Sales Tax Instructions

Sales Tax Instructions, 2009
―Section 2(28) ―Taxable Supply‖ means supply of taxable goods made in Pakistan other
than a supply a goods which is exempt under Section 13, and includes a supply of goods
chargeable to tax at the rate of zero percent under section 4‖
14. Section 2(30) before amendment defines ―time of supply‖ which as follows:-
―2(30) ―time of supply‖ (1). A supply made in Pakistan shall be deemed to take place at
the earlier of the time of delivery of goods or the time when any payment is received by
the supplier in respect of that supply‖.
15. It is clear from the arguments raised by the learned counsel for the appellants
before the High Court and reiterated here that the word ―Supply‖ in these the provisions of law has
been construed to be delivery of goods under the sale which had further been treated to be the date
when the property in goods shall be deemed to have passed to the buyer under Sales of Goods Act.
16. Learned counsel for appellants submitted that in view of the definition of the
expression ―time of supply‖ and supply used in section 2(22) and (30) respectively, the date on
which the amount of consideration in advance was received would be the date of sale, may be the
delivery of goods take place later qua the tax period and payment of sales tax. On the other hand,
learned counsel for the respondents argued that since under article 49 of the First Schedule of the
Constitution, the Sales Tax is chargeable on the sale of goods, therefore, unless the transaction
satisfies the legal requirement of completion of sale as defined in the Sale of Goods Act recording
to which the sale shall be deemed to have been completed when the property in goods passes to
the buyer, the tax is not recoverable. According to them, receipt in advance of any amount of
consideration would at the most give rise to merely an agreement of sale and not sale itself. The
learned judge of the High Court also took the view that the taxable activity would arise only when
the property in goods sold would pass to the buyer which would be the date of completion of sale
as such the demand of the appellants for payment of sale tax within 20 days of the month of
receipt of advance payment was violative of the Law.
17. Learned counsel for the appellants submitted that if the above mentioned
relevant provisions of the Sales Tax Act in particular section 2(30) is construed as, learned counsel
for the respondents/manufacturing want, it would give free hand to the manufacturers to invent a
device in order which hold the amount of Sales Tax payable to the Government beyond the tax
period under the Act at their own whims by showing a transaction to be a mere agreement of sale
through payment in advance of the considerations is received much earlier than the delivery of
goods.
18. The contention has considerable force. According to the well established
principles of interpretation and construction of the Statutes laid down by the superior courts,
harmonious construction is to be made keeping in view the different provisions of the statute after
fully understanding the intention with which the same had been made and the object which was
intended to be achieved. The intention behind the promulgation of relevant provisions of the Sales
Tax Act as reproduced above is clearly manifest that the sales tax should go to the Government
treasury within the tax period after the same having become due and should not be retained by the
manufacturers. There is no hard and fast rule as to when and at what stage, the transaction shall be
deemed to be transaction of sale of goods. Each case has to be decided according to the facts and
circumstances of the case in particular the practice, usage of a particular nature of business or
trade. In the case in hand, the manufacturers used to receive amount of considerations in advance
for the supply of cement to be made later. It is clear from the provisions of sections 2(22) and (30)
of the Sales Tax Act that time of supply was deemed to be the date on which advance payment