JUDGMENT: MR. JUSTICE MIAN SHAKIRULLAH JAN.--(1). The appellants, Collector of Customs, Sales Tax and Central Excise through all the appeals, by leave of the Court made a prayer for setting at naught the judgments of the Sindh High Court, Karachi, whereby while maintaining the order of the Customs, Sales Tax and Central Excise Appellate Tribunal, Karachi Bench and that of the Lahore High Court, Rawalpindi Bench, whereby it was held that the supply/sale of the old machinery, equipment sold by the respondents were not liable to the charge of Sales Tax, under the Sales Tax Act, 1990 (hereinafter referred to as 'Act') and the appeals were dismissed.
2. By this common judgment, we propose to dispose of/decide Civil Appeals No. 2687 to 2696 of 2001, Civil Appeals No. 551 and 552 of 2002 as have arisen from a common judgment/order, Civil Appeals No. 2087 to 2094 of 2004 and Civil Appeal No. 791 of 2005 as have been decided on the basis of the judgment impugned in the aforesaid appeals.
3. Though, common questions of law are involved in all these cases with almost identical facts, however, for the sake of convenience and proper understanding, the facts, where they are necessary, in short also to be referred in each case.
4. (i) In Civil Appeal No. 2687 of 2001, demand-cum-show cause notice was issued to the respondent mentioning therein that while scrutinizing the Financial Accounts, Officers of the Audit Division of the Sales Tax Collectorate, detected non-payment of Sales Tax against taxable supplies made by the respondent which also include the sale/supply of Fixed Assets, Scrap, Tangible Fixed Assets for the year ending 30th September, 1997 and 30th September, 1998, in addition to other allegations of non-payment of Sales Tax on different grounds, which are not relevant for the purpose of this appeal. The respondent's representation did not find favour with the Adjudication Officer, the Assistant Collector and who held the respondent liable to the payment of Sales Tax, with the consequential liability, on the supply of the afore-referred goods. The appeal before the Collector of Appeals, failed after which the respondents approached the Customs, Excise and Sales Tax Appellate Tribunal, Karachi Bench. The respondent succeeded in appeal and the Tribunal while setting aside the order of the forums below i.e. the order-in-original passed by the Additional Collector and order-in-appeal passed by the Collector Appeals, the respondent was held not liable to the payment of Sales Tax on the goods in question sold/supplied by them.
(ii)In Civil Appeal No. 2688 of 2001, according to the demand-cum-show cause notice, the respondent has not paid tie Sales Tax on the "Fixed Assets" sold during the year 1994 to 1998 and also for the year 1999.
(iii)In Civil Appeal No. 2689 of 2001, according to the demand-cum-show cause notice issued to the respondent mentioned that the audited financial accounts indicate disposal/sale of fixed assets in the period comprising from the year 1994 to 1998 without payment of Sales Tax and also for the year 1999 and was asked to pay the Sales Tax with Additional Tax under section 34 of the Act.
(iv)In Civil Appeal No. 2690 of 2001, according to the demand-cum-show cause notice during the course of scrutinizing the financial accounts by Sales Tax Audit, they do not pay the Sales Tax supply/sale of fixed assets for the period commencing 1994 to 1996, 1998-1999 and holding the respondent to have contravened sections 3, 6, 22, 23 and 26 of the Act.
(v)In Civil Appeal No. 2691 of 2001, according to the demand-cum-show cause notice during the course of scrutinizing the financial accounts by Sales Tax Audit, they do not pay the Sales Tax for the supply/sale of fixed assets for the period 1997 to 1999.
(vi)In Civil appeal No. 2692 of 2001, according to the demand-cum-show cause notice, the respondents have not paid Sales Tax in respect of supplies of their taxable fixed assets and also not taking the same into accounts of the taxable supplies/sales for the sale of assets during the Tax period ending on 30th June, 1994 and 30th June, 1996.
(vii) In Civil Appeal No. 2693 of 2001, according to the demand-cum-show cause notice, the respondent has not paid Sales Tax in respect of fixed assets for the year 1994, 1996 to 1998 and also for the sale/supply of scrap/waste/dead stock.
(viii) In Civil Appeal No. 2694 of 2001, according to the orders/judgments of the forums below, the respondent was issued demand-cum-show cause notice for the non-payment of Sales Tax on the supply of fixed assets for the period ending on 30th September, 1994 to 30th September, 1997.
(ix)In Civil Appeal No. 2695 of 2001, according to the order-in-original passed by the Additional Collector (Adjudication), the respondent has not paid the Sales Tax on the "Fixed Assets" sold during the period for 1994 to 1998.
(x)In Civil Appeal No. 2696 of 2001, according to the order-in-original, the respondent has not paid Sales Tax on the supply of fixed assets etc. for the year 1998-1999.
(xi)In Civil Appeal No. 551 of 2002, according to the demand-cum-show cause notice, the respondent has not paid Sales Tax for the sale of plant, machinery, electrical and mechanical equipment, furniture, fittings and fixture and motor vehicle during the year 1995-1996, 1996-1997, 1997-1998 and has contravened the provisions of section 2(33), 3, 6, 7, 11, 22, 23, 26, 49 of the Act.
(xii) In Civil Appeal No. 552 of 2002, according to the demand-cum-show cause notice, the respondent has not paid Sales Tax on the sale of plant, machinery, electrical and mechanical equipment, furniture, fittings and motor vehicles during the ending year 30.06.1996 and 1997.
(xiii) In Civil Appeal No. 2087 of 2004, according to demand-cum-show cause notice dated 28.05.1999, the respondent has sold fixed assets without payment of tax on it for the year 1994 to 1998 and also supplied scrap/waste/dead stock without paying tax on it for the same period i.e. for the year 1994 to 1998.
(xiv) In Civil Appeal No. 2088 of 2004, according to order-in-original dated 29.03.1999, the respondents sold fixed assets without payment of tax for the year 1994 to 1997 and Onward.
(xv) In Civil Appeal No. 2089 of 2004, according to order-in-original, the respondent has not paid the Sales Tax on the fixed assets, tangible assets and scrap sold during the year 1996-1997.
(xvi) In Civil Appeal No. 2090 of 2004, according to order-in-original, the respondent has not paid Sales Tax in respect of fixed assets for the year 19961997 and also for the sale/supply of scrap and tangible assets.
(xvii) In Civil Appeal No. 2091 of 2004, according to order-in-original, the respondent has not paid Sales Tax on the sale of fixed assets and tangible fixed assets and scrap for the years ending 30th September, 1996 and 30th September, 1997.
(xviii) In Civil Appeal No. 2092 of 2004, according to order-in-original, the respondent has not paid Sales Tax on the sale of fixed assets, tangible fixed assets and scrap for the year ended on 30th September, 1996 and year ended on 30th September, 1999.
(xix) In Civil Appeal No. 2093 of 2004, according to order-in-original, the respondent has not paid the Sales Tax on the sale of fixed assets, tangible fixed assets and scrap during the years ending 30th September, 1996 and in the year ending 30th September, 1997.
(xx)In Civil Appeal No. 2094 of 2004, the respondent did not pay Sales Tax amounting to Rs.
99,705/- on the sale of motor car, in addition, to some other discrepancies/non-payment of sales tax which are not relevant for the present controversy.
(xxi) In Civil Appeal No. 791 of 2005, the case was reported by the Team Post Refund Audit of the Sales Tax that the respondent in their annual audit accounts for the year ending 30th June, 1996 and 1997 indicates that the output tax payable on the sale of goods i.e. the Generator, Steam Generator (Boiler) and Machinery was not paid and were issued a show cause notice.
5. CMA No. 2627 and 2628 of 2005 were also filed in Civil Appeals No. 43 and 152 of 2005 for restoration of appeals which were dismissed on 16.05.2005 as the appellants failed to file the paper books at the appeal stage and the order of granting leave was also recalled. Now the compliance has been made i.e., the paper books have now been filed. However, the appeals are restored, not on the ground that the paper books have been filed after dismissal appeal, but on the ground that the question involved in the two appeals are identical to the one involved in the other connected appeals and which are heard on merits. The appeals deserve restoration. The learned counsel appearing on behalf of the respondents in the two appeals instead of contesting the application have argued the appeal on merits. In both these Civil Appeals i.e. 43 and 152 of 2005, the respondents have not been paid sales tax in respect of the scrap sold by them for the period 1996 and 1997.
6. Civil Appeal No. 2087 to 2094 are barred by a few days. The question in these cases involved in similar as involved in other appeals which have been filed within time. In view of the consistency and in order to avoid any conflict of decision, which fact has also been taken note of at leave granting stage, we condone the delay in these cases in the interest of justice.
7. The appellants also filed CMA No. 1904 and 1905 of 2004 in Civil Appeals No. 551 and 552 of 2002 for placing certain documents on record. The CMAs are allowed and they are permitted to place the documents.
8. After passing of the order-in-original, the aggrieved party filed appeals before the Appellate Authorities and ultimately, the matter came up before the High Court which culminated in the impugned judgment of the High Court. When the petitions came up before this Court, leave was granted to consider the following:-- "(a) Whether with reference to the facts and circumstances of these matters, the definitions of "Goods", "Supply" and "Taxable Activity", as provided under Sections 2(12), (33) and (35) of the Sales Tax Act, 1990, have correctly been interpreted and applied by High Court in these matters?
(b) Whether the fixed assets being movable property fall within the scope of "Goods", as defined in the aforesaid Act and are taxable?
(c) Whether the disposal of fixed assets/goods through sale, lease or through any other means of disposition carried out for consideration is taxable supply and is covered by definition of "Taxable Activity?""
9. Learned counsel for the appellants have contended that the sales tax is to be charged, levied and paid on all taxable supplies made by a registered person under Section 3 of the Act. There is no legal provision excluding sale of old plant, machinery, vehicles or scrap from the purview of taxable supply and taxable activity or business. It was also contended that the articles are subject to levy of sales tax and these do not come within the exemption clauses/notifications and liberal interpretation would not be made for granting exemption from levy of tax in respect of these articles.
10.On the other hand the learned counsel for the respondents have argued that the goods involved in these cases are old, broken, unserviceable, discarded and used equipment, computers, vehicles, furniture, machinery which had ultimately to become scrap and which were purchased on a high price and sold at a very low price and the transaction in these items cannot be considered business but it is rather loss and also cannot be construed as an activity for profit motive or in the nature of trade, commerce or manufacture and it is not the main/principal activity and is not an activity in furtherance of the business/activity. The items which were purchased many years back for a high price was sold at a very low price therefore it cannot be considered as a business in these items rather it was a loss. The items which were purchased and sold did not remain of the same type and more so after their use for many years. The sales tax is to be applied on the supply only if there is a chain of passing on the same first by the manufacturer then by the wholesaler then by the retailer and which ultimately made available for general public or consumer and assessee while dealing or selling the items of scrap or used items, they do not involve the aforesaid chain in the process. It was contended that the respondent do not fall in the category of manufacturer, wholesaler, distributor or retailer of the items in question as they neither manufacture these items nor deal in them. Further they also do not fall in the category of importers, as they do not import machinery or these items for resale purpose on a continuous basis. More so, the companies have to invest more in order to purchase new items in place of old ones. This is not a case of trading of assets. Reference was made to definitions of taxable goods, taxable supply, taxable activity and section 3 of the Act. They have also submitted that the disposal of these items is not in furtherance of business and would not qualify to be taxed under Section 3 of the Act. The intention of law is to charge sales tax on supply of goods produced and manufactured regularly and not on various activities of the business including the sale of the old items occasionally but rather intends the levy of sales tax on the supply of the goods made regularly. In order to be construed as business, the activity must be recurring, profit motive and must be in the nature of trade, commerce or manufacture. In the present case, disposal of items referred to above, cannot be construed as activity for profit motive or in the nature of trade, commerce or manufacture and thus it is not an activity in the furtherance of the business. The respondents do not trade in or manufacture the aforesaid assets; hence disposal thereof does not constitute taxable activity or business.
11. They have further contended that no input tax was available or availed by them as the same was also not allowed and if they are to pay the sales tax again it would fall within the ambit of double taxation as to pay tax at the time of sale of commodity will amount to double taxation as there was no value addition to the goods rather a depreciation in their value. This means that these goods were never considered as goods being used in the manufacture by not allowing input tax adjustment of the tax paid by them at the time of purchase of the goods. The respondents have not claimed an input tax on these assets sold by them therefore intention of making profit in furtherance of the business goes away. It was also contended that even the Ministry of Law, Justice and Human Rights, Islamabad vide its OM has opined that sale, auction or otherwise disposal of goods, moveable/fixed assets including plant/machinery, equipment or vehicles by a registered person shall not be charged to sales tax if such disposal is beyond taxable activity and more particularly when there was no value addition to the goods or for which the input tax was not allowed.
12. The emphasis was placed on the term "carrying on" or carrying on the business/taxable activity employed in Section 3 (1)(a) and by elaborating it, it was contended that the business must be a recurring and repeated transaction. For the interpretation of the word carrying on business, dictionary meaning assigned to it was referred to. According to Black's Law Dictionary Revised 4th Edition, Page 270, the terms carrying on trade or business has been defined to conduct, prosecute or continue a particular avocation or business as a continuous operation or permanent occupation, the repetition of Acts may be sufficient. In the Words and Phrases, Volume 6, published by ST. PAUL, MINN. WEST PUBLISHING CO., the carrying on business has been interpreted as simple and discontinuous acts or contracts do not constitute carrying on business. It means continuity thereofpursued as a continuous and substantial employment employs a continuous operation.
In this respect reliance was placed on the judgments from the Indian jurisdiction i.e., "Board of Revenue etc. etc., v. A.M. Ansari etc." (AIR 1976 SC 1813), "The State of Tamil Nadu v. Thiru Murugan Brothers" (AIR 1988 SC 336), "Director of Supplies and Disposals, Calcutta v. Member, Board of Revenue, West Bengal, Calcutta" (AIR 1967 SC 1826) and "State of Gujrat v. M/s. Raipur Manufacturing Co. Ltd." (AIR 1967 SC 1066) by emphasizing that since the respondents are carrying on business in the form of manufacturing/producing their products not of the items in question and one of the constituents of the business is its continuity which in the instant case by selling or disposing of old equipments after some years and occasionally and irregularly does not constitute any business/taxable activity. These judgments have also been relied upon by the High Court in its impugned judgment.
13. In order to appreciate the divergent arguments advanced by the learned counsel for the parties, which mainly relate to controversy over the interpretation of the different provisions of the Sales Tax Act, it may be advantageous to reproduce the relevant sections and the expression/terms and words used both in the Act and after its amendment in the year 1996 through Finance Act, 1996 as the aforesaid provisions covers the sales tax period involved in the instant cases. However, subsequently some other amendments were also made but those are not relevant for the purpose of deciding the present cases.
Sales Tax Act, 1990 "S. 2(8) "goods" means every kind of moveable property other than actionable claims, money, stocks, shares and securities;"
Which was amended by the Finance Act, 1996 and which reads:-- "S. 2(12). "goods" include every kind of movable property other than actionable claims, money, stocks, shares and securities;"
Sales Tax Act, 1990 "S. 2(22). "Supply" means sale transfer, lease or other disposition of goods in the course or furtherance of business carried out for consideration and includes:--
(a) putting to private, business or non-business use of goods acquired, produced or manufactured in the course of business;
(b) auction or disposal of goods to satisfy a debt owned by a person;
(c) possession of taxable goods held immediately before a person ceases to be a registered person;
(d) removal of goods from the manufacturing premises to the sale point or place of storage owned or operated by the manufacturer or his agent; and
(e) such other transaction as the Federal Government may, by a Notification in the official Gazette, specify;"
Which was amended by the Finance Act, 1996 and which reads:-- "S. 2(33). "supply" includes sale, lease or other disposition of goods in furtherance of business carried out for consideration and also includes--
(a) putting to private, business or non-business use of goods acquired, produced or manufactured in the course of business;
(b) auction or disposal of goods to satisfy a debt owed by a person;
(c) possession of taxable goods held immediately before a person ceases to be a registered person; and
(d) such other transaction as the Federal Government may, by notification in the official Gazette, specify;"
Sales Tax Act, 1990 "S. 2(24). "taxable activity" means any activity which is carried on by any person whether or not for a pecuniary profit, and involves in whole or in part, the supply of goods to any other person for a consideration and includes any activity carried on in the form of a business, trade or manufacture;"
Which was amended by the Finance Act, 1996 and which reads:-- "S. 2(35). "taxable activity" means any activity which is carried on by any person, whether or not for a pecuniary profit, and involves in whole or in part, the supply of goods to any other person, whether for any consideration or otherwise, and includes any activity carried on in the form of a business, trade or manufacture;"
Sales Tax Act, 1990 "S. 2(26). "taxable goods" means all goods other than those which have been exempted under section 13;"
Which was amended by the Finance Act, 1996 and which reads:-- "S. 2(39). "taxable goods" means all goods other than those which have been exempted under section 13;"
Sales Tax Act, 1990 "S. 2(28). "taxable supply" means a supply of taxable goods made in Pakistan other than a supply of goods which is exempt under Section 13, and includes a supply of goods chargeable to tax at the rate of zero per cent under section 4;"
Which was amended by the Finance Act, 1996 and which reads:-- "S. 2(41). "taxable supply" means a supply of taxable goods made in Pakistan other than a supply of goods which is exempt under section 13 and includes a supply of goods chargeable to tax at the rate of zero per cent under section 4;"
Section 3 which is charging section originally incorporated in the Act, 1990 as under:-- "S. 3(1)(a)(b). Scope of tax--(1) Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of twelve and half per cent of the value of-- (a)taxable supplies made in Pakistan by a registered person in the course of furtherance of any business carried on by him; and (b)goods imported into Pakistan."
Which was amended by the Finance Act, 1996 and which reads:-- "3. Scope of tax-- (1) Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of [eighteen] per cent of the value of-- (a)taxable supplies made in Pakistan by a registered person in the course or furtherance of any (taxable activity) carried on by him; and (b)goods imported into Pakistan."
It was further amended by Finance Act, 2003 and which reads:-- "3. Scope of tax.--(1) Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of [fifteen] per cent of the value of-- (a)taxable supplies made by a registered person in the course or furtherance of any (taxable activity) carried on by him; and (b)goods imported into Pakistan."
14.In the final analysis, it was found that the learned counsel for the parties were at variance on the interpretation of Section 3(1) of the Act which is a taxing section. Section 3(1)(a) consists of the following components/constituents, the sales tax to be levied charged at the rate of (15%) of the value of (i) taxable supply made (ii) by a registered person (iii) in the course or furtherance of (iv) any taxable activity/business (v) carried on by him. The expressions used in Section 3(1)(a) and which are relevant for the purpose of resolving the controversy are (i) taxable supply (iv) taxable activity, and (iii) in the course or furtherance of. Though the first two, but not the latter one and also not the word "business", have been defined directly under Section 2(28) or (41) and Section 2(24) or
(35) yet for proper appreciation of their meaning one has to revert back to the definitions of goods, taxable goods, supply and taxable supply. Goods means and includes moveable property other than money and securities etc. and Taxable Goods means and includes the moveable property other than those which have been exempted under Section 13 of the Act, supply means and includes sale, transfer and other disposition of goods and taxable supply means supply of taxable goods other than supply of goods which are exempt under Section 13 of the Act. Taxable activity means an activity which is carried on by any person not necessarily for pecuniary profit and involves in whole or in part the supply of goods to another person irrespective of any consideration and also includes an activity carried on in the form of business, trade or manufacture.
15. The main thrust of the learned counsel for the respondents was on the interpretation of Section 3(1)(a) and in their view the sales tax is to be imposed on the supply of the goods in which the assessee continuously, regularly deal with, i.e., the items produced or manufactured by them and not casually, occasionally, incidentally or sometimes. By contending so, they have lost sight of the fact that it is not only the business or the taxable activity which has been referred to or mentioned in the section but the important role is to be played by the words "in the course or furtherance" of which have prefixed the word business or taxable activity. The meaning of in the course of can be taken to mean as connected with, related to and having some nexus with the business/taxable activity and similarly "in furtherance of indicative of the fact that the taxable supply had been made for the enhancement/further development of the business/taxable activity.
The word furtherance has been defined in the Advanced Law Lexicon, Third Edition, 2005, P. 1953, as 'act of furthering, helping forward, promotion, advancement, or progress'. In furtherance of has been interpreted as in promoting or advancing in the Oxford English Dictionary, Volume-IV, P. 619.
Furtherance has been defined as 'fact or state of being furthered or helped forward, the action of, helping forward, advancement, aid, assistance'. It is abundantly clear that the taxable supply has not been confined or limited to the one which is the product or the goods manufactured but also including those goods which involve in some way with the progress, promotion, advancement of business/activity/taxable activity.
16.Since the assessee while furnishing accounts have to mention the income from the sale of the goods, machinery, may be vehicles used in the business and the consideration/price of which is still to be used in the taxable activity/in the business, may be, by purchasing a new item in place of the old one by using the assets in enhancing, promoting, advancing in development of the business/taxable activity. It follows that sales tax would be applicable in respect of taxable supply made during the course of a business activity. It also follows that it is immaterial whether the supplier is in the business of the relevant goods or not so involved but the sale of these items and the utilization of these sale consideration in the business activity is definitely to be considered in the course of or in furtherance of the business/taxable activity.
17.The judgments referred to by the learned counsel for the respondents firstly they are not having a binding effect, may be of persuasive in nature if setting up a rule of law while interpreting statutory provisions if those are identical with the cases which are dealt with but the instant cases are quite distinguishable as the statutory provisions which have been interpreted in the judgments are quite different and those judgments have been given in the context of those statutory provisions which have got no similarity altogether with the one in hand.
18.In the case of A. M. Ansari etc. (supra), the question for consideration was the interpretation of the word "dealer" which has been defined in section 2(c) of the Andra Pradesh General Sales Tax Act, 1957. According to the taxing section, which is section 5 and which imposes/levy of tax on the sale and purchase of goods on the persons who are dealer. Section 2(c) of the Act defines, dealer means any person who carries on the business of buying, selling, supplying or distributing goods. In this case certain forest produce viz. timber, fuel, bamboos, were to be auctioned by the Government in which respect notices were issued. It was held that the Government is not continuously dealing with the sale of such products cannot be considered as to carrying on the business and miscellaneous goods; coal and bye-products and subsidiary products such as 'waste caustic liquor' were held not to be liable Sales Tax. It was held that under section 2(c) of the Bombay Act to be a dealer, a person must carries on business, of selling those goods. The expression dealer is. defined in section 2(c) has meaning "any person who carries on the business of selling goods in the State of Bombay whether for commission, remuneration or otherwise".
22.One of the points which was taken up by the learned counsel for some of the respondents was that no input tax was availed by them as the same was not allowed. They were not liable to pay tax on the said items. Section 7 of the Sales Tax Act, which is a beneficiary section, entitles a registered person to deduct input tax from output tax, however, Section 8 provides certain eventualities and the powers of the federal government through a notification in the official gazette specify the goods under which the input tax is not available and in this respect the federal government while exercising powers under the aforesaid section has issued notification prescribing the goods on which the adjustment of input tax was disallowed. This may be in order to forestall the possible misuse of the input adjustment against the procurement of such goods which are not direct constituent/ ingredients of the finished goods or which have multiple usage as well and also in line with the provisions of Section 8 that the goods were used not for the purpose of manufacture or production of taxable goods or taxable supplies. The refusal of input tax adjustment within the purview of the legal provision or legally competent notifications do not absolve the assets from the settled/due liability.
23.The OM issued by the Ministry of Law, Justice and Human Rights, Islamabad contains an information and does not have any effect on the legality of the matter when it is not supported by any other statutory instructions/orders from the authority competent to do so under the Act and rules made there under and cannot be equated with the legislative instruments, and which is also subject to the decision of the Court.
24.Looking it from a different angle whenever there is a taxable supply made by a registered person in the course of a taxable activity sales tax will have to be levied and if any exemption i.e., the supply is not liable to the levy of the sales tax, is claimed then it is for the person so pleads to show that the same is covered under the exemption clauses. There is no legal provision excluding the sale of old plant and machinery, vehicles or scrap from the purview of taxable supply. These goods were purchased by the respondents in the course of their taxable activity, their sale cannot be considered as a transaction which is divorced from their normal business and that the said goods are business assets of the respondents and both their purchase and sale is a part of their normal business activity. The Act makes no distinction between the goods supplied by a registered person in the normal and continuous course of business activity as frequent and constant supply or otherwise and there can be no exemption on presumptions. The disposal of fixed assets, scrap by a registered person, being not exempted under section 13 or being not specified in the 6th Schedule to the Sales Tax Act are chargeable to Sales Tax and supply thereof, are taxable supply.
The consideration/sale proceeds received against disposal of fixed assets as well as scrap/waste are their income and therefore, it had been taken as income and accounted for as such in their financial accounts. Such income being a part of business and investing activity done during the course of business is an act of furtherance of business. It is statutory authority under sub-section
(2) of section 13 of the Sales Tax Act, 1990, which vests in the Federal Government the power to exempt any taxable supply made in Pakistan or any goods or class of goods from the whole or any part of the tax chargeable under the said Act, subject to the conditions and limitations so specified.
No exemption has since been notified by the Federal Government in relation to the sale, auction or otherwise disposal of goods, moveage fixed assets including plant/machinery equipment having no value addition to the goods and for which the input tax was not allowed.
25.The conclusion of the above discussion is that the fixed assets as have been referred in the cases are goods or taxable goods and comes within the ambit of taxable supply and liable to the levy I of sales tax. The High Courts have proceeded on the wrong premises and have wrongly interpreted the legal provisions and have drawn a wrong conclusion thereto. Resultantly, while accepting these appeals, the judgments impugned herein are set aside and it is held that the respondents/assessees are liable to the levy of tax on the sale of the assets subject matter of the cases.