ISLAMABAD  -   The Supreme Court of Pakistan, on an appeal of the Federal Board of Revenue (FBR), on Thursday issued notices regarding applicability of tax exemption/refunds in Provincial Administered Tribal Areas (PATA) of Balochistan. 

A two-member bench of the apex court comprising Justice Sajjad Ali Shah and Justice Ayesha Malik conducted hearing of the FBR appeal against the Balochistan High Court (BHC) judgment and issued notices to Sherani Traders (taxpayer/respondent). 

Sherani Traders (taxpayer) imported timber from Afghanistan in non-tariff area of Balochistan, district Zohab, and claimed sales tax refunds in view of Article 247 of the Constitution. According to the FBR appeal, the respondent failed to provide the relevant invoices for such consumption in non-tariff areas. 

Hafiz Ahsaan Ahmad Khokhar, counsel for the FBR, argued that though the tax exemption was available under Article 247 of Constitution to PATA areas of Balochistan, but claiming tax exemptions/refunds under Article 247 the taxpayer is legally bound to fulfil the requirements of sections 22, 23 and 73 of Sales Tax Act 1990 read with Sales Tax General Order 2010. 

He contended that the taxpayer has to show the consumptions of goods in non-tariff areas after importing them from Afghanistan. He said that the taxpayer has to produce documents and invoices to the tax authorities for such consumption in support of his refund claims, which is missing in the present case, adding this aspect has not been legally considered and evaluated by the BHC, the Appellate Tribunal and by the Commissioner Appeals while deciding the matter. 

Hafiz Ahsaan argued that it is responsibility of the taxpayer to substantiate his claims of tax exemption/refunds of sales tax only after through the process of verification conducted by tax officials after providing relevant documents and invoices supporting his claims of tax exemption/refunds to tax authorities that these goods have been consumed in non-tariff areas. He said in the present case the taxpayer failed to provide, and only relied on the constitutional provision without supporting his claim of consumption in non-tariff area of district Zohab. He said that the legal point has not been considered by the Commissioner Appeals, Appellate Tribunal and by the High Court, thus the impugned judgments are contrary to the provisions of law and is not legally sustainable. 

The FBR counsel said that the mechanism and judgment relied upon by below forums while pronouncing the impugned judgments were revisited by Supreme Court in another reported judgment in 2008 known as Gul Cooking Oil case. He said therefore the impugned judgments passed by all forums below, including the BHC cannot legally stand.