Law:

Section: 7, 8(1)(d), 21(3) , 73

Sales Tax Act, 1990 (III of 1990)-- ----Ss. 7, 8(1)(d), 21(3) & 73--Claim of input tax deductions--Denial of refunds--Allegations of--Status of suppliers was actual at time of verification--Raising of demand--petitioner had failed to provide any concrete evidence indicating that invoices were issued to respondent during any period of suspension or blacklisting--It is now well established in legal precedents that if a transaction is conducted while suppliers are active and duly registered, any invoices issued are not automatically invalidated by a subsequent blacklisting or suspension of those suppliers--Demand raised by Deputy Commissioner of Inland Revenue was unjustifiable, and, as such, it was rightly set aside by subsequent higher forums that reviewed matter, affirming respondent’s position--Petition dismissed. [Pp. 642 & 643] A, B & C Ch. Muhammad Zafar Iqbal, ASC for Petitioner. Nemo for Respondent. Date of hearing: 16.1.2025. Order Shahid Waheed, J.--This case involves a sales tax issue stemming from an order issued on the 12th of April, 2022, by a Division Bench of the High Court on an application filed by the Revenue—referred to as the petitioner—under section 47 of the Sales Tax Act, 1990 (the Act). 2.       At the heart of this matter lies a straightforward yet significant question: Can the taxpayer, referred to as the respondent, be considered to have violated section 8(1)(d) of the Act, by claiming input tax adjustments based on fake invoices? To understand this question fully, it is essential to state, in brief, the facts surrounding the situation. 3.       The Deputy Commissioner of Inland Revenue uncovered evidence suggesting that the respondent had improperly claimed input tax deductions relying on fake invoices purportedly issued by two suppliers—I.J. Traders and DAG Enterprises. The status of these suppliers was indicated as blocked. 4.       In response to these serious allegations, the respondent staunchly defended its position. It asserted that during the relevant taxable activities, the status of both suppliers was…