ISLAMABAD    -    The Supreme Court of Paki­stan on Thursday suspend­ed Balochistan High Court (BHC) judgment regarding refund of sales tax in view of Article 247(3) of the Consti­tution.

A three-member bench of the apex court headed by Chief Justice of Pakistan Jus­tice Umar Ata Bandial and comprising Justice Qazi Faez Isa and Justice Syed Mansoor Ali Shah heard the appeal of Commissioner Inland Rev­enue Zone-II, Regional Tax Office, Quetta.

The High Court, Appellate Tribunal, and the Commis­sioner Appeal had accepted the contention of taxpayer/Sherani traders and ordered for issuance of refunds.

Sherani Traders import­ed timber from Afghani­stan in non-tariff area of Ba­lochistan District Zohab and claimed sales tax refunds in view of Article 247(3) of the Constitution, that being ex­empt and non-tariff area, the law of Sales tax has no appli­cation there.

Advocate Hafiz Ahsaan Ah­mad Khokhar, representing Federal Board of Revenue (FBR), argued that Shera­ni Traders failed to provide the relevant invoices and proof for such consumption in non-tariff areas to the tax­ing authorities.

He contended that though the tax exemption was avail­able under Article 247 (3) of the Constitution to PATA ar­eas of Balochistan, but while claiming tax exemptions/re­funds under the Sales Tax Act 1990 the taxpayer is le­gally obliged to fulfil the re­quirements of Sections 22, 23 and 73 of the Act 1990.

He submitted that the tax­payer has to show the docu­ments and invoices for such consumption in support of his refunds claim to the tax authorities that the im­ported goods after import­ing from Afghanistan have been consumed in non-tariff area, adding in case he fails the taxpayer has no right to claim refunds. He said that in the present case despite is­suing notice to taxpayer, he has failed to provide the doc­uments and invoices in sup­port of his claim.

Hafiz Ahsaan informed that the Commissioner Ap­peal, the Appellate Tribu­nal and the High Court while deciding the matter had re­lied upon the Supreme Court judgment 2003, adding this judgment was revisited by apex court in 2008, there­fore the verdicts of all three forums are not sustainable in law and needs to be set aside.

The counsel further said that in the instant mat­ter the taxpayer had failed to fulfil the requirement and only relied on constitutional provision without support­ing his claim of consumption in non-tariff area of Zhob district.

Hafiz Ahsaan submitted that the three forums below have failed to appreciate that a company or a person de­rives income from business being carried out in taxable or non-taxable area is ques­tion of fact which cannot be decided without holding proper inquiry, for the pur­pose of tax liabilities and all other question regarding manufacturing, consump­tion in or outside of local limit etc including, non-tax­able area both from taxable and non-taxable areas.

He said that the impugned judgments passed by the be­low forums is result of mis­reading and non-reading of the material points of law and facts of the subject cas­es and has failed to take into account the principle of law.

The bench after hear­ing the arguments sus­pended the BHC judgment and passed leave granting order on the FBR appeal.