| Case ID |
0c2824d3-907b-4919-8043-b9ceead4f55f |
| Body |
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| Case Number |
STA No. 96/113/2016 |
| Decision Date |
Aug 15, 2016 |
| Hearing Date |
Jul 15, 2016 |
| Decision |
The Appellate Tribunal Inland Revenue, Islamabad, presided by Chairman Nazir Ahmed and Accountant Member Faheemul Haq Khan, has allowed the appeal filed by M/s. Nokia Solutions and Networks Pakistan (Pvt.) Ltd., Islamabad against The CIR Zone IV, LTU, Islamabad. The tribunal found that the Honourable Commissioner of Inland Revenue (Appeals-I), Islamabad erred in upholding the actions of the learned Additional Commissioner Inland Revenue (Audit-II), Large Taxpayers Unit, Islamabad in various aspects of the tax assessment for the period from January 2010 to December 2010. Specifically, the tribunal noted that the actions related to tax assessments were barred by the limitation period under section 14 of the Federal Excise Act, 2005. Additionally, the decision addressed the disallowance of input tax amounts, levying of sales tax on the disposal of fixed assets, and the imposition of Federal Excise Duty on payments to parent and associated companies. The tribunal concluded that the impugned order was beyond the statutory limitation and confirmed the taxpayer's appeal on the sole legal ground. Consequently, the actions taken by the Additional Commissioner Inland Revenue were deemed invalid, and the appeal was accordingly allowed. |
| Summary |
In the landmark tax appeal case, M/s. Nokia Solutions and Networks Pakistan (Pvt.) Ltd., Islamabad challenged the actions of The CIR Zone IV, LTU, Islamabad, under multiple legislative frameworks including the Federal Excise Act, 2005, the Income Tax Ordinance, 2001, and the Sales Tax Act, 1990. The case, cited as 2016 SLD 1224, was heard by the Appellate Tribunal Inland Revenue in Islamabad on a hearing date of July 15, 2016, with the decision rendered on August 15, 2016. The panel, comprising Chairman Nazir Ahmed and Accountant Member Faheemul Haq Khan, meticulously examined the grounds of the appeal, which primarily contested the validity of tax assessments initiated for the fiscal year spanning January 2010 to December 2010. Central to the appeal was the contention that the Commissioner of Inland Revenue (Appeals-I), Islamabad, had mistakenly upheld the amendments to the company's tax assessments beyond the permissible limitation period as stipulated by Section 14(1) of the Federal Excise Act, 2005. The appellant further argued that the actions of the Additional Commissioner, especially regarding the disallowance of Rs. 78,494,226 in input tax claims, were in contravention of Section 8(1)(a) of the Sales Tax Act, 1990. Moreover, the levy of Rs. 30,255,840 in sales tax on the disposal of fixed assets was challenged on the grounds that these disposals did not facilitate any taxable activity, thus not constituting a 'taxable supply' under Section 2(41) of the Sales Tax Act, 1990. The tribunal also scrutinized the imposition of Federal Excise Duty amounting to Rs. 231,509,200 on payments to parent and associated companies, analyzing whether such charges fell within the ambit of franchise as defined by the Federal Excise Act, 2005. Drawing upon multiple precedents and legal interpretations, including rulings by the Islamabad High Court and the Supreme Court of Pakistan, the tribunal concluded that the assessments were indeed time-barred and that the levy of excise duties lacked substantial legal grounding. The decision underscored the importance of adhering to statutory limitation periods in tax assessments and the correct application of tax laws concerning franchising arrangements and input tax disallowances. By prioritizing legal compliance and fairness in taxation, this case sets a significant precedent for future tax disputes, ensuring that taxpayer rights are adequately protected against overreaches by tax authorities. The ruling not only lifts the contested tax assessments but also reinforces the legal framework governing tax assessments and the necessity of upholding statutory limitations. Stakeholders in the corporate and legal sectors will closely observe this decision for its implications on tax law interpretations and the operational conduct of tax authorities in Pakistan. The case exemplifies the critical balance between regulatory authorities and taxpayers, emphasizing transparency, legality, and procedural correctness in tax administration. As businesses navigate the complexities of tax obligations, this judgment provides clarity and reinforces the judiciary's role in safeguarding equitable tax practices. |
| Court |
Appellate Tribunal Inland Revenue, Islamabad
|
| Entities Involved |
M/s. Nokia Solutions and Networks Pakistan (Pvt.) Ltd., Islamabad,
The CIR Zone IV, LTU, Islamabad
|
| Judges |
NAZIR AHMED,
FAHEEMUL HAQ KHAN
|
| Lawyers |
Mr. Khalid Mehmood, FCA,
Mr. Imran Shah, D.R.
|
| Petitioners |
M/s. Nokia Solutions and Networks Pakistan (Pvt.) Ltd., Islamabad
|
| Respondents |
The CIR Zone IV, LTU, Islamabad
|
| Citations |
2016 SLD 1224
|
| Other Citations |
CM Pak Limited vs Additional Commissioner Inland Revenue,
Pakistan Mobile Communication Limited vs Additional Commissioner Audit,
FEA Nos. 51 to 54/KB/2013 M/s. Schlumberger Seaco Inc. Vs CIR, LTU, Karachi,
Civil Petition No. 1306 of 2014 in the case of CIR, RTO, Rawalpindi Vs Major General ® Dr. C.M. Anwar etc.,
PLD 1967 (1) (S.C.),
PLD 1991 (963) (S.C.),
2013-107 Tax 141 (Trib. Islbd),
2013-108-Tax-185 (Trib.),
2014-109-Tax-127 (Trib.),
2015-111-Tax-104 (Trib.),
2015-111-Tax-209 (Trib.)
|
| Laws Involved |
Federal Excise Act, 2005,
Income Tax Ordinance, 2001,
Sales Tax Act, 1990
|
| Sections |
3(1)(d),
8,
19,
14(1),
14(2),
214(C),
2(41),
8(1)(a),
11(2),
33,
34,
72(B)
|