The Sindh High Court (SHC) ruled on Tuesday that the officers of the Collectorate of Customs (Adjudication) lack the authority to adjudicate or collect any short charge of sales tax or income tax on imported consignments released or cleared by the Customs department.
In this regard, the SHC rendered a decision in the case of Nestle Pakistan Limited v. Federal Board of Revenue (FBR) on Tuesday.
On the grounds that Adjudication had no jurisdiction to assess, recover, or decide any alleged short levy of income tax and sales tax after the release or clearance of their import consignments.
The petitioners have challenged the corresponding notices and constituents thereof, issued by the officers of the Collectorate of Customs (Adjudication). If any jurisdiction exists in this regard, it belongs to the Inland Revenue department.
In a nutshell, the petitioners had imported consignments that the Customs division had evaluated, cleared, and released.
The Collectorate of Customs (Adjudication) issued letters alleging short collection of income tax and sales tax and attempted to adjudicate and recover the same after accruing a large amount of time after that.
According to the SHC order, these petitions are allowed insofar as the officers of the Collectorate of Customs (Adjudication) have no jurisdiction to recover or adjudicate any short levy/recovery of sales tax and income tax once the imported consignments have been assessed to duty and taxes in accordance with Section 80 of the Customs Act, 1969, and are released/cleared from Customs. The SHC order also stated that the reasons for this will be recorded later.
Only in this regard, it is determined that the contested show cause notifications were issued without proper authorization and jurisdiction, and they are accordingly reversed.
However, SHC stated, officers of the Inland Revenue Department may begin any legal procedures involving short-levied income tax and sales tax in strict line with the law.
To read our blog on “K-Electric CEO gets bail-able arrest warrant from Sindh High Court,” click here.