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TARBELA STEEL RE-ROLLING MILLS (PVT.) LTD. vs COMMISSIONER INLAND REVENUE — 2026 PTD 943 SUPREME-COURT

Case information

Citation
2026 PTD 943 SUPREME-COURT
Court
Supreme Court of Pakistan
Year
2026
Reporter
PTD
Parties
TARBELA STEEL RE-ROLLING MILLS (PVT.) LTD. vs COMMISSIONER INLAND REVENUE
Subject matter
Tax & Customs
Provisions referred to
Sales Tax Act

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

Judgment text as reported

TARBELA STEEL RE-ROLLING MILLS (PVT.) LTD. VS COMMISSIONER INLAND REVENUE. Ss. 3 & 14(1)(e)---Sales Tax Special Procedure (Withholding) Rules, 2007, Rr. 1(d) & 2(6)---Sales tax---Non-deduction---Liability of buyer---Appellant company was alleged to have failed to collect withholding tax on behalf of its suppliers. The plea raised by the appellant company was that the suppliers were residents of the Federally Administered Tribal Area (FATA) who were non-registered persons. The High Court set aside the remand order passed by the Appellate Tribunal Inland Revenue. Validity: The suppliers, on account of being residents of and carrying on business in Tribal Areas, were neither under an obligation to get themselves registered nor pay any sales tax on the supplies made by them wholly in such areas as the provisions of the Sales Tax Act, 1990 were not extended to Tribal Areas in accordance with Article 247(3) of the Constitution. However, such persons could not claim immunity from payment of sales tax where the taxable activity or transaction for the supply of raw material did not take place wholly in Tribal Areas. Where the transaction for the supply of raw material was made in a settled area, the appellant company was under an obligation to deduct withholding tax regardless of the supply being originated in Tribal Areas. The assessing officer found transactions worth Rs. 1,775,500 to be unverifiable and it was on such transactions that the appellant company, as a withholding agent, was held by the Assessing Officer and the Commissioner to be under an obligation to deduct withholding tax under the Sales Tax Special Procedure (Withholding) Rules, 2007. The Appellate Tribunal Inland Revenue correctly remanded the matter but the Supreme Court was also sanguine that the Assessing Officer would bear in mind the law laid down in judgments of the Supreme Court and hold a factual inquiry to determine whether transactions for the supply of raw material to the appellant company took place in Tribal Areas or a settled area. The appeal was allowed.

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