| Case ID |
7383ea32-cc7d-4d21-b910-c07cb254ef7b |
| Body |
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| Case Number |
Civil Appeals Nos.289, 290, 291, 292 of 1978, 899- |
| Decision Date |
Jan 11, 1999 |
| Hearing Date |
Jun 16, 1998 |
| Decision |
The Supreme Court of Pakistan decided on the interpretation of the Sales Tax Act, particularly section 3(6)(d), which governs the treatment of partly manufactured goods in relation to sales tax. The Court found that the use of such goods in the manufacturing of finished products exempt from sales tax incurs a liability for sales tax on the intermediary goods. The judgment clarified that the deeming provision creates a legal fiction that the use of goods by the manufacturer is treated as a sale, thereby bringing it under the tax net, especially when the final product is exempt from sales tax. The ruling emphasized the importance of legislative competence in enacting such provisions and the need for a liberal interpretation of legislative entries to ensure effective tax administration. |
| Summary |
In this case, the Supreme Court of Pakistan addressed significant questions regarding the imposition of sales tax on partly manufactured goods. The central issue revolved around whether the use of these goods in the production of finished products, which were exempt from sales tax, would trigger a tax liability on the intermediary goods. The Court ruled that the Sales Tax Act, particularly section 3(6)(d), allows for such goods to be deemed as a sale, thus rendering them taxable. This decision underscores the necessity for a nuanced understanding of tax law and legislative intent, especially in the context of manufacturing processes. The Court's interpretation aligns with principles of statutory interpretation that favor a broader understanding of legislative entries, ensuring that the tax system functions effectively. This ruling is pivotal for manufacturers and legal practitioners navigating the complexities of sales tax obligations in Pakistan's economic landscape. |
| Court |
Supreme Court of Pakistan
|
| Entities Involved |
Commissioner of Sales Tax,
Hunza Central Asian Textile and Woollen Mills Ltd.
|
| Judges |
NASIR ASLAM ZAHID,
MUNAWAR AHMED MIRZA,
KHALIL-UR-REHMAN KHAN,
ABDUR REHMAN KHAN,
MUNIR A. SHEIKH
|
| Lawyers |
Syed Sharif-ud-Din Pirzada, Senior Advocate Supreme Court,
Mansoor Ahmad Khan, Senior Advocate Supreme Court,
Mansoor Ahmad, Advocate Supreme Court,
Ch. Akhtar Ali, Advocate-on-Record,
Ejaz Muhammad Khan, Advocate-on-Record
|
| Petitioners |
COMMISSIONER OF SALES TAX,
|
| Respondents |
,
HUNZA CENTRAL ASIAN TEXTILE AND WOOLLEN MILLS LTD.
|
| Citations |
1999 SLD 678,
1999 PTD 1135,
(1999) 79 TAX 433,
1999 PTCL 645,
1999 SCMR 526
|
| Other Citations |
Noorani Cotton Corporation v. Sales Tax Officer PLD 1965 SC 161,
Commissioner of Sales Tax v. Shaiq Corporation Limited PLD 1986 SC 731,
Abbasi Textile Mills Ltd. v. Commissioner of Sales Tax PLD 1990 SC 422
|
| Laws Involved |
Sales Tax Act, (III of 1951),
Constitution of Pakistan, 1973
|
| Sections |
3(6)(d),
185(3),
Fourth Schedule
|