Poultry farmers exempt from payment of sales tax under relevant law: FCC

ISLAMABAD: The Federal Constitutional Court (FCC) held that poultry farmers are exempt from the payment of sales tax under the relevant law and, therefore, are not required to obtain sales tax registration. A two-judge bench comprising Justice Aamer Farooq and Justice Muhammad Karim Khan Agha heard the appeals against the LHC judgment on whether additional tax is liable to be paid by the petitioners (Shahzor Feeds (Pvt.) Ltd and others, either in their capacity as poultry farmers or poultry feed manufacturers, set aside the LHC’s judgment dated December 4, 2025. The judgment said, “In the present case, poultry farmers are exempted from payment of sale tax on account of exemption under the law; thus, they are not required to be registered. ” “Since the requirement of non-registration is mandated by law (section 14 of the Act), no penal consequences would fall upon either of the categories of petitioners before us by way of payment of additional tax, ” it added. The petitioners are aggrieved by the order dated September 11, 2024, passed by the Commissioner (Inland) Revenue, Large Taxpayers Office (LTO), Lahore, whereby it was held that manufacturers of the poultry feed supplying products to the farmers were liable to pay additional tax under section 3(1A) of the Sales Tax Act, 1990, since the recipients of the supply were not registered. The petitioners then approached the Lahore High Court by way of petitions under Article 199 of the Constitution, but the same were dismissed through the consolidated impugned judgment on December 4, 2025. The judgment said that the law does not require the exempted person from registration of the sales tax. Therefore, the petitioners, who are poultry farmers, are not required to be registered, but to make poultry feed manufacturers liable to payment of further tax (which eventually would be passed on to poultry farmers), would not only be unjust but also against the system of payment of sales tax under the Act. It maintained that there is no cavil or dispute of any kind that the poultry farmers are exempted from payment of sales tax under the Act; however, factually, it is also correct that poultry feed manufacturers are making supplies to the non-registered persons. It noted that the plain reading of section 14(1) shows that every person who is engaged in making taxable supplies in Pakistan, including zero-rated supplies, in the course or in furtherance of any taxable activity carried on by him, falling in any of the categories mentioned in the section, is required to be registered if not already registered. Section 14, read with section 2(41) of the Act, makes it abundantly clear that a person who is exempted from payment of sales tax, or in other words, making taxable supplies, is not required to pay sales tax and even register himself. Copyright Business Recorder, 2026

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