Sales Tax Instructions

Sales Tax Instructions, 2009
registered persons who have been required to pay the aforesaid additional tax while the real
intention was to tax un-registered persons. All the petitioners agree that the aforesaid
amendments in the Sales Tax Act have been made with an idea to bring ―un-registered persons‖
into the net of the sales tax, it is however, stated that the liability to pay additional tax has fallen
on the already registered persons without any fault on their part; that this act on the part of the
legislature is un-constitutional. It is also stated that the amendments in question were otherwise
superfluous in as in such as sections 22 and 33 of the Sales Tax Act, 1990 provide for an adequate
penalty to those who avoid registration and to regulate maintenance of accounts within the
specified period. The safeguards provided in the Act according to the learned counsel are
sufficient to protect the interest of the revenue. The practical aspect of the amendment is stated to
be against some of the producers and importers who will become less competitive in view of their
charging of higher rates from the non-registered persons. Further that instead of punishing the
concerned persons the legislature through the amendment provision has found a scapegoat in the
form of the petitioners. Describing the provisions as discriminatory learned counsel refer to the
observations of the Supreme Court of Pakistan as made in re; Messrs Elahi Cotton Mills Ltd and
other v. Federation of Pakistan (PLD 1997 SC 582). Also point out an anomaly in law which is
based upon the definition of the word ―registered person‖ as contained in section 2(25) of the Act.
It defines a registered person to be a person ―who is registered or is liable to be registered under
this Act. The contention put forth at the bar being that the inclusion of both registered and those
liable to be registered in the concept of registered person has made whole of the newly added
provisions redundant and nugatory. For supply to a person who is not registered will still not be
culpable in as much as he is nonetheless liable to be registered and therefore according to the
definition of a registered person. Further that law does not require every person be get himself
registered. Section 14 of the Act is referred to in this regard to say that not every person is
required to be registered and therefore the legislation by way of the said provision has provided
for a penalty in the form of further tax without first creating a liability to register. The alleged
contradictions in the newly added provisions and those contained in section 14 of the Act are also
stated to be a good reason to declare them to be against the basic scheme and order to the Act.
Reference to section 18 of the Act which provides for voluntarily registration is also made to
stress the point.
10. The revenue represented by Mr. A.Karim Malik, Advocate and Kh. Saeed-uz-Zafar,
learned Deputy Attorney General however challenge all the aforesaid contention. First of all it is
pointed out that item No.49 of the Fourth Schedule to the Constitution should have read with
items-58 and 59 as observed by their Lordships of the Supreme Court in re: M/s Elahi Cotton
Mills (Supra); that there was absolutely no ambiguity as far the category of cases to which the
amended provisions of section (1-A) of section 3 was made applicable in the Finance Act, 1998.
However, if at all there was one it stood adequately removed by the next amendment made in the
year 1999 whereby sub-clause (c) of sub-section (2) and sub-sections (4) and (5) were also
brought within the scope of further tax contemplated in the provision. It is further claimed that
further tax levied by the amended provision was not in nature of penalty and even if assuming the
same to be so it could not be struck down merely for that reason alone. The Constitution,
according to the learned counsel for the revenue, permits creation of various clauses and that in
fact no class was intended to be created by the impugned amendment in as much as all the
petitioners who are in-variably registered persons will not change their class by making supplies
to either registered or non-registered persons. In other words their class remains the same yet
while making supplies to certain kinds of persons they are required to collect some tax for reasons
which are not unreasonable. According to the learned counsel for the revenue, there being no
compulsion upon them to make a supply to an un-registered person, the provisions in question will
not be attracted to them. The petitioners it is stated, have a choice and if they wanted to avoid the
alleged penalty they were free to make all supplies to registered persons only. It is also claimed
that petitioners are factually not aggrieved parties because they will only collect additional tax