ISLAMABAD: With a delay of more than 10 months, the government through Finance Bill 2018 has provided a legal cover to the criminal prosecution against tax evaders in pursuance of sales tax statutory regulatory order (SRO).

The SRO116, which empowered the Directorate General Intelligence & Investigation for exercising power and functions of investigation into sales tax evasion, was declared as illegal in a Lahore high Court judgement in July 2017.

In the wake of this judgment the FIRs registered and the criminal prosecution set in motion in light of SRO116 were also set aside and quashed.

Through the Finance Bill 2018, a section 30A was proposed in the Sales Tax Act 1990 where the powers are conferred to Directorate General Investigation to exercise power and function of investigation into sales tax evasion.

As a result, the finance bill has provided a legal cover to the actions of Directorate General Intelligence and Investigation.

Regarding the past cases including lodging of FIRs, a validation section 74 was proposed to the Sales Tax Act 1990. As per amendments, the validation section provides a legal cover to orders of Directorate General (Intelligence and Investigation) as if these powers were conferred before the commencement of Finance Act 2018.

For curtailing the powers of finance minister, the government took away power of making changes to the Sales Tax Act and allows the federal government to make any amendments to the Sales Tax Act, 1990. This amendment has been made in the light of recent court judgment of Mustafa Impex vs Federation of Pakistan.

Through another amendment, the finance bill proposed to insert new section sub-section for empowering the commissioner or the officer Inland Revenue to issue order of assessment of tax to any registered person, giving effect to any finding or direction in order made by the Commissioner Appeals, Appellate Tribunal, High Court or Supreme Court.

Furthermore, if an order is made by Appellate Tribunal, High Court or Supreme Court where an order of assessment is set aside wholly or partially the commissioner, the commissioner (Appeals) or cfficer of Inland Revenue is directed to pass new order of assessment within one year from the end a financial year in which the order is served.

This amendment will facilitate taxpayers by removing unnecessary disputes in quantification of tax liability pursuant to appeal order by commissioner (Appeals) , Appellate Tribunal, High Court or Supreme Court.

It is proposed that the powers of chief commissioner are curtailed regarding posting of officer on premises of tax payers. Because of numerous complaints where the chief commissioners were found to misusing the powers conferred under Section 40B. Through such amendment only the board has powers to post officer at the premises of taxpayers.

Published in Dawn, May 2nd, 2018

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