MUHAMMAD ARIF ICE FACTORY vs FEDERATION OF PAKISTAN Ss — 2021 PTD 1608 LAHORE-HIGH-COURT-LAHORE

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MUHAMMAD ARIF ICE FACTORY VS FEDERATION OF PAKISTAN Ss.14 & 3---SRO No.509(I)/2013, dated: 12-06-2013---Registration---Further tax---Extra tax---Scope---Petitioners were engaged in production and sale of "ice" which admittedly stood exempted under S.13 read with item No. 27 of the Sixth Schedule of the Sales Tax Act, 1990---Petitioners assailed the applicability and charging of "further tax" under S.3(1A) and "extra tax" imposed pursuant to SRO No.509(I)/2013, dated: 12-06-2013 issued under S.3(5) of the Sales Tax Act, 1990---Validity---Subsection (1) of S.14 of the Sales Tax Act, 1990, stipulated compulsory registration of persons involved in the making of taxable supplies, including zero rated supplies, in the course or furtherance of any taxable activity carried on by them if their business fell in one or more of the categories specified therein---Subsection (1) had no application to the case of the petitioners as they were not involved in making any taxable supplies, including zero rated supplies---No provision in the Sales Tax Act, 1990, required the petitioners to be registered---Object and purpose of S.3(1A) of the Sales Tax Act, 1990, imposing "further tax" on a person who failed to obtain registration number was to incentivize that person to register or else pay more tax---Such was based on underlying assumption that the person to be burdened with "further tax" was under a lawful obligation to obtain registration number and had for some reason failed to do so---Such "carrot and stick" policy was to induce a person to register and enforce the legislative intent of registering persons making taxable supplies---On a policy level, the wisdom behind this was to move towards a more documented economy and expand the tax base---"Further tax" under S.3(1A) was not intended to apply to and penalize those who made only exempt supplies and were not liable to be registered under the Sales Tax Act, 1990, otherwise the same would defeat the very intent, object and purpose of the levy---Purpose of levying "extra tax", in addition to the tax under subsection (1) of S.3 of the Sales Tax Act, 1990, was to charge the said tax from those persons who, despite being liable to be registered, had failed to do so---High Court observed that a restrictive meaning was to be assigned to the application under Ss.3(1A) & 3(5) of the Sales Tax Act, 1990, read with SRO No.509(I)/2013, dated: 12-06-2013 to those cases where the person was liable to be registered but had failed to register---Constitutional petitions were allowed

MUHAMMAD ARIF ICE FACTORY vs FEDERATION OF PAKISTAN Ss — 2021 PTD 1608 LAHORE-HIGH-COURT-LAHORE

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