Law:

Section:

(a) Sales Tax Act (VII of 1990)--- ----S. 25---Companies Ordinance (XLVII of 1984) --- Access to record, documents, etc.---Audit of sales tax and working out sales tax liabilities on the basis of Annual Audited Accounts/Income Tax Returns filed with Income Tax Department---Validity---Under the provisions of S.25(1) and (2) of the Sales Tax Act, 1990 the Sales Tax Officer was empowered to obtain and conduct the audit of the records being maintained under any other law besides the records being maintained under the Sales Tax Act, 1990---Annual audited Accounts were statutory documents being maintained under the Companies Ordinance, 1984 while the Income Tax Return was also a statutory document under the Income Tax Ordinance, 2001; declarations made in such documents were self-declarations by the assessee and the department was legally authorized to conduct audit on the basis of such statutory documents under the provisions of Sales Tax Act, 1990. (b) Sales Tax Act (VII of 1990)--- ----S.3---Scope of tax---Issuance of show-cause notice on the ground that assessee had disposed of their stocks/assets without payment of sales tax leviable thereon---Validity---Balance sheet of the assessee as on 30th June, 2006, revealed that the assets which were available on the balance sheet as on 30th June, 2005, but were not reflected in the balance sheet of the subsequent period i.e. 30th June, 2006, meaning thereby that assets were disposed of without payment of sales tax and the proceeds realized from such disposal of stocks/assets were utilized for payment of their outstanding liabilities as there was a corresponding decrease of liabilities in the balance sheet as on 30th June, 2006---Assessee could not explain as to how these assets disappeared from 'their Balance Sheet and how their liabilities decreased enormously when they were not having any alternate source of funding---Assets were always equal to liabilities in the Balance Sheet (Assets-Liabilities) and increase or decrease in assets had always corresponding effect on the liabilities of the balance sheet---Vanishing of such huge value of assets from the Balance Sheet and corresponding decrease in the…