Tax invoices

2020 PTD 465 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 2(37), 73, 3, 6, 7, 8(1)(d), 8A, 21, 22, 23, 26, 37, 38B, 34 & 33Tax fraudBlacklisting and suspension of registered personEffectTransactions to be made through Banking channelScope of sales taxTime and manner of paymentDetermination of sales tax liabilityTax credit not allowedJoint and several liability of registered persons in supplying chain where tax unpaidDe-registrationTax invoicesPower to summon persons or recordObligation to produce documents and provide informationImposition of penaltyAdditional taxScope

Officer of Inland Revenue, during audit, came to know that appellant had claimed inadmissible input tax on account of fake/flying invoices issued by fraudsters (blacklisted persons)

Deputy Commissioner Inland Revenue, after issuance of show-cause notice, directed appellant to pay the input tax, it had claimed along with default surcharge and a penalty equal to 100 percent of the amount involved

Appeal filed by appellant before Commissioner Inland Revenue (Appeals) was dismissed

Validity

Appellant had duly complied with S. 73 of Sales Tax Act, 1990 for it had made payments through Bank

Input tax credit claimed against invoices issued by blacklisted persons could not be denied

Input tax was to be allowed if payments were made through Banking channel irrespective of the fact that the supplier's units were subsequently blacklisted or their registration was suspended

Second supplier of appellant was blacklisted on 3-7-2013 while the purchases were made in December 2010 and January 2011

Said business unit was active and operative at the time of purchases and registration was not suspended

Appellant could not be penalized if the supplier unit had committed tax fraud

Imposition of 100 percent penalty and default surcharge without first establishing that the appellant committed anything wrong or contravened any provision of law, knowingly and dishonestly, was declared to be patently illegal, harsh, unjustified and without any logic

Orders passed by the authorities below were annulled.

2016 PTD 1377 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

S. 23Sales Tax Rules, 2006, R. 6Tax invoicesCompulsory registrationScopeSales Tax invoice could only be issued under S. 23 of Sales Tax Act, 1990 by specified persons onlyPerson not registered under Sales Tax Act, 1990 could not issue a sales tax invoice under S. 23 of Sales Tax Act, 1990

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.

2016 PTD 1377 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN Judicial Precedent

Ss. 2(25), 3(1)(a), 14 & 23Sales Tax Rules, 2006, R.6Tax invoicesRegistrationCompulsory registrationScope

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.