SHC restrains RTO Sanghar Region from Sales Tax recovery

KARACHI:-A division bench of High Court of Sindh (SHC) comprising Chief Justice Fasial Arab and Justice Iqbal Kalhoro restrained Collection Unit, Sanghar from recovering Sales Tax from a petitioner Cotton Ginning and Oil Mills while issuing notice of hearing of Constitution Petition for Nov 04, 2015.

Sonia Cotton Ginning Processing Factory and Oil Mills citing Chairman FBR, Chief Commissioner (Inland Revenue) , RTO Hyderabad , Deputy Collection IR (Enforcement and Collection Unit X Sanghar)  as respondent in the petition maintains that Sales Tax Unity has issued a notice of recovery to them without issuing a show cause notice or determining  the liability.

The petitioner maintained that their activity is ‘seasonal’  where in they process Cotton Seeds,  Oil Cake and Cotton Seed Oil and has paid all leviable taxes. There was a dispute of payment of rupees 6 per 40 Kilogram on supply of the cotton seed after the respondents issued a SRO  188 (1) / 2015 on 5-3-2015 requiring of the petitioner to pay the disputed amount on all in house and outside supply with effect July 01, 2015 and onwards. The petitioner maintains that Cotton Lint and Cotton Seeds are exempt from Salex Tax  vide Entry No 6 of Table 2 and Entry No 81 of Table 1 of Sixth Schedule of Sales  Tax Act 1990.

The  tax notice is for the period prior to the issuance of the SRO and for a past and closed transaction and being forced to pay .

The petitioner prayed to the court to declare the recovery notice and SRO as illegal.

The bench after hearing the counsel for petitioner restrained the Tax Collection Unity Sanghar from recovery and fixed Nov 4 as next date of hearing.

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