Summary: Constitutional Jurisdiction – Maintainability – Alternate Remedy: Where an alternate remedy is available under the law, the High Court ordinarily does not entertain constitutional petitions, especially when such remedies are equally efficacious and have already been availed by the petitioner. In this case, a Sales Tax Reference (STR No. 93/2024) had already been filed by the petitioner before the Division Bench of the High Court. Consequently, the constitutional petition seeking suspension of recovery notices issued by the tax authorities during the pendency of the Sales Tax Reference was held to be non-maintainable. (PLD 2024 SC 780; 2024 SCMR 853; 2021 SCMR 1675) ------ Recovery Proceedings – Jurisdiction of Tax Authorities: Tax recovery notices issued under Section 48 of the Sales Tax Act, 1990, are part of the administrative process and cannot be stayed by the High Court in its constitutional jurisdiction when an alternate statutory remedy, such as appeal or reference, is pending adjudication before the competent forums. The High Court reaffirmed that recovery orders do not attain finality until all appellate and judicial forums provided under the law are exhausted. (PLD 1998 SC 1445; 1993 SCMR 39) ------ Right to Fair Trial – Access to Justice: The right to access justice is fundamental and includes the right to adjudication of disputes before an independent and impartial tribunal. Tax recovery proceedings initiated during the pendency of an appeal or reference violate the principles of fair trial unless adjudicated by an independent appellate tribunal or forum. (PLD 2024 SC 337; 2006 SCMR 1519) ------ Judicial Precedent – Hierarchical Remedies: The principle of hierarchy in tax disputes requires that appellate and reference procedures provided under the Sales Tax Act, 1990, are followed before invoking the constitutional jurisdiction of the High Court. Orders of original authorities are not considered final unless reviewed by all statutory forums. (2024 PTD 1085 (SC); PLD 2018 SC 189) ------ Conversion of Proceedings: While the High Court may convert one type of proceeding into another, such as treating a constitutional petition as a reference, this power is not exercised when a reference is already filed and pending before a competent forum. Such conversion is justified only when no alternate remedy is available or plausible. (2021 SCMR 1675; PLD 2018 SC 449) ------ Outcome: The constitutional petition was held to be non-maintainable and disposed of on the basis that an alternate remedy in the form of a Sales Tax Reference was already filed and pending before a Division Bench of the High Court. The petitioner opted to withdraw the petition to pursue the pending reference and its associated remedies under the Sales Tax Act, 1990. ------ Citations and Precedents Cited: Mehram Ali v. Federation of Pakistan (PLD 1998 SC 1445) Jawad S. Khawaja v. Federation of Pakistan (PLD 2024 SC 337) Central Board of Revenue v. Chanda Motors (1993 SCMR 39) Messrs. Kamal Ltd. v. Federation of Pakistan (2017 PTD 243) Muhammad Salman v. Naveed Anjum (2021 SCMR 1675) Hafsa Habib Qureshi v. Amir Hamza (PLD 2024 SC 780) Federal Board of Revenue v. Dewan Salman Fiber Ltd. (2023 SCMR 1871) Muhammad Hanif Abbasi v. Imran Khan Niazi (PLD 2018 SC 189)

Summary: Background: The listed appeals and petitions arise from judgments by the Lahore High Court and the Sindh High Court concerning the adjustment and refund of input tax under the Sales Tax Act, 1990. The central issue involved interpretation of sections 7 and 10 of the Act, specifically regarding whether input tax paid on goods destroyed or unused for taxable supplies could be adjusted or refunded. The respondents in the cases include manufacturers in the textile and pharmaceutical industries, disputing demands by tax authorities to repay benefits derived from input tax adjustments or refunds. -----Issues: 1- Whether input tax deduction can be claimed under section 7 of the Sales Tax Act, 1990, for goods destroyed or unused for taxable supplies. -----2- Whether the retrospective exemption of sales tax on pharmaceutical products impacts adjustments already availed by taxpayers during the tax period. -----3- Whether taxpayers’ vested rights in past and closed transactions can be nullified through subordinate legislation. -----Holding/Reasoning/Outcome: The Supreme Court, addressing both cases (Mayfair Spinning Mills and pharmaceutical manufacturers), upheld the decisions of the High Courts and ruled in favor of the taxpayers. ---Key Findings in Mayfair Spinning Mills Case --Input Tax and Taxable Supplies: Section 7 allows input tax adjustment not only for goods already used in taxable supplies but also for goods intended for such use in the future. Damaged goods (e.g., cotton bales destroyed by fire) do not preclude input tax adjustment if they were intended for taxable supplies. --Time-Based Restriction: The adjustment of input tax is tied to the tax period but does not require actual consumption of goods within that period. --Refund Validity: Section 10 provides for refunds of unadjusted input tax. In this case, the claim for a refund was valid as the goods were intended for taxable supplies. --Retrospective Exemption: The exemption of sales tax on pharmaceutical supplies via subordinate legislation (SROs) does not retroactively affect adjustments made during a valid tax period. Transactions where taxpayers lawfully claimed input tax adjustments before the exemption are deemed past and closed, creating vested rights. --Legislative Scope: Subordinate legislation (SROs) cannot retroactively nullify past transactions unless explicitly authorized by primary legislation. The appeals by the tax authorities were dismissed, and the judgments in favor of the taxpayers were upheld. ----Citations/Precedents: Commissioner Inland Revenue v. Attock Cement Pakistan Ltd. (2023 SCMR 279) Clarified the adjustment of input tax against output tax under section 7. Al Samrez Enterprise v. Federation of Pakistan (1986 SCMR 1917) Vested rights in past and closed transactions cannot be nullified retrospectively. Federation of Pakistan v. Shaukat Ali Mian (PLD 1999 SC 1026) Subordinate legislation cannot override or nullify rights accrued under primary legislation. Mekotex (Pvt.) Ltd. v. Commissioner Inland Revenue (2024 SCP 316) Distinguished as it addressed primary legislation, not subordinate legislation. Army Welfare Sugar Mills Limited v. Federation of Pakistan (PLD 1992 SCMR 1652) Retrospective withdrawal of benefits requires explicit legislative authorization.

Summary: Per Syed Mansoor Ali Shah, J; Syed Hasan Azhar Rizvi, J. (as Referee Judge) agreeing; Ayesha A. Malik, J. dissenting. (a) Interpretation of statutes--- ----'Directory' and 'mandatory' provisions---Ascertainment of---Legislative intent can be drawn by consideration of the entire statute, its nature, its object and the consequences whether it will cause serious inconvenience or injustice to persons as a result of construing the provision in one way or the other---If by holding a provision mandatory serious general inconvenience will be created for innocent persons of the general public without furthering the object of the enactment, the same should be construed as directory. N.S Bindra's Interpretation of Statutes. 12th Edition. P.437 and 438 ref. (b) Sales Tax Act (VII of 1990)--- ----S. 45B(2), first and second provisos---Constitution of Pakistan, Art. 188---Review petition---Appeal to the Commissioner Inland Revenue (Appeals)---Timeframe provided under first and second provisos to section 45B(2) of the Sales Tax Act, 1990 ("Act")---Whether the first and second provisos were mandatory or directory provisions?---By way of judgment under review the Supreme Court held that the provisos were mandatory provisions and any order passed by the Commissioner (Appeals) under section 45B(2) beyond the maximum period of 180 days was an "invalid decision."---[Per Syed Mansoor Ali Shah, J. (Majority view): First and second provisos to section 45(B)(2) of the Sales Tax Act, 1990 ("Act") are directory provisions and lapse of the statutory timeframe will not affect the proceedings before the Commissioner (Appeals) who shall conclude the appeal in accordance with law by deciding the appeal on its merits---First and second provisos to section 45B(2) of the Act are directory provisions and do not deprive the taxpayer of his right to appeal or deny the tax department the right to adjudicate the matter on merits by virtue of lapse of the maximum statutory timeframe---Inspite of the first and second provisos to section 45(B)(2) being directory provisions, the Commissioner (Appeals) must make reasonable effort to decide the appeal of the taxpayer within the maximum statutory timeframe, subject to the third proviso to section 45B(2)---In case the taxpayer unduly delays the prosecution of the appeal without sufficient cause, the Commissioner (Appeals) is well within its power to proceed ex-parte against the taxpayer---Commissioner (Appeals) must also give reasons if the appeal is not decided within the statutory timeframe under the proviso to section 45(B)(2), so that the legislative aspiration to achieve effective and efficient tax governance is also realized even though such a timeframe is only directory in nature]---[Per Ayesha A. Malik, J. (Minority view): Primary ground for filing the present review was the argument that the adjournments taken by respondent/taxpayer during the proceedings before the Commissioner (Appeals) should have been considered in terms of Section 45-B(2), third proviso of the Sales Tax Act, 1990 (Act)---Record showed that the dates of adjournment were not considered while calculating the time period under Section 45B of the Act by the Appellate Tribunal Inland Revenue, Islamabad Bench (Tribunal) or the High Court---Given that present matter was a factual matter, it was necessary for the Tribunal to consider the dates of adjournments for the purposes of calculating the delay in terms of Section 45-B of the Act---Under the circumstances, review was allowed, the judgment under review was recalled; and accordingly, the orders of the High Court and the Tribunal were set aside; and the case was remanded to the Tribunal with the directions that the appeal of the taxpayer shall be deemed to be pending and the Tribunal shall decide afresh the issue of the timeframe as prescribed in Section 45-B of the Act with reference to the adjournments sought---[Per Syed Hasan Azhar Rizvi, J. (as Referee Judge) (Majority view): First and second provisos to section 45(B)(2) of the Act should be treated as directory provisions---This interpretation effectively safeguards the tax-payer's constitutional rights while promoting efficient and fair tax governance---It serves the public interest by preventing procedural timelines from being used against tax-payers in a way that would compromise fairness and justice in the appellate system---Provisions must not be interpreted in a way that limits or undermines fundamental rights---Strict enforcement of statutory timelines for tax-payer appeals could jeopardize these rights and potentially deny tax-payers a fair opportunity to seek redressal---Therefore, declaring first and second provisos to section 45(B)(2) of the Act as directory is crucial to maintain due process and uphold the constitutional principles of justice. 2019 SCMR 1735 ref. Malik Itaat Hussain Awan, Advocate Supreme Court; Ms. Asma Idrees, Additional Commissioner and Yousaf Khan, Law Officer for Petitioners. Respondent No.1, in person. Date of hearing: 25th October, 2022. SYED MANSOOR ALI SHAH, J.--- The judgment under review dated 12.5.2022 addresses the solitary question whether the first and second provisos to section 45B(2) of the Sales Tax Act, 1990 ("Act") are mandatory or directory provisions. The Court held that they were mandatory provisions and any order passed by the Commissioner (Appeals) under section 45B(2) beyond the maximum period of 180 days is an "invalid decision."

Summary: Sales Tax Act (VII of 1990)--- ----Ss. 3, 7 & Sixth Schedule, Entry No.151---Constitution of Pakistan, Arts. 23, 24 & 25---Business Operating in erstwhile trial areas---Exemption from sales tax---Sales tax regime, modification in---Condition of depositing payment order---Legality---Petitioners / companies were aggrieved of imposing condition of deposit of payment order as security against import of raw material to the value of amount of leviable duties and taxes---Validity---Imposition of condition, providing payment order at the time of clearance of goods for an amount equivalent to sales tax was negation of exemption, which was granted to petitioners / companies keeping in view their geographical locations as well as business activities---Petitioners/ companies, consuming raw materials imported through concessionary regime, were not liable to pay any tax---Petitioners / companies were not prohibited from selling their product outside erstwhile tribal area on payment of sales tax---Such activities were subject to assessment regime, as provided under Sales Tax Act, 1990---Condition of payment order, equal to amount of sales tax at the time of import would revert the exemption into payment of sales tax regime as provided under S. 3 of Sales Tax Act, 1990 and its adjustment as provided under S. 7 of Sales Tax Act, 1990 with the slight modification that, instead of input tax (in cash), the form would be changed to payment order---High Court declared that demand of payment order from business community belonging to erstwhile tribal areas was unreasonable condition depriving them to utilize their money for business activities which otherwise would also offend mandate of Arts. 23 & 24 of the Constitution---High Court further declared that amendment in Entry No. 151 of Sixth Schedule to Sales Tax Act, 1990 did not qualify test of reasonableness, as it was discriminatory and ultra vires the mandates of Arts. 18, 23, 24 & 25 of the Constitution---High Court in exercise of Constitutional jurisdiction struck down amendment in question and allowed petitioners to import raw material and machinery etc. against providing postdated cheques equal to the amount of sales tax---High Court directed the authorities to return instruments of payment orders already deposited with them against postdated cheques provided by petitioners---Constitutional petition was allowed accordingly. Messrs Taj Packages Company (Pvt.) Ltd. through Manager v. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 others 2016 PTD 203; Pakistan through Chairman, FBR and others v. Hazrat Hussain 2018 SCMR 939; Commissioner Income Tax, Peshawar v. M/s. Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. 2008 PTD 169; Whitney v. IR Commissioners (1926) 10 TC 88; The Commissioner, Inland Revenue, Karachi v. Messrs Attock Cement Pakistan Limited, Karachi 2023 SCMR 279; H.M. Extraction Ghee and Oil Industries (Pvt.) Ltd. and another v. Federal Board of Revenue and another 2019 SCMR 1081; Prag Ice Mills v. Union of India AIR 1978 SC 1296 and Mohammad Imran v. Province of Sindh 2019 SCMR 1753 ref. Issac Ali Qazi for Petitioners. Sanaullah, DAG, Barrister Sarwar Muzaffar Shah, Ishtiaq Ahmad (Junior), Hassan Naeem Saber, Ehtisham-ud-Din, Hafiz Ahsaan Ahmad Khokhar, Aimal Khan Barkandi along with Sharifullah, Assistant Director (Legal) for Respondents. Date of hearing: 22nd October, 2024. SYED ARSHAD ALI, J.--- This consolidated judgment is aimed at deciding the instant petition as well as connected petitions, the detail whereof has been provided in Annexure 'A' to this judgment, challenging the amendment in Entry No. 151 of the Sixth Scheduled to the Sales Tax Act, 1990 through Finance Act, 2024.

Summary: Sales Tax Act (VII of 1990)--- ----Ss. 2(25), proviso to, Ss.3(1A) 8(1)(m) & 73(4)---Persons liable to be registered---Scope and extent---Input tax, deduction of---Further tax---Scope---Benefit under S. 73(4) of the Sales Tax Act, 1990---Scope---Appellate Tribunal recorded findings to the effect that supplier / respondent, had paid further tax against the supplies made to persons not registered, who had not obtained registration number in terms of S.3(1A) of the Sales Tax Act, 1990---Validity---If recipients of supplies, who had not obtained registration number, were treated as not registered persons for the purposes of further tax, how could they be treated as deemed registered person for the purposes of subsection (4) of S. 73 of the Sales Tax Act , 1990---It was axiomatic that on one hand respondent had paid further tax qua the supplies made to person, without registration number, and on the other, benefit was claimed simultaneously qua the supplies to person not registered---Subsection (4) of S. 73 of the Sales Tax Act, 1990 contemplates and extends specific / exclusive benefit to the registered person, upon allowing claim of input tax qua taxable supplies when made within the limits prescribed, which benefit, by any stretch of imagination, cannot be doled out to non-registered recipient by banking upon S. 2(25) of the Sales Tax Act, 1990, which section cannot be construed contrary to the subject and context of subsection (4) of section 73 of the Act, 1990---Thus, in case of inconsistency between S. 2(25) of the Sales Tax Act, 1990 and subsection (4) of S. 73 of the Act, 1990, latter provision of the law would prevail---Subsection (4) of S. 73 of the Sales Tax Act, 1990 cannot be rendered repugnant by extending preference to the definition / interpretation clause---Even otherwise, the proviso to S.2(25) of the Sales Tax Act, 1990 envisaged benefit for potentially registerable person and such benefit cannot be extended or claimed by the registered person---Subsection (4) of S. 73 of the Sales Tax Act, 1990 is a special provision, dealing with specific situation and providing special concession / benefit, and effect thereof cannot be invalidated in the context of general provisions---Reference to S.8(1)(m) of the Sales Tax Act, 1990 by Appellate Tribunal was misplaced, which provision specifically dealt with input goods, attributable to the supplies---Thus, Appellate Tribunal misconstrued scope, extent and distinctiveness of subsection (4) of S. 73 of the Sales Tax Act , 1990, which erred in law while extending unwarranted preference to S. 2(25) of the Sales Tax Act , 1990, which construction and treatment constituted an illegality---Thus, proposed questions were answered in negative---Reference application was decided in favour of applicant / department. Muhammad Sulaman Bhatti for applicant-department. Khubaib Ahmad for Respondent-taxpayer.

Summary: Scope of sub-section (4) of Section 73 of Sales Tax Act, 1990 918Crl. Appeal 1379100.909-

Summary: Scope of section 3(1A) of Sales Tax Act, 1990 917STR (Sales Tax Reference) 34-23 CIR MULTAN VS M/S AN TEXTILE MILLS LTD Mr. Justice Asim Hafeez 15- 10- 2024 2024 LHC 4539 PLJ 2024 Lahore 859 (DB) (Multan Bench, Multan), 2025 PTD 1109 [Lahore High Court (Multan Bench)]

Summary: Scope of sub-section (4) of Section 73 of Sales Tax Act, 1990 -----Background: The Commissioner of Inland Revenue filed a Sales Tax Reference Application questioning the legality of the Appellate Tribunal Inland Revenue’s (ATIR) decision that extended tax benefits to M/s AN Textile Mills Ltd., even though these benefits were intended for registered persons. The department argued that only registered recipients of taxable supplies should benefit under Section 73(4) of the Sales Tax Act, 1990, while the ATIR allowed benefits under Section 2(25) to recipients who were "liable to be registered" but had not formally obtained registration. -----Issues: 1- Whether ATIR was correct to grant benefits of a registered person to those "liable to be registered," despite the proviso of Section 2(25) and in contradiction to Section 73(4). -----2- Whether ATIR erred by overlooking the specific requirements under Section 73(4) and incorrectly applying Section 2(25) in favor of the taxpayer. -----Holding/Reasoning/Outcome --Interpretation of Section 73(4): The court held that Section 73(4) specifically limits tax benefits to those who are registered. By allowing benefits to individuals who were merely "liable to be registered," the ATIR had misapplied the law, as the intent of Section 73(4) is to reward actual registration compliance within set monetary limits. --Application of Section 2(25): The court clarified that Section 2(25) defines a "registered person" and includes those "liable to be registered." However, it does not override Section 73(4), which is a special provision requiring formal registration for benefits. The court emphasized that where inconsistency exists, the special provision (Section 73(4)) prevails over the general definition in Section 2(25). The court concluded that ATIR misinterpreted the scope of Section 73(4) by prioritizing Section 2(25) and granted tax relief inappropriately. Thus, the reference application was decided in favor of the Inland Revenue Department. -----Citations/Precedents: Section 73(4) of the Sales Tax Act, 1990: Limits benefits strictly to registered persons, prohibiting tax adjustments for non-registered recipients of taxable supplies. Section 2(25) of the Sales Tax Act, 1990: Defines "registered person," with a proviso excluding benefits for those liable to be registered but not formally registered.

Summary: Background: This case involves a dispute over the imposition of "Further Tax" under Section 3(1A) of the Sales Tax Act, 1990, by the Appellate Tribunal Inland Revenue (ATIR). The applicant, a registered taxpayer, challenged the Tribunal's decision, raising questions about the interpretation and application of Section 3(1A), particularly regarding supplies made to individuals with a suspended, blacklisted, or non-filer status. -----Issues: 1- Was the ATIR justified in confirming the levy of Further Tax under Section 3(1A) of the Sales Tax Act in a non-speaking order? -----2- Can the amendment made in Section 3(1A) of the Sales Tax Act through the Finance Act, 2022, apply retroactively to supplies from 2013-2014? -----3- Does obtaining a registration number exempt a taxpayer from further tax if the recipient’s registration is suspended, blacklisted, or if they fail to file tax returns? -----Holding / Reasoning / Outcome: --Non-speaking order: The court found that the ATIR had provided sufficient reasoning in its order, thus dismissing the argument regarding the non-speaking nature of the order. --Retroactive application of amendment: The court held that the amendment in the Finance Act, 2022, was not referenced in the Tribunal's order. Therefore, this question was deemed unnecessary to address. --Application of Further Tax on suspended, blacklisted, and non-filers: The court examined Section 3(1A) and determined that merely obtaining a registration number does not exempt a taxpayer from the Further Tax regime if the registration was ineffective, suspended, or blacklisted at the time of the taxable transaction. Furthermore, the court clarified that a non-filer status could trigger the further tax obligation if it matures into a statutory default with legal implications. Since the ATIR did not address whether the recipients were non-filers or if this status constituted a statutory default, the matter was remanded to the Tribunal for further review. ----Citations / Precedents Interpretation of non-filing leading to suspension and blacklisting referenced per Rule 12 of the Sales Tax Rules, 2006

Summary: Scope and effect of sub-section (2) of Section 25 of Sales Tax Act, 1990. 922Crl. Appeal- Against Conviction- PPC 812-22 ABDUL BASIT VS STATE ETC Mr. Justice Muhammad Amjad Rafiq 14- 10- 2024 2024 LHC 4466 PLJ 2025 Cr.C 72 (DB) (Lahore High Court, Multan Bench), 2025 PCr.LJ 589 [Lahore (Multan Bench)]