| Case ID |
d72d5bb8-c1ed-4ab5-8cee-0bf17f7be19f |
| Body |
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| Case Number |
W.P. No. 21245/2014 |
| Decision Date |
Oct 24, 2019 |
| Hearing Date |
Oct 24, 2019 |
| Decision |
The Lahore High Court dismissed the petitions filed by Nishat Mills Limited, challenging the vires of specific sections of the Sales Tax Act, 1990, which disallowed input tax adjustments on certain goods. The court held that the petitioners failed to establish a direct nexus between the goods in question and their taxable supplies, as these goods were primarily for the petitioners' internal consumption rather than part of the supply chain. The court emphasized that the restrictions imposed by the law were reasonable and did not infringe upon the fundamental rights of the petitioners to conduct business. The decision reinforced the legislative intent to prevent fraudulent claims for input tax adjustments, thereby upholding the integrity of the tax system. |
| Summary |
In the case of Nishat Mills Limited vs. Federation of Pakistan, the Lahore High Court examined the legality of certain provisions in the Sales Tax Act, 1990, specifically Sections 8(1)(h) and (i), which restrict input tax adjustments for goods not directly linked to taxable supplies. The petitioners argued that these sections were ultra vires the Constitution of Pakistan, asserting their right to input tax adjustment as registered taxpayers. The court analyzed the relationship between the goods and the taxable activities of the petitioners, concluding that the items in question were not part of the supply chain and thus did not qualify for tax adjustments. This ruling has significant implications for businesses regarding tax compliance and the interpretation of tax laws, emphasizing the importance of maintaining a clear nexus between goods and taxable supplies to ensure eligibility for input tax credits. The judgment serves as a critical reference point for future cases involving tax disputes and the application of the Sales Tax Act, 1990. |
| Court |
Lahore High Court
|
| Entities Involved |
FEDERATION OF PAKISTAN,
NISHAT MILLS LIMITED
|
| Judges |
AYESHA A. MALIK
|
| Lawyers |
Rana Muhammad Afzal,
Mr. Mustafa Kamal,
Mr. Khalil ur Rehman,
Mr. Imtiaz Rashid Siddiqui,
Mr. Mansoor Usman Awan,
Mr. Raza Imtiaz Siddiqui,
Mr. Abuzar Hussain,
Mr. Waseem Ahmad Malik,
Mr. Khubaib Ahmad,
Mr. Shehryar Kasuri,
Mr. Qadeer Kalyar,
Mr. M. Hamza Sheikh,
Mr. Jamshed Alam,
Mr. Mehmood Ahmed,
Mr. Tariq Rashid,
Mr. Asif Imran Awan,
Mr. H.M. Majid Siddiqui,
Mr. Muhammad Raza Qureshi,
Mr. Habib ur Rehman,
Mr. Muhammad Asif,
Advocate vice Mr. Shahbaz Butt
|
| Petitioners |
NISHAT MILLS LIMITED
|
| Respondents |
FEDERATION OF PAKISTAN ETC.
|
| Citations |
2019 SLD 2781,
2019 LHC 5094,
(2020) 121 TAX 47
|
| Other Citations |
M/s Ghandhara Nissan Diesel Ltd. v. Collector, Large Tax-Payers Unit and 2 others (PTCL 2006 CL 673),
Collector of Customs Sales Tax and Central Excise, etc. v M/s Sanghar Sugar Mills Ltd., Karachi etc. (PTCL 2007 CL 565),
Collector of Sales Tax v. M/s Dhan Fibre Limited (2005 PTD 2012),
Treet Corporation Ltd. through Company Secretary and others v. Federation of Pakistan through Ministry of Finance and others (2014 PTD 1285),
Pakistan International Airlines Corporation through Secretary PIA v. Pakistan through Secretary, Islamabad and 2 others (2015 PTD 245),
Lahore Development Authority through D.G and others v. Ms. Imrana Tiwana and others (2015 SCMR 1739),
Supreme Tube Industries (Pvt.) Limited v. Federation of Pakistan and others (2016 PTD 2058),
Ittehad Chemicals Limited, Lahore v. Customs, Excise and Sales Tax Appellate Tribunal, Lahore through Chairman and another (2005 PTD 2067),
Messrs AMZ Spinning and Weaving Mills (Pvt.) Ltd. through Manager v. Appellate Tribunal, Customs Sales Tax and Federal Excise, Karachi (2006 PTD 2821),
Messrs Syntronics Limited, Industrial Estate, Hattar v. Additional Collector (ADJ) Customs, CE & Sales Tax Peshawar (2007 PTD 749),
Messrs Dewan Cement Ltd. through Authorized Representative v. Pakistan through Secretary Ministry of Finance, Revenue Division and Ex-officio Chairman, F.B.R., Islamabad and 2 others (2010 PTD 1717),
Coca-Cola Beverages Pakistan Ltd. v. Customs, Excise and Sales Tax Appellate Tribunal and others (2017 PTD 2380)
|
| Laws Involved |
Sales Tax Act, 1990,
Customs Act, 1969
|
| Sections |
2(33),
3(1A),
3(5),
7,
8,
8B,
8(1)(h),
8(1)(i),
26(5),
79,
81,
104,
Chapter 87 of the First Schedule
|