Law: Sales Tax Act, 1990

Section: 7,7(1),8(1)(b),1307(I)

(a) Sales Tax Act (VII of 1990)---Ss. 7(1) & 8(1)(b)---S.R.O. 1307(I)/1997, dated 20-12-1997--Determination of tax liability---Adjustment of input tax---Reclaim of input tax credit paid on import of machinery spares---Demand of short realization of sales tax and additional tax on the grounds that S.R.O. 1307(I)/1997, dated 20-12-1997 had excluded spares, machinery and lubricants being items which were not direct constituent or integral part of the goods produced, manufacture or supplied in taxable activity---Registered person contended that it was. indicative of the fact that S.R.O. 1307(I)/1997, dated 20-12-1997 was not in conformity with the mandate conferred on Federal Government by the Legislature and was in conflict with the substantive statutory provisions of S.8(1)(b) of the Sales Tax Act, 1990---Validity----Federal Government had disentitled registered person from reclaiming or deducting the input tax paid on goods which were not the direct constituent and integral part of the taxable goods produced, manufactured or supplied during the course or in furtherance of any taxable activity---Apparent conflict existed between S.R.O. 1307(I)/1997, dated 20-12-1997 and the provision contained in S.7(1) of the Sales Tax Act, 1990 which entitled the registered person to deduct input tax paid for the purpose of taxable supplies made or to be made---Substantive provisions in S.7 of the Sales Tax Act, 1990 did not provide that only such input tax shall be reclaimed or deducted which was paid on the goods which, were direct constituent and integral part of the taxable goods produced, manufactured or supplied---S.R.O. 1307(I)/1997, dated 20-12-1997 was in conflict with the provision contained in S.7 and S.8(1)(b) of the Stales Tax Act, 1990---Provisions contained in such sections shall prevail over the S.R.O. 1307(I)/1997, dated 20-12-1997---Machinery parts on which input tax was paid were used for the purpose of taxable supplies and the appellant being registered person was entitled to take input tax paid from the output tax paid while determining its tax liability, as these goods were not specified in any notification issued under S.8(1)(b) of the Sales Tax Act,…

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