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Latest Supreme Court of Pakistan Judgement

  1. Advocate Anthony Williams - March 13, 2023 - WhatsApp +923214409009 Mobile +971551946232 Latest Supreme Court of Pakistan Judgements Tax Dosti Presents
  2. Tax Dosti 13-3-2023
  3. Tribunal is the Final Forum for Fact Finding
  4. History of the Case Sales Tax Case for the Year 1995-96 1.Audit Proceedings 2.Collector of CE & ST 3.CEST Tribunal 4.Lahore High Court 5.Supreme Court of Pakistan 1995-96 to 2022-23 = 28 years
  5. Audit Proceedings ST Department •During audit proceedings, •It was revealed that M/s Qadbros Engineering (Pvt) Ltd (respondent) had claimed input adjustment of sales tax paid earlier on purchases from their sister unit M/s Qadri Brothers (Pvt.) Ltd. •The Show Cause Notice issued to the respondent alleged that it had wrongfully claimed input adjustment of sales tax on the purchase of M/s channels from its sister unit, Qadri Brothers (Pvt) Ltd. •The invoices No. 1 to 150 were issued by M/s Qadri Brothers (Pvt) Ltd., which was paying fixed sales tax on fixed production basis under the SRO.630(I)/1995 dated 02.07.1995.
  6. Tribunal Two Members giving two different views on the allegation •The Show Cause Notice was issued to the respondent with the allegation that it had wrongfully claimed input adjustment of sales tax on the purchase of channels from its sister unit, Qadri Brothers (Pvt) Ltd. •One learned member held that there is no prohibition under the law for issuing sale invoices and the respondent was found entitled to claim and adjust input tax on the basis of the disputed invoices. •However, another learned member recorded his dissenting view and held that when the supplier (Qadri Brothers) could not charge output tax on a tax invoice and was paying sales tax on presumptive production, the appellant/respondent could not get that right of input tax adjustment which was not available to the supplier. Therefore, it seems that there were differing opinions among members regarding whether M/s Qadbros Engineering (Pvt) Ltd could claim input tax adjustment in this case.
  7. The appellate tribunal partly allowed the appeal and waived the penalty but did not make any definite findings on the relationship between the respondent and Qadri Brothers.
  8. A company is considered a subsidiary of a holding company If the holding company has a majority of its voting rights or the right to appoint or remove a majority of its board of directors. A wholly-owned subsidiary is one whose shares are exclusively owned by the holding company, its wholly-owned subsidiaries, and their nominees. It is important to note that while a holding company and its subsidiary are separate legal entities, the affairs of the subsidiary can be treated as the affairs of the holding company for certain purposes under the law.
  9. The petitioner's department was unable to prove that M/s Qadbros Engineering (Pvt) Ltd is a sister concern or subsidiary of M/s Qadri Brothers (Pvt.) Ltd. The lack of tangible evidence, including records from the Securities and Exchange Commission of Pakistan (SECP), makes it difficult to establish the relationship between the two companies.
  10. Fishing Expedition
  11. Main Issue of the Case
  12. The issue at hand in a specific case in which an entity called M/s Qadri Brothers was accused of providing undue benefits to its sister company by arranging its invoices in a way that allowed for input tax adjustments. Despite paying a fixed sales tax, M/s Qadri Brothers was not prohibited by law from issuing invoices to buyers. However, to make input tax deductions, they needed to have proper invoices or bills. If the invoices were issued erroneously or in violation of the law, legal action should have been taken by the department for recovery.