I. BACKGROUND (BG)

1. This refers to the related Important TLQCs in trail blue, italic and double Line (a) 3350 of 15.11.25 about Input tax OK, even if indirectly or remotely in furtherance taxable activity - ---- (b) 3236 of 13.8.25 about Electricity & Gas Input to Factory Labour Colony is allowable – ----

2. We also refer to several other related TLQCs including (a) 3065 of 20.3.25 about Non-Resident's Franchise Services Input Tax allowed (b) 3056 of 15.3.25 about No Input tax of Cement, Steel, etc for Construction –---- (c) 3032 of 15.2.25 about Royalty, Franchise, Other Reverse charge input allowed – ---- (e) 2874 of 15.8.24 about Input Tax Adjustment on Hoteling & Vehicle – ----------- (d) 2615 of 22.1.24 about Input Tax Adjustment for Leather, Tent, etc

II. Updated Commentary

1. Further KQU ---------------, being an important matter, we would inform you about -----------------------(Attachment 3367.1) in the ensuing paragraph, with emphasis in bold & Underline, ours for quick reading.

2. This Reference Application under Section 47 of the Sales Tax Act, 1990 (the "Act") is directed against order dated ------------ passed by the Appellate Tribunal, Inland Revenue (the "Tribunal"). Although multiple questions of law have been craved, however, the following have been pressed for our opinion:

i) Whether, on the facts and in the circumstances of the case, the learned ATIR was justified in dismissing the appeal without properly considering the express and unambiguous language employed in clause (h) of sub-section (1) of Section 8 of the Sales Tax Act, 1990, which categorically disallows input tax credit in respect of "wires and cables"?

ii) Whether, on the facts and in the circumstances of the case, the learned ATIR erred in placing reliance on the judgment reported as ------------------------ v. Collector of Sales Tax) without appreciating that the said judgment pertained to disallowance of input tax relevant to tax periods from December 1997 to June 1998 under Section 8(1)(b) read with SRO ----------------------, whereas the present controversy involves disallowance of input tax under section 8(1)(h), which provision was inserted through the Finance Act, 2014; subsequent in time and materially distinct in scope?

3. After hearing learned counsel for the parties, we have examined that the Respondent-taxpayer was charged with inadmissible input tax adjustment under Section 8(1)(h) during the tax period ---------------- for the purchase of wires and cables.

4. The Commissioner Inland Revenue (Appeals), ------------ deleted the demand created along with penalty and default surcharge through Order-in-Appeal dated------------- while interpreting Section 8(1)(h) and upon factual analysis reached the conclusion that wires and cables have been used in machinery which in turn is used for production of goods/taxable activities. Therefore, input tax adjustment on wires and cables was allowed. The reasons put-forth by the CIR-Appeals are sound and cogent.

5. When the matter was taken up by the Tribunal, it was rightly held that the Respondent-taxpayer was entitled for input tax adjustment.

6. The question of law has its genesis in evaluation of factual verifications. The last fact verifying forum i.e. Appellate Tribunal, while affirming the order passed by CIR-Appeals has returned concurrent findings, which have been rendered on the basis of record which belied the stance coined by the Applicant-department. The concurrent findings have roots in factual determination and no issue of law emanates from the impugned order.

7. Therefore, this Reference Application is decided against the Applicant-Department and in favour of the Respondent-taxpayer and is accordingly dismissed.

III. Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.

Best regards for Here & Hereafter

Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner

Kasbati & Co (1400+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc

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