LAHORE: Sales tax authorities failed to disallow the input tax adjustment in the absence of proving adjustment against fake invoices or tax evasion, said sources.

They said a taxpayer had adjusted input tax amounting to Rs39,977 without fulfilling the requirement of the sales tax provisions. The relevant provision of the law requires payment of an amount for a transaction exceeding the value of Rs50,000, excluding payment against utility bills, to be made by cross cheque drawn on a bank or by crossed bank draft or crossed payment order or any other crossed banking instrument showing the transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer.

The taxpayer preferred to challenge the departmental action of disallowing adjustment of the input tax, saying that since the amount involved was less than Rs50,000; therefore, the department could not disallow input tax adjustment of Rs39,977 against the requirement of the relevant provision of the law. However, the department remained adamant to press the point that it would be sufficient to disallow input tax adjustment and for an order for recovery of the principal amount along with default surcharge and penalty.

But the appellate tribunal favoured the stance of taxpayer against disallowance of the input tax adjustment by Assistant Collector. Record revealed that Assistant Collector had disallowed the input tax adjustment on the ground that the payment had not been made in accordance with the requirement of the provision of the law without realising that the controversial amount was less than the amount specified in the said provision of the law. It was not the case of the department that the taxpayer was claiming input tax adjustment against fake invoices or had evaded the payment of tax. Also, the relevant provision of the law does not prescribe the penalty of disallowing the input tax adjustment for failure to show compliance with the requirement given there.

Separately, a citizen has approached the Lahore High Court against the Punjab government initiative of using image of Nawaz Sharif on Kissan (farmer) cards.

The petitioner Mashkoor Hussain through his counsel contended that Chief Minister Maryam Nawaz approved the use of farmer cards with her father Nawaz Sharif’s image. He said under the law, public funds cannot be used for personal promotion.

He said the Supreme Court had banned promotion of political leaders, party flags, or emblems by the governments.

He asked the court to restrain the Punjab government from issuing farmer cards with Nawaz Sharif’s image and to recover the expenses incurred for placing Sharif’s image on the cards.

Copyright Business Recorder, 2024