SC issues notices to respondents in PATA tax exemption case

The Supreme Court has issued notices to the respondents on the Federal Board of Revenue (FBR) appeal regarding applicability of tax exemption/refunds of sales tax to the Provincial Administered Tribal (Pata) areas of Balochistan.

A division bench of apex court comprising Justice Sajjad Ali Shah and Justice Ayesha Malik heard the appeal which was filed by the revenue board challenging the judgment of Balochistan High Court (BHC).

The case pertained to a taxpayer who had imported timber from Afghanistan in non-tariff area of Zohab, Balochistan and claimed sales tax refunds in view of Article 247 of the constitution.

He had failed to provide the relevant invoices for such consumption in non-tariff areas as per the FBR appeal.

Hafiz Ahsaan Ahmad Khokhar, counsel for FBR, argued that though the tax exemption was available under Article 247 of Constitution to Pata areas of Balochistan but while claiming tax exemptions/refunds under the sales tax Act 1990, the tax payer had to fulfill the requirements of sections 22, 23 and 73 of Sales tax Act 1990 read with Sales tax General Order 2010.

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He said the taxpayer had to show as well further the consumption of goods in non-tariff areas after the import of commodity from Afghanistan and produce documents and invoices for such consumption in support of his refund claim to the tax authorities.

He said the requirement was missing in the present case and had not been legally considered and evaluated by the BHC, appellate tribunal and commissioner appeals while deciding the matter.

Khokhar further argued that it was the responsibility of the taxpayer to substantiate his claims of tax exemption/refunds of sales tax after verification by the tax officials.

He said the taxpayer was required to provide relevant documents and invoices in support of his claims of tax exemption/refunds to tax authorities that these goods had been consumed in non-tariff areas.

The FBR counsel said that in the present case the taxpayer had failed to fulfill the requirement and only relied on constitutional provision without supporting his claim of consumption in non-tariff area of Zohab district.

He said the legal point had not been considered by commissioner appeals, appellate tribunal and the high court, thus the impugned judgments were contrary to the provisions of law and not legally sustainable.

He contended that the mechanism and judgment relied by below forums while pronouncing the impugned judgments were revisited by Supreme Court in another reported judgment in 2008 known as Gul Cooking Oil case, thus the impugned   judgments passed by all below forums including the BHC could not legally stand.

After hearing, the court issued notices to the respondents.