SHC upholds sales tax default surcharge

The Sindh High Court has held that a surcharge for late payment of Sindh sales tax on services is a strict legal duty meant to compensate the revenue authority. According to Dawn, the bench ruled that proving deliberate intent was not necessary for the charge to apply, and that officers of the Sindh Revenue Board, the commissioner and the appellate tribunal had no authority to waive, cut or postpone it on grounds of hardship or lack of intent.

The two-judge bench of Justice Agha Faisal and Justice Shah Nawaz Memon acknowledged the disruption that Covid-19 caused to business in Sindh, but said sympathy could not create jurisdiction and that tax matters carry no equity. The judgement was delivered while deciding 12 identical reference applications under the special sales tax regime, which the SRB had lodged against tribunal orders.

Earlier, the appellate tribunal had cancelled the levy the SRB placed on a dozen industries, banks and private firms, finding no wilfulness. The court noted that the Sindh Sales Tax on Services Act already offers a pandemic relief route under Sections 17(3) and 45, which allow the SRB to set a different payment time and exempt the surcharge, but the respondents did not use it.