SHC upholds sales tax default surcharge
KARACHI: The Sindh High Court has ruled that the liability to pay default surcharge under the Sindh sales tax on services law was a strict statutory obligation of a compensatory character. The SHC also noted that proof of wilfulness or mens rea was not a condition for its imposition, and neither officers of the Sindh Revenue Board (SRB), nor the commissioner or appellate tribunal, were vested…
The Sindh High Court has ruled that the rule requiring payment of a default surcharge under the Sindh sales tax on services law is a strict statutory obligation. The court noted that proof of intent or "mens rea" is not necessary for the surcharge to be imposed. Additionally, neither officers of the Sindh Revenue Board, nor the commissioner or appellate tribunal, have the authority to waive, reduce, or delay such liability in cases of hardship, equity, or lack of intention.
The court acknowledged the disruption caused by Covid-19 to commercial life in Sindh, but stated that sympathy does not justify jurisdiction and there is no equity in the tax. The two-judge bench, consisting of Justice Agha Faisal and Justice Shah Nawaz Memon, issued the ruling while considering 12 similar special sales tax reference applications filed by the Sindh Revenue Board against orders from the appellate tribunal.
The tribunal had reduced the surcharge imposed by the SRB on a dozen industries, banks, and other private firms, arguing that there was no intent or "mens rea" behind the default. The SHC pointed out that the Sindh Sales Tax on Services Act provides a mechanism for pandemic relief through Sections 17(3) and 45, allowing the SRB to set different payment times and exempt the surcharge.
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