ISLAMABAD, June 13: The government has introduced a number of legal and procedural changes in the Sales Tax Act 1990 to facilitate the taxpayers.
Through the Finance Bill 2003-04, the changes were incorporated in the sales tax act, which were earlier causing problems to the taxpayers. The definition of retail price in section 2(28) has been amended by including the words or the “importer” for the purpose of charging sales tax on retail price of imported goods mentioned in the third schedule.
The definition of taxable activity as given in section 2(35) has been amended to include the services for the purposes of allowing input tax adjustment.
The words “made in Pakistan” wherever occurring in the act have been deleted in order to remove ambiguity about supply of imported goods. It has been made mandatory that sales tax invoice, bill of entry or the treasury challan should be in the name of the registered person for claiming input tax adjustment. In order to prevent misuse of this lacuna, section 7 has been amended.
The concept of fixation of minimum sales tax has been introduced by amending section 11. Registration rules have been amended through SRO504 to bring registration in uniformity with income tax law.
There is no provision in the act to blacklist the persons found involved in tax fraud or evasion of tax. Therefore, a provision has been made in section 21 for putting such persons on blacklist pending inquiry against such persons.
The present section 25 has been renumbered as section 25 (1) and four new sub-sections have been added to prescribe the audit procedure, which would now be conducted only once in a year.
A new section 7A has been inserted which in certain cases, will allow for levy of tax on the quantum of value addition only. The penalty for non-production of record has been enhanced for repeated defiance by amending section 33.
Other amendments made in the sales tax act includes: section 37A has been amended to authorize assistant collector to cause arrest; section 45A has been amended to empower collector adjudication to re-open the case of any proceedings of his sub-ordinate officers; section 46 has been amended to allow a single member of the appellate tribunal to dispose of cases not exceeding Rs500,000; section 47 has been amended to clarify that stay could not be granted for more than six months on appeals and section 58 has been amended to include business enterprises and to recover evaded amount from the owners, partners or directors of company or other business enterprises.
Through the Finance Bill other changes made in the act includes: reference to repealed income tax ordinance 1979 in section 3(1A) has been substituted by the new income tax ordinance; Asphalt, bitumen and lubricants of all sorts have been excluded from POL products for the purpose of exemption from payment of further tax; the period for issuing adjudication order within 45 days of issuance of show cause notice has been enhanced to 90 days.
Moreover, the collector has been authorized to allow extension for further 90 days; a new section 40B has been inserted in the act to empower the board or collector to post an officer of sales tax to the premises of the registered person, who is involved in tax fraud or in a tax evasion to monitor his production, sale and stock provision and a new section 75 has been added in the act to empower the federal government to notify any of the provisions of Customs Act 1969 to adapt them to the circumstances in like matter in respect of sales tax.