Overview
- The Supreme Court set aside the Sindh High Court and ATIR decisions and restored the FBR’s Order‑in‑Original that disallowed Bawany Sugar Mills’ input‑tax adjustment.
- The claim involved input tax on cement and steel used in immovable structures for the periods July–December 2013 and was ruled outside the scope of adjustment under the applicable rules.
- The restored assessment imposes a tax demand of Rs22,758,773 plus a penalty of Rs682,761 that were first levied in the Order‑in‑Original dated January 30, 2015.
- The court upheld the FBR’s reliance on SRO 4571 (May 27, 2013) and found the company breached Sections 8(1)(ca), 8A and 73 of the Sales Tax Act by failing to produce invoices, books and bank statements and by not using required banking channels.
- The judgment clarifies that courts must independently decide questions of law and that concessions by departmental counsel do not bind judicial interpretation, a ruling that strengthens tax authorities’ ability to press documentation and banking compliance in future audits.