Sales Act Government of Pakistan Updated Up to July 2014 (1)

7/26/2019 Sales Act Government of Pakistan Updated Up to July 2014 (1)

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The Sales Tax Act, 1990

(Sales Tax Act, 1990, as on July 01, 2014)(The amendments made through the Finance Act, 201, ha!e"een sho#n in $ed)%(The amendments made through Finance Act 2014, ha!e

"een sho#n in &reen)%

The Sales Tax Act,1990

(Act 'o% o 19*1 asAmended "y Act + o 1990)

..................................................................................................-dated !ide Finance Act, 2014

.y

'ida Anum,

1


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Second Secretary,FAT/ ing,

Federal .oard $e!enue,slama"ad%

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ContentsChapter I..................................................................................1. Short title, extent and commencement. ...........................62. Defnitions.............................................................6

ChapterII.............................................................................19SC!"# A$D "A%$T !' TA(..........................................19). Scope o* tax......................................................................19)A. !mitted..........................................................................22)AA. !mitted........................................................................22)AAA. !mitted......................................................................22)+. Collection o* excess sales tax etc..................................22. -ero ratin.......................................................................22/. Chane in the rate o* tax.................................................2)

6. Time and manner o* pament..........................................2. Determination o* tax liailit...........................................2/A. 3e4 and collection o* tax on specifed oods on 4al5e

addition...... 26. Tax credit not allo7ed......................................................26A. 8oint and se4eral liailit o* reistered persons in s5ppl

chain 7here tax 5npaid..................................................2+. Ad:5stale inp5t tax......................................................29. Deit and credit note.......................................................29

10. ;e*5nd o* inp5t tax........................................................2911. Assessment o* Tax and reco4er o* tax not le4ied r shortle4ied or errono5sl re*5nded..........................................)0

11A. Short paid amo5nts reco4erale 7itho5t notice.......)112. !mitted..........................................................................)21). #xemption.listin and s5spension o*

reistration......................................................................))ChapterI?............................................................................)/+!!@ @##"I$= A$D I$?!ICI$= ;#BI;#$TS........)/22. ;ecords..........................................................................)/2). Tax In4oices...................................................................)62. ;etention o* record and doc5ments *or f4e ears.......)

)


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2/. Access to record, doc5ments, etc.................................)2/A. Dra7in o* samples....................................................)2/AA. Transaction et7een

Associates....................................................................1

Chapter?.............................................................................)9;#TB;$S.............................................................................026. ;et5rn............................................................................026A. !mitted........................................................................126AA.

!mitted............................................................................................................./

2. Special ;et5rns..............................................................1

2. 'inal ;et5rn...................................................................129. ;et5rn deemed to ha4e een made...............................2Chapter?I............................................................................)

A""!I$T$T !' !''IC#; !' SA3#S TA( T#I;"!E#;S...........................................................................)

)0. Appointment o* A5thorities............................................))0A. Directorate =eneral, FIntellience and In4estiationG

Inland ;e4en5e................................................................))0+. Directorate =eneral Internal A5dit.............................

)0C. Directorate =eneral o* Trainin and ;esearch...........)0D. Directorate =eneral o* ?al5ation.................................)0DD. Directorate o* "ost Clearance A5dit........................)0#. "o7ers and '5nctions o* Directorate etc....................)1. "o7ers............................................................................/)2. Deleation o* po7ers...................................................../)2A. Special A5dit Chartered Acco5ntants or Cost

Acco5ntants....................................................................../)2AA. !mitted......................................................................6Chapter?II...........................................................................!''#$C#S A$D "#$A3TI#S..............................................)). !Hences and penalties...................................................). De*a5lt S5rchare........................................................../))A. #xemption *rom penalt and de*a5lt s5rchare..........//)/. !mitted..........................................................................//)/A. !mitted........................................................................//)6. !mitted..........................................................................61). "o7er to s5mmon persons to i4e e4idence and prod5ce

doc5ments in in5iries 5nder the Act.............................//)A. "o7er to arrest and prosec5te..................................../6)+. "roced5re to e *ollo7ed on arrest o* a person........../6)C. Special 85des............................................................../


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)D. ConiJance o* !Hences Special85des....................................................6/

)#. Special 85de, etc. to ha4e excl5si4e85risdiction.......................................... 66

)=. Trans*er o*cases.................................................................................................66

). "lace o*Sittins..................................................................................................66

)I. Appeal to the ihCo5rt...................................................................................66

). A5thorised oHicers to ha4e access to premises, stoc>s,acco5nts and records......................................................./9)A. "o7er to call *or in*ormation.......................................62)+. !liation to prod5ce doc5ments and pro4ide

in*ormation.......................................................................62)9. !mitted..........................................................................60. Searches 5nder 7arrant................................................6)0A. !mitted........................................................................6)0+. "ostin o* Inland ;e4en5e !Hicer...............................6)

0C. &onitorin o* Trac>in #lectronic or othermeans.................................01. !mitted..........................................................................62. !mitted..........................................................................6Chapter?III..........................................................................6/

A""#A3S..............................................................................6/). !mitted..........................................................................6/. !mitted..........................................................................2/. !mitted..........................................................................2/A. "o7er o* the +oard and Commissoner to call *or

records........................ 6//+. Appeals........................................................................666. Appeals to Appellate Tri5nal.......................................6. ;e*erence to the ih Co5rt..........................................6A. Alternati4e disp5te resol5tion....................................69Chapter?IIIA......................................................................6/S#TT3#$T !' CAS#S....................................................6/!mitted.................................................................................6/ChapterI(............................................................................2;#C!?#;% !' A;;#A;S....................................................2. ;eco4er o* arrears o* tax............................................2Chapter(.............................................................................

/


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&ISC#33A$#!BS...............................................................9. Sales o* taxale acti4it or trans*er o* o7nership.......9A. 3i5idators.................................................................../0. "o7er to ma>e r5les....................................................../

/0A. Comp5teriJed sstem..................................................//1. +ar o* s5its, prosec5tion and other leal proceedins..6/2. Appearance a5thorised representati4e...................../2A. eintermediaries to e appointed................................/). #state o* deceased person............................................./. #state in an>r5ptc......................................................//. ;emo4al o* diHic5lties..................................................../6. Ser4ice o* order, decisions, etc....................................../. Correction o* clerical errors, etc.................................9

/. 3iailit *or pament o* tax in the case o* pri4atecompanies or 5siness enterprises................................../A. ;epresentati4es...........................................................0/+. 3iailit and oliations o* representati4es................1/9. Tax paid on stoc>s ac5ired e*ore reistration...........260. "o7ers to deli4er certain oods 7itho5t pament o* tax

..........................................................................................261. ;epament o* tax in certain cases.................................)61A. ;epament o* tax to persons reistered in AJad 8amm5

and @ashmir.....................................................................)62. Dra7ac> allo7ale on reexport................................)6). Dra7ac> on oods ta>en into 5se et7een importation and

reexportation....................................................................)6. "o7er to declare 7hat oods are identifale and to

prohiit dra7ac> in case o* specifed *orein territor. 6/. #xemption o* tax not le4ied or short le4ied as a res5lt o*

eneral practice...............................................................66. ;e*5nd to e claimed 7ithin one ear...........................6. Delaed ;e*5nd............................................................../6. 3iailit o* the reistered person *or the acts o* his

aent................................................................................/69. Iss5ance o* d5plicate o* sales tax doc5ments.............../0. Comp5tation o* limitation period.................................../1. Special proced5re..........................................................62. !Hicers o* Inland ;e4en5e to *ollo7 +oardKs orders, etc.

.......................................................................................... 9/). Certain transactions not admissile..............................96. Condonation o* timelimit............................................../. Application o* the pro4isions o* Act I? o* 1969 to Sales

Tax....................................................................................

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S/3/S..........................................................T# 'I;ST SC#DB3#.......................................................T# S#C!$D SC#DB3#..................................................T# TI;D SC#DB3#......................................................9

T# '!B;T SC#DB3#..................................................91T# 'I'T SC#DB3#......................................................91T# SI(T SC#DB3#......................................................9$!T# T# S#?#$TSC#DB3# ..............................................................1))T# #I=TSC#DB3#....................................................................................1)T# $I$T

SC#DB3#...................................................................................1/


[Act No. III of 1951 as Amended by Act VII of 1990]


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An Act to consolidate and amend the law relating to the levy of a tax on thesale 1a[, importation, exportation, production, manufacture or consumption] ofgoods.

WHEEA! it is expedient to consolidate and amend the law relating to the

levy of a tax on the sale 1a[, importation, exportation, "roduction, manufacture orconsumption] of goods#

$t is here%y enacted as follows&'

25ha-ter6

P!"I#INA$

1.Sho%t t&tle, extent and commencement '

(1) *his Act may %e called the !ales *ax +[... ]Act, 1-.

() $t extends to the whole of "a/istan.

0[(+) $t shall come into force on such date as the ederal 2overnment may, %ynotification in the official 2a3ette, appoint.]

5[(. )ef&n&t&ons.' '

$n this Act, unless there is anything repugnant in the su%4ect or context,''

5[(1) 6Appellate *ri%unal7 means the Appellate *ri%unal $nland evenueesta%lished under section 1+- of the $ncome *ax 8rdinance --1 (9:$9 of--1)#]

() 6appropriate officer7means an ;[officer of $nland evenue]authorised %y the


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1[(A) 6arrears7, in relation to a person, means, on any day, the sales tax due andpaya%le %y the person under this Act %efore that day %ut which has not yet %eenpaid#]

[*+ associates (associated persons) means, - -

FiG su%4ect to su%'clause (ii), where two persons associate and therelationship %etween the two is such that one may reasona%ly %eexpected to act in accordance with the intentions of the other, or%oth persons may reasona%ly %e expected to act in accordancewith the intentions of a third person#

(ii) two persons shall not %e associates solely %y reason of the fact thatone person is an employee of the other or %oth persons areemployees of a third person#

(iii) without limiting the generality of su%'clause (i) and su%4ect to su%'

clause (iv), the following shall %e treated as associates, namely&- -

(a) an individual and a relative of the individual#

(%) mem%ers of an association of persons#

(c) a mem%er of an association of persons and the association,where the mem%er, either alone or together with anassociate or associates under another application of thissection, controls fiftyper cent or more of the rights to incomeor capital of the association#

(d) a trust and any person who %enefits or may %enefit under thetrust#

(e) a shareholder in a company and the company, where theshareholder, either alone or together with an associate orassociates under another application of this section, controlseither directly or through one or more interposed persons=-

(i) fifty per cent or more of the voting power in thecompany#

(ii) fiftyper cent or more of the rights to dividends# or

(iii) fiftyper cent or more of the rights to capital# and

(f) two companies, where a person, either alone or together withan associate or associates under another application of thissection, controls either directly or through one or moreinterposed persons =-

(i) fifty per cent or more of the voting power in %othcompanies#

1C7a'se +#! s'bstit'ted b Finance !ct, #00. :ar7ier it was inserted b /a; =aws +!mendments4rdinance, 1999. 4riina77 it was inserted b Finance !ct, 1991.#C7a'se +3 s'bstit'ted b Finance !ct, #00.

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(ii) fiftyper cent or more of the rights to dividends in %othcompanies# or

(iii) fiftyper cent or more of the rights to capital in %othcompanies.

(iv) two persons shall not %e associates under su%'clause(a) or (%) of paragraph (iii) where the 1[>ommissioner]is satisfied that neither person may reasona%ly %eexpected to act in accordance with the intentions ofthe other.

(v) $n this clause, 6relative7 in relation to an individual,means=-

(a) an ancestor, a descendant of any of the

grandparents, or an adopted child, of theindividual, or of a spouse of the individual# or

(%) a spouse of the individual or of any personspecified in su%'clause (a).]

[(+A) 6association of persons7 includes a firm, a Hindu undivided family, anyartificial 4uridical person and any%ody of persons formed under a foreign law, %utdoes not include a company#]

+[(+AA) 6%an/ing company7 means a %an/ing company as defined in the

ompanies 8rdinance, 15 (:?$$ of 15) and includes any %odycorporate which transacts the %usiness of %an/ing in "a/istan#]

0[(0) 6Board7 means the ederal ommissioner7 means a person appointed as the chief>ommissioner $nland evenue under section +-#]

12'bstit'ted for * co77ector of 2a7es /a;- b Finance !ct, #010 w.e.f. j'ne 5, #010/he same amendment

was made b Finance +!mendment 4rdinance, #010, $rom'7ated as 4rdinance o. %%% of #010, datedFebr'ar ", #010 $'b7ished in the Gazette of Pakistan :;traordinar $art % at $aes #3 to 53 and thisamendment was made thro'h Finance +!mendment 4rdinance, #009, $rom'7ated as 4rdinance o.&&%% of #009, $'b7ished in the Gazette of Pakistan :;traordinar Part % at $aes ##9 to #59.#C7a'se +3! inserted b Finance !ct, #00.3C7a'se +3! re6n'mbered as +3!!. :ar7ier it was inserted b Finance !ct, #00.C7a'se + s'bstit'ted b Finance !ct, #00. :ar7ier it was s'bstit'ted b Finance !ct, #00


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1[(@) 6>ommissioner7 means the >ommissioner of $nland evenue appointedunder section +-#]

[(@A) 6common taxpayer identification num%er7 means the registrationnum%er or any other num%er allocated to a registered person#]

+[(@AA) 6company7 means- -

(a) a company as defined in the >ompanies 8rdinance, 10 (9: ?$$ of10)#

(%) a %ody corporate formed %y or under any law in force in "a/istan#

(c) a modaraba#

(d) a %ody incorporated %y or under the law of a country outside"a/istan relating to incorporation of companies#

(e) a trust, a co'operative society or a finance society or any othersociety esta%lished or constituted %y or under any law for the time%eing in force# or

(f) a foreign association, whether incorporated or not, which the


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1[(5A) 6defaulter7 means a person and, in the case of company or firm, everydirector, or partner of the company, or as the case may %e, of the firm, of whichhe is a director or partner or a proprietor and includes guarantors or successors,who fail to pay the arrears#]

[(5


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(a) tax levied under this Act on supply of goods to the person#

(%) tax levied under this Act on the import of goods %y the person#

(c) in relation to goods or services acGuired %y the person, tax levied

under the ederal Excise Act, --@ in sales tax mode as a duty ofexcise on the manufacture or production of the goods, or therendering or providing of the services#

(d) "rovincial sales tax levied on services rendered or provided to theperson# and

(e) levied under the !ales *ax Act, 1- as adapted in the !tate ofA3ad ammu and ashmir, on the supply of goods received %y theperson#]

1

[ (10A) *he expression 6$


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(c) any person, firm or company which owns, holds, claims or uses anypatent, proprietary, or other right to goods %eing manufactured,whether in his or its name, or on his or its %ehalf, as the case may %e,whether or not such person, firm or company sells, distri%utes,

consigns or otherwise disposes of the goods1[&]

["rovided that for the purpose of refund under this Act, only suchperson shall %e treated as manufacturer'cum'exporter who owns orhas his own manufacturing facility to manufacture or produce thegoods exported or to %e exported#]

+[(1) 68fficer of $nland evenue7 means an officer appointed under section+-#]

(1) Iopen mar/et priceJ means the consideration in money which that supply ora similar supply would generally fetch in an open mar/et#

0[(-) 6output tax7, in relation to a registered person, means- -

(a) tax levied under this Act on a supply of goods, made %y the person#

(%) tax levied under the ederal Excise Act, --@ in sales tax mode asa duty of excise on the manufacture or production of the goods, orthe rendering or providing of the services, %y the person#

(c) "rovincial sales tax levied on services rendered or provided %y theperson#]

@[(1) 6person7 means,=

(a) an individual#

(%) a company or association of persons incorporated, formed,organi3ed or esta%lished in "a/istan or elsewhere#

(c) the ederal 2overnment#

(d) a "rovincial 2overnment#

(e) a local authority in "a/istan# or

(f) a foreign government, a political su%division of a foreigngovernment, or pu%lic international organi3ation#]

() 6"rescri%ed7 means prescri%ed %y rules made under this Act#

12'bstit'ted for the semi6co7on b Finance 4rdinance, #000.#Proiso inserted b Finance 4rdinance, #000.3C7a'se +1 s'bstit'ted b Finance !ct, #010 w.e.f. j'ne 5, #010. /he same amendment was made b

Finance +!mendment 4rdinance, #010, $rom'7ated as 4rdinance o. %%% of #010, dated Febr'ar ", #010

$'b7ished in the Gazette of Pakistan :;traordinar $art % at $aes #3 to 53 and this amendment was madethro'h Finance +!mendment 4rdinance, #009, $rom'7ated as 4rdinance o. &&%% of #009, $'b7ished inthe Gazette of Pakistan :;traordinar Part % at $aes ##9 to #59.C7a'se +#0 s'bstit'ted b Finance !ct, #00. :ar7ier it was inserted b Finance !ct, #00


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1[(A) 6Provincial sales tax7 means tax levied under, "rovincial laws or lawsrelating to $slama%ad >apital *erritory, which are declared %y the ederal 2ovt.,through notification in the official 2a3ette to %e "rovincial !ales *ax for thepurpose of input tax#]

(+) 6registered office7 means the office or other place of %usiness specified %ythe registered person in the application made %y him for registration under thisAct or through any su%seGuent application to the [>ommissioner]#

(0) 6egistration num%er7 means the num%er allocated to the registered personfor the purpose of this Act#

+[(@) 6registered person7 means a person who is registered or is lia%le to %eregistered under this Act&

"rovided that a person lia%le to %e registered %ut not registered under thisAct 0[ ...]shall not %e entitled to any %enefit availa%le to a registered person under

any of the provisions of this Act or the rules made thereunder#]

@[5...]

(;) 6retail price7, with reference to the *hird !chedule, means the price fixed %ythe manufacturer 5[...], inclusive of all ;[duties], charges and taxes (other thansales tax [...]) at which any particular %rand or variety of any article should %esold to the general %ody of consumers or, if more than one such price is so fixedfor the same %rand or variety, the highest of such price[&].

1-["rovided that the


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his total turnover per annum shall %e ta/en into account for the purposes ofregistration under section 10.]

1[ A ... ]

() 6return7 means any return reGuired to %e furnished under >hapter'? of this

Act#

[(A) 6sales tax7 means- -

(a) the tax, additional tax, or default surcharge levied under this Act#

(%) a fine, penalty or fee imposed or charged under this Act# and

(c) any other sum paya%le under the provisions of this Act or the rulesmade thereunder#]

+

[(AA)]6sales tax account7 means an account representing the dou%le entryrecording of sales tax transactions in the %oo/s of account#]

(+-) 6!chedule7 means a !chedule appended to this Act#

(+1) 6similar supply7, in relation to the open mar/et price of goods, means anyother supply of goods which closely or su%stantially 0[resem%les] thecharacteristics, Guantity, components and materials of the aforementioned goods#

@[(+1A) 6special audit7 means an audit conducted under section +A#]

(+) 6!pecial udge7 means the !pecial udge appointed under !ection 5[+;> ofthe act until such appointment is made %y the !pecial udge appointed undersection]1@ of the >ustoms Act#

;[(++) 6supply7 means a sale or other transfer of the right to dispose of goods asowner, including such sale or transfer under a hire purchase agreement, and alsoincludes- -

(a) putting to private, %usiness or non'%usiness use of goods producedor manufactured in the course of taxa%le activity for purposes otherthan those of ma/ing a taxa%le supply#

(%) auction or disposal of goods to satisfy a de%t owed %y a person#and

1C7a'se +#! omitted b Finance !ct, #00. :ar7ier it was inserted b Finance !ct, 199


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(c) possession of taxa%le goods held immediately %efore a personceases to %e a registered person&

"rovided that the ederal 2overnment, may %y notification in theofficial 2a3ette, specify such other transactions which shall or shall not

constitute supply# ]

1[6(++ A) 6 !upply >hain7 means the series of transactions %etween%uyers and sellers from the stage of first purchase or import to the stage offinal supply#7# ]

[(+0)]tax7, unless the context reGuires otherwise, means sales tax# ]

+[(+@) 6taxable activity7, means any economic activity carried on %y a personwhether or not for profit, and includes- -

(a) an activity carried on in the form of a %usiness, trade ormanufacture#

(%) an activity that involves the supply of goods, the rendering orproviding of services, or %oth to another person#

(c) a one'off adventure or concern in the nature of a trade# and

(d) anything done or underta/en during the commencement ortermination of the economic activity,

%ut does not include- -

(a) the activities of an employee providing services in that capacity toan employer#

(%) an activity carried on %y an individual as a private recreationalpursuit or ho%%y# and

(c) an activity carried on %y a person other than an individual which, ifcarried on %y an individual, would fall within su%'clause (%). ]

(+5) 6tax fraction7 means the amount wor/ed out in accordance with the followingformula&-

a

1-- K a

(LaL is the rate of tax specified in section +)#

(+;) 6tax fraud7 means /nowingly, dishonestly or fraudulently and without anylawful excuse (%urden of proof of which excuse shall %e upon the accused) =-

(i) doing of any act or causing to do any act# or

1C7a'se +33! inserted b Finance !ct, #013.#C7a'se +3 s'bstit'ted b Finance !ct, #00.3C7a'se +35 s'bstit'ted b Finance !ct, #00.

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(ii) omitting to ta/e any action or causing the omission to ta/e any action,1[including the ma/ing of taxa%le supplies without getting registrationunder this Act [[# or],]

+[(iii)] falsifying 0[or causing falsification]the sales tax invoices,]

in contravention of duties or o%ligations imposed under this Act or rules orinstructions issued thereunder with the intention of understating the taxlia%ility @[or underpaying the tax lia%ility for two consecutive tax periods]oroverstating the entitlement to tax credit or tax refund to cause loss of tax#

5[ +. MMM ]

(+) 6taxa%le goods7 means all goods other than those which have %eenexempted under section 1+#

(0-) IJtax invoiceJJ means a document reGuired to %e issued under section +#

(01) IJtaxa%le supplyJJ means a supply of taxa%le goods made ;[...] [%y an

importer, manufacturer, wholesaler (including dealer), distri%utor or retailer]otherthan a supply of goods which is exempt under section 1+ and includes a supplyof goods chargea%le to tax at the rate of 3ero per cent under section 0#

[0. MMM ]

(0+) 6tax period7 means a period of one month or such other period as theederal 2overnment may 1-[, ]%y notification in the official 2a3ette, specify#

11[(00) 6time of supply,7 in relation to,=-

(a) a supply of goods, other than under hire purchase agreement,

means the time at which the goods are delivered or made availa%leto the recipient of the supply7 1[6or the time when any payment isreceived %y the supplier in respect of that supply, which ever isearlier]#

(%) a supply of goods under a hire purchase agreement, means thetime at which the agreement is entered into# and

(c) services, means the time at which the services are rendered orprovided#

1>ords etc. inserted b Finance !ct, #00.#2'bstit'ted for comma b Finance !ct, #005.32'b6c7a'se +iii inserted b Finance !ct, #005.>ords inserted b Finance !ct, #00ords inserted b Finance 4rdinance, #000."C7a'se +3 omitted b Finance !ct, #00.


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1L M "ro4ided that in respect o* s5 cla5se F aG ,FG or FcG, 7here anpart pament is recei4ed, -

FiG *or the s5ppl in a tax period, it shall e acco5nted *or inthe ret5rn *or that tax periodN and

FiiG in respect o* exempt s5ppl, it shall e acco5nted *or in the

ret5rn *or the tax period d5rin 7hich the exemption is7ithdra7n *rom s5ch s5ppl NO

(00A) trust, means an o%ligation annexed to the ownership of property andarising out of the confidence reposed in and accepted %y the owner, or declaredand accepted %y the owner for the %enefit of another, or of another and theowner, and includes a unit trust#

(00AA) unit trust, means any trust under which %eneficial interests are dividedinto units such that the entitlements of the %eneficiaries to income or capital aredetermined %y the num%er of units held# ]

[0@. MMM]

(05) 6value of supply7 means&''

(a) in respect of a taxa%le supply, the consideration in money including allederal and "rovincial duties +[and taxes, if any, which the supplierreceives from the recipient for that supply %ut excluding the amount oftax&

"rovided that- -

(i) in case the consideration for a supply is in /ind or is partly in /ind

and partly in money, the value of the supply shall mean the openmar/et price of the supply excluding the amount of tax# 0[ ... ]

(ii) in case the supplier and recipient are associated persons and thesupply is made for no consideration or for a consideration whichis lower than the open mar/et price, the value of supply shallmean the open mar/et price of the supply excluding the amountof tax# @[and]

5[(iii) in case a taxa%le supply is made to a consumer from generalpu%lic on installment %asis on a price inclusive of mar/ up orsurcharge rendering it higher than open mar/et price, the value

of supply shall mean the open mar/et price of the supplyexcluding the amount of tax.]

(%) in case of trade discounts, the discounted price excluding the amountof tax# provided the tax invoice shows the discounted price and therelated tax and the discount allowed is in conformity with the normal%usiness practices#

(c) in case where for any special nature of transaction it is difficult toascertain the value of a supply, the open mar/et price#

1C7a'se + $roiso added b Finance !ct, #013.#

C7a'se +5 omitted b Finance !ct, #00.3>ords inserted b Finance !ct, 1999.>ords *and- omitted b Finance 4rdinance, #001.5>ord inserted b Finance 4rdinance, #001."2'b6c7a'se +iii inserted b Finance 4rdinance, #001.

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(d) in case of imported goods, the value determined under section @ 1[...]of the >ustoms Act, including the amount of customs'duties andcentral excise duty levied thereon# [...]

(e) in case where there is sufficient reason to %elieve that the value of asupply has not %een correctly declared in the invoice, the valuedetermined %y the ?aluation >ommittee comprising representatives oftrade and the +[$nland evenue]constituted %y the 0[>ommissioner]@[#]and]

5[(f)] in case the goods other than taxa%le goods are supplied to aregistered person for processing, the value of supply of suchprocessed goods shall mean the price excluding the amount of salestax which such goods will fetch on sale in the mar/et&]

;[(g)] in case of a taxa%le supply, with reference to retail tax, the priceof taxa%le goods excluding the amount of retail tax, which a supplier willcharge at the time of ma/ing taxa%le supply %y him, or such other price asthe ord etc. *? and- s'bstit'ted for *co7on- b Finance 2'$$7ementar +!mendment !ct, 199ords inserted b Finance !ct, 199


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consideration or stores such goods %elonging to others as an agent for thepurpose of sale# and includes 1[a person supplying taxa%le goods to [aperson +[who deducts income tax at source under the $ncome *ax8rdinance, --1 (9:$9 of --1)]]0[...]# and

(0) 63ero'rated supply7 means a taxa%le supply which is charged to tax at therate of 3ero per cent under section 0.]

/APT!II

SP! AN) PA$#!NT 2 TA3

+. Sco4e of tax.= =

(1) !u%4ect to the provisions of this Act, there shall %e charged, levied and paid

a tax /nown as sales tax at the rate of

@

[seventeen]per cent of the value of- -(a) taxa%le supplies made 5[N] %y a registered person in the course or

furtherance of any ;[taxa%le activity] carried on %y him# and

(%) goods imported into "a/istan.

LF1AG S5:ect tothepro4ision o* s5 section F6G o* section or annotifcation iss5ed there5nder, 7here taxale s5pplies are made toa person 7ho has not otained reistration n5mer, there shall echared , le4ied and paid a *5rther tax at the rate o* one percent o*the 4al5e In addition to the rate specifed in s5 sections 1G,F1+G,F2GF/Gand F6G pro4ided that the 'ederal =o4t. ma, notifcation inthe oHicial =aJette, speci* the taxale s5pplies in respect o* 7hichthe *5rther tax shall not e chared, le4ied and paid. O 9LF1+G The+oard ma, notifcation in the !Hicial =aJette, in lie5 o* le4inand collectin tax 5nder s5 setion F1G on taxale s5pplies, le4 andcollect tax- -

FaG!n the prod5ction capacit o* plants, machiner, 5nderta>in,estalishments or installation prod5cin on man5*act5rins5ch oodsN or

FG !n fxed asis, as it ma deem ft, *rom an person 7hois in a position to collect s5ch tax d5e to the nat5re o* the5siness.O

1/he words, brackets and fi'res inserted b Finance !ct, 199.#2'bstit'ted for *$erson ded'ctin adance ta; 'nder s'b6section + of section 50 of the %ncome /a;, 19


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1-[() Fotwithstanding the provisions of su%'section (1)&- -

(a) taxa%le supplies specified in the *hird !chedule shall %e charged totax at the rate of 1[seventeen]per cent of the retail price which alongwith the amount of sales tax shall %e legi%ly, prominently and indeli%lyprinted or em%ossed %y the manufacturer on each article, pac/et,container, pac/age, cover or la%el, as the case may %e# [&]+[ ]

0["rovided that the ederal 2overnment, may, %y notification inthe official 2a3ette, exclude any taxa%le supply from the said !cheduleor include any taxa%le supply therein# @[..]

(aa)5[goods specified in the Eighth schedule shall %e charged totax at such rates and su%4ect to such conditions and limitations asspecified therein# and]

(%) the ederal 2overnment may, su%4ect to such conditions andrestrictions as it may impose, %y notification in the official 2a3ette,declare that in respect of any goods or class of goods imported into orproduced [MMM] or any taxa%le supplies made %y a registered person ora class of registered persons, the tax shall %e charged, collected andpaid in such manner and at such higher or lower rate or rates as may%e specified in the said notification.]

(+) *he lia%ility to pay the tax shall %e,''

(a) in the case of supply of goods;[N], of the person ma/ing the supply,and

(%) in the case of goods imported into "a/istan, of the person importingthe goods.

[(+A) Fotwithstanding anything contained in clause (a) of su%'section (+),the ederal 2overnment may, %y a notification in the official 2a3ette, specify thegoods in respect of which the lia%ility to pay tax shall %e of the person receivingthe supply.]

9LF)+G $ot7ithstandin anthin contained in s5 section F1G andF)G, sales tax on the import and s5ppl o* the oods specifed in the$inth Sched5le to this Act shall e chared, collected and paid at

the rates, in the manner, at the time, and s5:ect to the proced5reand conditions as specifed therein or as ma e prescried, andthe liailit to chare, collect and pa the tax shall e on thepersons specifed therein.O

10L . PPP O

102'b section +# s'bstit'ted b Finance !ct, #001#2'bstit'ted for *? and- b Finance !ct, #00


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1[(@) *he ederal 2overnment may, in addition to the tax levied under su%'section (1)[ ], +[ ] su%'section () and su%'section (0), levy and collect 0[6tax atsuch extra rate or amount7]not exceeding @[seventeen]per cent of the value ofsuch goods or class of goods and on such persons or class of persons, in suchmode, manner and at time, and su%4ect to such conditions and limitations as it

may, %y rules, prescri%e.]5[(5) *he ederal 2overnment or ;[the ord etc. * and +1 !- omitted b finance !ct, #00.3>ord etc. * c7a'se +C of- omitted b Finance 4rdinance, #00#.>ords s'bstit'ted b Finance !ct, #013.5ate s'bstit'ted b Finance !ct, #013."2'b section +" inserted b Finance 4rdinance #001enl eHect on and*rom the 1st da o* 85l, 200.Explanation, the rate o* nine percent in lie5 o* 4al5e addition is less thanthe standard rate o* tax chareale 5nder s5 section F1G, as all inp5t taxad:5stments ha4e een catered *or 7hile determinin the f5re o* ninepercentQ.O102ection +3! omitted b Finace !ct, #00.112ection +3!! omitted b Finace !ct, #00.1#2ection +3!!! omitted b Finace !ct, #00#.

2)


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1LFG $ot7ithstandin anthin contained in an la7 or notifcationmade there5nder, in case o* s5ppl o* nat5ral as to C$= stations,the =as Transmission and Distri5tion Compan shall chare salestax *rom the C$=stations at the rate o* se4enteen per cent o* the4al5e o* s5ppl to the C$= cons5mers, as notifed the +oard

*rom time to time, 5t excl5din the amo5nt o* tax, as pro4ided incla5se F6G o* section 2.

2LF9G $ot7ithstandin anthin contained in s5section F1G, taxshall e chared *rom retailers thro5h their monthl electricitills, at the rate o* f4e percent 7here the monthl ill amo5nt doesnot exceed r5pees t7ent tho5sand and at the rate o* se4en andhal* per cent 7here the monthl ill amo5nt exceeds the a*oresaidamo5nt, s5:ect to the excl5sions, proced5re, restrictions andlimitations as prescried in Chapter II o* the Sales Tax Special

"roced5re ;5les, 200R"ro4ided that the tax 5nder this s5section shall e in addition

to the tax paale on s5ppl o* electricit 5nder s5 section F1G,F1AG and F/G.

+[+. ollect&on of excess sales tax etc.= =

(1) Any person who has collected or collects any tax or charge, whether undermisapprehension of any provision of this Act or otherwise, which was not paya%leas tax or charge or which is in excess of the tax or charge actually paya%le andthe incidence of which has %een passed on to the consumer, shall pay theamount of tax or charge so collected to the ederal 2overnment.

0[.]

@[() Fotwithstanding anything contained in any law or 4udgement of a court,including the !upreme court and a High court, any amount paya%le to the ederal2overnment under su%'section (1) shall %e deemed to %e an arrear of tax orcharge paya%le under this Act and shall %e recovera%le accordingly and anyclaim for refund in respect of such amount shall neither %e admissi%le to theregistered person nor paya%le to any court of law or to any person under directionof the court.]

(+) *he %urden of proof that the incidence of tax or charge referred to in su%'section (1) has %een or has not %een passed to the consumer shall %e on theperson collecting the tax or charge.]

6. 7e%o %at&n8.= =

1 2'b6section %nserted b Finance !ct #01#2'b6section 9 inserted b Finance !ct #01347d section +3 ! ren'mbered as +3) b Finance !ct, 199"

02'b6section +# s'bstit'ted b Finance !ct #01, read as fo77ows !n amo'nt $aab7e to the Federa7 Goernment'nder s'b6section +1 sha77 be deemed to be an arrear of ta; or chare $aab7e 'nder this !ct and sha77 be recoerab7e

accordin7 and no c7aim for ref'nd in res$ect of s'ch amo'nt sha77 be admissib7e .52'b Bsection+# inserted b Finance !ct #01.

2


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Fotwithstanding the provisions of section +, 1[...] the following goods shall %echarged to tax at the rate of 3ero per cent&''

[(a) goods exported, or the goods specified in the ifth !chedule#]

(%) supply of stores and provisions for consumption a%oard a conveyance

proceeding to a destination outside "a/istan as specified in section 0of the >ustoms Act, 15 ($? of 15)#

[(c) such other goods as the ederal 2overnment may, %y notification in theofficial 2a3ette, specify&]

"rovided that nothing in this section shall apply in respect of a supply ofgoods which ''

(i) Are exported, %ut have %een or are intended to %e re'imported into"a/istan# or

(ii) have %een entered for export under !ection 1+1 of the >ustoms Act,15 ($? of 15), %ut are not exported +[N] 0[# or]

/LFiiiG ha4e een exported to a co5ntr specifed the'ederal =o4ernment, $otifcation in the oHicial=aJette6LROO

;[provided further that the ederal 2overnment may, %y a notification in theofficial 2a3ette, restrict the amount of credit for input tax actually paid andclaimed %y a person ma/ing a 3ero'rated supply of goods otherwise chargea%le

to sales tax.[(d) such other goods as may %e specified %y the ederal ords *a 2'$$7 of- omitted b Finance !ct, #00#>ords *a 2'$$7 of- omitted b Finance !ct, #003>ords *with in thirt das of the date of fi77in of bi77 of e;$ort r s'ch e;tended $eriod as a co77ector maa77owed- omitted.2'bstit'ted for f'77 sto$ b Finance !c t, 19915inserted b Finance !ct 1991 wef 30th Ma, 1991."F'77 sto$ re$7aced b the co7on and thereafter $roisio inserted b the Finacne !ct, 199".ustoms Act, 15 ($? of 15)#

(ii) in case the goods are cleared from warehouse, on the date on

which a 1[goods declaration] for clearance of such goods ispresented under section 1-0 of the >ustoms Act, 15 ($? of15)#

"rovided that where a [goods declaration] is presented inadvance of the arrival of the conveyance %y which the goods areimported, the tax shall %e charged as is in force on the date on whichthe manifest of the conveyance is delivered&

"rovided further that if the tax is not paid within seven days of thepresenting of the [goods declaration] +[under section 1-0 of the>ustoms Act,]the tax shall %e charged at the rate as is in force on the

date on which tax is actually paid.

. T&me and manne% of 4ayment.= =

(1) *he tax in respect of goods imported into "a/istan shall %e charged andpaid in the same manner and at the same time as if it were a duty of customspaya%le under the >ustoms Act, 15 0[and the provisions of the said Act[@including section +1A thereof], shall, so far as they relate to collection, paymentand enforcement of tax under this Act on such goods where no specific provisionexists in this Act, apply,].

5

[(1A) Fotwithstanding anything contained in any other law for the time %eingin force, including %ut not limited to the "rotection of Economic eforms Act,1 (9$$ of 1), and notwithstanding any decision or 4udgment of any forum,authority or court whether passed, %efore or after the promulgation of the inanceAct, 1 ($$$ of 1), the provisions of section +1'A of the >ustoms Act, 15($? of 15), referred to in su%'section (1) shall %e incorporated in and shall %edeemed to have always %een so incorporated in this Act and no person shall %eentitled to any exemption from or ad4ustment of or refund of tax on account of thea%sence of such a provision in this Act, or in conseGuence of any decision or4udgment of any forum, authority or court passed on that ground or on the %asisof the doctrine of promissory estoppel or on account of any promise or

commitment made or understanding given whether in writing or otherwise, %y anygovernment department or authority.]

() *he tax in respect of taxa%le supplies made ;[...]during a tax period shall %epaid %y the registered person at [the time of] filing the return in respect of thatperiod under >hapter'? [ & ]

12'bstit'ted for *bi77 of entr- b Finance !ct, #005#2'bstit'ted for *bi77 of entr- b Finance !ct, #0053>ords Fi're and comma inserted b the Finance !ct, 199"./he >ords inserted in $7ace of *%( of 19"9- b Finance !ct, 199"5/he words inserted b Finance !ct, 199"

2'b 2ection +1! inserted b 2a7es /a; +amendment 4rdinance, #00# dated j'ne 0


27/168


1["rovided that the ords inserted b Finance !ct, #00.10>ords inserted b Finacne !ct, 199.11%nserted b finance !ct #01.1#>ords etc * e;c7'din the amo'nt of ta;- omitted b Finance !ct, #0013

2'bstit'ted for the f'77 sto$ b Finance !ct, #0031Proiso s'bstit'ted b Finance !ct, #00.15>ords *in Pakistan- omitted b Finance !ct, #003.1">ords inserted b Finance !ct, #003.1


28/168


num%er, duly cleared %y the customs under section ; or section 1-0of the >ustoms Act, 15 ($? of 15)#]

(iii) 1[in case of goods purchased in auction, he holds a treasury challan,[in his name and %earing his registration num%er,]showing paymentof sales tax#]

+[(iv) MMM]

0[(+) Fotwithstanding anything in su%'sections (1) and (), the ederal2overnment may, %y a special order, su%4ect to such conditions, limitations orrestrictions as may %e specified therein allow a registered person to deduct inputtax paid %y him from the output tax determined or to %e determined as due fromhim under this Act.]

@[(0) Fotwithstanding anything contained in this Act or rules made there under,the ederal 2overnment may, %y notification in the official 2a3ette, su%4ect to

such conditions, limitations or restrictions as may %e specified therein, allow aregistered person or class of persons to deduct such amount of input tax from theoutput tax as may %e specified in the said notification.]

[:A. "e;y and collect&on of tax on s4ec&f&ed 8oods on ;aled.= =

(1) Fotwithstanding anything contained in this Act, a registered person shall not%e entitled to reclaim or deduct input tax paid on- -

1C7a'se +iii inserted b Finance 4rdinance, #00##Comma and words inserted b Finance !ct, #00.3C7a'se +i omitted b Finance !ct, 1992


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1[(a) the goods [or services]used or to %e used for any purpose other than+[...]for taxa%le supplies made or to %e made %y him #]

(%) any other goods or services which the ederal 2overnment may, %y anotification in the official 2a3ette, specify0[#@[...]]

5

[(c)];

[...] the goods under

[su%'section](@) of section +

[?]1-[(ca) the goods 11[or services] in respect of which sales tax has not

%een deposited in the 2overnment treasury %y the respectivesupplier#]

1[(caa) purchases, in respect of which a discrepancy is indicated %y>E!* or input tax of which is not verifia%le in the supply chain#]

1+[(d) fa/e invoices#10[..]

(e) purchases made %y such registered person, in case he fails to furnishthe information reGuired %y the ords * for the man'fact're of $rod'ction of man'fact're oods or,- omitted b Finance !ct, #00


30/168


() $f a registered person deals in taxa%le and non'taxa%le supplies, he canreclaim only such proportion of the input tax as is attri%uta%le to taxa%le suppliesin such manner as may %e specified %y the ourt, for the purposes of this section, no input taxcredit shall %e allowed to the persons who paid fixed tax under any provisions ofthis Act as it existed at any time prior to the first day of Decem%er, 1.]

+[(5) Fotwithstanding anything contained in any other law for the time %eing inforce or any provision of this Act, the ederal 2overnment may, %y notification inthe official 2a3ette, specify any goods or class of goods which a registeredperson cannot supply to any person who is not registered 0[ ]under this Act.]

@[...]

[=A. @o&nt and se;e%al l&ab&l&ty of %e8&ste%ed 4e%sons &n she%etax apitalgoods&]

provided further that the


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() A registered person, su%4ect to su%'section (1), may %e allowedad4ustment 1[or refund]of input tax not allowed under su%'section (1) su%4ect tothe following conditions, namely&=-

(i) in the case of registered persons, whose accounts are su%4ect to

audit under the >ompanies 8rdinance, 10, upon furnishing astatement along with annual audited accounts, duly certified %y theauditors, showing value additions less than the limit prescri%edunder su%'section (1) a%ove# or

(ii) in case of other registered persons, su%4ect to the conditions andrestrictions as may %e specified %y the


32/168


of section


33/168


(+) where %y reason of some collusion or deli%erate Act any tax orcharge has not %een levied or made or has %een short levied or has%een erroneously refunded, the person lia%le to pay any amount of taxor charge or the amount of fund erroneously made shall %e served with

the notice reGuiring him to show cause for payment of the amountspecified in the notice.

(0) Where, %y reason of any inadvertence, error or misconstruction any tax orcharge has not %een levied or made or has %een short'levied or has %eenerroneously refunded, the person lia%le to the amount of tax or charge or theamount of refund erroneously made shall %e served with a notice reGuiring him toshow cause for payment of the amount specified in the notice#"rovided that, where a tax or charge has not %een levied under this su% section theamount of tax shall %e recovered as tax fraction of the value of supply.

(@) Fo order under this section shall %e made %y an officer of $nland evenueunless a notice to show cause is given within five years ,of the relevant date,to the person in default specifying the grounds on which it is intended to proceedagainst him and the officer of !ales *ax shall ta/e into consideration therepresentation made %y such person and provide him with an opportunity of%eing heard&

"rovided that order under this section shall %e made within one hundredand twenty days of issuance of show cause notice or within such extended periodas the >ommissionermay, for reasons to %e recorded in writing, fix provided thatsuch extended period shall in no case exceed ninetydays&

"rovided further that any period during which the proceedings aread4ourned on account of a stay order or Alternative Dispute esolutionproceedings or the time ta/en through ad4ournment %y the petitioner notexceeding sixty days shall %e excluded from the computation of the periodspecified in the first proviso.

(5) Fotwithstanding anything in su%'section (1), where a registered person failsto file a return, an officer of $nland evenue, not %elow the ran/ of Assistant

>ommissioner , shall su%4ect to such conditions as specified %y the ederal


34/168


paid amount of tax along with default surcharge shall %e recovered from suchperson %y stopping removal of any goods from his %usiness premises andthrough attachment of his %usiness %an/ accounts, without giving him a showcause notice and without pre4udice to any other action prescri%ed under section0 of this Act or the rules made thereunder&

"rovided that no penalty under section ++ of this Act shall %e imposedunless a show cause notice is given to such person.]

1[1(. BBB]

([1+. !xem4t&on.= =

(1) Fotwithstanding the provisions of section +, supply of goods or import ofgoods specified in the !ixth !cheduleshall, su%4ect to such conditions as may %especified %y the +[ederal 2overnment], %e exempt from tax under this Act 0[.]

@[...]

() Fotwithstanding the provisions of su%'section (1)- -

(a) the ederal 2overnment may, %y notification in the official 2a3ette,exempt any taxa%le supplies made 5[...] or ;[import or supply of] anygoods or class of goods, from the whole or any part of the taxchargea%le under this Act, su%4ect to the conditions and limitationsspecified therein# and

(%) the


35/168


ha4te%III

!CISTATIN

1[16. e8&st%at&on.= =

Cnder this Act, registration will %e reGuired for such persons and %e regulated insuch manner and su%4ect to rules as the


36/168


1+[ ] %e re4ected through a self'spea/ing appeala%le order and after affording anopportunity of %eing heard to such person.]

1[(0) 6Fotwithstanding anything contained in this Act, where the ommissioner or any officer authori3ed %y the ommissioner having 4urisdiction for further investigation andappropriate legal action.]

13>ords and fi're omitted b Finance !ct, #013.12'b section + inserted b Finance !ct, #013.

)6


37/168


ha4te%IV

E E!!PINC AN) INVIINC !FGI!#!NTS

1[((. eco%ds.-=

(1) A registered person ma/ing taxa%le supplies shall maintain and /eep at his%usiness premises or registered office in English or Crdu language the followingrecords of goods purchased [, imported]and supplied (including 3ero'rated andexempt supplies) made %y him or %y his agent acting on his %ehalf in such formand manner as would permit ready ascertainment of his tax lia%ility during a taxperiod- -

(a) records of supplies made shall indicate the description, Guantity andvalue of goods, name and address of the person to whom supplieswere made and the amount of the tax charged#

(%) records of goods purchased shall show the description, Guantity andvalue of goods, name, address and registration num%er of the supplierand the amount of the tax on purchases#

+[(c) records of goods imported shall show the description, Guantity andvalue of goods and the amount of tax paid on imports#]

0[(d)] records of 3ero'rated and exempt supplies#

@[(da) dou%le entry sales tax accounts#]

5

[(e)] invoices, credit notes, de%it notes, %an/ statements,;

[%an/inginstruments in terms of section ;+,] inventory records, [utility%ills, salary and la%our %ills, rental agreements, sale purchaseagreements and lease agreements]# [...]

1-[(6ea7) ecord relating to 2ate passes, inward or outward and transportreceipts.]

11[(f)] such other records as may %e specified %y the


38/168


1[(1A) Fotwithstanding anything in any other law for the time %eing in force,the


39/168


"rovided further that not more than one tax invoice shall %e issued for ataxa%le supply.]

1[() Fo person other than a registered person or a person paying [MMMa[MMM]]+[retail tax]shall issue an invoice under this section.

0

[(+) A registered person ma/ing a taxa%le supply may, su%4ect to such conditions,restrictions and limitations as the ommissioner, on the %asisof the record, o%tained under su%'section (1), may, once in a year, conduct audit&

"rovided that in case the >ommissioner has information or sufficientevidence showing that such registered person is involved in tax fraud or evasionof tax, he may authori3e an officer of $nland evenue, not %elow the ran/ ofAssistant >ommissioner, to conduct an inGuiry or investigation under section +&

"rovided further that nothing in this su%'section shall %ar the officer of

Inland ;e4en5e from conducting audit of the records of the registered

person if the same were earlier audited %y the office of the Auditor'2eneral of"a/istan. ]

12'b 2ection +# inserted b Finance !ct, 199".#>ords * t'rnoer ta; or- omitted b Finance !ct, #00.#a. /he words *or retai7er ta;- added b Finance !ct,199ords inserted b Finance !ct, 199


40/168


1[(+)] After completion of Audit under this section or any other provision of this Act,the officer of $nland evenue may, after o%taining the registered personJsexplanation on all the issues raised in the audit shall pass an order under section(11) or section (+5), as the case may %e. ]

[ MMM]

+[ MMM]

0[ (@) Fotwithstanding the penalties prescri%ed in section ++, if a registeredperson wishes to deposit the amount of tax short paid or amount of tax evadedalong with @[default surcharge]voluntarily, whenever it comes to his notice, %eforereceipt of notice of audit, no penalty shall %e recovered from him&

"rovided if a registered person wishes to deposit the amount of tax shortpaid or amount of tax evaded along with [default surcharge] during the audit, or atany time %efore issuance of show cause notice 5[..] he may deposit the evadedamount of tax, @[default surcharge]under section +0, and twenty five per cent of

the penalty paya%le under section ++&

"rovided further that if a registered person wishes to deposit the amount oftax short paid or amount of tax evaded along with @[default surcharge] afterissuance of show cause notice, he shall deposit the evaded amount of tax,[default surcharge] under section +0, and full amount of the penalty paya%leunder section ++ and thereafter, the show cause notice, shall stand a%ated.]

;[6 Explanation.= = or the purpose of sections @, +, +A, +< and 0@A and forremoval of dou%t, it is declared that the powers of the ommissioner orofficer of $nland evnue under these sections are independent of the powers ofthe &n8 of sam4les.- -

Where an authori3ed officer of [$nland evenue]considers it necessary to ta/e asample of any goods or raw materials, for the purpose of determining their lia%ilityto sales tax or for the purpose of esta%lishing their value or for any other reason,he may remove a minimum Guantity of goods or raw materials sufficient to ena%lea proper examination or analysis to %e made. At the time of ta/ing the sample the

person in possession of the goods shall %e informed and given the opportunity tosign the representative samples, so drawn, and ta/e a corresponding sample forhis record. Any sample ta/en under this section shall %e ta/en against a proper

12'b 2ection 3 s'bstit'ted b Finance !ct, #010.#2'b 2ection omitted b Finance !ct, #010.32'b 2ection +! e;$ired.2'b 2ection +5 inserted ) Finance !ct, #003.52'bstit'ted for *!dditiona7 /a;- b Finance !ct, #005">ords in 7ie' of !'dit re$ort omitted b Finance !ct, #010


41/168


receipt a copy each of which shall %e /ept in the record %y the registered personand the 1[:arge *axpayers Cnit or egional *ax 8ffice, as the case may %e].]

[(5 AA. T%ansact&ons bet>een assoc&ates.= =

*he >ommissioner or an office of $nland evenue may, in respect of any

transaction %etween persons who are associates, determine the transfer price oftaxa%le supplies %etween the persons as is necessary to reflect the fair mar/etvalue of supplies in an armJs length transaction.]

12'bstit'ted for * Co77ectorate- b Finance !ct, #010 w.e.f. j'ne5, #010. /he same amendment was madeb Finance +!mendment 4rdinance #010, $rom'7ated as 4rdinance o. %%% of #010, dated Febr'ar ",#010, $'b7ished in the Gazette of Pakistan :;tra 4rdinar Part % at $aes #3 to 53 and this amendment wasmade thro'h Finance +!mendment 4rdinance, #009, $rom'7ated as 4rdinance o. &&%% of #009, dated

4ctober #, #009 $'b7ished in the Gazette of Pakistan :;traordinar Part % at $aes ##9 to #59.#

2ection +#5!!b Finance !ct, #010 w.e.f. j'ne5, #010. /he same amendment was made b Finance+!mendment 4rdinance #010, $rom'7ated as 4rdinance o. %%% of #010, dated Febr'ar ", #010,$'b7ished in the Gazette of Pakistan :;tra 4rdinar Part % at $aes #3 to 53 and this amendment was madethro'h Finance +!mendment 4rdinance, #009, $rom'7ated as 4rdinance o. &&%% of #009, dated4ctober #, #009 $'b7ished in the Gazette of Pakistan :;traordinar Part % at $aes ##9 to #59.

1


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ha4te%V

!TGNS

1[(.]([ ... ]etords *makin ta;ab7e s'$$7ies- omitted b Finance !ct, 1999.>ords inserted b Finance !ct, #00".5%n the $ro$osed amendment *a f'77 sto$ is s'bstit'ted for a co7on- whi7e co7on is a7read a$$earin."Proiso inserted b Finance !ct, #00".Proiso omitted d b Finance !ct, #00".ords inserted b Finance !ct, #011.1#2'bsection + inserted b Finance !ct, #003.132'bstit'ted for *!dditiona7 /a;- b Finance !ct, #005.

2


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"rovided that in case the registered person wishes to deposit the amount of taxas pointed out %y the officer of 1[$nland evenue] during the audit, or at any time%efore issuance of the show cause notice [...], he may deposit the evadedamount of tax, [default surcharge] under section (+0), and twenty five percent ofthe penalty paya%le under section ++ along with the levied return&

"rovided further that in case the registered person wishes to deposit the amountafter issuance of show cause notice, he shall deposit the evaded amount of salestax +[ ],+[default surcharge] under section +0, and full amount of levya%lepenalty under section ++ along with the revised return and thereafter, the showcause notice, shall stands a%ated.]

0[(@) *he


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(9. etords inserted b Finance !ct, 199".


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ha4te%VI

APPINT#!NT 2 1[22I!S 2 SA"!S TA3]H T/!I P!S

([+0. A44o&ntment of Aommissioner $nland evenue(Appeals) shall %e su%'ordinate to the ommissioner $nlandevenue shall %e su%'ordinate to the chief commissioner $nlandevenue.

(+) Additional >ommissioner $nland evenue, Deputy >ommissioners$nland evenue, Assistant >ommissioner $nland evenue,!uperintendent $nland evenue auditor officer, $nland evenue officer@[, $nspector $nland evenue], and 8fficer of $nland evenue with anyother designation shall %e su%'ordinate to the >ommissioner $nlandevenue and shall perform their functions in respect of such personsor classes of persons or such areas as the >ommissioners, to whomthey are su% ordinate, may direct.

(0) Deputy >ommissioner $nland evenue, Assistant >ommissioner $nlandevenue, !uperintendent $nland revenue, $nland evenue Audit8fficer, $nland revenue 8fficer, 5[$nspector $nland evenue 8fficer] an

1!n reference to the *2a7es /a; 4fficer- sha77 be constr'e as reference to an *4fficer of *%n7and een'e-b irt'e of section


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officer of $nalnd evenue with any other designation shall %e su%'ordinate to the Additional >ommissioner $nland evenue.]

1[+-A. Directorate 2eneral, ($ntelligence and $nvestigation) [$nlandevenue]- - *he Directorate 2eneral ($ntelligence and $nvestigation)+[$nland evenue]shall consist of a Director 2eneral and as manyDirectors, Additional Directors, Deputy Directors and AssistantDirectors and such other officers as the


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+1. Po>e%s.= =

An officer of 1[$nland evenue]appointed under section +- shall exercise suchpowers and discharge such duties as are conferred or imposed on him under thisAct# and he shall also %e competent to exercise all powers and discharge all

duties conferred or imposed upon any officer su%ordinate to him&"rovided that, notwithstanding anything contained in this Act or the rules, thee%s.= =

+[(1)]*he hief >ommissioner, with the approval of the ommissioner $nland evenue or Deputy>ommissioner $nland evenue to exercise any of the powers of a>ommissioner $nland evenue under this Act# and

(%) any Deputy >ommissioner $nland evenue or Assistant >ommissioner$nland evenue to exercise any of the powers of an Additional>ommissioner $nland evenue under this Act#

(c) any Assistant >ommissioner $nland evenue to exercise any of thepowers of a Deputy >ommissioner $nland evenue under this Act# and

(d) any other officer of $nland evenue to exercise any of the powers ofan Assistant >ommissioner $nland evenue under this Act.]

0[()...]

(+) *he officer to whom any powers are delegated under this section shall notfurther delegate such powers.]

12'bstit'ted for *sa7es ta;- b Finance !ct, #010 wef j'ne 5, #010. /he same amendment was made bFinance +!mendment 4rdinance, #010, $rom'7ated as 4rdinance o.%%% of #010, dated Febr'ar ", #010,$'b7ished in the Gazette of Pakistan :;traordinar Part % at $aes #3 to 53 and this amendment was made

thro'h Finance +!mendment 4rdinance, #009, $rom'7ated as 4rdinance o. &&%% of #009, dated

4ctober #, #009, $'b7ished in the Gazette of Pakistan :;traordinar Part % at $aes ##9 to #59.#2ection 3# s'bstit'ted b Finance !ct, 199".32'b 2ection +1 s'bstit'ted b Finance !ct, #010 w.e.f. j'ne 5, #010. :ar7ier c7a'se +a to +d s'bstit'tedb Finance +# omitted b the Finance !ct, #0102'b 2ection +# omitted b the Finance !ct, #010.


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1[+(A. S4ec&al Ahartered Accountants or a >ost and Banagement Accountant within themeaning of the >ost and Banagement Accountants Act, 155 (9$? of 155) or a

firm of >ost and Banagement Accountants, for conducting special audit ofrecords of registered person&5[ ? ]]

5["rovided that the hartered Accountants as defined under the >hartered Accountants 8rdinance,151 (9 of 151), or a >ost and Banagement Accountant within the meaning ofthe >ost and Banagement Accountants Act, 155 (9$? of 155), or a firm of >ostand Banagement Accountants to conduct audit of refund claims.]

() Fotwithstanding that records of a registered person have %een audited %y anofficer appointed under section +-, the ommissioner] may direct anauditor appointed under su%'section (1) to audit the records of any registeredperson.

(+) An auditor appointed under su%'section (1), shall have the powers of anofficer of [$nland evenue]under sections @, +; and +.

1-[+AA. MMM]

12ection 3#! inserted b Finance !ct, 199.#2'b6section +1 s'bstit'ted b the Finance !ct, 1999.3>ords inserted b Finance !ct, #010 w.e.f. 8'ne 5, #010.

>ords and comma *b notification in the officia7 Gazette,- omitted b Finance !ct, #010 w.e.f. j'ne 5,#010.52'bstit'ted for the F'776sto$ b Finance !ct, #00"."Proiso inserted b Finance !ct, #00".ords and comma *b notification in the officia7 Gazette,- omitted b Finance !ct, #010 w.e.f. j'ne 5,#010.2'bstit'ted for *Co77ector- b Finance !ct, #010 w.e.f. j'ne 5, #010. /he same amendment was made bFinance +!mendment 4rdinance, #010, $rom'7ated as 4rdinance o. %%% of #010 dated Febr'ar ", #010,$'b7ished in the Gazette of Pakistan :;traordinar Part % at $aes #3 to 53 and this amendment was madethro'h Finance +!mendment 4rdinance, #009, $rom'7ated as 4rdinance o. &&%% of #009, dated4ctober #, #009, $'b7ished in the Gazette of Pakistan :;traordinar $art % at $aes ##9 to #59.92'bstit'ted for *sa7es ta;- b Finance !ct, #010 w.e.f. j'ne 5, #010./he same was made b Finance

+!mendment 4rdinance, #010, $rom'7ated as ordinance o. %%% of #010, dated Febr'ar ", #010,

$'b7ished in the Gazette of Pakistan :;traordinar $art % at $aes #3 to 53 and this amendment was madethro'h Finance +!mendment 4rdinance, #009, $rom'7ated as 4rdinance o. &&%% of #009, dated4ctober #, #009, $'b7ished in the Gazette of Pakistan :;traordinar Part % at Paes ##9 to #59.102ection 3# !! omitted b Finance !ct, #00. :ar7ier it was inserted b /a; =aws !mendment 4rdinance,#000, dated ma #, #000.


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>hapter'?$$

22!N!S AN) P!NA"TI!S

1[++. ffences and 4enalt&es.= =

[...]Whoever commits any offence descri%ed in column (1) of the *a%le %elowshall, in addition to and not in derogation of any punishment to which he may %elia%le under any other law, %e lia%le to the penalty mentioned against that offencein column () thereof&- -

TA"!

ffences Penalt&es Sect&on of the Act to>h&ch offence has%efe%ence

(1) () (+)

1. Where any personfails to furnish areturn within the duedate.

!uch person shall pay apenalty of five thousandrupees&"rovided that in case aperson files a returnwithin fifteen days of thedue date, he shall pay apenalty of one hundredrupees for each day of

default.

5

. Any person who failsto issue an invoicewhen reGuired underthis Act.

!uch person shall pay apenalty of five thousandrupees or threeper centof the amount of the taxinvolved, whichever ishigher.

+

+. Any person who un'authori3edly issuesan invoice in which anamount of tax is

specified.

!uch person shall pay apenalty of ten thousandrupees or fiveper centof the amount of the tax

involved, whichever ishigher.

+ , ; and +

0. Any person who failsto notify the changesof material nature inthe particulars of

!uch person shall pay apenalty of five thousandrupees.

10

12ection 33 s'bstit'ted b Finance !ct, #005.#)racket and Fi're *one- omitted b Finance !ct, #00.

9


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registration of taxa%le activity.

@. Any person who failsto deposit theamount of tax due or

any part thereof inthe time or mannerlaid down under thisAct or rules or ordersmade there under.

!uch person shall pay apenalty of ten thousandrupees or fiveper cent

of the amount of the taxinvolved, whichever ishigher&"rovided that, if theamount of tax or anypart thereof is paidwithin fifteen days fromthe due date, thedefaulter shall pay apenalty of five hundredrupees for each day of

default&"rovided further that nopenalty shall %eimposed when anymiscalculation is madefor the first time during ayear&"rovided further that ifthe amount of tax due isnot paid even after theexpiry of a period ofsixty days of issuance ofthe notice for suchpayments %y an officerof 1[$nland evenue, not%elow the ran/ ofAssistant >ommissioner$nland evenue], thedefaulter shall, further%e lia%le, uponconviction %y a !pecial

udge, to imprisonmentfor a term which mayextend to three years, orwith fine which mayextend to amount eGualto the amount of tax

+, 5, ; and 0

12'bstit'ted for *2a7es ta;-, not be7ow the rank of !ssistant Co77ector of sa7es ta;- b Finance !ct, #010.

/0


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involved, or with %oth.

5. Any person whorepeats erroneouscalculation in thereturn during a year

where%y amount oftax less than theactual tax due is paid.

!uch person shall pay apenalty of five thousandrupees or threeper centof the amount of the tax

involved, whichever ishigher.

; and 5

;. Any person who isreGuired to apply forregistration under thisAct fails to ma/e anapplication forregistration %eforema/ing taxa%lesupplies.

!uch person shall pay apenalty of ten thousandrupees or fiveper centof the amount of taxinvolved, whichever ishigher&"rovided that suchperson who is reGuiredto get himself registeredunder this Act, fails toget registered withinsixty days of thecommencement oftaxa%le activity, he shall,further %e lia%le, uponconviction %y a !pecialudge, to imprisonmentfor a term which may

extend to three years, orwith fine which mayextend to an amount

10

/1


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eGual to the amount oftax involved, or with%oth.

. Any person who fails

to maintain recordsreGuired under thisAct or the rules madethere under.

!uch person shall pay a

penalty of ten thousandrupees or fiveper centof the amount of taxinvolved, whichever ishigher.

and 0

. Where a registeredperson who, without anyreasona%le cause, innon compliance with the

such person shall pay apenalty of five thousandrupees#

@

/2


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provisions of section @,= =

(a) fails to produce therecord on receipt offirst notice#

(%) fails to produce therecord on receipt ofsecond notice# and

(c) fails to produce therecord on receipt ofthird notice.

such person shall pay apenalty of ten thousandrupees# and

such person shall pay apenalty of fifty thousandrupees.

1-. Any person who failsto furnish the

!uch person shall pay apenalty of ten thousand

5

/)


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information reGuired %ythe


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which may extend to fiveyears, or with fine whichmay extend to an amounteGual to the loss of taxinvolved, or with %oth.

10. Where any personviolates any em%argoplaced on removal ofgoods in connectionwith recovery of tax.

!uch person shall pay apenalty of twenty fivethousand rupees or tenper centof the amount ofthe tax involved,whichever is higher. Heshall, further %e lia%le,

0

//


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upon conviction %y a!pecial udge, toimprisonment for a termwhich may extend to oneyear, or with fine whichmay extend to amounteGual to the amount of taxinvolved, or with %oth.

1@. Any person whoo%structs theauthori3ed officer inthe performance of

!uch person shall pay apenalty of twenty fivethousand rupees or onehundredper centof the

+1 and 2eneral

/6


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his official duties. amount of tax involved,whichever is higher.

15. Any person who failsto ma/e payment inthe manner

prescri%ed undersection ;+ of thisAct.

!uch person shall pay apenalty of five thousandrupees or threeper cent

of the amount of taxinvolved, whichever ishigher.

;+

1;. Any person who failsto fulfil any of theconditions,

!uch person shall pay apenalty of five thousandrupees or threeper cent

;1 and 2eneral

/


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limitations orrestrictionsprescri%ed in aFotification issuedunder any of the

provisions of this Act.

of the amount of taxinvolved, whichever ishigher.

1. Where any officer of1[$nland evenue]authori3ed to actunder this Act, acts

!uch officer of [$nlandevenue]shall %e lia%le,upon conviction %y a!pecial udge, toimprisonment for a term

2eneral

1>ords *2a7es /a;- 2'bstit'ted for %n7and een'e b Finance +!mended 4rdinance, #010.#2'bstit'ted for *2a7es /a;- b Finance !ct, #010.

/


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or omits or attemptsto act or omit in amanner causing lossto the sales tax

revenue or otherwisea%ets or connives inany such act.

which may extend tothree years, or with finewhich may extend toamount eGual to theamount of tax involved,

or with %oth.

1. Any person whocontravenes any of

!uch person shall pay apenalty of five thousand

2eneral.]

/9


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the provision of thisAct for which nopenalty has,specifically, %eenprovided in this

section.

rupees or threeper centof the amount of taxinvolved, whichever ishigher. ]

1[ -. MMM ]

[1].Where any personrepeats anoffence for whicha penalty isprovided underthis Act

!uch person shall paytwice the amount ofpenalty provided underthe Act for the saidoffence

2eneral.

. Any person who,'

(a) /nowingly andwithout lawfulauthority gainsaccess to orattempts to gainaccess to thecomputeri3edsystem# or

(%)

unauthori3edlyuses or disclosesor pu%lishes orotherwisedisseminatesinformationo%tained from thecomputeri3edsystem# or

(c) falsifies anyrecord orinformationstored in thecomputeri3edsystem# or

(d) /nowingly ordishonestlydamages orimpairs thecomputeri3ed

!uch person shall pay a

penalty of twenty'fivethousand rupees or onehundredper centof theamount of tax involved,whichever is higher. Heshall, further %e lia%le,upon conviction %y the!pecial udge, toimprisonment for a termwhich may extend toone year, or with finewhich may extend to anamount eGual to the lossof tax involved, or with%oth.

@-A]

12eria7 no. #0 omitted b Finance !ct, #00.#2eria7 o. #1 and ## inserted b Fiannce !ct, #00".

60


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system# or

(e) /nowingly ordishonestly

damages orimpairs anyduplicate tape ordisc or othermedium on whichany information

61


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o%tained from thecomputeri3edsystem is /ept orstored# or

(f) unauthori3edlyuses uniGue useridentifier of anyother registereduser to

62


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authenticate atransmission ofinformation to thecomputeri3ed

system# or

(g) fails to complywith orcontravenes any

6)


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of the conditionsprescri%ed forsecurity of uniGueuser identifier.

1[+6. )efaord inserted b Finance !ct, #00.5C7a'se +b omitted b Finance !ct, #00.

6


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1[+0A. Exemption from penalty and [default surcharge].''

*he ederal 2overnment may, %y a notification in the official 2a3ette, or the

+[e% to s


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1[+:A. Po>e% to a%%est and 4%osecriminal "rocedure, 1 (Act ? of 1).

;[(+) MMM ]

(0) Fotwithstanding anything contained in su%'section (1) to su%section (+) or anyother provision of this Act, where any person has committed a tax fraud [or anyoffence warranting prosecution under this Act], the [>ommissioner]may, either%efore or after the institution of any proceedings for recovery of tax, compoundthe offence if such person pays the amount of tax due along with such 1-[default

surcharge]and penalty as is determined under the provisions of this Act.

(@) Where the person suspected of tax fraud 11[or any offence warrantingprosecution under this Act]is a company, every director or officer of that companywhom the authorised officer has reason to %elieve is personally responsi%le foractions of the company contri%uting the tax fraud 1+[or any offence warrantingprosecution under this Act]shall %e lia%le to arrest# provided that any arrest underthis su%'section shall not a%solve the company from the lia%ilities of payment oftax, 1[default surcharge]and penalty imposed under this Act.]

1([+:. P%oceded on a%%est of a 4e%son.

(1) When a !ales *ax 8fficer authori3ed in this %ehalf arrests a person under!ection +;A, he shall immediately intimate the fact of the arrest of that person tothe !pecial udge who may direct such 8fficer to produce that person atconsiders such time and place and on such date as the !pecial udge considersexpedient and such 8fficer shall act accordingly.

() Fotwithstanding anything contained in the su%'section (1), any personarrested under this Act shall %e produced %efore the !pecial udge or, if there isno !pecial udge within a reasona%le distance, to the nearest udicial Bagistrate,

12ection 3ords inserted b Finance !ct, #00ords *in res$ect of a s'$$7 or s'$$7ies made b him- omitted b Finance !ct, #00ords inserted b Finance !ct, #00


67/168


within twenty'four hours of such arrest, excluding the time necessary for the4ourney from the place of arrest to the >ourt of the !pecial udge or, as the casemay %e, of such Bagistrate.

(+) When any person is produced under su%'section () %efore the !pecialudge, he may, on the reGuest of such person, after perusing the record, if anyand after giving the prosecution an opportunity of %eing heard, admit him to %ailon his executing a %ond, with or without sureties, or refuse to admit him to %ailand direct his detention at such place as he deems fit&

"rovided that nothing herein contained shall preclude the !pecial udgefrom cancelling the %ail of any such person at a su%seGuent stage if, for anyreason, he considers such cancellation necessary, %ut %efore passing such orderhe shall afford such person an opportunity of %eing heard, unless for reasons to%e recorded he considered that the affording of such opportunity shall defeat thepurposes of this Act.

(0) When such person is produced under su%'section () %efore a udicialBagistrate, such Bagistrate may, after authorising his detention in such custodyat such place and for such period as he considers necessary or proper forfacilitating his earliest production%efore the !pecial udge, direct his production%efore the !pecial udge on a date and time to %e fixed %y him or direct suchperson to %e forthwith ta/ento, and produced %efore, the !pecial udge and heshall %e so ta/en.

(@) Fothing in su%'section (+) or su%'section (0) shall preclude the !pecial udgeor the udicial Bagistrate from remanding any such person to the custody of the!ales *ax 8fficer holding inGuiry against that person if such officer ma/es areGuest in writing to that effect, and the !pecial udge or the udicial Bagistrate,

after perusing the record, if any, and hearing such person, is of the opinion thatfor the completion of inGuiry or investigation it is necessary to ma/e such order&

"rovided that in no case the period of such custody shall exceed fourteendays.

(5) When any person is arrested under this Act, the !ales *ax 8fficer shall recordthe fact of arrest and other relevant particulars in the register specified in su%'section (1-) and shall immediately proceed to inGuire into the charge againstsuch person and if he completes the inGuiry within twenty'four hours of his arrest,excluding the time necessary for 4ourney as aforesaid, he may, after producingsuch person %eforethe !pecial udge or the nearest udicial Bagistrate, ma/e a

reGuest for his further detention in his custody.

(;) While holding an inGuiry under su%'section (5), the !ales *ax

Documents

Sales Act Government of Pakistan Updated Up to July 2014 (1)