Law: Sales Tax Act, 1990

Section: 3,2(41),2(35),2(33)

(Sales Tax Act (VII of 1990).......Ss. 3, 2(41), 2(35) & 2(33)---Scope of tax---"Taxable supply"--­"Taxable activity"---"Supply"---Definition---Sales tax shall be charged, levied and paid on taxable supplies made in Pakistan by a registered person in the course of furtherance of any taxable activity carried on by him on the goods imported in Pakistan--Sales tax liability could not be assessed/imposed solely on the basis of Bank statement of the registered person without any evidence of corresponding taxable supply made in the course of taxable activity---Cash-credits appearing in the account books for which no satisfactory explanation was furnished could not be treated as the amount received on account of taxable supplies or in furtherance of taxable activity---Any Bank account of a registered person without any nexus to taxable supplies, could not be treated as amount received from such "supplies" and liable to sales tax---Where the allegation of "tax-fraud" was made, the onus of proof was on the Department--­Principles. In terms of the provisions contained in section 3 of the Sales Tax Act, 1990, which is the charging section, the sales tax shall be charged, levied and paid on taxable supplies made in Pakistan by a registered person in the course of furtherance of any taxable activity carried on by him and on the goods imported in Pakistan. While defining the terms "supply" and "taxable activity" the Legislature has enacted deeming provision also and by fiction of law has included private business or non-business the course of business and an activity without pecuniary profit, as well as supply without any consideration is taxable activity. But, for the definitions contained in the Sales Tax Act, 1990, the above acts could not be treated as "supply" or "taxable activity". The definition of term "supply" has excluded the doctrine of mutuality. Thus, wherever the Legislature has deemed fit, resort has been made to the deeming provisions by fiction of law. However, there is no provision in the Sales Tax Act, 1990 analogous to the provisions contained in the Income Tax Law, whereby the discovery of any cash-credits in the accounts of an assessee can be deemed…

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