COMMISSIONER INLAND REVENUE, ZONE-I, LTO, KARACHI vs PAKISTAN STATE OIL COMPANY LIMITED, KARACHI Ss

Fields are extracted from the reported citation and judgment text. Where a detail is not stated in the record, it is not shown.

COMMISSIONER INLAND REVENUE, ZONE-I, LTO, KARACHI VS PAKISTAN STATE OIL COMPANY LIMITED, KARACHI Ss. 2(37) &11(5)---Supply of oil products by Oil Marketing Company (Pakistan State Oil Company Limited /PSO)---Price Differential Claim ('PDC') receipts---Non-payment of sales tax, allegation of---Tax fraud, claim of---Scope---Issuance of Show-Cause Notice against the Registered Person---Limitation---Scope---After elapse of five years from relevant tax periods of the Registered Person/PSO, the Department issued two Show Cause Notices against Registered Person for non-payment of sales tax on Price Differential Claim ('PDC') receipts having been received from the Government of Pakistan---Assessment order was passed against (Registered Person /PSO) raising sales tax demand along with a penalty equal to the principal amount and default surcharge---Department approached the Appellate Tribunal Inland Revenue ('Tribunal') as the Commissioner Inland Revenue (Appeals) ['CIR (Appeals)']deleted the entire demanded amount (the sales tax as well as penalty and default surcharge) on the ground of limitation prescribed under S. 11(5) of the Sales Tax Act, 1990---Claim of the Appellant / Department, while relying on decision passed in WP 163/2010 dated 21-04-2010 passed by Lahore High Court, was that the case was not time-barred as the Respondent (Registered Person /PSO) was manifestly in default by committing tax fraud and failing to charge sales tax on PDC receipts---Whether the limitation prescribed under S.11(5) of the Sales Tax Act, 1990, was inapplicable in view of the Department's claim of tax fraud?---Held: Though the Appellant /Department asserted that limitation did not apply in case(s) of tax fraud, however, the Original Assessment Order contained no evidence establishing fraudulent intent under S. 2(37) of the Sales Tax Act, 1990; the CIR (Appeals) concluded that the limitation plea was valid and that the tax demand for periods prior to 30.06.2012 was time-barred---Claim /argument of the Appellant / Department did not stand on tenuous legal footing as issuance of show-cause notices beyond the statutory period prescribed under S. 11(5) of the Sales Tax Act, 1990, could not be justified on the basis of alleged "tax fraud" under S. 2(37) of the Sales Tax Act, 1990---Even, in the present case, the Show-Cause Notice did not seem to be a case of tax fraud per se as in the same the only allegation was that sales tax had not been charged on Price Differential Claims received from the Government of Pakistan against supplies of oil products; such transaction could not be a case of tax fraud---Thus, delayed show cause notices for sales tax on Price Differential Claims could not be salvaged from the bar of limitation on the basis of alleged tax fraud---Appellate Tribunal Inland Revenue affirmed the findings of the CIR (Appeals) that the tax periods prior to 30.06.2012 were time-barred under S. 11(5) of the Sales Tax Act, 1990, which findings did not warrant interference---Appeal, filed by the Department, was dismissed, in circumstances.

COMMISSIONER INLAND REVENUE, ZONE-I, LTO, KARACHI vs PAKISTAN STATE OIL COMPANY LIMITED, KARACHI Ss — 2025 PTD 1803 INLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

Case information

Judgment text as reported

Other judgments reported in 2025 PTD