The case revolved around amendments to SRO No. 555 through SRO No. 869, which took effect on July 1, 2002. The FBR argued that these amendments barred pharmaceutical companies from making input tax adjustments against output tax after the specified date. However, the companies contended that the adjustments were lawfully made during the period when sales tax was applicable and should therefore remain intact as vested rights.
The Court concurred with the companies, ruling that requiring repayment of these benefits would adversely affect vested rights and overturn completed transactions. The Court further noted that such retrospective demands through subordinate legislation require explicit authorization by primary legislation, which was not present in this case.
By upholding the earlier judgments of the Sindh High Court, the Supreme Court confirmed that the appeals by the FBR lacked merit, providing clarity on the legal boundaries of retrospective tax adjustments.
