Law: Sales Tax Act, 1990

Section: 7(1),8(1)(b),33,34,36,46

Sales Tax Act (VII of 1990)---Ss. 7(1), 8(1)(b), 33, 34, 36 & 46---Evasion of sales tax on ground of wrong adjustment of input tax---Appeal to Appellate Tribunal---Authority vide its order-in-original directed appellant to deposit amount under S.36 of Sales Tax Act, 1990 along with unspecified additional tax chargeable under S.34 of the Act---Appellant was also imposed penalty under S.33(7) of Sales Tax Act, 1990 Validity---Central Board of Revenue, had no authority under S.8(l)(b) of Sales Tax Act, 1990 to prohibit input tax adjustment on the disputed goods since same were not specified in notification and provisions of S.8 of Sales Tax Act, 1990 were to be construed strictly---Initiation of action against appellant was ab initio wrong and not warranted by law---Allowing appeal, impugned order was set aside. JUDGMENT This appeal challenges the vires of the order dated 30-10-2000 passed by the Additional Collector of Customs, Sales Tax and Central excise Adjudication, Karachi-III. 2. According to the records, the facts of the case are that the appellant are the manufacturers of cotton yarn and cloth. They supply their product on payment of sales tax leviable thereon, invariably. The claim input tax on the raw material imported or locally purchased as it is used in the manufacture of taxable supply in accordance with section 7(1) of the Sales Tax Act, 1990. 3. An Audit Division of the Sales Tax Collectorate while conducting special audit of the appellant's unit, observed certain irregularities involving millions of rupees during the period October, 1997 to September, 1998 and reported the matter to the learned adjudicating authority. The learned respondent, thereupon, issued a show-cause notice dated 23-5-2000 alleging the evasion of sales tax on many counts including wrong adjustment of input tax on oils and spare parts used in the machinery utilized in the manufacture of taxable supplies. 4. The appellant replied the show-cause notice and successfully proved that the charges as levelled are unsubstantiated and nothing is due and payable. The learned respondent also came to the conclusion that no amount of sales tax is evaded and the show-cause notice was…

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