Law:

Section:

Sales Tax Act (III of 1951)--S. 12(1)---Goods sold by assessee which were purchased from the persons other than the licensed manufacturers or licensed wholesalers and for which assessee was unable to lead any evidence, to show that while purchasing the said goods which it later sold it had paid any sales tax, Sales Tax Officer, held, was entirely justified in calling upon assessee to pay sales tax by invoking S.12(1) of the Act. Per Rustam S. Sidhwa, J: - In the Case of Messrs Noorani Cotton Corporation P L D 1985 SC 161 and Commissioner of Income-tax v. Sh. Muhammad Ismail & Co. (1986) 53 Tax 122 (SC) ref. JUDGMENT RUSTAM S. SIDHWA, J.---This is an appeal by Messrs Sufi Soap Factory, Lahore, appellant, against the judgment of a learned Division Bench of the Lahore High Court dated 8-1-1979 answering the question posed in the tax reference in the affirmative and thus making the appellant firm liable to sales tax. 2. The brief facts of the case are that the appellant firm is a manufacturer of indigenous soap. The appellant firm also sells raw materials connected with the soap industry. With regard to the assessment year 1964-65 it declared sales of soap at Rs.118,788.62 and sales of soap raw materials at Rs.159,407.31. It showed the sales of soap as liable to sales tax under the Sales Tax Act, 1951 but the sales of the raw materials as free from any such liability. The Sales Tax Officer, `M' Circle, Lahore, vide his order dated 15-6-1980, charged the sales of soap to sales tax. With regard to the sales of raw materials, which were split up as under:-- (1) Sales of Wooden Boxes, Empty drums etc. Rs.2141 (2) Sodium Silicate Rs. 5587 (3) Cotton Seed Oil Rs.51188 (4) Sales of Soda Caustic Rs,28680 . (5) Rosin Rs. 8805 (6) Coconut Oil Rs.35494 (7) Tallow Rs.27512 Rs.159407 The Sales Tax Officer found that all the purchases were made from local manufacturers and importers for which the appellant firm had not filed any certificates under Rule 16 of the Sales Tax Rules, 1951. The purchases were also partly unvouched. Three of the items, namely, sales of wooden boxes, sodium silicate and cotton seed oil were treated as exempt by the Sales Tax Officer in view of the…

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