Law: Sales Tax Act, 1990

Section: 2(30)(22)(28),3,11

Law: Constitution of Pakistan, 1973

Section: 199

(a) Sales Tax Act (VII of 1990)--- ----S.2(30)---Time when sale takes place---Time of supply---Situations when payment of sales tax become due. (b) Sales Tax Act (VII of 1990)---Ss.2(30)(22)(28), 3 & 11---C.B.R. Letter No. 1(59) STP-94, dated 14-11-1994---Constitution of Pakistan (1973), Art.199---Constitutional petition---Time of supply---Advance payments for supply of goods---Chargeability of sales tax ---Assessee/petitioner; a manufacturer, received advance payments against supply of goods ---Assessee/petitioner was required to pay additional sales tax and surcharge for non-payment of sales tax on payment received in advance against supply in the light of interpretation of S.2(30), Sales Tax Act, 1990, vide C.B.R. Letter No.1 (59) STP-94, dated 14-11-1994 that sales tax was payable as soon as the money was received by assessee/petitioner---Validity---Mere deposit of money in anticipation of future sale could not be made the occasion for demanding the payment of sales tax---Stockists' deposit money with manufacturer in routine even though at the time of deposit, there was no contract specifying the price to be paid or the quantity to be purchased---No concluded sale existed at the time of deposit of money and the transaction could be nullified by manufacturer or stockists---No provision of Sales Tax Act, 1990 had purported to deem the receipt of money to be a sale---Department's interpretation had no basis in the text of the Sales Tax Act, 1990 and that it sought to change the nature of the tax from a levy on the supply of goods to a tax on the mere bailment of money---None of the provisions of the Sales Tax Act, 1990 provided that bailment of money could be deemed to be a sale or supply of goods--¬Instructions contained in the C.B.R. letter, therefore, were declared to be without jurisdiction and lawful Authority by the High Court and ill orders/actions against the petitioner/assessee based upon said letter and instructions were of no legal effect. Elahi Cotton Mills Ltd. v. Federation of Pakistan and others PLD 1997 SC 582. = 1997 PTD 1555; B.N. Syed v. Afzal Jahan Begum PLD 1970 SC 29; Siraj Din v. Sardar Khan 1993 SCMR 745; Mehran Associates Limited…

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