FOUNDATION WIND ENERGY-II vs COMMISSIONER PUNJAB REVENUE AUTHORITY Ss

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FOUNDATION WIND ENERGY-II VS COMMISSIONER PUNJAB REVENUE AUTHORITY Ss. 3(3), 11, 24, 52 & 67-a---Reference---Taxable services---Territorial jurisdiction---applicant / company was withholding agent and was aggrieved of show cause notice issued by authorities for non-deducting of sale tax on the services---Plea raised by applicant / company was that taxable services were provided in other province and tax could not be charged only for the reason that head office was registered in the Province of Punjab---Validity---Mere residency of a company in Punjab or its classification as a prescribed withholding agent does not, by itself, create a substantive tax liability under Punjab Sales Tax on Services act, 2012---Liability to sales tax under Ss. 11, 24 & 52 of Punjab Sales Tax on Services act, 2012 was fastened exclusively upon a registered person providing taxable services---Punjab Revenue authority was competent to initiate withholding tax proceedings on the basis of undisputed audited accounts showing composite amounts paid for services; final determination of withholding tax liability could not be made on aggregated figures alone---Each individual transaction was to be reconciled and examined to ascertain whether it had constituted a taxable service, the applicable rate of tax, and the obligation to deduct and deposit tax---Burden was upon the withholding agent to explain nature of transactions and justify non-deduction of tax---Once documentary evidence was produced before appellate Tribunal, it was incumbent upon the Tribunal, as the final fact-finding authority, to scrutinize and reconcile each transaction and determine taxability accordingly---appellate Tribunal's failure to undertake such exercise amounted to non-application of judicial mind, warranting annulment of its order and remand of the matter for fresh decision in accordance with law---High Court declared that the show cause notice was issued without any legal foundation and appellate Tribunal had erred in upholding initiation of proceedings under S. 52 of Punjab Sales Tax on Services act, 2012 against applicant / company, despite absence of any statutory authority permitting such proceedings against a service recipient---appellate Tribunal wrongly placed reliance on Withholding Rules, 2015, as subordinate legislation could not enlarge or create a substantive tax liability not contemplated by the parent statute---High Court set aside order passed by appellate Tribunal as well as Order in-Original and show cause notice, as the appellate Tribunal fell in error by sustaining proceedings and by affirming jurisdiction of Punjab Revenue authority against applicant / company---Reference was allowed in circumstances.

FOUNDATION WIND ENERGY-II vs COMMISSIONER PUNJAB REVENUE AUTHORITY Ss — 2026 PTD 542 LAHORE-HIGH-COURT-LAHORE

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