Law: Sales Tax Act, 1990

Section: 2(40),7(2)(i)

Sales Tax Act (VII of 1990)---Ss. 2(40), 7(2)(i) [as amendment by Finance Act (I of 2003)] & 23--­Adjustment of input tax on basis of tax invoice from a registered or un­registered person---Scope---Qualification of registered or unregistered person was not available under un-amended S. 7 of Sales Tax Act, 1990---Right to seek an adjustment under S.7 of Act, 1991 was independent of provision of S.23 thereof---Provision of S.23(2) of Act, 1991, thus, could not be read in S.7 thereof---Tax invoice was qualified to be by a registered person after amendment made in S.7(2)(i) of Act, 1990 through Finance Ordinance, 2003---Input tax was a species of sales tax, which was paid only once---Adjustment of input tax at the time of payment of output tax was co-related with journey of raw material to finished products---Provisions of Sales Tax would be construed strictly to avoid any possibility of double taxation---If assessee was not allowed adjustment of output tax against a valid tax invoice showing payment of input tax, then same would lead to double taxation, which was not sustainable under present scheme of Sales Tax Act, 1990. JUDGMENT MANSOOR AHMAD, J.---Collector, of Sales Tax, Rawalpindi filed this tax appeal from the judgment, dated 125th of April, 2002 passed by Customs, Central Excise and Sales Tax, Appellate Bench, Islamabad. 2. Messrs Islamabad Feeds, Rawalpindi the respondent, adjusted a sum of Rs.7,15,956 against an output tax pertaining to the period December, 1996 to March, 1997. It was discovered by the Sales Tax Authorities that Messrs Islamabad Fees procured raw material from Messrs Muddassar Traders, Islamabad who was not registered persons within the scope of Sales Tax Act, 1990 and thus was not empowered to issue any tax invoices. A Show-Cause Notice No. ST/Adj/15/97/3522-24, dated 28-7-1997 was issued to Messrs Islamabad Feeds Rawalpindi by Additional Collector (Adj) wherein it was pointed out that the respondents adjustment for the sum of Rs.7,15,956.00 was inadmissible as the tax invoice was issued by Muddassar Traders, Islamabad who was not registered with Sales Tax Department and was not empowered to issue Sales tax invoices or replacement…

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