Sales Tax Instructions

Sales Tax Instructions, 2009
section 2(34) will make all such provisions redundant. In other words through the additional tax
under section 3(1-A) the Sales Tax has indirectly been re-introduced in respect of these supplies
which were otherwise exempted from levy; that section 13 over rides section 3(1-A) and therefore
no tax directly or indirectly could be charged from the persons who are exempted or are not liable
to the levy; that levy of a further tax of one percent (in the year 1998) and of 3% (from the year
1999 and onwards) amounts to double taxation; that further tax levied by section 3(1-A) of the Act
is violative of Article 25 of the Constitution being discriminatory; that the amount levied is also
violative of Articles 4, 18 and 24 of the Constitution which guarantees free trade and business and
protection of property.
5. The petitioners who are bottlers have a further grievance. They claim that in the first
amendment in the year 1998, no reference was made to sub-section (1) of section 3 of the Sales
Tax Act. Therefore, according to them as section 3 of the Act provided for a levy only with
reference to the value of the supplies made in Pakistan or goods imported into Pakistan the new
levy has nothing to do with these suppliers which were covered by retail tax system under third
schedule of the Sales Tax. System was otherwise protected through a non-obstante clause from the
main charging section i.e. section 3(1) of the Act which was necessarily value based system. It is
accordingly placed that additional tax under section 3(1A) did not at all relate to the retail price
regime provided for under section 3(2) of the Act. In this connection a specific reference to the
phrase ―in addition‖ as used in the newly inserted sub-section is made. According to these
petitioners the makers of beverages and soft drinks of various brands the import of concept of
further tax into the regime of retail price was not only un-practicable but also against the spirit of
the Act. Therefore, it is stressed that their products like Pepsi Cola, Coca Cola, Mirinda and Team
etc. will have two different sale prices i.e. one for registered persons and the other for unregistered
persons. The supplying of the one product at two different rates, according to portions
is practically impossible as these could not have two different rates of prices mentioned on their
labels as required by sub-clause (c) of section 3 of the Act.
6. the first three categories of the applicants namely manufacturers of sugar, producers of
iron, steel and polythene makers have addressed similar arguments while the bottlers mostly
represented by Mr. Salman Akram Raja, Advocate, have taken the said additional plea that the
provisions of section 3(1-A) are not attracted to retail tax regime.
7. For the petitioners in terms of the contents of the petition, it is stressed that the newly
added sub-section is ultra vires of the Constitution because it is against the basic scheme and
scope of the sales tax as levied under the Sales Tax, 1990; that all the petitioners are already
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.