2026 PLP 943 (PTD)

MIANGUL HASSAN AURANGZEB, J.

Through the instant petition, the petitioner M/s. Tarbela Steel Re-Rolling Mills (Pvt.) Ltd. has called in question the judgment dated 19.10.2023 passed by the Peshawar High Court, whereby sales tax reference No.34-P/2021 filed by respondent No.1 against the order dated 27.01.2021 passed by the Appellate Tribunal Inland Revenue ("ATIR"), Peshawar, was answered in the positive by setting aside ATIR's said order.

2. The record shows that the petitioner is engaged in the business of sale and manufacturing of steel products. For the manufacture of steel products, the petitioner procures raw material through imports as well as purchases in the local market. The petitioner also makes local purchases from suppliers resident in the Federally Administered Tribal Areas1 ("FATA") and Provincially Administered Tribal Areas ("PATA"), (hereinafter collectively referred to as "Tribal Areas").2

3. During the course of the petitioner's audit for the tax periods from 2014 to 2016 and 2018, it was observed that the petitioner had made purchases of raw material from suppliers who were not registered under the provisions of the Sales Tax Act, 1990 ("the 1990 Act"), and that withholding tax had not been deducted from payments made to such suppliers. The Department's case was that the petitioner, as a withholding agent, in terms of rule 1(d) read with rule 2(6) of the Sales Tax Special Procedure (Withholding) Rules, 2007 ("the 2007 Rules") was under an obligation to deduct withholding tax at the rate of 1% of the value of the taxable purchases from payments made to the suppliers of raw material.

4. On 10.04.2019, the Deputy Commissioner, Inland Revenue issued a notice to the petitioner requiring it to show cause as to why Rs.11,474,200/- (which according to the Department, the petitioner was required to deduct as withholding tax from the payments made to suppliers of raw material) should not be recovered from it in addition to default surcharge and penalty. It was alleged that the petitioner had made domestic purchases of taxable goods from unregistered persons without deducting and depositing 1% withholding sales tax on the value of taxable purchases.

5. The petitioner, in its reply to the said show cause notice, took the position that for the periods between 2014 and 2016 the petitioner had already paid the sales tax and the matter regarding the said period was the subject matter of Writ Petition No.479-P/2017 before the Peshawar High Court, which had directed the assessing officer not to pass a final order. As regards the tax period of 2018, the petitioner's stated position was that since it had made purchases of raw material from suppliers in FATA, who were not liable to be registered under the provisions of the 1990 Act, withholding tax was not liable to be deducted from payments made to such suppliers. It was explained that suppliers in FATA were not liable to be registered under the 1990 Act as the provisions of the said Act had not been extended to FATA in terms of Article 247(3) of the Constitution of the Islamic Republic of Pakistan ("the Constitution").

6. On 30.09.2019 an assessment order was passed whereby sales tax demand of Rs.1,115,316/- was made against the petitioner. Additionally, default surcharge and penalty was also imposed on the petitioner.

7. The order dated 30.09.2019 was assailed by the petitioner in an appeal before the Commissioner Inland Revenue (Appeals). One of the grounds taken in the appeal was that the 1990 Act was not applicable in Tribal Areas during the period when the supplies in question were made. The Commissioner took the view that the petitioner's suppliers were actually wholesalers/ dealers who were liable to be registered under section 14(1)(e) of the 1990 Act but were not registered. However, he also took the view that if the suppliers were to make supplies of goods in the Tribal Areas, they would not be liable to be registered. A finding as to the supplies in question having been to the petitioner whose manufacturing unit is located beyond the Tribal Areas was made by the Commissioner, which according to him, made the petitioner liable to be registered under the provisions of the 1990 Act. He, therefore, concluded that the petitioner, being withholding agent under the 2007 Rules, was liable to withhold tax at the rate of 1% on the value of taxable purchases made from unregistered persons. After holding so, the Commissioner dismissed the petitioner's appeal vide judgment dated 13.01.2020.

8. The said judgment was further assailed by the petitioner before the ATIR. The grounds taken in this appeal were the same as the ones taken in the appeal before the Commissioner. This appeal was partly allowed vide judgment dated 27.01.2021. The ATIR, being cognizant of the fact that the petitioner did not withhold tax at the rate of 1% while making payments to suppliers of raw material, held inter alia that since the provisions of the 1990 Act had not been extended to the Tribal Areas in terms of Article 247(3) of the Constitution, the persons carrying on business in such areas were not liable to pay sales tax and, therefore, the petitioner was "not obliged to deduct tax from purchases made from persons located in FATA/PATA." The ATIR remanded the matter to the assessing officer with the direction to recalculate the petitioner's liability in accordance with the observations in the said judgment dated 27.01.2021.

9. The Department filed a sales tax reference against the ATIR's judgment dated 27.01.2021 before the Peshawar High Court which, vide judgment dated 19.10.2023, answered the reference in the positive and held the petitioner liable to deduct sales tax at the rate of 1% of the value of taxable supplies made to it. The High Court held that since the petitioner was based in District Swabi, which is not within the Tribal Areas, the transactions for the purchase of raw material with suppliers would be subject to the imposition of sales tax in terms of section 3 of the 1990 Act, regardless of whether such suppliers were based in the Tribal Areas. Furthermore, it was explained that in terms of section 3, the payment of sales tax was the liability of the person making the supplies whereas the liability of the purchaser was limited to withhold the sales tax under the 2007 Rules. The said judgment dated 19.10.2023 has been called in question in the instant petition.

10. We have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance. The facts leading to the filing of the instant petition have been set out in sufficient detail in paragraphs 2 to 9 above and need not be recapitulated.

11. Sales tax is charged on taxable supplies of goods. Under section 3(3)(a) of the 1990 Act, the liability to pay sales tax remains with the supplier (i.e., the seller), not the purchaser. The said section provides that in the case of supply of goods, the liability to pay sales tax is of the person making the supply. This confirms that it is the supplier who is responsible for (i) charging sales tax on the invoice, (ii) collecting it from the purchaser, and (iii) depositing it into the government treasury.

12. The concept of withholding tax under the scheme of the 1990 Act refers to a mechanism where certain registered persons are required to withhold a portion of sales tax from payments made to their suppliers, instead of the full sales tax being paid by the suppliers directly. While the 1990 Act does not itself set out in-depth procedures for withholding, section 3(7) thereof, as it stood when the show-cause notice dated 10.04.2019 was issued, empowered the Federal Government to specify any person or class of persons as withholding agent for the purpose of deduction and deposit of tax at the specified rate in such manner and subject to such conditions or restrictions as the Federal Government may prescribe in this behalf. In this way, the legislature left it to the Government to lay down a special process by which withholding is carried out.

13. The withholding mechanism was operationalized through the 2007 Rules which were made by the Federal Government in exercise of the powers conferred by inter alia section 3(6) and section 3(7) of the 1990 Act. These Rules give effect to the withholding mechanism. Rule 1(2) (d) of the 2007 Rules makes the said Rules applicable to taxable goods and services supplied to withholding agents that include companies which are registered for sales tax, federal excise duty or income tax. The 2007 Rules require the withholding agent to deduct a portion of sales tax shown on the supplier's invoice and deposit the withheld amount of sales tax directly into the treasury along with the return filed for the month in which the purchase was made. They also require the withholding agent to provide the supplier with a certificate of deduction so the supplier can take credit in his return. More specifically, rule 3(1) of the 2007 Rules obligates the registered suppliers to issue a sale tax invoice in respect of every taxable supply made to a withholding agent, whereas rule 3(2) requires the registered supplier to file monthly returns and to adjust total input tax against output tax under sections 7, 8 and 8B of the 1990 Act, taking due credit of the sales tax deducted by the withholding agent. The purpose of making reference to these rules is to illustrate that when the withholding agent deducts tax from the payments made to suppliers of goods, such deduction operates as partial payment of sales tax by the supplier, regardless of whether he was registered or not.

14. Since the core principle under section 3(3) (a) of the 1990 Act is that sales tax is the liability of the supplier, the withholding mechanism does not shift the legal incidence of tax but it only changes the mode of collection. In other words, the withholding mechanism does not transfer the tax liability from supplier to purchaser. The purchaser does not become the taxpayer but merely performs a statutory obligation to deduct and deposit part of the supplier's tax. Withholding operates as a statutory mode of partial recovery of the supplier's tax liability at source. The purchaser is merely acting as a collection agent of the Government. The underlying tax obligation continues to be that of the supplier. The purchaser, by withholding an amount from the invoiced amount and paying it to the treasury, is discharging part of the supplier's sales tax liability on the supplier's behalf.

15. The obligation of a purchaser to withhold sales tax under the 1990 Act and the 2007 Rules is contingent upon the existence of a taxable supply chargeable to tax under section 3 of the said Act. Where the provisions of the 1990 Act do not extend to the area in which the supplier operates and the supply is not chargeable to tax under the said Act, no sales tax liability arises. In the absence of such liability, no withholding obligation can legally be imposed upon the purchaser. The purchaser cannot be required to withhold an amount that is not legally payable as sales tax. The withholding mechanism is procedural in nature and cannot create substantive liability to pay tax where none exists. It cannot convert a non-taxable supply into a taxable one.

16. With this preface it needs to be determined whether the petitioner, whose manufacturing unit is not located in the Tribal Areas, could be held liable for not having withheld tax at the rate of 1% of the value of taxable purchases in terms of rule 2(3)(ii) of the 2007 Rules from the payments made for the procurement of raw material to suppliers based in the Tribal Areas. The primary ground taken by the petitioner to justify not having done so was that the supplies of the raw material were made to the petitioner in the Tribal Areas to which the provisions of the 1990 Act had not been extended in terms of Article 247(3) of the Constitution during the period with respect to which the show cause notice dated 10.04.2019 was issued to the petitioner. On this basis it was asserted by the petitioner that since the provisions of the 1990 Act had not been made applicable to the Tribal Areas, the suppliers in such areas were not liable to be registered under the provisions of the said Act, and therefore no deduction of withholding tax could be made from payments for supplies made by them in such areas.

17. Section 14 of the 1990 Act makes every person engaged in making taxable supplies in Pakistan in the course or furtherance of any taxable activity carried on by him liable to be registered under the said Act. The said section also lists the categories of persons that are required to be registered. Although in terms of section 1(2) of the 1990 Act, the provisions of the said Act extend to the whole of Pakistan, in the case at hand we are concerned with a period prior to the enactment of the Constitution (Twenty-fifth Amendment) Act, 2018 ("the 25th Amendment") on 31.05.2018. The reason why this date is of significance is that by virtue of the 25th Amendment, Article 247 of the Constitution was omitted. Prior to the amendment, a federal statute would not apply in FATA unless the President so directed. Similarly, a federal statute would not apply in PATA unless the Governor of the Province in which the tribal area is situated, with the approval of the President so directed. In this regard, the erstwhile Article 247(3) of the Constitution is reproduced herein below:- "(3) No Act of Majlis-i-Shoora (Parliament) shall apply to any Federally Administered Tribal Area or to any part thereof, unless the President so directs, and no Act of Majlis-i-Shoora (Parliament) or a Provincial Assembly shall apply to a Provincially Administered Tribal Area, or to any part thereof, unless the Governor of the Province in which the Tribal Area is situated, with the approval of the President, so directs; and in giving such a direction with respect to any law, the President or, as the case may be, the Governor, may direct that the law shall, in its application to a Tribal Area, or to a specified part thereof, have effect subject to such exceptions and modifications as may be specified in the direction."

18. The special status of the Tribal Areas in the Constitution was not unique or without parentage. The earlier Constitutions in Pakistan contained similar provisions as regards the different procedure to be adopted for the application of federal statutes to the Tribal Areas. Without delving deep into the historical background, it may be mentioned that under the Constitution of the Islamic Republic of Pakistan, 1956 ("the 1956 Constitution"), the areas, which under the 1973 Constitution were known as FATA and PATA, were given the status of "Special Areas." Article 104(1) of the 1956 Constitution inter alia provided that "no Act of Parliament or of the Provincial Legislature shall apply to a Special Area or to any part thereof unless the Governor, with the previous approval of the President, so directs, and in giving such a direction with respect to any Act the Governor may direct that the Act shall, in its application to a Special Area, or to any specified part thereof, have effect subject to such exceptions and modifications as may be specified in the direction."

19. Similarly, under the Constitution of the Islamic Republic Pakistan, 1962 ("the 1962 Constitution") the areas, which under the Constitution are known as FATA and PATA, were renamed and given the status of "Tribal Areas." The definition of "Tribal Areas" in Article 242 of the 1962 Constitution was exactly the same as that of "Special Areas" under the 1956 Constitution. Article 223(1) of the 1962 Constitution provided that "no Central Law shall apply to a Tribal Area or to any part of a Tribal Area unless the President so directs, and no Provincial Law shall apply to a Tribal Area or to any part of a Tribal Area unless the Governor of the Province in which the Tribal Area is situated, with the approval of the President, so directs, and in giving such a direction with respect to any law, the President or the Governor, as the case may be, may direct that the law shall, in its application to a Tribal Area or to a specified part of a Tribal Area, have effect subject to such exceptions and modifications as may be specified in the direction."

20. Article 246 of the Constitution defines "Tribal Areas" and bifurcates them into FATA and PATA. The areas which are included in FATA are listed in Article 246(c) whereas the areas which are included in PATA are listed in Article 246(b). These areas were collectively known as Special Areas and Tribal Areas under the 1956 Constitution and the 1962 Constitution, respectively.

21. It is an admitted position that prior to the enactment of the 25th Amendment, the operation of the 1990 Act was not extended to the Tribal Areas in accordance with the erstwhile 247(3) of the Constitution. Since sales tax liability is statutory in nature, it could not exist outside the territorial application of the statute. Therefore, persons residing or carrying on business wholly in the Tribal Areas were not "persons liable to be registered" under the provisions of the 1990 Act and/or the 2007 Rules. No taxable supply arose under the 1990 Act in respect of supplies made wholly within that area. The omission of Article 247 from the Constitution through the 25th Amendment resulted in the mechanism for the application of federal statutes to the Tribal Areas to be done away with. The consequential effect of this omission was that the provisions of the 1990 Act became applicable to the whole of Pakistan which would also include the Tribal Areas.

22. Section 13(1) of the 1990 Act provides inter alia that the supply of goods or the import of goods specified in the Sixth Schedule shall, subject to such conditions as may be specified by the Federal Government, be exempt from tax under the said Act. Serial No. 151 in Table-1, Sixth Schedule to the 1990 Act, which was inserted through the Finance Act, 2019 read thus: "151. (a) Supplies; and (b) imports of plant, machinery, equipment for installation in tribal areas and of industrial inputs by the industries located in the tribal areas, as defined in the Constitution of Islamic Republic of Pakistan, as made till [30th June, 2025], to which the provisions of the Act or the notifications issued thereunder, would have not applied had Article 247 of the Constitution not been omitted under the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018): Provided that, in case of imports, the same shall be allowed clearance by the Customs authorities on presentation of a [pay order] for the amount of sales tax payable under the Sales Tax Act, 1990, and the same shall be returned to the importer after presentation [within six months] of a consumption or installation certificate, as the case may be, in respect of goods imported as issued by the Commissioner Inland Revenue having jurisdiction: Provided further that if plant, machinery and equipment on which exemption is availed under this serial number, is transferred or supplied outside the tribal areas, the tax exempted shall be paid at applicable rate on residual value."

23. The said entry was omitted through the Finance Act, 2025. Consequently, the provisions of the 1990 Act and the Rules made thereunder are fully applicable in the Tribal Areas. In the case at hand, the show-cause notice dated 10.04.2019 was issued to the petitioner as a result of an audit of its income tax returns for the tax years 2014 to 2016 and 2018. This period is prior to the enactment of the 25th Amendment and the exemption under section 13 having been brought to an end. Nevertheless, the High Court held that rule 2(3)(ii) of the 2007 Rules obligated the petitioner liable to deduct tax from payments made to suppliers of raw material based in the Tribal Areas. The said Rule reads thus:- "A withholding agent, other than specified in clause (i), shall on purchase of taxable goods from persons liable to be registered but not actually registered under Chapter 1 of the Sales Tax Rules, 2006, deduct sales tax at the rate of one percent of the value of taxable supplies made to him from the payment due to the supplier and the amount of sales tax for the purpose of this rule shall be worked out on the basis of gross value of taxable supply; Provided that the withholding agent shall not be entitled to reclaim or deduct the amount of tax withheld from such persons as input tax". (Emphasis added)

24. The petitioner is admittedly registered under the provisions of the 1990 Act and its manufacturing unit is located in District Swabi, which is beyond the geographical limits of the Tribal Areas. Under section 14 of the 1990 Act, every person making taxable supplies in Pakistan in the course of taxable activity is required to be registered. However, this requirement presupposes that the person is making a taxable supply, and that the supply is made in a territory to which the said Act applies. Suppliers residing or carrying on business in Tribal Areas are required to register under the 1990 Act or Rules made thereunder only if they are making taxable supplies in a territory where the provisions of the 1990 Act apply. Persons operating solely in the Tribal Areas were outside the tax regime under the 1990 Act. In other words, supplies made within the Tribal Areas were not "taxable supplies" under the Act. Therefore, where a supplier resides and conducts business exclusively in Tribal Areas to which the 1990 Act did not extend, the supplies made in such areas are not taxable supplies under the said Act, and therefore the supplier is not required to obtain registration under the said Act. What follows is that where the transaction for the supply of the raw material took place outside the Tribal Areas, the purchaser would be liable to withhold sales tax from the amount paid to the supplier regardless of whether the supplier was a resident of or carried on business in the Tribal Areas. The matter is different where the transaction for the supply took place wholly in the Tribal Areas. In such a scenario, the supplier could not be held to be a person liable to be registered under the provisions of the 1990 Act.

25. In the case at hand the suppliers, on account of being residents of and carrying on business in the Tribal Areas, were neither under an obligation to get themselves registered nor pay any sales tax on the supplies made by them wholly in such areas. This is because the provisions of the 1990 Act had not been extended to the Tribal Areas in accordance with Article 247(3) of the Constitution. However, such persons cannot claim immunity from payment of sales tax where the taxable activity or the transaction for the supply of the raw material does not take place wholly in the Tribal Areas. Where the transaction for the supply of raw material is made in the settled area, the petitioner would be under an obligation to deduct withholding tax regardless of supply being originated in the Tribal Areas. In holding so, reliance is placed on the following case-law:- (i) In the case of Commissioner of Income Tax v. Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. (2008 PTD 169), the question that came to be considered by this Court was whether the income derived by a person residing or carrying on business in Malakand, which was a part of PATA, was chargeable to income tax. Just like the 1990 Act the provisions of the Income Tax Ordinance, 1979 had also not been extended to the Tribal Areas in terms of Article 247(3) of the Constitution. This Court held that the question of whether a person derives income from business carried out in a taxable or non-taxable area was a pure question of fact which was to be decided by holding a proper inquiry. In this regard paragraph 16 of the said report is reproduced herein below:- "

16. There is no cavil to the legal position that exemption under the law from payment of income tax is available to a person or company carrying its business in tribal areas and income tax cannot he collected from such person or company by the tax collecting authorities of the Government unless the law relating to the collection of Income Tax is extended to the tribal areas by virtue of Article 247 of the Constitution. However, the question whether a company or a person derives income from business being carried out in taxable or non-taxable area is a pure question of fact which cannot be decided without holding groper inquiry for determination of controversial facts regarding the tax liability. The business of a person or Company may or may not be confined to a particular place or area rather it may be expended beyond the local limits of the area in which Income Tax Ordinance is not applicable and thus if the income tax is derived from the sale of products which are manufactured in the factory situated in non-taxable area both from taxable and non-taxable area, the question relating to the tax liability of such a business concern cannot be determined only on the basis of location of factory or its registered office rather the requirement of law in such case is to hold a proper inquiry and ascertain the correct factual position for determination of tax liability. The exemption from payment of tax is certainly available on the business being carried in tribal area in which income tax law is not applicable but the real question for determination in the present case would be that a company with its manufacturing unit and registered office in non-taxable area, if is also carrying business in taxable area is exempted from payment of income tax on its income as a whole or only on the income being derived from non-taxable area." In order for the question as to whether income was derived by a person resident of a Tribal Area in either a Tribal Area or a settled area, the matter was remanded to the income tax department with the observation that immunity from payment of income tax could not be claimed without establishing the fact that taxable income was not derived from the area where the Income Tax Ordinance, 1979 was applicable. (ii) In the case of Pakistan v. Hazrat Hussain (2018 SCMR 939), persons carrying on business in PATA had imported iron and steel re-meltable scrap for use in their plant located in PATA. Although the Customs Duty on these imports was paid, the importer disputed the demand made for the payment of advance income tax and sales tax on the ground that neither the Income Tax Ordinance, 2001 ("the 2001 Ordinance") nor the 1990 Act had been extended to PATA in accordance with Article 247(3) of the Constitution. The Department's stance was that it was not known whether the goods imported through Karachi would in fact be delivered to a plant in PATA where they would be processed and sold. The importers invoked the constitutional jurisdiction of the High Court, which set out a mechanism for resolving this factual dispute. This mechanism entailed the issuance of postdated cheques in favour of the Department and issuance of a certificate to the effect that the imported goods had indeed been consumed at the plant in PATA. The Department challenged the High Court's judgment before this Court which held in clear terms that the Department lacks the jurisdiction in relation to an activity taking place in PATA, but does have jurisdiction to carry out an inquiry in the settled areas of Pakistan where the tax laws apply. It was also held that the initial burden of proof rests on the importer to establish that the goods were intended for PATA and once this burden has been discharged the burden shifts to the Department to establish that fraud had been committed and the imported goods had, in fact, been processed and sold in the areas where the tax does apply. (iii) In the case of Chief Commissioner/Commissioner-IR Zone-II/Zone-III v. Akbar Khan Filling Station (2024 SCMR 858), the respondents were engaged in the business of purchase of petroleum products and their subsequent sale to retail consumers at petrol stations located in FATA. The companies selling petroleum products to the respondents had deducted tax under section 156-A of the 2001 Ordinance from the amount of commission paid or discount allowed to the respondents. Although the sale of the petroleum products to the respondents took place beyond the territorial limits of FATA, the respondents asserted that the sale of such products to the consumers took place within the territorial limits of FATA to which the provisions of 2001 Ordinance had not been extended in accordance with Article 247(3) of the Constitution. The respondents applied under section 170 of the 2001 Ordinance to the taxation officer for refund of the amount deducted as tax under section 156-A of the 2001 Ordinance. The order dismissing this application was set aside by the Commissioner Inland Revenue (Appeals) on the sole ground that the respondents were carrying on business in an area where the provisions of the 2001 Ordinance had not been made applicable. The department's further appeal before the ATIR as well as its reference before the High Court were not successful. This Court allowed the department's appeal by holding that "the factum of income having been accrued was on account of the commission paid to the respondents for the sale of petroleum products and not the sale of the petroleum products to the consumers at the petrol stations operated in FATA." Furthermore, it was held that since the transactions for the sale of petroleum products to the respondents had taken place outside the territorial limits of FATA, therefore the transactions for such sale and the income arising therefrom were not immune from the applicability of the provisions of the 2001 Ordinance.

26. The principles deduced from the case law referred to herein above is that the applicability of the taxing statute to a transaction would not depend solely on the residence or place of business of a supplier but the place where the sale transaction takes place. If the transaction takes place where the provisions of the 1990 Act applied, the supplier cannot assert immunity from liability thereunder. The High Court, while overturning the ATIR's order, did not appreciate that liability to deduct withholding tax from payments made to the suppliers of raw material would be pinned on the petitioner only after a factual inquiry as to whether the transactions for the supply of raw material to the petitioner took place in the Tribal Areas or the settled areas where the provisions of the 1990 Act were fully attracted at all material times.

27. Perusal of the ATIR's judgment dated 27.01.2021 shows that the assessing officer had found the transactions worth Rs.1,775,500/- to be unverifiable and it is on these transactions that the petitioner, as withholding agent, was held by the assessing officer and the Commissioner to be under an obligation to deduct withholding tax under the 2007 Rules. Although we agree with the remand order of the ATIR but are also sanguine that the assessing officer, bearing in mind the law laid down in aforementioned judgments of this Court, must hold a factual inquiry to determine whether the transactions for the supply of the raw material to the petitioner took place in the Tribal Areas or the settled area. This factual inquiry is all the more necessary as the petitioner, in its reply to the show cause notice, asserted that it had made purchases of the raw material from FATA. The petitioner attempted to improve on its position by pleading in its appeal to the Commissioner that it had also made purchases from PATA. It is only with respect to those transactions which wholly took place in the Tribal Areas that the petitioner would avoid liability to withhold tax from payments made under such transactions.

28. In the result, leave to appeal is granted; the petition is converted into appeal and allowed in the above terms; the matter is remanded to the assessing officer. No costs. MH/T-1/SC Appeal allowed. 1 Defined in Article 246(c) to include (i) Tribal Areas, adjoining Peshawar district; (ii) Tribal Areas adjoining Kohat district; (iii) Tribal Areas adjoining Bannu district; (iiia) Tribal Areas adjoining Lakki Marwat district; (iv) Tribal Areas adjoining Dera Ismail Khan District; (iva) Tribal Areas adjoining Tank district; (v) Bajaur Agency; (va) Orakzai Agency; (vi) Mohmand Agency; (vii) Khyber Agency; (viii) Kurram Agency; (ix) North Waziristan Agency; and (x) South Waziristan Agency. 2 Defined in Article 246(b) to include (i) the districts of Chitral, Dir and Swat (which includes Kalam) the Tribal Area in Kohistan district, Malakand Protected Area, the Tribal Area adjoining Mansehra district and the former State of Amb; and (ii) Zhob district, Loralai district (excluding Duki Tehsil), Dalbandin Tehsil of Chagai district and Marri and Bugti Tribal territories of Sibi District.