Provincial sales tax

Such adjustment was denied to the petitioner by the Department on the ground that notwithstanding promulgation of provincial sales tax law in three Provinces, the same were not recognized as provincial sales tax law for the purpose of input tax adjustment by the Department

Department further contended that S. 2(22A) of the Sales Tax Act, 1990 provided a discretion to decide as to which provincial sales tax should be allowed for adjustment of input tax under S. 7 of the Sales Tax Act, 1990

Held, that basic right of the petitioner was provided under S. 7(1) of the Sales Tax Act, 1990 wherein taxpayer was entitled to adjustment of input tax from their output tax for a given tax period

Sales Tax Act, 1990 had clearly defined input tax under S. 2(14) and output tax under S. 2(20)(c) to mean provincial sales tax levied on services rendered or provided to the person

Section 2(22A) of the Sales Tax Act, 1990 defined provincial sales tax to mean tax levied under provincial laws which meant provincial sales tax as promulgated in any or all of the Provinces of Pakistan and further defined that for purposes of the Islamabad Capital Territory, provincial sales tax would be that which was declared by the Federal Government to be a provincial sales tax for purposes of input tax adjustment, which declaration was required in the Official Gazette only for the purpose of Islamabad Capital Territory

Respondent Department, in the present case, had assumed under the cover of S.2(22A) of the Sales Tax Act, 1990 a discretionary power to decide as to which provincial sales tax should be allowed for input tax adjustment, and such discretion had the effect that S. 7 of the Sales Tax Act, 1990 had become subject to the discretion of the Department and the Federal Government; which clearly was not within the scheme of the Sales Tax Act, 1990 which on the contrary, provided a specific right of adjustment of input tax

Section 2(22A) of the Sales Tax Act, 1990 could not be used to deny the right of input tax adjustment by a declaration in the Official Gazette

High Court directed the Department to accept sales tax return filed by the petitioner by allowing adjustment claimed by the petitioner of provincial sales tax on services under provincial laws

Constitutional petition was allowed, accordingly.

Terms "income" and "property" as used in relation to taxation in Art.165 of the Constitution, were to be given broad meaning and the same were not confined to narrow and strict meaning

Inter-governmental immunity granted by Art. 165 of the Constitution was lifted in relation to provincial entities in respect of income tax by Art.165-A of the Constitution, expressly provided therein and by extension thereof in relation to federal sales tax

Provincial sales tax levied by and under Sindh Sales Tax on Services Act, 2011, was within the broad meaning to be given to "income" in Art. 165 of the Constitution

Inter-governmental immunity from provincial sales tax was available to Civil Aviation Authority, just as immunity from octroi was available to Pakistan Telecommunication Corporation

Civil Aviation Authority was not liable to pay tax under Sindh Sales Tax on Service Act, 2011, and all demands made, proceedings initiated, orders passed or notices issued to the Authority by Provincial Government were quashed and set aside

Petition was allowed accordingly.