Sales Tax Act (III of 1951)


Sales Tax

not liable when tax paid for goods which were never imported.

Elerman and Busnell Steamship Vs. Shahidi Trading Corporation (1958)
10 DLR 46.


Sales Tax Act (III of 1951)

S. 2(11). ‘Manufacture’—Marking cloth after going through the
process of dyeing, calendaring and marking—This constitutes “manufacturer of
goods” and assessable to lax.

Messrs Muhammad & Ahmed Co. Vs. Commissioner of Income Tax
(1967) 19 DLR 93.


—Period of
limitation in regard to both the years 1954-55 and 1955-56 would be extended by
3 months.

petitioner (a private limited company) in its returns for the year 1955-1956
filled under the Sales Tax Act, 1951 showed taxable sales at the amount a – Rs.
48182/-. The Sales Tax Officer acting under sec Lion 28 of the Act, by his
order dated 31.5.60, fix the taxable sale at the amount of Rs. 232190/-.

The question
that arose was: whether on account of the definition of the “year” in Finance
Ordinance (XXV of 1960), four years mentioned in section 34 of the Income Tax
Act would mean four years of 12 months each or three years of 12 months each
and the year 1958-59 of 15 months.

In the
present case, four years mentioned in section 28 of the Sales Tax Act began
from the 1st of April, 1956, and before the period had run out the amendment to
section 2(20) of the Act came into effect on the 31st of March, 1959.

Held : In this view of the matter the contention that since there is
nothing in the Finance Ordinance to indicate that the amended provision would
have retrospective effect the amendment cannot be pressed into service in the
instant case, cannot be accepted.

The clear
indication by introducing the two provisos to sections 2(2) and section 28 of
the Sales x Act is that the period of limitation in regard to ii the years
1954-55 and 1955-56 would be extendeb by three months.

Hossain Brothers (Pak) Ltd Vs. Sales Tax Officer (1964) 16 DLR


S. 2 (12)—Sale tax is payable for batching oil which is a part of
manufactured jute goods.

Commissioner of Income Tax vs. Amin Jute Mills Ltd. (1966) 18 DLR


S. 2(12) read with S. 27(1)—‘Partly manufactured goods’
explained—Paper cartons used while selling electric bulbs are not partly
manufactured goods within the meaning of section 2(12) of the Sales Tax Act and
hence the under section 27(I) of the Act cannot be claimed.

Bangladesh Lamps Ltd. Vs. Commr. S. Tax  27 DLR 473.


S. 3.Tax on manufactured or produced goods—

So far as
the manufactured or produced goods are concerned the sales tax becomes payable
only when goods are delivered to the purchaser or when the property in the goods
passes to the purchaser.

Noorani Cotton Corporation
Vs. Sales Tax Officer (1965) 17 DLR (SC) 157.


Secs. 3 & 37—Payment of sales-tax when not payable.

Payment of
sales-tax when the same was not payable under the law relating to sales tax
could not be said to be a disbursement so as to be recoverable in terms of the
contract between the parties. The goods not having been imported at all, no
sales tax was payable on the same and an improper payment cannot constitute
disbursement so as to entitle the plaintiff to recover the same.

Ellerman and Busnull Steamship vs. Shahidi Trading Corporation
(1958) 10 DLR 46.


—The fact
that the carriers did not object to the payment of the import duty does not
take away any right which the carriers may have under the law to object to the
payment of sales-tax.

satisfaction of the Sales-Tax Officer as to excess payment of sales tax in
respect of goods short landed in order that ret und of such excess may be
allowed to the consignee, production of short landing certificate is not
indispensably necessary. Such satisfaction can he obtained by any other
evidence. Ibid.


S. 3(a). [See under section 2(11) in case of Messrs Muhammad & Ahmed
Co. vs. Commissioner of Income Tax in,
(1967) 19 DLR 93 above.


S. 3(1)(b) Fire extinguishing plant is used to put out fire. Safety devices
are parts of the machinery of manufacturing plant.-Such plants comes under
exemption clause.

used for industrial process in the modern times seem to have built-in safety
devices. It is not disputed that this fire extinguishing plant is a modern
device for extinguishing fire by the jute manufacturers.

Commissioner of Sales Tax, Vs. Amin Jute Mills Lid. (1978) 30 DLR


S. 3(5). Provisions of Sea Customs Act regarding clearance, shipping, removal
of goods and securing payment of tax have been incorporated in the Sales Tax
Act, but provisions as regards assessment or re-assessment of tax has not been
so incorporated.Customs Officers not competent to make assessment or
reassessment for rectification under section 3(5).

Usmania Glass Sheet Factory
Ltd. s. Assistant collector of Customs (1967)19 DLR 592.

Officers’ power exercisable in regard to matters mentioned in section 3(5) in
Sales Tax Act—Customs Officers have no power for reassessment of tax by way of
rectification of mistake under section 3(5) of the Sales Tax Act.   Ibid.

3(5) provides that the tax shall be paid on importation or exportation as the
case may be “as provided hereunder”.

The point of
Lime as to when the tax is realizable is of great importance and ordinarily
should not be departed from except under circumstances of fraud, collusion or
mistake. ibid.


S. 3(5) : Laws which were in operation before independence in Tribal Areas
did not lapse with the Independence Act of 1947 but continued even after that.

The Custom
Authorities seized a truck-load of smuggled goods in the tribal area and
proceeded against the accused for violating the provisions of section 5(1) of
the Land Customs Act, Section 167 (8) (36) and (81) of the Sea Customs Act and
section 3(s) of the Sales Tax Act.

On a writ
petition, the High Court of West Pakistan held the seizure illegal and in an
appeal before the Supreme Court (by the State) question arose whether the
aforesaid laws which were in operation in tribal areas before independence were
still in operation after the coming into force of the Indian Independence Act
of 1947.

Held : The laws of a state or territory do nor disappear by a change in
its sovereignty. Law governing or regulating the relations, the rights and
obligations of the residents of a acceding territory do not lapse by a mere
change in the sovereignty but continues to remain operative until changed by a
competent authority.

sections 8 and 9 of the Indian Independence Act, 1947 extended the power of the
Governor-General to tribal areas and in exercise of that power the
Governor-General issued Order Nos. 5 and 6 of 1949 to provide for the accession
of tribal areas to the territories of Pakistan arid the governance thereof.

Under the
Constitution of 1956, by sub-article (2) of Article I the tribal areas which in
1955 were incorporated in the territories of the Province of West Pakistan also
became territories of Pakistan but the nomenclature was altered and they were
to be known as ‘special area’.

Superintendent, Land Customs Vs. Zewar Khan (1969) 21 DLR (SC)


S. 3(6)(d) : Goods manufactured for manufacturing some other articles though
itself may be finished goods—Not liable to taxation.

Latif Bawani Jute Mitts Ltd. Vs. The Sales Tax Officer (1970) 22
DLR 798.


—S. 3(6)(d). Sale of ‘partly
manufactured goods’ to a manufacturer is not liable to tax.

section 3(6)(d) the Sales Tax Officer may determine the value for the tax in a
case where the goods are kept for use by the manufacturer and such a
transaction is to be regarded as a sale.

Noorani Cotton Corp. Vs. Sales Tax Officer (1965) 17 DLR (SC) 157.


S. 4. Sale of ‘partly manufactured goods’ to a manufacturer is not
liable to tax.

What is the
device adopted for ensuring that sales-tax is paid only at one stage in spite
of what is contained in the charging section making all manufactured goods when
they go to the purchaser liable to the payment of tax?

The device
adopted as will appear from section 4, is that the sale of “partly manufactured
goods” to a manufacturer is not liable to the charge of tax.

provision in section 4 is that the sale of. goods by a licensed manufacturer to
another licensed manufacturer of partly manufactured goods is not liable to the
incidence of tax.

contained in section 4 arc a sufficient guarantee that the tax will be paid
only with respect to the last stage of manufacture of goods.


In a case
where a manufactured article into which partly manufactured goods arc to be
incorporated is for some reason not liable to the payment of sales tax, in such
a case no sales tax will need be paid at all.

Noorani Cotton Corporation vs. Sales Tax Officer (1965) 17 DLR
(SC) 157.


—Sec. 4. refers to articles which arc to be manufactured after importing
of part of goods. Exemption against liability to pay u/s. 3(I)(b) is sought on
the basis of Notification of 5-12-62. Clause (I) of this notification shows
that exemption is granted for machinery of all sorts operated by power of any
description as is used in industrial process. It is the admitted position that
Hydrant Sprinkler Plant is operated by power and it is erected in every part of
a jute mill and is controlled centrally as modem safety device for
extinguishing fire.

commissioner Sales Tax Vs. Amin Jute Mills (1978)30 DLR 226.


S 4(a). Tax when not payable in respect of partly manufactured

Section 4
(a) of the Sales Tax lays down that the tax will not be payable if the goods
are sold by one licensed manufacturer to another licensed manufacturer provided
the goods are “partly manufactured goods”.

of Income Tax vs. Amin Jute Mills Ltd. (1966) 18 DLR 331


Secs. 4(b) and 17. Exemption from pay- merit of sales-tax as
provided under section 4(b) of the S.T. Act— When can be claimed.

Held: Import of raw materials for using in the manufacture of washing
soap must be by a licensed manufacturer, Section 4(b) speaks about goods
imported by a licensed manufacturer. Similarly section 17(I) speaks about
purchases of partly manufactured goods by a licensed manufacturer.

as contemplated in section 4(b) and the remedy as provided in section 27(I) are
not available to the assessed because he was not a “licensed manufacturer” when
partly manufactured goods were imported.

Messer. Haji Noor Ali Sowdagar Vs. Commissioner of Sales Tax
(1982) 34 DLR (AD) 339.


S. 5(1): Sales Tax Act, 1951 visualized therein an Income-tax Officer
under the Income-lax Act, 1922 to be a Sales Tax Officer for the purpose of the
Act. By a subsequent amendment of the Income-Lax Act, 1922. Examining Officer
was also included in the definition of the Income-tax Officer as given in the
Income-tax Act.

Haji Nazimuddin Ltd. Amanullah Vs. The Corm. of Sales Tax, Dacca
Zone (1970) 22 DLR 527.

Income-lax Officer and others named in section 5(1) is entitled to exercise the
powers of a Sales Tax Officer. By an amendment effected in 1963 in the
Income-tax Act, an Examining Officer was also made an Income-tax Officer. Ibid


S. 7, Edible oil, what
edible oil is exempt
from sale tax.

Such edible
oils are exempt from payment of sales-tax as are not included within “vegetable
products” in entry 23 of the Notification No. 9 of the Government under section
7 of the Sales Tax Act.

Noorani Cotton Corp. Vs. Sales Tax Officer (1965) 17 DLR (SC) 157.


—Products of
iron foundries—Which are the items in respect of which sales tax was assessed
by the Sales Tax Officer were:

C.I. (Cast
Iron) Pans; Rice Huller Shells; Hand pumps, Hand pump Plungers, Rain Water
Pipes; Hamon Dastan; Jalkhati Structural works.

The reason
given by the Sales Tax Authority was that the above items cannon be termed a
product of iron foundries and steam and hammer works.

Held: C.I. Pans, Rain water Pipes; Haman Dastan; Jalkhati arc certainly
foundry products, as after the process of casting is done nothing else remains
to be done for the completion of the manufacture of these articles.

Mansur Engineering Works Ltd. vs. Commissioner of Income Tax
(1967) 19 DLR 494.


—S. 7: Exemption of tax payment under section 7 under the order of the
Government is discretionary with the Government—subsequently such exemption
can, in the judgment of the Government, be withdrawn.

Baby Biscuit Co. vs. Sales Tax Officer (1976) 28 DLR 463.


—S. 7: Exemption granted under section 7 of the Act applied to the gunny
bags exported by the petitioners and this exemption covered also “other jute
manufactures” including hessian or sacking cloth that went into the making of
the gunny bags.

Latif Bawany Jute Mills Ltd. Vs. The Sales Tax Officer (1970)22
DLR 798.


Ss. 7 & 8(2): The provision of these two sections do not
amount to delegated legislation to the executive— Conditional legislation
permissible under certain circumstances.

It was
contended that the power given under sections 7 and 8(2) of the Sales Tax Act
to the Executive Government amounts to conferment of delegated legislation to
the Executive as the Executive Government is given the right to exempt any good
or class of goods or any person or class of persons from Lax and as such it
amounts virtually to handing over all the power of imposing the sales tax to
the executive Government and therefore these sections arc ultra vires.

It was
further contended that the power given under these sections permit
discrimination between goods and goods, persons and persons and classes of

Held: The Act envisages that in the matter of imposition of sales Lax
there cannot be a right rule as to the rates of tax in regard to certain
classes of goods and the exemption to be granted to goods which come within the
purview of the Act: If the relevant provisions are considered, it will be
evident that the legislature felt that, in regard to the above two matters,
decision will be dependent upon the trade conditions prevailing in the country
at a given time. It is because of this that wide powers in regard to the rates
of tax exemption have been given to the Central Government. In this view of the
matter, ii. Cannot be said that the provisions under attack amount to delegated
legislation and arc therefore ultra vires.

Where it is
not possible for the Legislature to anticipate the circumstance under which
exemption can be granted (in regard to payment of sales tax) discretion had to
be left to the Executive Government to take decisions according to the
exigencies of trade, and in the absence of any clear proof that the discretion
has been abused it is not possible to accept the contention that the impugned
provisions are ultra vires as delegated legislation or violative of the 15th
Fundamental Right guaranteed by the Constitution.

Tiger Wire Products Ltd. vs. Sales Tax Officer (1965) 17 DLR 237.


S. 8(2): For determining total turnover of any manufacturer, turnover of
exempted goods cannot be added to turnover of unexempted goods for the purpose
of Notification No. 10 issued under section 8(2) of the Act.

Commissioner of Income Tax, E.Pak. Vs. M/s. Ayurvedic Pharmacy
Ltd., (1970) 22 DLR (SC) 179.


Ss. 10 and 28 Assessment year 1957-58. — The order of assessment dated June,
1961, two years having elapsed from the assessment year, section applicable is
section 28 and not section 10.

assessment year is 1957-58, and a notice was issued on the Assessee on 1.5.61
and thereafter the assessment order made on 26.6.61 under section 10 of the

The question
which was referred under section 17(1) of the Sales Tax Act was in the
following terms

“Whether in
the circumstances of the case issue of a notice under section 28 of the Sales
Tax Act, 1951 was necessary for initiation of the proceedings for assessment
year 1957-58 after the expiry of that year?”

The question
as framed, however, is whether the issue of a notice was necessary for
initiation of proceedings for assessment for the year 1957-58, after the expiry
of that year. It has been seen that the assassinate has been admittedly made
under section 10(4) and that assessment can be made in this case only under
section 28 of the Sales Tax Act and that a notice should have been issued,
proceedings conducted, and an enquiry held, as contemplated in section 28 as
distinguished from section 10 of the Act.

Absence of
enquiry is prejudicial to the interest of an Assessee.

Messrs. Ata
Hussain Khan Ltd. vs. Commissioner of Income Tax, (1968) 20 DLR 567.


Goods in the
present case not liable to sales tax—
The expression “hammer work” is of wide
connotation. It is not the name of any specific manufactured commodity. It
must, therefore, mean products of a manufacturing process where the use of the
hammer is a dominant factor.

The water
tanks in question were made with C.I. iron sheets by a manual process of
hammering and as such the said tanks are exempt from sales tax as it comes
within the description as given in the Notification 9, dated 27th June, 1951.

Commissioner of Income-tax Vs. M/S Ameer Bux Metal Industries, (1968) 20 DLR 592.


S. 12: Recovery of
sales tax or penalty from individual partner of unregistered firm without
service of demand notice on him not legal.

Aswab Ali
Vs. Commissioner of Income-Tax (1965) 17 DLR


S. 12A: Section 12A
is ultra vires of 1962 Constitution
inasmuch it imposes tax on tax which the central Legislature had the authority
to enact.

Sree Gobinda
Oil Mills Vs. T.R. Officer (1977) 29 DLR 341.


S. 14 :
Notwithstanding provisions of appeal and in the Sea Customs Act and Sales Tax
Act, in case where it is found that relief contemplated by deference such
appeal not equally effective, efficacious and inexpensive, the affected party
can come for relief under Art. 98.

M/S Usmania Glass Sheet Factory Ltd. Vs. Assistant Collector of
Customs (1967) 19 DLR 592.


Ss. 28, 29: Section 29
does not refer to the cc of escaped assessment for which the appropriate
section is section 28.

provision has been made for issuance of notice for escaped assessment under the
provisions of section 28 of the Sales Tax Act.

Commr. Of I.
T. Ctg. Vs. Consolidated Tea (1978) 30 DLR 226.


S. 29: Section 29
is applicable to a person who is not a licensed manufacturer.

of Sale Tax Vs. Amir Jute Mills. (1978) 30 DLR 226.


S. 30A : Expression
“mistake apparent on the face of the record” explained.

expression “Mistake apparent on the face of the record” has been accepted to
mean a patent error or an error which is self-evident on the face of the record
and does not require argument or evidence or a long drawn process to establish

Ganesh Oil
Mills Vs. Commissioner of Income Tax 56 (1979) 31 DLR (AD) 56.

S. 30(1) : Section
30(1) permits rectification of mistake apparent on the face of the record
within 4 years from the dale of the order—Mistake discovered beyond 4 years,
section 30(1) not applicable. Ibid.