I. BACKGROUND - KC Recommendations

In order to avoid issues like above, etc we recommend an Urgent Registration by U or team for attending Advance Withholding Income Tax and Five Sales Taxes (including 5 Finance Acts' Changes) Workshop to be held 28.8.26 (ISA) as per details in the trail, after the double line, 

II. UPDATED COMMENTARY

A. Reference

Further to KQU 4046 of 19.8.26, being an important matter, we would inform you about Cooking oil, vegetable ghee exports to Afghanistan: ATIR rules in FBR’s favour on WHT exemption (Attachment 3696.1) in ensuing paragraph, with emphasis ours in bold & Underline and heading ours for quick reading.

B. Authentication

The document mentioned above is not available on relevant websites, although our team checks all relevant websites twice a day. However, we found the document from reliable resources; hence, the QC is being sent now. 

C. Executive Summary

ATIR, Special Division Bench, Quetta has issued an order in favour of FBR regarding conditions applicable on exporters of cooking oil and vegetable ghee to Afghanistan, seeking withholding tax exemption under the Duty and Tax Remission for Exports (DTRE) Scheme.

ATIR, Special Division Bench, Quetta, comprising Mr M Akram and Mr Abdullah Khan Kakar, Members, has ruled in favour of the FBR holding that the exemption from withholding tax u/s 154 of ITO, 2001, available to exporters of cooking oil and vegetable ghee to Afghanistan under clause (47C) of Part-IV of the Second Schedule, is strictly conditional upon actual collection of advance tax u/s 148 at the import stage and cannot be claimed merely on the basis that the corresponding liability was secured through an indemnity bond or an un-encashed post-dated cheque under the DTRE Scheme.

D. History

Source told that consolidated appeals pertaining to Tax Years 2013, 2014 and 2015 were filed by the CIR, WHT, RTO Quetta, against a common order of the CIR(A) which had annulled orders passed u/s 162 creating a combined withholding tax liability of over Rs 74 million against a Ghee Mill. The CIR(A) had held that the taxpayer, operating under DTRE, was entitled to the clause (47C) exemption since the import-stage duties and taxes had been “secured” through indemnity bonds and post-dated cheques.

E. Tribunal Deliberations and Decision

1. Source Reversing this finding, the Tribunal held that the statutory language “from whom advance tax has been collected u/s 148” is plain, unambiguous, and deliberately chosen by the legislature, drawing a clear distinction between an amount that is merely secured and one that is actually collected or paid. Notably, the taxpayer’s own Authorized Representative conceded before the Tribunal that the post-dated cheques furnished under the DTRE arrangement were never subsequently encashed by the Collector of Customs, a fact fatal to the claim of exemption.

2. Relying on the settled principle that exemption provisions must be construed strictly in favour of the taxing authority, the Tribunal invoked the Supreme Court’s rulings in PLD 1991 SC 963, 2005 PTD 2131 & 1999 SCMR 412, holding that no implication can enlarge the scope of an exemption beyond its plain and clearly expressed language, and that every word of a statute must be given effect without being treated as surplusage.

3. The Tribunal further held that Circular No 14/2004, which introduced clause (47C), itself contemplated verification of the Bill of Entry to confirm actual collection of tax, reinforcing that the legislative intent was tied to real collection, not contingent security. It also rejected the argument that Section 154 being a “machinery provision” could dilute the express statutory condition, and clarified that reliance on an earlier appellate order in the taxpayers own case for Tax Year 2012 could not override the express requirement of the law, particularly once the factual position regarding non-encashment of cheques was established.

4. Non-deduction of tax remains recoverable u/s 162 once the exemption fails. Accordingly, the departmental appeals were allowed, the CIR(A) orders were set aside, and the original orders u/s 162 were restored in full: ATIR ordered.

III. CLAUSE 47C

This refers to several workshops on Withholding Tax like the one to be held on 28.8.26 covering below matters as well as several Advance Tax Withholding Tax matters

Clause 47C of Part IV of the Second Schedule is reproduced below for ready reference in Italic.

(47C) The provisions of sub-section (1) of section 154 shall not apply to an exporter in respect of cooking oil or vegetable ghee exported to Afghanistan, from whom advance tax has been collected under section 148 on import of edible oil.

IV. FURTHER DETAILS & SERVICES

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.

Best regards for Here & Hereafter 

Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

Kasbati & Co (1400+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc

Quick Commentary Service Provider and High Level 440+ Tax & Levies Laws Consultants) 

Head of Tax & Professional Excellence Services (Symbols of High Quality Practical Tax, Levies & Corporate Training for Beginners to High Levels' Professionals) 

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ADVANCE WITHHOLDING INCOME FEDERAL & PROVINCIAL TAX (including Finance Acts Changes)

Workshop on 28 August Tuesday (with Several Panelists) from 9:30am to 6pm Karachi Physically & Online from all over Pakistan. Page 1 is pasted below; for Full Brochure with Objectives & Content on page 2 and Images of High Quality Physical & Online Workshop on pages 3 & 4 click here

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