2026 PLP 390 (PTD)
FATIMA FERTILIZER COMPANY Versus COMMISSIONER INLAND REVENUE, ZONE-3, LARGE TAXPAYERS OFFICE, MULTAN and others
| Citation | 2026 PLP 390 (PTD) |
| Forum / Court | Lahore High Court (Multan Bench) |
| Bench Members | Asim Hafeez and Abid Hussain Chattha, JJ |
| Parties | FATIMA FERTILIZER COMPANY Versus COMMISSIONER INLAND REVENUE, ZONE-3, LARGE TAXPAYERS OFFICE, MULTAN and others |
| Primary Law | Sales Tax Act (VII of 1990) |
Q1: What are the key laws and sections cited in 2026 PLP 390 (PTD)?
This judgment primarily cites: Sales Tax Act (VII of 1990) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2026 PLP 390 (PTD)?
The case was heard and decided by the Lahore High Court (Multan Bench) bench comprising: Asim Hafeez and Abid Hussain Chattha, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2026 PLP 390 (PTD) (FATIMA FERTILIZER COMPANY Versus COMMISSIONER INLAND REVENUE, ZONE-3, LARGE TAXPAYERS OFFICE, MULTAN and others). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- Iftikhar Majid for Respondent.
- 2. Heard. Undisputedly, no provision of Sales Tax Act, 1990 ( Act ) explicitly or specifically defines Certified Emission Reduction certificates (Carbon credits) as taxable supplies; and attempt to bring those within the ambit of definition of goods [in terms of section 2(12) of the Act] tantamount to rewrite the scope of charging provision [section 3 of the Act]. Learned counsel for respondent fails to explain that how trading or sale of Carbon credits, outside Pakistan, could be construed as taxable supply, made in furtherance of taxable activity merely classifying Carbon credits as goods is not enough to otherwise bring transaction within the ambit of sales tax regime. Carbon credits are, at best, construable as entitlement accrued in lieu of efforts made for reducing carbon emissions. Commissioner (Appeals) annulled claim raised against Carbon credits which erred to an extent by treating them as securities but ultimate order of annulment of liability is nevertheless correct and warrants no interference and Tribunal erred by treating them as goods [though acknowledging them as intangible(s).
Headnotes / Summary
Ss. 2(12) & 3
Carbon credits not 'goods'
Scope
Carbon credits
Whether taxable supplies
Appellate Tribunal Inland Revenue ('Tribunal') held that the Certified Emission Reduction certificates fell within the meaning of goods as defined in S. 2(12) of the Sales Tax Act, 1990 ('the Act, 1990') and the consideration received from outside Pakistan by the company/taxpayer, arising from the sale of Certified Emission Reduction certificates in international emissions trading markets, was subject to sales tax under the Act, 1990
Undisputedly, no provision of Sales Tax Act, 1990 ('the Act, 1990') explicitly or specifically defines Certified Emission Reduction certificates (Carbon credits) as taxable supplies; and attempt to bring those within the ambit of definition of 'goods' in terms of S.2(12) of the Act, 1990 tantamount to rewriting the scope of charging provision under S. 3 of the Act, 1990
Department / respondent failed to explain that how trading or sale of Carbon credits, outside Pakistan, could be construed as taxable supply, made in furtherance of taxable activity
Merely classifying carbon credits as goods is not enough to otherwise bring transaction within the ambit of sales tax regime
Carbon credits are, at best, construable as entitlement accrued in lieu of efforts made for reducing carbon emissions
Commissioner (Appeals) correctly annulled claim raised against carbon credits and Tribunal erred by treating them as goods [though acknowledging them as intangible(s)
Thus, the proposed questions were answered in affirmative in favour of Applicant/Company
High Court annulled the decisions of the appellate Tribunal Inland Revenue and Order-in-Original
Reference application , filed by the Company, was allowed accordingly. Asad Zaman Tarar for Applicant.
Judgment & Decree
Following questions of law are proposed, statedly arisen out of order dated 28.07.2025, passed by the Appellate Tribunal Inland Revenue Multan Bench (Tribunal): i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal Inland Revenue erred in holding that the Certified Emission Reduction certificates fall within the meaning of goods as defined in Section 2(12) of the Sales Tax Act, 1990 and are therefore subject to sales tax under the Sales Tax Act, 1990 ? ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal Inland Revenue erred in law by failing to appreciate that the consideration received from outside Pakistan by the Applicant, arising from the sale of Certified Emission Reduction certificates in international emissions trading markets, was not subject to sales tax under the Sales Tax Act, 1990?
2. Heard. Undisputedly, no provision of Sales Tax Act, 1990 ( Act ) explicitly or specifically defines Certified Emission Reduction certificates (Carbon credits) as taxable supplies; and attempt to bring those within the ambit of definition of goods [in terms of section 2(12) of the Act] tantamount to rewrite the scope of charging provision [section 3 of the Act]. Learned counsel for respondent fails to explain that how trading or sale of Carbon credits, outside Pakistan, could be construed as taxable supply, made in furtherance of taxable activity merely classifying Carbon credits as goods is not enough to otherwise bring transaction within the ambit of sales tax regime. Carbon credits are, at best, construable as entitlement accrued in lieu of efforts made for reducing carbon emissions. Commissioner (Appeals) annulled claim raised against Carbon credits which erred to an extent by treating them as securities but ultimate order of annulment of liability is nevertheless correct and warrants no interference and Tribunal erred by treating them as goods [though acknowledging them as intangible(s).
3. Questions proposed are answered in affirmative and reference application is decided in favour of applicant and decision of the Tribunal and order in original are annulled.
4. Office to send copy of this order to the Appellate Tribunal under the seal of the Court for information. MQ/F-3/L Reference allowed.