COMMISSIONER INLAND REVENUE VS GOLDEN PEARL COSMETICS, 2017 PTD-LAHORE-HIGH-COURT-LAHORE 1485 (2017)

May 10, 2017 LAHORE HIGH COURT LAHORE 2017 PTD 1485

2017 PTD-LAHORE-HIGH-COURT-LAHORE 1485

COMMISSIONER INLAND REVENUE VS GOLDEN PEARL COSMETICS

2017 P T D 1485

[Lahore High Court (Multan Bench)]

Before Abid Aziz Sheikh and Jawad Hassan, JJ

COMMISSIONER INLAND REVENUE

Versus

Messrs GOLDEN PEARL COSMETICS

S.T.R. No.21 of 2016, decided on 10/05/2017.

(a) Sales Tax Act (VII of 1990)---

----S. 47---Reference/appeal to High Court---Nature of jurisdiction of High Court under S.47 of the Sales Tax Act, 1990---Re-framing/ amendment of question(s) of law---High Court, in order to decide real issues between the parties, could reframe and resettle question(s) of law under S.47 of the Sales Tax Act, 1990.

Commissioner of Income Tax Company's II, Karachi v. Messrs National Food Laboratories 1992 PTD 570 rel.

(b) Punjab Sales Tax on Services Act (XLII of 2012)---

----Ss. 1(4), 3,4 & Sched.---Sales Tax Act (VII of 1990), Ss. 11 & 47---Constitution (Eighteenth Amendment) Act (X of 2010), Preamble---Constitution of Pakistan, Arts. 270AA(6) & 264---Punjab Sales Tax on Services (Withholding) Rules, 2015, R. 7---Sales Tax Special Procedure (Withholding) Rules, 2007, R. 2(3A)---Sales Tax on services---Deduction of Sales Tax on advertisement services---Declaration and continuance of laws---Conflict of Federal and Provincial Laws after the Constitution (Eighteenth Amendment) Act, 2010)---Effect of Art.270AA(6) of the Constitution on Federal Laws on Sales Tax on Services---Implied repeal of Federal Law by enactment of a Provincial Statute on the subject of Sales Tax on Services under Art.270(AA) of the Constitution---Scope---Maxim: leges posteriores priores contrarias abrogant---Applicability---Question before the High Court was whether sales tax deductions on service of "advertisement", were under jurisdiction of the Federal Board of Revenue under Sales Tax Special Procedure (Withholding) Rules, 2007 framed under Sales Tax Act, 1990 or under the Rules framed per Punjab Sales Tax on Services Act, 2012---Validity---After enforcement of Punjab Sales Tax on Services Act, 2012, various services were notified including advertisement services under the Schedule to the said Act and such services were subject to deduction of withholding tax under S.4(2) of the Punjab Sales Tax on Services Act, 2012 and subsequently R.7 of the Punjab Sales Tax on Services Withholding Rules, 2015 was specifically framed to deduct tax on advertisement services---High Court observed that as a consequence, an anomalous situation developed since on the one hand, Sales Tax Special Procedure (Withholding) Rules, 2007 levied Federal sales tax on advertisement services and on the other hand, Punjab Sales Tax on Services Act, 2012 and Rules thereunder also levied Provincial sales tax on the same advertisement services, which situation squarely attracted maxim "leges posteriores priores contrarias abrogant" which meant later laws repeal earlier laws inconsistent therewith---After the Constitution (Eighteenth Amendment Act, 2010), legislative competence to enact laws regarding "services" being with the Province, the Punjab Sales Tax on Services Act, 2012 would prevail over the Sales Tax Special Procedure (Withholding) Rules, 2007 and thus R.2(3A) of the Sales Tax Special Procedure (Withholding) Rules, 2007, levying withholding of sales tax on advertisement services was impliedly repealed---Reference was answered accordingly.

Tanveer Hussain v. Divisional Superintendent, Pakistan Railways PLD 2006 SC 249; Messrs Tank Steel and Re-Rolling Mills (Pvt.) Ltd. Dera Ismail Khan and others v. Federation of Pakistan and others PLD 1996 SC 77; Commissioner Inland Revenue v. Messrs Al-Mehdi International and 2 others 2013 PTD 2125; Ahmad Khan Niazi v. Town Municipal Administration, Lahore through Town Municipal Officer and 2 others PLD 2009 Lah. 657 and Government of Punjab through Secretary, Home Department v. Zia Ullah Khan and 2 others 1992 SCMR 602 rel.

(c) Interpretation of statutes---

----Implied repeal, doctrine of---Applicability---Scope---Essential condition for implied repeal was that when a provision of a former statute was inconsistent and in conflict with the provision of a later statute and the two could not be reconciled or harmonized, so as to stand together, then in such a situation, provision of the earlier statute would give way to similar provision of the later statute on the basis of doctrine of implied repeal.

(d) Maxim---

---Leges posteriores priores contrarias abrogant---Applicability.

Tariq Manzoor Sial for Applicant.

Javed Iqbal Qazi and Malik Mumtaz Hussain Khokhar for Respondent.

Date of hearing: 10th May, 2017.

JUDGMENT

ABID AZIZ SHEIKH, J.---This application by way of reference has been filed under section 47 of the Sales Tax Act, 1990 ("Act of 1990") against the order dated 18.02.2016 ("impugned order") passed by the Appellate Tribunal Inland Revenue ("Tribunal") in respect of S.T.A. No.1328/LB/2015.

2.The following question of law has been urged for expression of our opinion by the applicant counsel at the time of arguments. No other question of law formulated in the reference was pressed and thus shall be deemed to have been abandoned.

"Whether under the facts and circumstances of the case, the learned ATIR was justified to delete the recovery of illegal input tax adjustment made out of the payments to Punjab Revenue Authority for the period 7/2012 to 06/2013 while Federal Government notified the input adjustment on services vide S.R.O. 212(I)/2014 dated 26.03.2014 effective from 01.07.2013"?

3.Facts are uncomplicated and do not present much difficulty. During scrutiny of record it was observed that respondent assessee claimed input tax amounting to Rs.29,83,272/- but failed to deposit the withholding tax on receipt of advertisement services. On receipt of contravention report, show cause notice was issued where it was alleged that respondent assessee has not only failed to withhold and deposit the amount of sales tax involved but also claimed excess amount of Rs.19,41,456/- as input tax adjustment, which was recoverable along with default surcharge and penalty. Response to show cause notice was not found satisfactory, hence order in original dated 09.01.2015 was passed by Deputy Commissioner Inland Revenue (DCIR) under section 11(2) of the Act of 1990 for recovery of sales tax amount of Rs.54,65,166/- on account of evasion/unauthorized sales tax input tax adjustment from July 2009 to June 2013. The respondent/assessee being aggrieved filed appeal before the Commissioner Inland Revenue ("CIR") who confirmed the order of DCIR. However in further appeal by assesse, the Tribunal vide impugned order dated 18.02.2016, partly allowed the appeal and deleted the charge of sales tax on advertisement services amounting to Rs. 23,40,461/- for the period July 2012 to June 2013 on the ground that Federal Board of Revenue ("FBR") had no jurisdiction after the enactment of Punjab Sales Tax on Services Act, 2012 ("Act of 2012) and jurisdiction was of Government of Punjab.

4.Learned counsel for the applicant department submits that in Act of 2012, there is no clause, which excludes the jurisdiction of FBR under the Act of 1990. He further submits that for the first time through notification dated 26.03.2014 (given effect from 01.07.2013), it was notified that sales tax levied under the Act of 2012 shall be provincial sales tax for the purpose of input tax. He therefore submits that the sales tax charged and adjusted before 01.07.2013 was covered under the Act of 1990 and recovery by FBR was legally justified. On question of limitation, submits that impugned order dated 18.02.2016 was received by the applicant on 11.03.2016, therefore, this reference application filed on 08.06.2016 was within prescribed period of limitation of 90 days under section 47 of the Act of 1990. He further submits that no office objection was raised on the question of limitation.

5.Learned counsel for the respondent-assessee raised preliminary objection that this reference application is barred by time. Submit that the impugned order was dispatched by the Tribunal on 08.03.2016, therefore, reference application on 08.06.2016 was not within 90 days. Further submit that statement of the case is not annexed with the reference application which is mandatory requirement under section 47(1) of the Act of 1990. On merits, learned counsel for the respondent argued that the entire sales tax was paid by the respondent-assessee as evident from documents and record, therefore, adjustment of input tax for period in question was lawfully made under Act of 1990. Learned counsel further submit that after promulgation of Act of 2012, sales tax adjusted could not be recovered under the Act of 1990 by the FBR.

6.We have heard learned counsel for the parties and perused the record. Regarding preliminary objections, we have noted that the impugned order dated 18.02.2016 was received by the applicant department on 11.03.2016 which is evident from receipt No.4617 on the back of the impugned order. The respondent has not produced any counter receipt to show that said order was received earlier. Under section 47 of the Act of 1990, the limitation to file reference is 90 days from the communication of the order of the Tribunal, hence this reference application filed on 08.06.2016 is within time. The other objection of respondent that no statement of case has been filed is also misconceived. Perusal of reference application shows that facts of the case, the determination of Tribunal and questions of law have been given in this reference application, therefore, this requirement has also been fulfilled. In any case being no penal consequences provided for non-compliance of this requirement, the same is curable procedural requirement and not fatal to the proceedings.

7.Now coming to the merits of this case and question of law urged by the applicant, we have noted that the 18th Amendment in the Constitution of Islamic Republic of Pakistan, 1973 ("Constitution") took effect from 19.10.2010. Through 18th Amendment, the entry No.49 in the Federal Legislative List was substituted as under:--

"49. Taxes on the sales and purchase of goods imported, exported, produced, manufactured or consumed, except sales tax on services."

The purpose of exception added to entry No.49 was to recognize expressly on Constitutional plane that taxing power in respect of taxing event of rendering or providing of services vests in the provinces. In pursuance to 18th Amendment in the Constitution, the Act of 2012 was passed by the Punjab Assembly on 21.06.2012 and after assent by Governor of Punjab on 26.06.2012, it was published in Official Gazette on 27.06.2012. The Act of 2012 was to come in force from date of notification under section 1(3) of the Act of 2012. The said notification under section 1(3) of the Act of 2012 was issued on 30.06.2012 and from said date, the Act of 2012 was enforced.

8.The Act of 2012 was to levy tax on services as notified under section 1(4) of the Act of 2012. The provision of section 1(4) is reproduced as under:--

"Short title, extent and commencement.-

(4) Notwithstanding subsection (3), the Government may, by notification in the official Gazette, specify services or class or classes of services in respect of which tax shall be collected and paid with effect from the date subsequent to and different from the date of the commencement of this Act."

The taxing event is prescribed in section 3(1) of the Act of 2012 which is reproduced hereunder:--

"3. Taxable service.---(1) Subject to such exclusion as mentioned in Second Schedule, a taxable service is a service listed in Second Schedule, which is provided by a person from his office or place of business in the Punjab in the course of an economic activity, including the commencement or termination of the activity."

Section 4 of the Act of 2012 is also a charging section and its relevant clauses are reproduced hereunder:-

"4. Application of principles of origin and reverse charge in certain situations.-(1) Where a person is providing taxable services in a Province other than the Punjab but the recipient of such services is resident of the Punjab or is otherwise availing such services in the Punjab and has charged tax accordingly, the person providing such services shall pay the amount of tax so charge to the Government.

(2) Where the recipient of a taxable service is a person registered under the Act, he shall deduct the whole amount of tax in respect of the service received and pay the same with the Government.

(3) Where a person is providing taxable service in more than one Province or territory in Pakistan including the Punjab, such person shall be liable to pay tax to the Government to the extent the tax is charged from a person resident in the Punjab or from a person who is otherwise availing such services in the Punjab.

(8) The provisions of this section shall apply notwithstanding any other provision of this Act or the rules and the Government may specify special procedure to regulate the provisions of this section."

9.Plain reading of above provisions shows that under Act of 2012, sales tax shall be charged on services or class or classes of services specified in the notification. Under section 3(1), a taxable service is a service listed in Second Schedule of the Act of 2012. Under section 4 where a person is providing taxable services in province other than Punjab but recipient of services is in Punjab or availing service in Punjab, and tax charged, then the person providing such services shall pay the amount of tax charged to the Government. Where the recipient of service is registered under the Act of 2012, he shall deduct whole amount of tax in respect of services received and pay the same with the Government. The "Government" is defined under section 2(25) of the Act of 2012 means Government of Punjab and "Authority" under section 2(6) of said Act means Punjab Revenue Authority ("Authority").

10.The Act of 2012 provides mechanism for payment and collection of tax on taxable services and also recovery of arrears of tax under section 70 of the Act of 2012. The Authority under section 76 of the Act of 2012 with the approval of Government can also make rules for carrying out the purpose of any of the provisions of the Act of 2012. The holistic reading of entire Act of 2012 shows that it is all embracing and self-sufficient enactment for levy and recovery of tax payable against notified taxable services.

11.Close analysis of above referred legal provisions and constitutional amendments shows that in order to express our opinion on the question posed, there are certain other ancillary and interconnected legal issues which also need to be touched upon and addressed. This exercise is possible in view of law settled by august Supreme Court in Commissioner of Income Tax Company's II, Karachi v. Messrs National Food Laboratories (1992 PTD 570) where it is held that in order to decide real issues between the parties, this Court can reframe and resettle questions of law.

12.The basic legal question raised in this reference application is not regarding the recovery of tax on notified taxable services, rather the real issue is regarding jurisdiction of FBR and Province of Punjab/Authority after 18th Amendment of Constitution and promulgation of Act of 2012. In order to decide this real issue, we are inclined to reframe and resettle following further three legal questions:-

First issue is that if deductions against advertisement services were not made and deposited prior to Act of 2012, whether FBR will have jurisdiction to recover said amount?

Secondly if deductions were not made and amount was not deposited on advertisement services after promulgation of Act of 2012, whether to recover said amount, jurisdiction will be of FBR or of the Provincial Government/Authority under the Act of 2012? and,

Finally the third and nub of the issue is that if against tax paid on services, excess input tax adjustment is made against "supplies" under sections 7 and 8 of the Act of 1990, whether after Act of 2012, jurisdiction will be of FBR or Provincial Government/Authority?

13.Regarding first issue, no doubt after substitution of entry 47 in the Federal Legislative List of the Constitution through 18th Amendment, the tax on services is in domain of Provincial Government. However, sub-article (6) of the Article 270AA of the Constitution provides that notwithstanding omission of the concurrent legislative list by the Constitution, 18th Amendment, all laws with respect to any matters enumerated in the said list shall continue to remain in force until altered, repealed or amended. Similarly under sub-Article (7) of Article 270AA of the Constitution, all taxes and fee levied under any law in force before 18th Amendment shall continue to be levied until they are varied or abolished by an Act of the appropriate legislature. For convenience, sub-Articles (6) and (7) of Article 270AA is reproduced hereunder:-

"270AA. Declaration and continuance of laws etc.---

(6) Notwithstanding omission of the Concurrent Legislative List by the Constitution (Eighteenth Amendment) Act, 2010, all laws with respect to any of the matters enumerated in the said List (including Ordinances, Orders, rules, bye-laws, regulations and notifications and other legal instruments having the force of law) in force in Pakistan or any part thereof, or having extra-territorial operation, immediately before the commencement of the Constitution (Eighteenth Amendment) Act, 2010, shall continue to remain in force until altered, repealed or amended by the competent authority.

(7) Notwithstanding anything contained in the Constitution, all taxes and fees levied under any law in force immediately before the commencement of the Constitution (Eighteenth Amendment) Act, 2010, shall continue to be levied until they are varied or abolished by an Act of the appropriate legislature."

14.Prior to 18th Amendment in the Constitution on 19.10.2010, the "Sales Tax Special Procedure (Withholding) Rules, 2007" were promulgated through S.R.O. 660(I)/2007 dated 30.06.2007 by the Federal Government under Act of 1990 (Rules 2007). Sub-rule (3A) of Rule 2 of Rules 2007 as amended vide SRO 630(I)/2009 dated 25.06.2009 required that a person who receives "advertisement services" shall deduct the amount of sales tax. For ready reference, sub-rule (3A) of Rule 2 of the Rules of 2007 is reproduced hereunder:--

"2. Responsibility of a withholding agent.-

(3A) A person mentioned in clause (e) of sub-rule (2) of rule 1, who receives advertisement services, provided or rendered by a person based in Pakistan or abroad, shall deduct the amount of sales tax as mentioned in the invoice issued by the service provided from the payment due to the service provider. In case the sales tax amount is not indicated on the invoice, the recipient shall deduct sales tax at the applicable rate of the value of taxable services from the payment due to the service provider."

The aforesaid sub-rule (3A) of Rule 2 of Rules of 2007 though made by the Federal Government but being already in field before the 18th Amendment in the Constitution on 19.10.2010, the same was protected and remained in field under Article 270AA(6) and (7) of the Constitution. The respondent assessee in terms of Rules, 2007 was bound to deduct withholding tax on advertisement services and deposit the same with the tax department. The necessary legal consequence was that in case of default, under Rules of 2007, the jurisdiction to issue show cause notice and to recover short paid tax is with the FBR under the Act of 1990.

15.Now coming to the second question, after enforcement of Act of 2012 on 30.06.2012, various services were notified including advertisement services under clauses 2, 12 and 29 of the 2nd Schedule of Act of 2012. These services were subject to deduction of withholding tax under section 4(2) of the Act of 2012. Subsequently by virtue of section 76 of the Act of 2012, rule 7 of the Punjab Sales Tax on Services Withholding Rules, 2015 (Rules of 2015) was specifically framed to deduct tax on advertisement services. This has created an anomalous situation because on one hand, the Rules of 2007 levy Federal sales tax on advertisement services and on the other hand, Act of 2012 and rules thereunder also levy provincial sales tax on the same advertisement services. This situation squarely attracts well established maxim "leges posteriores priores contrarias abrogant" means later laws repeal earlier law inconsistent therewith. It is settled law that in case of conflict between two laws, preference would be given to the new law and implied repeal of earlier law would be inferred where enactment of later law is totally inconsistent with the earlier law. In normal circumstances, the Federal Law will prevail over Provincial Law but in the present scenario, after the 18th Amendment, the legislative competence to enact law regarding "services" being with the Province, the Provincial Act of 2012 will prevail over subsection (3A) of section 2 of Rules 2007.

16.The essential condition for implied repeal is that when provision of former statute is inconsistent and in conflict with the provision of later statute and the two cannot be reconciled or harmonized, so as to stand together. In such situation the provision of earlier statute will give way to similar provision in the later statute on the basis of doctrine of implied repeal. In this regard, reliance is placed on apex Court's rulings in Tanveer Hussain v. Divisional Superintendent, Pakistan Railways (PLD 2006 SC 249) and Messrs Tank Steel and Re-Rolling Mills (Pvt.) Ltd. Dera Ismail Khan and others v. Federation of Pakistan and others (PLD 1996 SC 77). Further this Court in Commissioner Inland Revenue v. Messrs Al-Mehdi International and 2 others (2013 PTD 2125) and Ahmad Khan Niazi v. Town Municipal Administration, Lahore through Town Municipal Officer and 2 others (PLD 2009 Lahore 657) also held that where earlier and later law cannot stand together, the later law will abrogate earlier contrary law being a logical necessity due to inconsistent laws. No doubt under sub-Articles (6) and (7) of Article 270AA of the Constitution, the rule 2(3A) of the Rules of 2007 were to remain in force until repeal, however, as discussed above, the said rule has been impliedly repealed after Act of 2012.

17.In the given circumstances, after promulgation of Act of 2012, and issuance of notification under section 1(4) of the said Act regarding levy of Provincial sales tax inter alia on advertisement services, the earlier provision of sub-rule (3A) of rule 2 of Rules 2007, levying withholding of sales tax on same advertisement services, will deemed to be impliedly repealed. However if law is repealed or deemed to have been repealed under statute, or by virtue of Constitution, the repeal shall not except, otherwise provided in the Constitution, effect the previous operation of law or anything done and suffered under that law in view of Article 264 of the Constitution. Reliance is placed on Government of Punjab through Secretary, Home Department v. Zia Ullah Khan and 2 others (1992 SCMR 602).

18.In view of above discussion, the answer to second question is that after the enforcement of Act of 2012 on 30.06.2012 and levy of provincial sales tax on advertisement services, the provision of sub-rule (3A) of Rule 2 of Rules of 2007 has impliedly repealed and jurisdiction to determine whether withholding tax on said services was deducted and deposited after 30.06.2012, will be of the Provincial Government/ Authority under the Act of 2012 and not of FBR under the Act of 1990.

19.Now stage is set to address the base line third and final question of input tax adjustment against tax paid on advertisement services. There are inbuilt provisions of sections 7 and 8 in the Act of 1990 for input tax adjustments. In terms of section 7, a registered person shall be entitled to adjustment of input tax paid against taxable supplies, whereas under section 8 of the Act, registered persons shall not be entitled to claim or deduct input tax on goods or services used or to be used other than for taxable supplies made by him. Under Act of 2012, no such specific provision has been provided, however, under section 76 of the Act of 2012 for input tax adjustment, "The Punjab Sales Tax on Services (Adjustment of Tax) Rules, 2012 ("Rules of 2012") were introduced through Notification No.PRA/Order.0/2012(3) dated 01.08.2012. Under Rules of 2012, a registered person who holds a tax invoice for the purchase of goods or services used or consumed in providing taxable services in his name, shall be entitled to deduct or adjust input tax paid or payable during the relevant tax period. Rule 7 of Rules of 2012, however, specifically postulates that adjustment shall be confined only to such extent to which it has been consumed in the providing of taxable services during a tax period. In order to comprehend the clear position of input tax adjustment, it will be useful to juxtapose two set of provisions i.e. sections 7 and 8 of the Act of 1990 and rules of 2012. The contrasting feature of these provisions are that under section 8 of the Act of 1990 if services are used for "taxable supply" input tax can be claimed under section 7 of Act of 1990, whereas under Rules of 2012, if services are used for "taxable services" the input tax can be claimed under the Rules of 2012. This further leads to inescapable conclusion that if input adjustment is made under sections 7 and 8 of the Act of 1990 against the "taxable supply", then the jurisdiction to determine whether said adjustment was admissible or not will be of FBR under the Act of 1990 but if the input tax adjustment is made against the "taxable services" under Rules of 2012, then the jurisdiction will be of Punjab Revenue Authority or Government of Punjab under the Act of 2012 and rules made thereunder and not of the FBR under Act of 1990.

20.Now coming back to question specifically urged by the applicant department in this reference application, admittedly in the present case, the allegation against the respondent assessee is that excess adjustment of input has been made against taxable supplies under sections 7 and 8 of the Act of 1990. It is also not the case of the respondent assessee before us that input tax adjustment was made under the Rules of 2012 against the taxable services and not taxable supplies. Once input tax adjustment is claimed against taxable supplies under the Act of 1990, then notwithstanding the fact that Act of 2012 was enforced on 30.06.2012, the jurisdiction will be of FBR to examine if said input tax adjustment was admissible or not.

21.We have also noted that for the purpose of input tax, the "Provincial Sales Tax" is defined under subsection (22-A) of section 2 of the Act of 1990 as under:--

"Provincial Sales Tax" means tax levied under provincial laws or laws relating to Islamabad Capital Territory, which are declared by the Federal Government through notification in the official Gazette, to be provincial sales tax for the purpose of input tax.

It is admitted position between the parties that for the first time, notification/S.R.O. 212(I)/2014 dated 26.03.2014 ("SRO") was issued by the Government of Pakistan under clause (22-A) of section 2 of the Act of 1990 to declare the tax levied under the Act of 2012, to be provincial sales tax for the purpose of input tax under the Act of 2012. For convenience, the said SRO is reproduced hereunder:--

"S.R.O.212(I)/2014-In exercise of the powers conferred by clause (22A) of section 2 of the Sales Tax Act, 1990, the Federal Government is pleased to declare the tax levied under the following laws to be provincial sales tax for the purpose of input tax under the said Act, namely:-

(a) The Balochistan Sales Tax Ordinance, 2000 (Balochistan Ordinance No.I of 2000);

(b) The Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLIII of 2001);

(d) The Punjab Sales Tax on Services Act, 2012 (Punjab Act No.XLII of 2012).

2. This notification shall take effect and shall be deemed to have been in effect from 1st July, 2013."

22.Similarly notification was reiterated on 02.09.2016 through S.R.O. No.814(I)/2016. Bare reading of SRO shows that the tax levied inter alia under the Act of 2012 was to be treated as "provincial sales tax" for the purpose of input tax under the said Act. This SRO being given effect from 01.07.2013, means that before 01.07.2013, for the purpose of "input tax", the tax levied under Act of 2012 was not provincial sales tax. Therefore before 01.07.2013, jurisdiction of FBR was not excluded to examine the validity of input tax claimed under Act of 1990.

23.The ambient facts and legal position discussed above would lead to ineluctable conclusion that for period from July 2012 to June 2013, regarding input tax adjustment, under Act of 1990, the FBR had jurisdiction in the matter. The necessary corollary and effect is that the finding rendered by Tribunal to this effect being contrary to law is to be treated as non-est.

24.Resultantly the questions resettled by this Court are answered accordingly and question raised above by applicant is answered in negative in favour of the applicant department and against the respondent-assessee. However as appeal was decided by Tribunal only on legal issue, the factual aspect of the matter i.e. whether the sales tax for the period 7/2012 to 6/2013 was actually deducted and paid on advertisement services by the respondent assesse and if it could claim the input tax adjustment for said period lawfully, shall be decided by the Taxation Officer on the basis of available record and law discussed and settled above, after hearing the parties afresh.

25.This reference application is allowed accordingly.

KMZ/C-13/L Order accordingly.

COMMISSIONER INLAND REVENUE VS GOLDEN PEARL COSMETICS, 2017 PTD-LAHORE-HIGH-COURT-LAHORE 1485 (2017)

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