Pakistan Case Law
2005 PTD 2582

COLLECTOR OF SALES TAX AND CENTRAL EXCISE LARGE TAXPAYERS UNIT, KARACHI vs Messrs ALLIED ENGINEERING AND SERVICES LTD., KARACHI

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Citation2005 PTD 2582
CourtSindh High Court
Case No.Special Sales Tax Appeal No. 529 of 2004
Date2005-09-09
Judge(s)Muhammad Mujeebullah Siddiqui and Khilji Arif Hussain
Authored byMuhammad Mujeebullah Siddiqui
ResultAppeal dismissed
AI Summary — generated from this judgment; read the full text below and verify before relying on it.

This appeal arose from an order of the Tribunal regarding the inclusion of installation charges in the "value of supply" for sales tax purposes. The appellant, the Collector of Sales Tax, challenged the Tribunal's decision, arguing that installation services provided alongside the supply of generators should be considered an integral part of the supply transaction under the Sales Tax Act, 1990. The core legal question was whether charges for such allied services, including installation, delivery, and warranty, must be aggregated into the "value of supply" as defined by the Act. Upon reviewing the statutory definitions provided in Section 2 of the Sales Tax Act, 1990, the Sindh High Court found that the appellant failed to demonstrate that installation charges could legally be construed as part of the "value of supply" under the law prevailing in the year 2000. Consequently, the Court held that no substantial question of law requiring further interpretation existed. The appeal was dismissed in limine, affirming that such service charges are not included in the taxable value of supply.

Questions settled in this judgment
  • Are installation charges for supplied goods included in the 'value of supply' under the Sales Tax Act, 1990?
  • Does the provision of installation services constitute a taxable activity under the Sales Tax Act, 1990?
  • Can incidental services like delivery and warranty be legally excluded from the 'value of supply' definition in the Sales Tax Act, 1990?
Laws & provisions referred
  • Section 2(33), Sales Tax Act, 1990
  • Section 2(35), Sales Tax Act, 1990
  • Section 2(46), Sales Tax Act, 1990
  • Section 47, Sales Tax Act, 1990
Sales Tax ActValue of SupplyInstallation ChargesTaxable ActivityTax AppealSindh High Court

ORDER

1. MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---In this appeal under section 47 of the Sales Tax Act, 1990 the appellant has proposed the following questions of law for our opinion: "(1) Whether or not in a transaction of supply, "the value of supply" in terms of section 2(46) of the Sales Tax Act, 1990, would be constructed as including the value of goods, as well as all allied and ancillary functions/services which are to be carried out by the supplier as integral part and parcel of supply leading to finalization of the transaction of supply?

2. "(2) Whether or not the installation services provided by a supplier in respect of goods so supplied should be construed as integral part of supply in terms of section 2(33), ibid?

(3) Whether or not the concept of value-added tax (VAT) as envisaged in the Sales Tax Act, 1990, would not be injured by the order of the learned Tribunal if the charges or incidental or allied intangible services/functions treated separately from materials, such as delivery, warranty and installation, are allowed to be excluded from the term 'value of supply' as defined in section 2(46), ibid?"

3. The short point involved is whether the charges received for installation of the generators sold by the respondent are to be included in the value of supply and the incidental question is, "whether the rendering of such services is included in taxable activity?".

4. We have heard Mr. Raja Muhammad Iqbal, learned counsel for the appellant, and Mr. Faisal Siddiqui, learned counsel for the respondent.

5. The Tribunal has held that receiving of installation charges is not to be included in the value of supply. Mr. Raja Muhammad Iqbal has taken us through the definitions contained in section 2(33),

(35) and (46) of the Sales Tax Act, 1990. He is not able to show that the receiving of installation charges could be included in the value of supply .By any stretch of imagination in the value of supply in accordance with the law as prevailing in the year, 2000. Only substantial questions of law are to be entertained by this Court. As no substantial question of law requiring interpretation has been shown, therefore, the appeal is dismissed in limine.

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