The COMMISSIONER, INLAND REVENUE, KARACHI vs ATTOCK CEMENT PAKISTAN LIMITED, KARACHI Ss

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The COMMISSIONER, INLAND REVENUE, KARACHI VS ATTOCK CEMENT PAKISTAN LIMITED, KARACHI Ss. 7(1) & 66---Import of new machinery and spare parts---Input tax, refund/adjustment of---Time and manner of claiming the adjustment of input tax---Appellant-tax authority asserted that the adjustment could be claimed in the same tax period and that too in the monthly returns, while the respondent-company claimed it as a right enforceable beyond the tax period in which the input tax was paid---Held, that section 66 of the Sale Tax Act, 1990 ('the Act') provides for refund of tax claimed to have been 'paid or over paid' through 'inadvertence, error or misconstruction' and prescribes a period of one year for preferring such claims---In the present case, the respondent-company, during the relevant period, was not obliged to pay 'output tax' equivalent to the amount of 'input tax' paid on imports, but it overlooked availing the facility of adjustment of the 'input tax' afforded under section 7(1) of the Act---Such omission, as asserted by the respondent-company, was due to 'confusion' and 'misunderstanding' on its part, and would thus come within the purview of the word 'inadvertence', envisaged under section 66 of the Act---Facility of making adjustment of the 'input tax' was available to the respondent-company till 1st July 1997, when the taxable supply of cement, was exempted from payment of sales tax by the Finance Act, 1997---Obviously, after the said exemption of cement from payment of sales tax, there was no question of payment of 'output tax', and hence 'input tax' paid could not have been adjusted by the respondent-company---Only remedy, thus, available to the respondent-company was to seek the refund of the excess amount of 'output tax' paid by the respondent-company, under section 66 of the Act---Period of limitation prescribed for seeking the refund under section 66 was one year from the date of over-payment of tax that is, when 'output tax' was paid by the registered person without adjusting the 'input tax'---In the present case, the respondent-company would, therefore, be entitled under Section 66 of the Act to claim refund of an amount of the overpaid 'output tax', equivalent to the 'input tax' not adjusted in the monthly returns filed during the period of one year preceding 11-06-1997, that is, from 11-06-1996 till 10-06-1997---Appeal was partly allowed.

The COMMISSIONER, INLAND REVENUE, KARACHI vs ATTOCK CEMENT PAKISTAN LIMITED, KARACHI Ss — 2023 SCMR 279 SUPREME-COURT

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