Law: Sales Tax Act, 1990

Section: 36,11,3,7,33,34,45,3

Law: Federal Tax Ombudsman Ordinance, 2000

Section: 9

Sales Tax Act (VII of 1990)---Ss. 36, 11, 3, 7, 33, 34, 45 & 3---Sales Tax Refund Rules, 1996--­Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9---Recovery of amount of tax not levied or short levied or erroneously refunded--Show-cause notice for recovery of amount refunded alongwith penalty and additional tax on the ground that the same was obtained against fake invoices and sales tax had not been paid on such invoices by the suppliers---Validity---Complainant had discharged its duty by paying sales tax to the supplier, credit for which was claimed in the monthly sales tax returns and allowed by the Sales Tax Department---Suppliers had failed to meet their legal responsibility, by not depositing the sales tax recovered from the complainant---Section 3 of the Sales Tax Act, 1990 clearly places the responsibility for payment of sales tax at the prescribed rate on the registered suppliers--­Functionaries of Sales Tax having failed to detect the payment of sales tax by the supplies/registered persons' plausible reason that would come to the mind was that the sales tax returns tiled monthly gave particulars indicating the total tax deposited, without giving the details of the sales transactions party-wise with names and addresses, tax invoices numbers, value of goods sold and the output tax audit was only after audit was carried out when the records/account books of the parties were physically checked that such evasion came to the light---Such lacuna in the procedure laid down by the Central Board of Revenue required to be rectified and Complainant did not appear to be at fault---Federal Tax Ombudsman recommended that the Collectorate of Sales Tax should pursue recovery of sales tax from the companies on which legal responsibility lay under S.3 of the Sales Tax Act. 1990. being suppliers, Additional Collector (Adjudication) may examine reconciliation between the yarn consumed and the quantity of goods exported to satisfy himself that yarn was physically transferred from the suppliers account to the complainant's account and the lacuna-identified in the procedure prescribed for payment of sales tax and claim of adjustment in the…

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