Karachi, December 29, 2024 – Section 11C of the Sales Tax Act (STA), 1990, empowers tax authorities to adjust or modify assessments and orders based on decisions made by higher judicial bodies.
This provision is designed to ensure that tax assessments align with the latest legal interpretations.
Sub-section (1): Alignment with Judicial Orders
When a question of law is decided by a High Court or the Appellate Tribunal in the case of a registered taxpayer, the Commissioner or an officer of Inland Revenue has the authority to apply the same decision to similar cases under their review. This is applicable even if an appeal or reference against the High Court or Tribunal’s decision has been filed. The decision can be followed for assessments pending before the Commissioner or Inland Revenue officers, provided it addresses the same legal question. However, this alignment remains valid only until the decision of the High Court or Tribunal is reversed or modified by a higher authority.
Sub-section (2): Adjustment Following Reversal or Modification
If the High Court or Tribunal’s decision is later reversed or altered, the Commissioner or Inland Revenue officer can revise the assessments or orders where the original decision was applied. Importantly, this revision can be made even if the statutory time limit for making such changes has expired. Authorities are given a one-year window from the date of receiving the new decision to ensure that the assessments or orders conform to the final legal ruling.
This section highlights the adaptability of the tax system to judicial rulings, ensuring consistency in the application of tax laws. It allows for the temporary application of judicial decisions while providing a mechanism to rectify assessments when legal interpretations evolve. Tax experts emphasize the importance of clear communication between the judiciary and tax authorities to prevent undue delays and ensure taxpayers are not adversely affected by frequent changes in assessments. This provision demonstrates the balance between adhering to legal precedents and maintaining flexibility to address changes in judicial outcomes.
