Sales Tax Instructions

Sales Tax Instructions, 2009
understanding that the Federal Government has the enabling power to do so under subsection
(3A) of section 3 which says that the Federal Government may through a
notification specify the goods in respect of which the liability to pay tax shall be of the
buyer (recipient of goods).
2. But while deciding the Writ Petition No.20602/99 and Writ Petition
No.20689/99, the Honourable Lahore High Court did not accept the department‘s
argument based upon the above referred understanding and declared rules 5 and 6 of the
Special Procedure for Ginning Industry Rules, 1996 ultra vires of the provisions of subsection
(3) of section 3. Relying upon this judgement of the Lahore High Court dated
22.11.1999 several buyers started delaying payment of sales tax on ginned cotton on the
pretext that responsibility to pay tax on such supplies no more rests on them but it now
falls on the ginners. Resultantly, huge arrears of sales tax started piling up in ginning
sector and the Collectors‘ efforts for recovery were defeated on the basis of the aforesaid
judgement.
3. Department has already filed appeal in the Supreme Court of Pakistan
against the above quoted judgement of the Honourable Lahore High Court which is
pending for decision. Meanwhile to off set the effect of the judgement under reference,
the Federal Government has issued SRO.118(I)/2000 dated 13.3.2000 to provide a legal
cover to the existing rules, prospectively. It is directed that the Collector may please give
wide publicity to this notification and ensure that provisions of rules 5 and 6 of the
Special Procedure for Ginning Industry Rules, are not violated by any person buying
goods from the ginners and there are no arrears piling up on this pretext further.