INDUS MOTORS COMPANY LIMITED vs GOVERNMENT OF BALOCHISTAN, FINANCE DEPARTMENT Ss

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INDUS MOTORS COMPANY LIMITED VS GOVERNMENT OF BALOCHISTAN, FINANCE DEPARTMENT Ss.14 & 52---Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018, R. 3---Recovery of the tax not levied or short levied---Special procedure and tax withholding provisions---Responsibility of withholding agent---Scope---Petitioner assailed the issuance of show-cause notice by the Balochistan Revenue Authority---Validity---Officer had issued impugned show cause notice for tax periods of 2016, 2017 and 2018 ignoring the fact that the Balochistan Sales Tax Special Procedure (Withholding) Rules, 2018, were notified on 27th June, 2018---Subsection (3) of S. 14 of Balochistan Sales Tax on Services Act, 2015, which creates a liability on the withholding agent and empowers the authority to personally hold responsible a withholding agent if he fails to withhold sales tax on services was inserted through Balochistan Sales Tax on Services (Amendment) Act, 2019, notified on 15th January, 2019---Again subsection (6) of S. 52 which provides the mechanism for recovery of sales tax on services required to be withheld by a withholding agent in case the withholding agent fails to withhold such sales tax on services was also inserted through Balochistan Sales Tax on Services (Amendment) Act, 2019---Officer had also failed to invoke S. 52(6) of the Balochistan Sales Tax on Services Act, 2015---Officer had demanded total amount of sales tax on services from the petitioner which was payable by the taxpayer---Officer had ignored the fact that the same sum of money was already ordered as recoverable from the taxpayer through orders in original---Letter and spirit of law is that the withholding agent is liable to withhold certain portion of tax payable by a taxpayer---Such tax actually is liability of the taxpayer and the withholding agent just withholds a portion of total liability of the taxpayer---Such tax cannot be recovered simultaneously from the taxpayer as well as withholding agent---Once the taxpayer discharges his tax liability then the withholding agent is only liable to default surcharge under S. 49 of the Balochistan Sales Tax on Services Act, 2015---Impugned show cause notice was declared to be unlawful and void ab initio---Constitutional petition was allowed.

INDUS MOTORS COMPANY LIMITED vs GOVERNMENT OF BALOCHISTAN, FINANCE DEPARTMENT Ss — 2022 PTD 1226 QUETTA-HIGH-COURT-BALOCHISTAN

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