I. BACKGROUND (BG)

1. This refers to the related Important QCs in trail, blue, italic and double Line (a)  3282 of 26.9.25 about E-Invoicing & Integration: New Deadlines for all Registered Person - SRO 1852 (b)  3096 of 28.4.25 about FST Invoice Integration by all as per SR0 709 & Major Issues

2.  We also refer to several Other QCs including:(a) 3280 of 24.9.25 about E-Invoicing & Integration: LTBA extension request due to IRIS system issues (b) 3225 of 1.8.25 about E-Invoicing & Integration - PHC hearing on 6.8.25 (c)  3218 of 27.7.25 about E-Invoicing & Integration - LHC Interim stay 

II. EXECUTIVE SUMMARY

1. The SHC deliberated that SRO 709 mandates electronic invoicing was intra /or ultra vires u/s 23(3) because the original text of the sub-section used the word "may," implying an option to issue electronic invoices.

2. However, SHC found that section 23(3) had been amended by the Finance Act, 2024, to use the word "shall," making electronic invoicing mandatory for registered persons notified by the FBR. Additionally, the FA also added sub-sections (4) and (5) to u/s 40C which further stipulate the requirement for electronic integration with the FBR's computerized system for real-time reporting of sales through licensed integrators.

3. Therefore, the court concluded that SRO 709 was not ultra vires, and the petition was dismissed in limine due to a "non-reading of the statute" by the Petitioner.

4.  We are of the view that owing to the above SHC order and new SRO 1413 of 31.7.25 (TLQC 3282 of 26.9.25 in trail refers), LHC & PHC are likely to decide against the Taxpayers, though there is stay at present to the best of our knowledge to the extent of Petitioners and not otherwise.

5. Hence, we suggest reading para VI to VII as to the KC Recommendations for Taxpayers, Public at Large and Govt plus Multiplication.  

III. DETAILS

A.   References  

Further to KQU 3576 of 29.9.25, being an important matter, we would inform you about Gama lux Oleochemicals Ltd VS FOP, etc - CP 4583/2025 - SHC* (Attachment 3292.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading 

B. Background of the Petition & FBR SRO Notification

By SRO 709 dated 22.4.25(TLQC 3096 of 28.4.25 in trail refers), issued u/s  50 of the STA, 1990 read with sub-Rule (2) of Rule 150-Q of the STR, 2006, the FBR notified that corporate and non-corporate registered persons shall electronically integrated their hardware and software with the FBR‟s computerized system through a licensed integrator. It is contended by the Petitioner that SRO 709 is ultra vires sub-section (3) of u/s 23 of the STA, 1990 in that, such SRO mandatorily requires registered persons to issue electronic invoices, whereas sub-section (3) of u/s 23 of the Act provides the registered person with an „option‟ to issue electronic invoices. In pitching such case, the Petitioner relies on the word „may‟ in sub-section (3) of u/s 23 as it existed in the year 2023 as under:

“23(3). A registered person making a taxable supply may, subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify, issue invoices to another registered person electronically and to the Board as well as to the Commissioner, as may be specified.”

C. Additional Amendments by Finance Act 2024

However, at the time SRO 709 was issued, sub-section (3) of u/s 23 of the STA stood amended by the FA, 2024 to use the word „shall‟ as follows:

“23(3). A registered person making a taxable supply shall, subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify to issue electronic invoices.”

The Rules for electronic integration of hardware and software used by registered persons for generating and transmitting electronic invoices through a licensed integrator were then set-out in Chapter XIV of the STR, 2006.

Further, as part of the scheme for monitoring electronic invoices, the FA, 2024 also added sub-sections (4) and (5) to u/s 40C of the STA to stipulate:

“40C(4). Notwithstanding anything contained in this Act, the Board through notification in the official Gazette, may require any person or class of persons to integrate their electronic invoicing system with the Board‟s Computerized System for real time reporting of sales in such mode and manner and from such date as may be specified therein; and

(5) Licensed integrator shall integrate electronic invoicing system of registered persons referred to in sub-section (4) in such mode and manner as may be prescribed.”

D. SHC Decision

Ex-facie, sub-section (3) of section 23 and sub-sections (4) and (5) of u/s 40C of the STA, as amended by the FA, 2024, no longer leave an „option‟ for issuing electronic invoices with registered persons who have been so notified by the FBR, rather said provisions require compliance with electronic invoicing. Therefore, SRO 709 is not ultra vires sub-section (3) of u/s 23 of the STA, 1990. The very premise of the challenge appears to be a non-reading of the statute. Resultantly, the petition is dismissed in limine.

IV.   Kasbati & Co Views as to expected LHC & PHC order

1. We are of the view that owing to the above SHC order and new SRO 1413 of 31.7.25 (TLQC 3282 of 26.9.25 in trail refers), LHC and PHC are likely to decide against the Taxpayers, though there is stay at present to the best of our knowledge to the extent of Petitioners and not otherwise.

2.  Even Otherwise, as the SRO 709 is not more in field, hence, petitions are likely to be dismissed. 

V  Kasbati & Co Recommendations for Taxpayer and Govt 

1. Owing to SHC order and expected LHC & PHC order against taxpayers, all Registered Tax Payer are recommended to proceed to E-Invoicing and Integrations as per SRO 1413, especially those entities working in cities. 

2. Those who are not registered for Sales Tax are recommended to be registered, followed by matter in para V1 to avoid serious repercussions, which may ruin the Good name of the entity and owner/s & shareholders.

3. For Tax, Levies, Corporate Compliance & Savings, we recommend your team members to attend the Courses considering their Education & Experience. These courses can be attended Physically at Karachi; Online from Karachi Lahore, Islamabad, etc and Recorded Lecture are also available. Click here for the Main Tax Flyer. Specific Level as per the following Courses, click Flyers and Tentative Registration Links. Please click on the Link for  (a)  Comparative Study to decide relevant Level by Mr Asif Kasbati FCA, FCMA, LLB and Courses Director (b) View of High Level Professionals view (c) Participants views 

4. Suggest Friends & Contacts to get Daily News Clipping, Updates & High Quality Commentary Subscriber in order to get this type of Quality emails, as per suggested by several High Level Professionals and current Subscribers.  For Flyer, click here. For video as  to the details about services, please click link.  For Comments by High Level Professionals & Subscribers views, please click here. For 15 days FREE Samples as Trial, please fill Form, if not filled earlier. 

VI  Kasbati & Co Recommendations for Taxpayer and Govt 

On the other hand, Govt is recommended (hence this email is being sent / sent to FM & FBR offices, etc) as follows:

1.  Data Safely and Security as certain FBR Data Hacked few years ago plus Pak Suzuki & Pakistan Petroleum Limited Data Hacking (our KQU/DNVC & TLQCs in this regards refers) with suggested recommendations (a) DNVC dated 24.8.21 KTBA urges FBR to secure data centre from hacking - TNS (b) FRQC274 of 9.8.25 about Cyber Attack disrupted Pakistan Petroleum’s IT Systems for ransom & KC Recommendation (c) COQC648 of 29.5.25 about SECP Cyber Security Advisory & KCR (d) FRQC214 of 22.4.24 about Pak Suzuki Data Leakage and KCR (e) FRQC195 of 24.2.24 about Cyber Threats surge by 17% in 2023. Hence Be careful.

2.  Make the above Mandatory for Only big Cities by issuing a list thereof owing to below issues.  After 3 months for Small Cities, keeping in view below matters too

3.  Electricity Distribution Infrastructure be improved on a fast track, to avoid Electricity failure from time to time, especially in Summer and Rainy & Flood seasons

4.  Internet, Digitization & relevant Education Development and Free for Taxpayers who is registered for E-Invoicing cum Integration

5. IRIS and E-Invoicing Software Development to avoid issues as we face in the last days of filing income tax returns, as generally IRIS cannot face the High Workload of several Entities millions of E-Invoices.

VII  Multiplication

Although all the Commentaries are to the extent of the Subscribed IDs only, however, your Goodself is allowed to share this QC to Impart Knowledge. 

VIII. 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

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