Compulsory registration

Appellant, being a distributer of goods, was compulsorily registered under S. 24B of Sindh Sales Tax on Services Act, 2011

Validity

Appellant, under an agreement of distribution, purchased goods and supplied to wholesalers and retailers within the area assigned to it as per the instructions and rate fixed by its principal

Such an activity was covered by tariff heading 9845.0000 (supply chain management or distribution (including delivery) services)

Appeal was dismissed.

Section 24 of the Sindh Sales Tax on Services Act, 2011 provides that registration shall be required for all persons who are residents and provide services, listed in the Second Schedule, from their registered office or place of business in the province

Section 24B, Sindh Sales Tax on Services Act, 2011 provides that if a person is required to be registered under the Act and that person has not applied for registration, the officer of the Provincial Board of Revenue shall, after such enquiry as he may deem fit and after notice, register the person through an order to be issued in writing and such person shall be deemed to have been registered from the date he became liable to registration.

Impugned order did not deal with any question relating to the tax assessment and did not impose any type of financial penalty upon the appellant

Section 60 of Punjab Sales Tax on Services Act, 2012, provided the hierarchy of the officers of "The Authority" having different pecuniary jurisdictions to decide the matters involving determination of tax liability, assessment of the tax, charging of default surcharge, imposition of penalty and recovery of amount erroneously refunded or any other contravention or violation including tax fraud

Words 'any other contravention or violation' had to be read and understood in the same sequence as it also related to the matters involving the determination of tax assessment or any other financial liability or claim of the taxpayer

Grievance of appellant could easily be redressed under S.29(2) of Punjab Sales Tax on Services Act, 2012, and R. 13 of Punjab Sales Tax on Services (Registration and De-registration) Rules, 2012

Authority was bound to de-register the appellant if he satisfied the Authority by producing the evidence that he did not qualify to be treated as taxable service provider

Order for compulsory registration of appellant was well-reasoned as the appellant himself had pleaded that he was constructing a commercial building

Appeal was dismissed.

Appellant had purchased land/immovable property in the name of the registered partnership firm for use as a commercial project and for subsequently selling the constructed units (shops and apartments) to various buyers

Construction being carried on by the appellant had to involve or intended to involve the provision of services to the person who had booked the unit

Person who had booked the unit had no interest in the said property therefore, it could not be said that he was being provided with any service

Appellate Tribunal observed that it would be illogical to state that the construction and development carried out by the appellant for a "booked" unit or only on the basis of an "agreement to sell" to be a taxable service

Appellant's registration was cancelled.

Appellant, being a non-banking finance company, was compulsorily registered under S.24B of the Sindh Sales Tax on Services Act, 2011

Validity

Tariff heading No. 9813.8100 was a sub-heading under Tariff Heading No. 98.13 for taxing the services provided by the institutions mentioned therein and non-banking financial institution was one of the listed institutions

Appellant was rendering taxable services in the Province and since it had failed to get itself voluntarily registered, therefore, it was compulsorily registered under S.24B of the Sindh Sales Tax on Services Act, 2011

Assessing Officer, while imposing penalty, had not discussed as to why the maximum penalty was imposed instead of minimum penalty

Appellate Tribunal observed that where two types of penalties were provided, the Assessing Officer was duty bound to justify the imposition of maximum penalty

Appellate Tribunal partly allowed the appeal and reduced the penalty.

Section 24 of the Sindh Sales Tax on Services Act, 2011 provides that registration shall be required for all persons who are residents and provide services, listed in the Second Schedule, from their registered office or place of business in the province

Section 24B, Sindh Sales Tax on Services Act, 2011 provides that if a person is required to be registered under the Act and that person has not applied for registration, the officer of the Provincial Revenue Board shall, after such enquiry as may deem fit and after notice, register the person through an order to be issued in writing and such person shall be deemed to have been registered from the date he became liable to registration.

Appellant was found to be involved in the business of manufacturing taxable goods and making taxable supplies but had not got himself registered with the sales tax department, therefore, sales tax liability was adjudged vide order-in-original

Appeal against order-in-original was dismissed by Commissioner (Appeals)

Validity

Commissioner (Appeals) had rejected the appeal on the sole ground that since the online system of FBR indicated that the appellant was registered with the department from the year 2004, therefore, he was under legal obligation to collect and pay sales tax

Appellant was registered with the income tax department in the year 2004 whereas he was compulsorily registered with the sales tax department in the year 2017

Liability of sales tax was created against the appellant through show cause notice for the date much prior to registration

Demand of sales tax created against the appellant for the periods prior to sales tax registration was illegal and unlawful

Appeal filed by registered person against impugned orders was accepted.

Demand of sales tax created against a registered person for the periods prior to sales tax registration is illegal and unlawful.

Department, during scrutiny of income tax returns of taxpayer, observed certain discrepancies and issued a show cause notice to the taxpayer confronting sales tax liability along with default surcharge and penalty

Validity

Taxpayer was registered as a manufacturer with the department in the year 1993 and it was deregistered by the department in the year 2004 as its supplies and utility bills were below the basic threshold

Taxpayer was a non-registered person, therefore, it was not required to observe the provisions of Sales Tax Act, 1990

Term 'tax invoice' had been defined in S 2(40) of the Sales Tax Act, 1990, which stated that 'tax invoice' meant a document required to be issued under S. 23 and sales tax invoice could be issued under S. 23 of Sales Tax Act, 1990 by the specified persons only and its subsection (2) in unequivocal terms forbade that "no person other than a registered person" or a person paying retail tax could issue an invoice hence, a person not registered under the Sales Tax Act, 1990 could not issue a sales tax invoice

Section 26 of Sales Tax Act, 1990 required every 'registered person' to furnish a true and correct return within the due date, thus, an un-registered person or a person liable to be registered could not file its return, since no procedure was provided for an unregistered person to file its return and to collect tax from the recipient, without issuance of sales tax invoice

Under the provisions of Sales Tax Act, 1990 and the Sales Tax Rules, 2006, only a registered person having sales tax registration number, ID, Pin code and password, could file sales tax returns and without sales tax registration number, a person liable to be registered could not file sales tax return, charge, levy and pay sales tax or be subjected to audit under S.25 of the Act hence, imposition of sales tax by the department without first assigning sales tax registration number did not find any support from R. 6 which explained and laid down the procedure for carrying out the spirit of Sales Tax Act, 1990

Where a person did not register himself voluntarily, it became the duty of the sales tax department to register the defaulting person compulsorily, as per the provisions of R. 6 of the Sales Tax Rules, 2006 at the material time

Where a person was liable to be registered, departmental authorities were first required to register that person compulsorily or otherwise in accordance with law and then charge sales tax from him under S. 3(1)(a) of the Sales Tax Act, 1990, which stipulated that there would be charged, levied, or paid a tax known as sales tax at the rate of seventeen percent of the value of the taxable supplies made by a registered person in the course or furtherance of any taxable activity carried on by him

Appellate Tribunal set aside the impugned show-cause notice and consequent orders of both the authorities below being illegal, unlawful and void ab initio

Appeal was accepted.

Assessing officer passed order of compulsory registration under S. 24B of Sindh Sales Tax on Services Act, 2011 for the service falling under Tariff Heading 9845.0000 [Supply chain management or distribution (including delivery) services] of the Second Schedule and imposed penalty

Commissioner (Appeals) maintained the order of compulsory registration

Validity

Appellant under an agreement was appointed as a distributor to deliver the products of the manufacturer

Appellant could not exercise full control over the goods and was bound by the instructions of the manufacturer regarding sale, fixation of price and the area in which the goods were to be sold

Appellant, as distributor, used to acquire goods against cash consideration or credit for supplying to the whole-salers or retailers and in that way it supplied goods of its principal against fixed margin

Reading S. 3 of Sindh Sales Tax on Services Act, 2011 with Tariff Heading 9845.000 showed that the distribution including delivery service was a "taxable service"

Appeal was dismissed.

Appellant was compulsorily registered on ground that he was providing "airport services" which was a taxable service under Sindh Sales Tax on Services, 2011 - Contention of appellant, inter alia, was that it was not a service provider under tariff of "airport services" as for such service, a licence was required from Civil Aviation Authority, which he did not have

Validity

Perusal of record revealed that Department had failed to provide any document to establish that appellant was a provider of "airport services" and that appellant was in fact a service receipt for its foreign based client and therefore could not be compulsorily registered under the tariff heading of "airport service" per the Sindh Sales Tax on Services Act, 2011.

If a person was not registered but was required or liable to be registered then under R.6(1) of Sales Tax Rules, 2006, concerned authority could issue and compulsorily register such person under Sales Tax Act, 1990 after following procedure prescribed thereunder.

Combined reading of Ss.2(25) & 23 of Sales Tax Act, 1990 and R.6 of Sales Tax Rules, 2006 showed that where a person was required to be registered under Sales Tax Act, 1990 as envisaged under S. 14 of Sales Tax Act, 1990; he was under obligation to apply for registration and in case of failure, Department should issue a notice to such person and after allowing him an opportunity of being heard it would pass an order whether or not such person was liable to be registered compulsorily or not

Where a person was liable to be registered, Department was required to register compulsorily and then charge sales tax from such person under S. 3(1)(a) of Sales Tax Act, 1990.