Toll manufacturing: SHC disposes of pleas on ST collection after FBR-SRB statement

ISLAMABAD: Sindh High Court has disposed of all petitions and reference applications on collection of sales tax on toll manufacturing after submission of a joint statement by the Federal Board of Revenue (FBR) and Sindh Revenue Board (SRB).

In this regard, the SHC has issued an order on Thursday in the case number (CP No. D-1472/2016).

Lead counsel in these cases was Abid Shaban on the behalf of petitioner companies. A joint statement has been filed by the FBR and the SRB in the SHC.

Jurisdiction issue: SC sends back toll manufacturing sales tax case to high court

According to the statement, on behalf of the Federal Board of Revenue and Sindh Revenue Board (SRB) that, in compliance of the directions contained in the Supreme Court’s Order dated June 6, 2024 and the Sindh High Court’s Order dated May 27, 2025, several meetings were held between the representatives of FBR and the SRB to resolve the matter in relation to the levy of sales tax on the ‘activity of manufacturing or processing for others on toll basis’ in the light of the provisions of the respective statutes i.e. Sindh Sales Tax on Services Act, 2011 (Act, 2011) and Sales Tax Act, 1990 (Act, 1990).

In the light of the deliberations and discussions in the aforesaid meetings, FBR and SRB state as follows:-

(1)The services provided in the matter of manufacturing and processing for others on toll basis became liable to Sindh Sales Tax (SST) w.e.f. July 1, 2013 when such services were added in the Second Schedule to the Act, 2011 through the Sindh Finance Act 2013.

(2) Following sub-clause (d) was added in section 2(33) of the Sales Tax Act, 1990 through the Federal Finance Act, 2015 w.e.f. July 1, 2025.

(3)For the period from July, 2015 to June 2022 during which the activity was liable to tax under both Federal and Sindh’s statutes, there shall be no double taxation and, consequently, if the registered persons/litigants have discharged their tax liability with either of the authorities, the said payment shall be considered final subject to verification.

(4)In view of notification No SRB-3-4/21/2022 dated 28-06-2022 whereby SST on the services provided in the matter of manufacturing or processing for other on toll basis was exempted w.e.f. July 1, 2022, therefore, there is no issue of double taxation or otherwise since that date.

(5) No coercive recovery shall be enforced by either of the two authorities for a period up to December 31, 2025, during which the taxpayers/litigants may provide evidence of tax payments already made by them to either of the authorities.

In view of the above consensus, the Honourable Court may graciously be pleased to dispose of the litigation cases accordingly in the interest of justice, the joint statement added.

Copyright Business Recorder, 2025