SUI NORTHERN GAS PIPE LINES LIMITED vs COMMISSIONER INLAND REVENUE, LTO, LAHORE Ss

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SUI NORTHERN GAS PIPE LINES LIMITED VS COMMISSIONER INLAND REVENUE, LTO, LAHORE Ss.3 & 13, Sixth Sched., Table I, Sr.No.151, Sub-serials (a) & (b) [as inserted by Finance Act, 2019 vide Circular No.01 of 2019] Transporsition of exemption under SRO 1212(I)/2018 following rescindment of SROs 888, 889 and 890(I)/2018---Post Twenty-Fifth Amendment to the Constitution---Federally Administrated Tribal Area / Provincially Administrated Tribal Area (FATA/PATA)---Exemption---Sales tax on area of FATA / PATA, charging of---Supplies made from outside the territory of FATA/PATA---Argument of the Department was that since appellant /SNGPL had supplied gas from outside the territory of FATA/PATA from Pakistan, therefore, the taxpayer being based in Pakistan had no exemption on its supplies made to erstwhile FATA---Plea of the appellant / SNGPL was that it was incorrect to state that the supplies made by SNGPL were from outside territory of FATA/PATA as the appellant / SNGPL had a wide network having offices, infrastructure and pipelines and supply of gas was made within the territorial bounds of erstwhile FATA/PATA---Held, that the Serial No.151 of Table-I of Sixth Schedule of Sales Tax Act, 1990, had restored the legal position prior to enactment of the Constitution (Twenty-fifth Amendment) Act, 2018 and the appellant was fully entitled to exemption available to supplies to Swat (FATA/PATA ) under S.No.151---Appellate Tribunal Inland Revenue declared Sales Tax (including Further tax and Extra Tax along with default surcharge and penalty) charged on supplies made by the appellant / SNGPL to Swat area (FATA/PATA) as illegal, void ab-initio and without lawful authority---Impugned orders were set aside---Appeal filed by registered person (SNGPL) was allowed, in circumstances. S.13, Sixth Schedule, Table-1, Sr. No.151, sub-serials (a) and (b)---Exemption for Federally Administrated Tribal Area/Provincially Administrated Tribal Area (FATA/PATA)---"Or" and "and", to be read conjunctively or disjunctively---Interpretation---Arguments of respondent / Department was that the provisions given in sub-serials (a) and (b) of Sr.No.151 were to be read conjunctively as a single preposition; and that if sub-serials (a) and (b) were read disjunctively, it would lead to a very absurd result; and that the word 'supplies' given in sub-serial (a) if read in isolation it would mean all the supplies were exempted from the charge/levy of sales tax under the Sales Tax Act, 1990 which could not be the intent of legislature; thus, it was only when "supplies" was read conjunctively with sub-serial (b) it came out that the 'supplies' and 'imports' by the industries located in the Tribal Areas were exempted from levy of sales tax---Argument of the appellant / SNGPL was that both the sub-serials operate independently and were separately connected to the phrase "as made till 30th June 2024"---Validity---The word "or" is normally disjunctive and "and" is normally conjunctive, but at times, they are read vice versa to give effect to the manifest intentions of the legislature---Legislative history and the intention of the framers clearly point out that concession to the residents of FATA/PATA in respect of immunity from sales tax on supplies was continued by providing breathing space to them to enter into the tax regime gradually and so they were granted all benefits, in the shape of exemption from all taxes, which were available to them prior to the 25th Amendment to the Constitution---Plain reading of S.No.151 did not support the interpretation made by the Department ---Sr.No.151 is divided into two separate and distinct prepositions enumerated separately as (a) and (b) and are divided by use of semi colon---Semi colons are used to join two related but independent clauses---Thus, the expression "and" used in between the two clauses, should be not read conjunctively---Intent of the legislature was manifestly clear that it decided to continue the concession of exemption on sales tax as on supplies till 30th June 2024 in order to provide some breathing space to the inhabitants of FATA/PATA to merge them into the constitutional state---Appeal filed by registered person (SNGPL) was allowed, in circumstances. S. 13, Sixth Schedule, Table-1, Sr. No. 151, sub-serials (a) and (b) & Sr. 152 [as inserted by Finance Act, 2019 vide Circular No.01 of 2019]---Transposition of exemption under SRO 1212(I)/2018/ following rescindment of SROs 888, 889 and 890(1)/2018---Exemption for Federally Administrated Tribal Area / Provincially Administrated Tribal Area (FATA/PATA) area---"Supplies" as given in Serial 151 and phrase "as made till 30 June 2024"---Interpretation---Argument of the Department was that supplies of electricity had been specifically exempted vide Serial No.152 and had the legislature intended to exempt supplies of gas it would have also done so specifically---Validity---Contention of the Department was misconceived as provision envisaged in Serial No.151 was to be seen and interpreted according to its language keeping in view the background and history of the legislation---Federal Government had issued different SROs to facilitate the inhabitants of FATA/PATA to bring them within the constitutional sphere phasewise and by providing exemption on supplies as it existed prior to the 25th Constitutional Amendment and Serial No.151 is a transposition of SRO 1212(I)/2018 (now rescinded) which provided exemption from whole of sales tax by whatever name it was---Further, if the legislature in its wisdom had specifically mentioned in Serial No.152 of Table-I Sixth Schedule exemption on supplies of electricity to all consumers that did not mean that rest of all supplies were excluded from exemption specially in the presence of S.No.151 which dealt with 'supplies' also---Thus, the word "supplies" given in sub-serial (a) was an independent provision and had to operate separately by connecting with phrase "as made till 30 June 2024---Appeal filed by registered person (SNGPL) was allowed, in circumstances. Sixth Schedule, Table-1, Sr. No. 151, sub-serials (a) and (b) [as inserted by Finance Act, 2019, vide Circular No.01 of 2019]---Transposition of exemption under SRO 1212(1)/2018/ following rescindment of SROs 888, 889 and 890(I)/2018---Exemption for Federally Administrated Tribal Area /Provincially Administrated Tribal (FATA/PATA)---The underlined word "Further"---Argument of the Department was that if both sub-serials were read disjunctively it would mean that all kind of supplies were exempt from tax which was against the intent of Legislature---Circular No.01 issued by FBR, while giving explanation for reasons of insertion of S.No.151, clarified that Sr.No.151 was added and it was a transposition of exemption under SRO 1212(I)/2018; it was explained that in transposed form, it allowed further exemption on imports of industrial input including plant and machinery imported by industrial units located within tribal areas---The underlined word "further" was of much relevance, which meant exemption on imports was also granted in addition to exemptions already available under SRO 1212(I)/2018 with respect to supplies within tribal areas---Under the said SRO the Federal Government provided exemption from whole of sales tax by whatever name called as levied under Sales Tax Act, 1990---Hence, the argument of the Department was misconceived---Intent of the legislature was manifestly clear that it decided to continue the concession of exemption on sales tax as on supplies till 30th June 2024 in order to provide some breathing space to the inhabitants of FATA/PATA to merge them into the constitutional state---Appeal filed by registered person (SNGPL) was allowed, in circumstances.

SUI NORTHERN GAS PIPE LINES LIMITED vs COMMISSIONER INLAND REVENUE, LTO, LAHORE Ss — 2025 PTD 153 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

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