COMMISSIONER INLAND REVENUE, PESHAWAR vs PAKISTAN TOBACCO COMPANY (LTD — 2022 SCMR 1251 SUPREME-COURT

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COMMISSIONER INLAND REVENUE, PESHAWAR VS PAKISTAN TOBACCO COMPANY (LTD.), ISLAMABAD Ss. 2(33), 2(39), 2(41), 3(1a) & 3(3)(a)---Sale of Goods act (III of 1930), Ss. 4 & 19---Constitution of Pakistan, art. 247 [since omitted]---Taxable supplies made to unregistered persons in erstwhile Provincially administered Tribal areas (PaTa) and Federally administered Tribal areas (FaTa) ('the Tribal areas') [before the 25th amendment to the Constitution]---additional sales tax, charging of ---Whether there was any liability for the payment of additional sales tax in terms of section 3(1a) of the Sales Tax act, 1990 ('act') in respect of a situation where the person making the taxable supplies was located in Pakistan whereas the recipient of those supplies was located in the erstwhile Tribal areas---Held, that before the 25th amendment to the Constitution, federal laws which otherwise applied in the whole of Pakistan nonetheless did not so apply in relation to the Tribal areas by reason of article 247 of the Constitution (since omitted)---For a law to apply in the Tribal areas, there had to be a specific direction in that regard in terms of article 247(3), and admittedly there was no such direction in relation to the act at the relevant time---For there to have been a valid levy and charge in terms of section 3(1a), there had to have been a sale of taxable goods in Pakistan---Term "sale" as used in the definition of "supply" in clause (33) of section 2 of the act could include both a 'sale' and an 'agreement to sell' in terms of the Sale of Goods act, 1930---Sale between a manufacturer and seller and its dealers had to take place "in Pakistan", in the special sense in which these words were used prior to the 25th amendment to the Constitution---Simply arguing that the supplier was "in Pakistan" was not enough---Question as to whether the supplies over the relevant tax periods were indeed made "in Pakistan" was essentially one of fact, or at least had significant factual elements---Such aspects had to be properly alleged in any show cause notice issued by the department, and proved or otherwise established from the record---However, in the show cause notices in the present cases there was no such allegation, and when the record was examined there were no relevant factual findings as could result in a conclusion that the supplies over the relevant tax periods were indeed made "in Pakistan"---although in terms of section 3(3)(a) of the act the legal liability to pay the tax fell on the person making the taxable supplies---However, the crucial question in the present cases was whether or not the supplies were made "in Pakistan"---Said question was not, as a matter of fact, established from the record and was not even alleged in the show cause notices---Such defect was fatal to the case sought to be made out by the department, and in the absence of any such findings the show cause notices simply could not succeed---appeals filed by the department were dismissed. Head NotesCase Description

COMMISSIONER INLAND REVENUE, PESHAWAR vs PAKISTAN TOBACCO COMPANY (LTD — 2022 SCMR 1251 SUPREME-COURT

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