2004 PLP 1614 (PTD)

(iv) ***" "(23) Tax Invoices.‑‑‑(1) A registered person making a taxable supply, shall issue a serially numbered tax invoice at the tine of supply of goods containing the following particulars, namely:‑‑ (a) name, address and registration number of the suppliers; (b) name, address and registration number of the recipient; (c) dame of issue of the invoice; (d) description and quantity of goods; (e) value exclusive of tax; (f) amount of sale's tax; and (ff) amount of sales tax as specified in subsection (1A) of section 3; (g) value inclusive of tax: Provided that the Board may, by notification in the official Gazette, specify such modified invoices (***) for different persons or classes of persons: Provided further that not more than one tax invoice shall be issued for a taxable supply. (2) No person other than a registered or a person paying turnover tax (or retail tax) shall issue an invoice under this section:"

5. Relevant feature of the case is that the provision of section 7 supra were amended through Finance Ordinance 2003 and relevant amendment is reproduced:‑‑ "(b) in subsection (2), (i) in clause (i),‑‑ (a) the words "in Pakistan" shall be omitted; and (b) after the words, "invoice", the words "in his name and bearing his registration number", shall be inserted"

6. We have considered the arguments at the bar and found that under the provision of section 7(2)(1) the adjustment of input tax was permissible on the basis of tax invoice. It was not provided that the tax invoice should be from a registered person. The tax invoice is a document which is described in section 2 read with section 23 and it is a document which reflect the payment of input tax also enumerating the name of the registered person, the period and other particulars. It is true that a person unregistered with Sales Tax Department was not empowered to issue any tax invoice but in the instant case the question is not whether the tax invoice was issued by an authorized person but the question is whether on the basis of a tax invoice showing the payment of input tax by Messrs Rafhan C.P.C. the respondent who have acquired the feed through a middle trader, which happens to be an unregistered person would be precluded to claim the adjustment, under the provision of section 7(2). Answer to this question is that adjustment is to be claimed on the basis of a tax invoice relating to a taxable supply the holder thereof may be a registered or unregistered person. The object appears to be that taxable supply showing the payment of input tax would be document required for claiming adjustment. Phraseology of section 7(2)(1) provided a. wide leverage and predicating the same with qualification of registered or unregistered person was not available under unamended section

7. The right to seek an adjustment under section 7 was independent of the provision of section 23, therefore, provision of sub‑clause 2 of section 23 could not be read in section

7. It was after the Finance Ordinance, 2003, that the tax invoice is qualified to be by a registered persons. Input tax is a species of sales Tax and it is paid only once. The adjustment of the input tax at the time of payment of output tax is co‑related with the journey of raw material to the finished products. The provisions of the Sales Tax have to be construed strictly to avoid any possibility of double taxation. In case against a valid tax invoice showing the payment of input tax if the respondent is not allowed adjustment of output tax, it would lead to double taxation which is not sustainable under the present scheme of Sales Tax Act 1990.

7. Accordingly, we do not find any substance in the appeal filed by the Revenue and the same is dismissed. S.A.K./C‑10/L Appeal dismissed.