the Appeal The registered person, M/s Populo, Lahore (NTN: 7185443-8), filed a sales tax appeal (STA No. 30/LB/2026) before the Appellate Tribunal Inland Revenue, Lahore Bench, against the blacklisting order dated 19.11.2025 passed by the Commissioner Inland Revenue, Zone-IV, RTO, Lahore, under Section 21(2) of the Sales Tax Act, 1990 read with Rule 12(b)(i) of the Sales Tax Rules, 2006. 2. Initial Allegations and Order The registration was earlier suspended. A Joint Investigation Team report linked to FIR No. 1/2023 revealed a large-scale fake invoice scam involving dummy/non-existent suppliers. The registered person was found to have claimed inadmissible input tax of Rs. 922,821/- on invoices issued by a dummy supplier (Eagle Impex) during November 2023 to February 2024. After alleged non-compliance with show cause and final hearing notices, the Commissioner blacklisted the registration with immediate effect, treating the activity as tax fraud under Section 2(37). 3. Taxpayer’s Defense The registered person contended that: The blacklisting order and preceding notices were never served. Proceedings were conducted ex-parte in violation of natural justice and Rule 12. No collusion or knowledge of the supplier’s status was established. A bona fide purchaser cannot be penalized for the supplier’s default once tax has been paid. Blacklisting violated constitutional rights and the VAT scheme of input tax adjustment. 4. Tribunal Proceedings Heard on 10.06.2026. The Authorized Representative reiterated the grounds of non-service and absence of mens rea/collusion. The Departmental Representative supported the blacklisting order. 5. Tribunal’s Findings The registered person had claimed input tax of Rs. 922,821/- on invoices from a supplier later found to be dummy/non-existent. The registered person was a consecutive non-filer of sales tax returns under Section 26(1) for the past six tax periods. Section 21(2) empowers blacklisting where a person is directly or indirectly involved in claiming illegal/inadmissible input tax adjustment/refund. The Commissioner’s…