CBR EXTENDS THE SUSPENSION OF OPERATION OF SECTION 73 OF THE SALES TAX ACT, 1990 TILL 29TH FEBRUARY, 2004

CBR EXTENDS THE SUSPENSION OF OPERATION OF SECTION 73 OF THE SALES TAX ACT, 1990 TILL 29TH FEBRUARY, 2004 <!--[if gte mso 10]> CBR EXTENDS THE SUSPENSION OF OPERATION OF SECTION 73 OF THE SALES TAX ACT, 1990 TILL 29TH FEBRUARY, 2004 By Mr. Javed Akhtar, Advocate, Lahore Keeping in view, the demand of various bodies including FPCCI and APTMA, CBR had suspended the operation of section 73 of the Act till 31st August, 2003. Through its letter C. No. 3(36)STP/99-Pt-I dated 9-8-2003, CBR had communicated that during the period, the provisions of section 73 as existed prior to the substitution shall remain operative. CBR's authorities are making attempts to redraft sections 7 and 73 of the Act in consultation with all stake holders including FPCCI, SITE Association, APTMA etc. However in the meantime, the suspension of section 73 of the Act was extended till 30th September, 2003. 2. Draft of sections 7 and 73 had been circulated to various trade bodies for their comments and were enclosed with our earlier letter dated 29-9-2003. In the meantime, the suspension of operation of section 73 was extended up to 31st December, 2003. However, Tax Managers have failed to reach any decision and vide its letter C.No. 3(36)STP/99(Pt-A) dated 28-1-2004 C.B.R. has extended the suspension of section 73 till 29-2-2004. 3. Taxpayers are advised to file their returns for the month of February 2004 in the same pattern on which they had been filing the returns prior to substitution of section 73. The adjustment of input tax on purchases made during the month of February, 2004 can be claimed on the strength of invoices issued during the relevant month irrespective of the fact whether or not the payment of the amount of sales tax has been made by the buyer- to the supplier. However, it has to be kept in mind that the payment of the whole amount of invoice will have to be transferred through any of the prescribed mode showing transfer of payment from the business bank account of the buyer to that of the supplier within 120 days of the issuance of tax invoice. 4. In consultation with FPCCI, APTMA and other trade bodies, CBR has prepared a revised draft of section 73 which is being annexed with this letter for your information and record. In case you have any reservation on the said draft, you are advised to approach CBR well in time to avoid any future complication. PROPOSED SECTION 73 (CBR'S REVISED DRAFT) [3rd January, 2004] 73. Certain transactions not admissible.---(1) Notwithstanding anything contained in this Act or any other law for the time being in force, payment of the amount for a transaction exceeding value of fifty thousand rupees, excluding payment against a utility bill, shall be made by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer. (2) The buyer shall not be entitled to claim input tax credit, -adjustment or deduction, or refund, repayment or drawback or zero‑rating of tax under this Act if payment for the amount is made otherwise than in the manner prescribed in subsection (1), provided that payment in case of a transaction on credit is so transferred within one hundred and eighty days of issuance of the tax invoice. (3) The amount transferred in terms of subsection (1) shall be deposited in the business bank account of the supplier, otherwise the supplier shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment of drawback or zero-rating of tax under the Act. Explanation.---For the purpose of this section the term "business bank account" shall mean the bank account utilised by the registered person for business transactions, declared to the Collector of Sales Tax in whose jurisdiction he is registered. (4) Nothing in this section shall apply to supplies made by registered retailers to ordinary customers, or to exports made from Pakistan, or to supplies of taxable goods made by registered persons to unregistered persons against payment of further tax under sub-section (IA) of section 3, provided that the provisions shall be applicable on purchases made against such transactions.