ISLAMABAD: Islamabad High Court (IHC) has ruled that the entire scheme of the track and trace system of the Federal Board of Revenue (FBR) does not violate any of the provisions of the Sales Tax Act, 1990.
According to the detailed judgment of the IHC on the track and trace system, the entire scheme or the state of affairs does not, in any manner, make the rules or the letters by the tax authorities violative of the provisions of the Sales Tax Act, 1990.
In the entire writ petitions, petitioners are the companies engaged in the business of manufacturing, as well as, sale of cigarettes; they are aggrieved of amendments made in the law, i.e., section 40C of the Sales Tax Act, 1990, as well as, Chapter XIV-B of Sales Tax Rules, 2006 and also relevant Sales Tax General Orders.
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The petitioners are aggrieved of section 40C ibid in general and section 40C (3) in particular that same could not have been introduced through a Money Bill, as it does not have any fiscal implication and/ or levy made in the circumstances by way of payment to the licensee for stamps /banderols, etc., and acquisition of fee for implementing TTS in the nature of fee.
IHC stated that the section 40C (monitoring or tracking by electronic or other means) purely provide a mechanism to plug the evasion in various activities (including tobacco industry). The said section is not introducing any specific tax or a fee but solely regulating the payment of sales tax and preventing its evasion. The tax here being sales tax levied under section 3 (1) of Sales Tax Act, 1990. Subsections (1) & (2) of section 40C clearly fall for the purposes of treatment of the statute as Money Bill under Article 73(2)(a) of the Constitution; hence do not suffer from any deficiency or illegality, IHC said.
“I do not believe that section 40C ibid of the Sales Tax Act, 1990 is ultra vires the Constitution on the basis that same got incorporated through two different Finance Acts as Money Bill inasmuch as they are merely regulatory measures to make the payment of sales tax efficient and plug the holes of evasion”, the IHC order said.
Another aspect of the letters written by the revenue authorities for purpose of import or installation of the machines; though acquisition cost as provided in section 40C (3) is to be borne by the taxpayer and the machine is to be provided by licensee yet as such, asking the taxpayer to import the machine in itself does not make the impugned letter ultra vires the parent statute. The entire scheme or the state of affairs does not, in any manner, make the rules or the letters by the tax authorities violative of the provisions of the Sales Tax Act, 1990.
For the above reasons, instant writ petitions are without merit and are accordingly dismissed, IHC order added.
Copyright Business Recorder, 2023
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