Summary: (a) Federal Excise Act, 2005—Repeal and re-enactment—Applicability of General Clauses Act, 1897—Continuation of notifications issued under repealed law ----S. 48 of the Federal Excise Act, 2005; S. 24 of the General Clauses Act, 1897—Central Excise General Order (CEGO) No. 4 of 2002—Effect of repeal of Central Excise Act, 1944 on CEGO—Held, Section 24 of the General Clauses Act applies to situations where a statute is repealed and re-enacted, and notifications or orders issued under the repealed statute continue to remain in force unless inconsistent with the new law or expressly superseded—Court found no express repeal or inconsistency between CEGO No. 4 of 2002 and the scheme of the Federal Excise Act, 2005—Mechanism and dual rate structure for concentrate and aerated beverages existed under both repealed and re-enacted statutes—Therefore, CEGO No. 4 of 2002 remains valid and enforceable. (b) Federal Excise Duty—Concentrates vs. aerated beverages—Optional method of tax assessment—No inconsistency found in CEGO procedure ----CEGO No. 4 of 2002—Options for bottling plants—Held, bottling plants could either pay excise duty on concentrate syrup (PCT 2106.9010) or opt to pay duty as if aerated beverages were produced from the syrup—Second option absolved post-mix operators from excise obligations—Tribunal’s finding that this scheme was inconsistent with the re-enacted Federal Excise Act, 2005, held to be misconceived—The Court observed that both old and new statutes permitted different rates and mechanisms for concentrate and aerated beverages, and thus the optional scheme under CEGO No. 4 of 2002 aligned with both statutory regimes. (c) Taxation—Interpretation of the term “inconsistent” under S. 24, General Clauses Act, 1897—Scope and application ----Held, “inconsistency” under S. 24 must be assessed with reference to the entire scope, purpose, and structure of the repealed and re-enacted enactments—Mere existence of a separate duty rate or procedural variance does not automatically amount to inconsistency—Court relied on Stroud’s Judicial Dictionary to explain that inconsistency arises only when the coexistence of two provisions renders the new law unworkable or defeated in application—Thus, unless CEGO No. 4 of 2002 was expressly repealed or shown to undermine the new statute, it remains in effect. (d) Federal Board of Revenue—Statutory competence—Power to issue General Orders under repealed and re-enacted statutes ----S. 3, 43 of Federal Excise Act, 2005; S. 3(2) of Central Excise Act, 1944; S. 4 of Federal Board of Revenue Act, 2007—Held, FBR (formerly CBR) was fully competent to issue CEGO No. 4 of 2002 under valid delegation—Such general orders regulating tax collection mechanisms continue unless specifically revoked—Court reaffirmed that FBR's powers include formulation of tax procedures, issuance of instructions, and quasi-judicial enforcement—No challenge to FBR’s competence was raised, and the issuance of CEGO remained within statutory bounds. (e) Disposition—Sales Tax Reference allowed—Tribunal's interpretation of inconsistency reversed—CEGO No. 4 of 2002 held enforceable —Held, Appellate Tribunal Inland Revenue erred in treating CEGO No. 4 of 2002 as inconsistent with Federal Excise Act, 2005—Sales Tax Reference allowed—CEGO held to survive repeal and to remain effective under the reenacted statute—Matter answered in positive under S. 86(5) of the Act. Messrs Pakistan WAPDA Foundation v. The Collector of Customs, Sales Tax, Lahore (2023 SCMR 79) Stroud’s Judicial Dictionary of Words and Phrases (4th Ed.)

Summary: [Discussion on subsidiary company and holding company under the company law. Payment of sales tax under the presumptive Tax Regime. Fixed Amount of Sales Tax Rules, 1995 vis-?-vis the limitation for rebate, remission, refund, drawback or adjustment. Powers of High Court under Section 47 of the Sales Act, 1990) The dispute centered around the respondent's claim of input adjustment of sales tax on purchases made from their sister unit, M/s Qadri Brothers (Pvt) Ltd. The petitioner alleged that the respondent wrongfully claimed this adjustment and that the invoices issued by M/s Qadri Brothers (Pvt) Ltd. were fabricated to provide this benefit. The case proceeded through various stages, including an Order-in-Original, an appeal before the Collector of Central Excise & Sales Tax, and an appeal before the Customs, Excise and Sales Tax Appellate Tribunal. The Appellate Tribunal's decision resulted in divergent views, leading to the referral of the matter to a referee/third member. The referee ultimately rendered a decision in favor of the respondent, stating that there was no evidence to substantiate the relationship between the respondent and M/s Qadri Brothers (Pvt) Ltd. as sister concerns. The Lahore High Court upheld the decision of the Appellate Tribunal, which led to the petitioner's appeal before the Supreme Court. In the Supreme Court's judgment, Justice Muhammad Ali Mazhar analyzed the case and observed that the lower authorities did not definitively address the crucial issue of the relationship between the respondent and M/s Qadri Brothers (Pvt) Ltd. The court discussed the definition of a subsidiary company and the criteria for determining such a relationship. Ultimately, the court concluded that the lower authorities had not properly dealt with the core allegation raised in the Show Cause notice. Based on these findings, the Supreme Court set aside the impugned judgment of the Lahore High Court and remanded the case back to the Appellate Tribunal for a fresh decision, directing it to consider and decide the matter afresh in light of the court's observations.

Summary: Background: Multiple constitutional petitions and sales tax reference applications were filed, relating to the dispute over the collection and levy of sales tax on Toll Manufacturing. This case involves the conflict between the Federation and the Province of Sindh regarding who holds the authority to levy and collect sales tax on Toll Manufacturing. The petitioners have been paying sales tax on Toll Manufacturing to the Federal Government through the Federal Board of Revenue (FBR), but the Province of Sindh claims the tax should be paid to them as it considers Toll Manufacturing a service under the Sindh Sales Tax on Services Act, 2011. The dispute intensified post the 18th Amendment, with differing interpretations on which government entity is entitled to collect the tax. ----Issues: 1- Whether the collection of sales tax on Toll Manufacturing falls under the jurisdiction of the Federal Government or the Province of Sindh. 2- Whether Toll Manufacturing qualifies as a "service" under the Sindh Sales Tax on Services Act, 2011, or as "manufacturing of goods" under the Sales Tax Act, 1990. 3- Whether the Province of Sindh can retroactively claim sales tax from the Petitioners for Toll Manufacturing, even after agreeing that FBR would collect it post-July 2022. ----Holding/Reasoning/Outcome: The court held that Toll Manufacturing is not a service but a manufacturing process under the Sales Tax Act, 1990, and therefore the Province of Sindh cannot claim sales tax on this activity under the Sindh Sales Tax on Services Act, 2011. The court referred to previous judgments establishing that Toll Manufacturing is part of the manufacturing process and not a service. The court further observed that any sales tax already paid by the Petitioners to the Federation through the FBR constitutes a final discharge of their liability for the disputed period, and they are not obliged to pay further sales tax to the Province of Sindh. If the Province of Sindh seeks any share of the tax already collected, it must approach the Federation for an amicable settlement. ----Citations/Precedents: Amie (2006 PTD 1459) ORI TECH (2019 SCMR 875) Constitution of Pakistan, Fourth Schedule, Entry 49 Gulistan Textile Mills Ltd. v. Soneri Bank (2018 CLD 203)

Summary: Issue:Whether the procedural requirements of the Sales Tax Act, 1990, specifically the need for a fresh show cause notice following a re-audit, were duly observed in determining the tax liability of the respondent company.---Holding:The Supreme Court refused leave, upholding the Lahore High Court's judgment that procedural improprieties, particularly the absence of a fresh show cause notice post re-audit, invalidated the Department's actions against the respondent.---Rationale:The Court emphasized the importance of procedural fairness, noting the Department's re-examination of records during adjudication was akin to a second audit, requiring a fresh show cause notice under Section 25 of the Sales Tax Act, 1990. The failure to provide a clear and specific notice deprived the respondent of a fair opportunity to respond, breaching principles of fair trial and due process under Article 10A of the Constitution.---Judgment:The petition was dismissed, affirming the High Court's judgment and underscoring the necessity for tax authorities to adhere strictly to statutory requirements and principles of fairness in their proceedings.

Summary: The respondent, countered that the Special Procedure rules for steel re-rolling mills contained an overriding clause that prevails over the general charging sections of the Act, including section 3(1A). The respondent argued that their sales tax liability had been discharged in accordance with the Special Procedure. The Court examined the relevant provisions of the Sales Tax Act and the Special Procedure rules and concluded that the Special Procedure contained an overriding clause that must be given effect. The Court stated that the respondents were entitled to be treated in accordance with the Special Procedure and had discharged their tax liability as stipulated. The Court also noted that the petitioner's reliance on a previous case was not applicable as the relevant tax years were not mentioned, making it unclear if the same provisions were under consideration. Considering these factors, the Court dismissed the petitions, stating that leave to appeal would not be granted as the concurrent decisions had not been shown to be contrary to the law.

Summary: Sales Tax Act (VII of 1990)--- ----Ss. 7, 8 & 11(2)---Federal Board of Revenue Act (IV of 2007), Ss.4(1) (a) & 4(1) (k)---Adjustment/refund of input tax, exclusion of---Taxable activity/supply of the registered person---Scope---Petitioner/Company assailed Show-Cause Notice/Notice issued by FBR / Respondent under S. 11(2) of the Sales Tax Act, 1990 (the "1990 Act") relying on the case Nishat Mills Limited v. Federation of Pakistan and others (2020 PTD 1641), in which the Assessing / Adjudicating Officer was directed to interpret Ss. 8(1)(h) & (i) of the Sales Tax Act, 1990, on case to case basis after determining facts of each case without prejudice---Whether the inputs had been utilized for the purpose of taxable supplies or not---Held, that provisions of S. 8 of Sales Tax Act, 1990 manifest that the exclusion of adjustment/refund of input tax does not have a nexus with the taxable activity/supply of the registered person and parameters regarding adjustment of input tax are given in subsections (a) to (m) of the S. 8 of the Act, 1990---Mechanism provided in S. 8 will be read together with the provisions contained in Ss. 2 & 7 of Act 1990 when such kind of exercise regarding input tax is carried out by the competent authority---Scope of impermissibility concerning the adjustment of input tax with reference to the scope of the word "purpose" and/or "direct use" in production or manufacture of taxable goods/supplies has already been distinguished by a Division Bench of (Lahore) High Court---Then the only point involved in the matter is whether the inputs have been utilized for the purpose of taxable supplies or not and stance of the petitioners is that the items, on which input tax has been claimed by them, can only be used or have been used for the industrial establishment of the petitioner/Company---Federal Board of Revenue (FBR) in terms of Ss. 4(1) (a) & (k) of the Federal Board of Revenue Act, 2007, has to act in implementing the provisions of all fiscal laws, by (i) taking appropriate action; (ii) making policy; and (iii) issuing rules and regulations or guidelines in a clear, transparent, effective and expedient manner---Federal Board of Revenue (FBR) as a regulatory body has to deal with all the tax related affairs under relevant provisions of the 2007 Act---Petitioner in response to show-cause notice has specifically made request, after few days, to the respondents to visit manufacturing unit by deputing a team but this exercise has not been done so far---Notably, the issue-in-hand (whether the inputs have been utilized for the purpose of taxable supplies or not) can only be conveniently resolved if an on-site/physical verification of the utilized inputs of Petitioner No.1 is made, which is also the statutory mandate of Sales Tax Act, 1990, and even otherwise there is no harm in law if such exercise is done for the entire satisfaction of both the petitioner and the revenue hierarchy, before a final decision is rendered---Thus, respondents are directed to decide the matter after constitution of a team of the qualified/expert persons to attain an on-site/physical verification clarifying the fact whether the items, on which input tax has been claimed by petitioner has been done strictly as per provision of the Act or not and adjudicating authority will finally adjudicate the matter after taking into consideration the legal points, relevant provisions of Sales Tax Act, 1990, and the Federal Board of Revenue Act, 2007 as well as the judgment passed in Nishat Mills Limited case, within the prescribed period provided under the law---Constitutional petition was disposed of accordingly. Reliance Commodities (Private) Ltd. v. Federation of Pakistan and others PLD 2020 Lah. 632 = 2020 PTD 1464; Coca-Cola Beverages Pakistan Ld. v. Customs, Excise and Sales Tax Appellate Tribunal and others 2017 PTD 2380; Chenab Flour and General Mills and others v. Federation of Pakistan through Secretary Revenue Division and others PLD 2021 Lah. 343; Ramzan Sugar Mills Limited v. Federal Board of Revenue and others 2021 PTD 1321 and Nishat Mills Limited v. Federation of Pakistan and others 2020 PTD 1641 ref. Raza Imtiaz Siddiqui for Petitioner along with Miss Sibgha Saqib and Barrister Fasih-ur-Rehman. Muhammad Yahya Johar, Advocate Supreme Court/Legal Advisor for Respondent-FBR. Nasir Javaid Ghumman, Deputy Attorney General.

Summary: (a) Constitution of Pakistan ----Art. 199 & Art. 10-A---Right to fair trial---Input tax adjustment---Show-cause notice---Request for physical verification---Scope---Petitioners impugned issuance of show-cause notices under S.11(2) of the Sales Tax Act, 1990, for disallowance of input tax adjustment related to supply of equipment used at their other plant---Petitioners contended that the Respondents, while acting under the Sales Tax Act, 1990, failed to follow settled legal principles laid down by the Division Bench of the High Court in Nishat Mills Limited v. Federation of Pakistan (2020 PTD 1641), which required factual determination of input tax use in the context of taxable supplies---Petitioners specifically invoked their right under Art.10-A of the Constitution for fair trial and requested physical verification of input tax usage at their manufacturing premises prior to adjudication---High Court held that Respondents’ inaction on such request and lack of verification despite legal obligation warranted a direction for compliance. (b) Sales Tax Act, 1990 ----Ss. 2, 7 & 8---Adjustment of input tax---Statutory interpretation---Textual and holistic reading---Doctrine of Intertwined---Court held that Ss.2, 7, and 8 of the Sales Tax Act, 1990 must be interpreted collectively rather than in isolation---Section 7 permits adjustment of input tax for taxable supplies while Section 8 lists disqualifying factors; both must be harmonized for legal clarity---Doctrine of Textualism and the “Doctrine of Intertwined” discussed and applied, holding that statutory interpretation must focus on the plain text while considering interconnected provisions---Case law including Coca-Cola Beverages Pakistan Ltd. v. Customs Appellate Tribunal (2017 PTD 2380) and Reliance Commodities (Pvt.) Ltd. v. Federation of Pakistan (PLD 2020 Lahore 632) affirmed. (c) Federal Board of Revenue Act, 2007 ----S. 4(1)(a) & (k)---FBR as regulator---Function and responsibility---Court reiterated that FBR, under the 2007 Act, is the regulator of fiscal laws and must act transparently and fairly while implementing tax provisions---In tax-related disputes, the FBR’s statutory mandate includes record collection, policy issuance, and clear adjudication without violating procedural fairness. **(d) Constitutional jurisdiction---Exercise of discretion---Court’s role in directing fair procedure---Where an authority has failed to act in accordance with its statutory duty or judicial precedents, and a fair trial requires factual verification, High Court may exercise discretion under Art.199 to protect procedural rights---Petitioners’ request for on-site inspection was found lawful and conducive to the resolution of input tax dispute. Disposition: Petition disposed of with direction to Respondent No.4 to constitute a qualified verification team and complete on-site verification under the Sales Tax Act, 1990, prior to final adjudication. Cited Cases: • Nishat Mills Limited v. Federation of Pakistan 2020 PTD 1641 • Coca-Cola Beverages Pakistan Ltd. v. Customs, Excise and Sales Tax Appellate Tribunal 2017 PTD 2380 • Reliance Commodities (Pvt.) Ltd. v. Federation of Pakistan PLD 2020 Lahore 632 = 2020 PTD 1464 • Tariq Iqbal Malik v. M/s Multiplierz Group (Pvt.) Ltd. 2022 CLD 468 • Chenab Flour and General Mills v. Federation of Pakistan PLD 2021 Lahore 343 • Ramzan Sugar Mills Ltd. v. FBR 2021 PTD 1321

Summary: [Maintainability of petitions before the Supreme Court without filing an ICA before the High Court] The respondents' counsel objected to the maintainability of the petition, stating that the petitioners had not exhausted the available remedy of filing an Intra Court Appeal (ICA) before the High Court. The counsel cited several case laws to support their contention. The petitioners' counsel, on the other hand, argued that the petition was maintainable and referred to a case called Media Network to support their claim. The Supreme Court, after hearing the arguments and reviewing the case laws, noted that the filing of an ICA before the High Court is generally a prerequisite before approaching the Supreme Court. However, the Court has entertained such petitions in exceptional circumstances involving important questions of law, constitutional interpretation, validity of statutes, and fundamental rights. Additionally, the objection of maintainability should be raised at an early stage. In this case, the Supreme Court found no exceptional circumstances and noted that the objection of maintainability was raised in a timely manner. The reliance on the Media Network case was considered misconceived as it involved different circumstances. The current matter was related to the adjustment of input tax for services received by the respondent against sales tax on services. Therefore, the Supreme Court upheld the preliminary objection raised by the respondents' counsel, ruling that the instant petition was not maintainable. Consequently, the petition was dismissed.

Summary: UN Privileges Act, 1948.5th Schedule of the Sales Tax Act, 1990.Article 247 (repealed) of the Constitution of Islamic Republic of Pakistan, 1973.A.Norwegian Refugees Council was not found to be a privileged organization under the United Nations privileges Act, 1948, and therefore, not found exempt from payment of sales tax under 5th Schedule of the Sales Tax Act 1990.B.Immunity from payment of sales tax was area specific under repealed Article 247 of the Constitution and same could only be acailed by residents of Ex-FATA or Ex-PATA when the persons used to reside or carried on business in said area.

Summary: Background: The petitioners, Nawab Brothers Steel Mills Pvt Ltd., Naveena Steel Mills (Pvt) Ltd., and Union Steel Industries, are manufacturers of steel products. They challenged the imposition and collection of Sales Tax at the rate of 17% on the import of their plant and machinery. The petitioners argued that they should be governed by Section 7A of the Sales Tax Act, 1990, read with Rule 58H of the Sales Tax Special Procedure Rules 2007, which they claimed provided a substitute mechanism for the payment of Sales Tax as a final discharge of liability, including sales tax at the import stage. -----Issues: 1- Whether the petitioners are liable to pay Sales Tax at the rate of 17% on the import of plant and machinery, or if they are exempt under Rule 58H of the Sales Tax Special Procedure Rules 2007. 2- Whether the imposition of Sales Tax on the import of plant and machinery constitutes double taxation and is a burden on the petitioners. 3- Whether Rule 58H of the Sales Tax Special Procedure Rules 2007 exempts the petitioners from paying Sales Tax on the import of plant and machinery. -----Holding/Reasoning/Outcome: ---Sales Tax Liability: The court held that Rule 58H of the Sales Tax Special Procedure Rules 2007 pertains only to the payment of Sales Tax on the production and sale of finished products and does not extend to the import of plant and machinery. The levy of Sales Tax on the import of goods is distinct and in addition to the liability arising from the manufacture or supply of finished products. Therefore, the petitioners are liable to pay Sales Tax on the import of plant and machinery at the rate of 17%, as per Section 3 of the Sales Tax Act, 1990. ---Double Taxation: The court found that the imposition of Sales Tax on the import of plant and machinery does not constitute double taxation. The Sales Tax on the import of goods is separate from the Sales Tax on the production and sale of finished products. The fixed Sales Tax through electricity bills applies only to the production and sale of steel products, not to the import of plant and machinery. ---Rule 58H Exemption: The court clarified that Rule 58H provides a special procedure for the payment of Sales Tax on the production of steel billets, ingots, and mild steel products, with Sales Tax paid through electricity bills considered as final discharge for those products. However, Rule 58H does not exempt the import of plant and machinery from Sales Tax. The rule addresses the payment of Sales Tax on specific inputs and raw materials but does not extend this exemption to the import of plant and machinery. -----Citations/Precedents: Attock Cement Pakistan Ltd. Vs. Collector of Customs (PTCL 2001 CL. 509) M/s. Daewoo Pakistan Express Bus Services Limited Vs. Federation of Pakistan (PTCL 2016 CL. 490) Collector of Customs, Sales Tax and Central Excise etc. Vs. M/s. Sanghar Sugar Mills Ltd. (PTCL 2007 CL. 565) Commissioner, Inland Revenue, Karachi Vs. M/s. Attock Cement Pakistan Limited, Karachi (Civil Appeal No. 1422/2019)