The instant Sales Tax Reference Appeal, under Section 47 of the Sales Tax Act, 1990 ('the Act 1990') has been filed by the appellant/department i.e. The Commissioner Inland Revenue ('CIR'), Zone-II, Regional Tax Office, Quetta at Hub, assailing the order dated 06.10.2023 ('the impugned order'), passed by the Commissioner Inland Revenue ('the CIR(A)'), whereby the appeal filed by the respondent No.1, i.e. M/s. Deenar Industries (Pvt.) Ltd. ('the registered person') against the Order-in-Original No.04 of 2023-24, dated ; 27-07-2023, passed by the Deputy Commissioner Inland Revenue ('DCIR') was allowed by setting aside the same/order-in-original and order dated 03.02.2025 ('the impugned order'), passed by the Appellate Tribunal Inland Revenue (Karachi Bench) Karachi ('the Appellate Tribunal') (respondent No.2), whereby, the appeal filed by the appellant/department was dismissed by upholding the order of the CIR(A).

1. Briefly stated facts arising out of the instant appeal are that during the course of investigation/inquiry carried out, analysis of the sales tax-cum-federal excise return, the other data available at e-portal of the FBR and the information received from the Government Departments and credible information was received that the respondent No.1, having NTN 4437610-3, are involved in suspicious business activities and claiming of inadmissible/illegal input tax, amounting to Rs.853,964,065/- on the invoices issued by the fraudster units activities who have already been declared suspended/blacklisted after thorough investigations/inquiries being non-existent or involved in fraudulent activities or abnormal business activities and un-verified withholding sales tax amounting to Rs.35,565,984/during the period July 2017 to June 2022.
2. Learned counsel for the appellant mainly emphasized that the Appellate Tribunal, was not justified to upheld the decision of CIR (A) and to allow input tax adjustment on account of supplies received from blacklisted/suspended units; that the forums below without any legal backing and justification have interfered in the order-in-original, passed by the DCIR, which otherwise, was well reasoned and passed on the basis of cogent material available on record and as per law; that the orders impugned passed by the forums below are result of surmises, thus, warrant interference by this Court.

4 On the contrary, learned counsel for the respondent No.1/registered person, stated that the fora-below have passed speaking orders, which are based on sound reasoning, as such, there is no room available to interfere in the same.

1. We have heard the learned counsel for the parties and perused the record with their able assistance.
2. During arguments, besides other contentions, mainly the following three questions of law were urged. -
3. Whether the forums below i.e. CIR (A) and the Appellate Tribunal have failed to consider that respondent No. 1/registered person has claimed input tax adjustment against fake and flying invoices, issued by the blacklisted/suspended units (detail whereof is mentioned in the Show-Cause Notice under section 11(2) of the Act of 1990)?
4. Whether the burden to prove the allegations against the respondent No.1/registered person was upon the concerned authorities or the registered person?
5. Whether the forums below have passed the impugned orders in accordance with law or otherwise?

Q. No.1
Whether the forums below i.e. CIR (A) and the Appellate Tribunal have failed to consider that respondent No.1/registered person has claimed input tax adjustment against fake and flying invoices, issued by the blacklisted/suspended units (detail whereof is mentioned in the Show Cause Notice under Section 11(2) of the Act of 1990)?
7. As far as question No.1, is concerned, it has been established by the respondent No.1/registered person that all the transaction made with the supplier, during the alleged period from July 2017 to June 2022, were through proper bank channel i.e. crossed banking instrument, whereas, at the time of purchases from the alleged suppliers, both, the buyer and the supplier were duly declared in the sale tax returns as active and no coercive action at that time was taken against the alleged blacklisted/blocked suppliers. To prove his version, the respondent No.1/registered .persons also produced complete detail of purchases made along with proof of purchases invoices and bank statements. It also appears from the order impugned of the CIR (A) that during the course of respondent No.1 's proceeding, the representative of the department was asked to provide any proof of inquiry or investigation, carried out by them to ascertain from where did he determined that the respondent No.1/registered person is involved in purchases of fake and flying invoices, not only he remained mum, but also showed unawareness of the business activities of the respondent No.1/registered persons, thus, it was well established by the respondent No.1/registered person that at the time when the supplies were made and invoices were issued, the suppliers were neither blacklisted nor it is shown that the invoices issued, had any direct nexus with the blacklisting order, therefore, question No.1 is an answered against the applicant/department. The Hon ble Supreme Court of Pakistan, in an unreported case titled as "The Commissioner Inland Revenue, Lahore v. Messrs Eagle Cables (Pvt.) Ltd. Lahore" while dealing with similar nature of issue, has held that:
"It is now well established in legal precedents that if a transaction is conducted while the suppliers are active and duly registered, any invoices issued are not automatically invalidated by a subsequent blacklisting or suspension of those suppliers. Therefore, it follows that the denial of refunds cannot be justified solely based on the later blacklisting of a supplier. In light of this context, according to sub section (3) of Section 21, all purchasers, including the respondent, who procured goods before the suppliers' registration was suspended or they were blacklisted, and who complied with the conditions outlined in Section 73 of the Act, were entitled to claim an adjustment of input tax." Q.No.2.
(ii) Whether the burden to prove the allegations against the respondent No.1/registered person was upon the concerned authorities/department or the registered person?

1. As far as, the second question is concerned, it is an admitted feature of the case that though show-cause notice was issued to the respondent No.1/registered person, but record is silent whether before issuance of show-cause notice any meaningful efforts were made by the sales tax officials to conduct an audit, or any proper inquiry was made by exercising powers conferred under the Act of 1990, in order to verify the allegations. It reveals from the contents of the show-cause notice that the same has been based on vague allegations and an assumption, such as, the respondent No.1/registered person had claimed input tax adjustment of Rs.889,530,049/- against sales tax invoices of suppliers who were subsequently blacklisted/suspended or made inactive by the Federal Board of Revenue. As per show-cause notice, the claim of the respondent No.1/registered person was not only in violation of the Act of 1990 but was recoverable from the respondent No.1/registered person along with penalty and default surcharge under Sections 33 and 34 of the Act of 1990. It appears that in reply to the show-cause notice, the respondent No.1/registered person stated the legal position that subsequent blacklisting/suspension of the suppliers does not require a registered person to repay the amount of sales tax already adjusted by him on such supplies. He also contended that it has already been held in number of cases that subsequent blacklisting or suspension of the suppliers does not empower the FBR to recover the amount of input tax already adjusted by the buyer. Apart from this, as stated above, it appears from the record that the respondent No.1/registered person fully complied with the provisions of Section 73 of the Act of 1990 and payment to the suppliers mentioned in the show-cause notice was made through proper bank challans. Coming back to the relevant question, it is settled law that, while interpreting fiscal statutes, the court looks to what is clearly said and there is no room for any intendment nor is there any equity about a tax. There is no presumption as to tax and nothing was to be read in or implied and one could only look fairly at the language used.
2. The scheme of the Act of 1990 clearly envisages that the obligation to establish that a person was liable to pay any tax or charge and the same has not been levied or paid or has been short-levied is essentially that of the sales tax authorities. The burden to prove the allegations is on the shoulders of the authorities/department. In order to discharge this obligation they have been vested with wide powers under the Act of 1990. It is well settled that whoever asserts a fact is also burdened with the duty to establish that it is highly probable to be true. In some exceptional cases, the legislature, in its wisdom, has provided for what is known as reverse onus, by placing the burden on the person against whom an allegation has been made. Section 187 of the Customs Act, 1969 and section 14 of the National Accountability Ordinance, 1999 are such illustrations. The concept of reverse onus i.e. placing the burden on the person against whom an allegation has been made runs contrary to the established principle of presumption of innocence. It is therefore, for this reasons that Courts lean in favour of interpreting or reading down such provision in an effort to safeguard the fundamental principles of fair trial. There is no provision pari materia with section 187 of the Customs Act, 1969 or section 14 of the National Accountability Ordinance, 1999, in the Act of 1990. The legislature, therefore, did not intend to reverse the onus of proof in matters relating to the levy, charge and payment of the tax under the Act of 1990. The proceedings before the adjudicating authority or the statutory appellate forum under the Act of 1990 are quasi judicial in nature. When the department alleges that a registered person has committed any illegality, the former is burdened with a statutory duty to establish before the adjudicating forum, through persuasive and proper evidence, that the allegations are highly probable to be true, rather than being unreliable, false or doubtful. The duty to establish facts on the standard of balance of probabilities is on the department under the Act of 1990, thus, the question No.2 also goes against the department. Q.No.3.

(iii) Whether the forums below have passed the impugned orders in accordance with law or otherwise?
10. In view of what has been discussed hereinabove, we are of the firm view that the forums below i.e. CIR (A) and the Appellate Tribunal, have passed well speaking orders, in the light of the applicable provisions of the relevant law, discussed each and every point related to the matter in hand and have rightly set aside the order-in-original of the DCIR, thus, this Court finds no reason to interfere in the concurrent findings of the forums below.
For the above reasons, the instant Sales Tax Reference Appeal No.06 of 2025, is hereby dismissed.
Appeal dismissed.