Supreme Court Allows FBR to Collect Extra Sales Tax from Unregistered Flour Mills

Supreme Court Allows FBR to Collect Extra Sales Tax from Flour Mills

The Supreme Court of Pakistan (SCP) has given a major verdict in favor of the Federal Board of Revenue (FBR). The Court ruled that FBR can legally collect further sales tax and extra sales tax on the utility bills of unregistered flour mills.

---

Background of the Case

Earlier, the Lahore High Court (LHC) had ruled that flour mills should not be charged extra taxes under SRO 509(I)/2013 and the Sales Tax Act, 1990. Based on that decision, flour mills argued that they were exempt from registration and extra taxation.

However, FBR challenged this decision in the Supreme Court, saying that unregistered flour mills were still liable to pay.

---

Supreme Court’s Verdict

The Supreme Court bench, headed by the Chief Justice, reviewed previous cases including Arif Ice Factory and ACRO Spinning and Weaving Mills.

The judges clarified that earlier exemptions were related to specific goods like ice, not flour mills. Therefore, those judgments could not be applied to this case.

The Court ruled that:

FBR has the legal right to collect further and extra sales taxes under Section 3(1A) of the Sales Tax Act, 1990.

The Lahore High Court had made an error by ignoring the relevant provisions of the law.

The petitions of flour mills were rejected, and FBR’s appeals were allowed.

---

What This Means for Flour Mills

With this judgment:

Unregistered flour mills will now face additional tax charges on their utility bills.

The ruling strengthens FBR’s power to ensure tax compliance in the flour industry.

Registered mills will continue operations under existing tax regulations, while unregistered ones must comply or face extra charges.

---

Conclusion

The Supreme Court’s ruling is a big win for FBR and a reminder for all businesses to stay registered and compliant with tax laws. Flour mills that are not registered will now have

to bear additional costs through higher sales tax.