BUDGET PROPOSALS UNDER THE SALES TAX ACT, 1990 FOR THE YEAR 2006-2007

BUDGET PROPOSALS UNDER THE SALES TAX ACT, 1990 <!--[if gte mso 10]> BUDGET PROPOSALS UNDER THE SALES TAX ACT, 1990 FOR THE YEAR 2006-2007 By A.K. Shamim, Advocate, Patron-in-Chief, Karachi, Sales Tax Bar Association I submit the following proposals to be adopted in Federal Budget for the year 2006-2007. During the year 2004-05 number of Sales Tax registered persons were reduced due to automatic De-registration on the basis of Exemption on taxable turnover, which remained below the threshold i.e. being below Rupees Five Millions in the earlier years and the registered persons declaring turnover exceeding Rupees Five Million were continued in the Net of Sales Tax. I feel that the number of registered persons in the trade of Sweetmeat, Restaurant, Bakery and other Snacks are quite nominal despite the fact that most of them having turnover more than five millions in a year and they are avoiding sales tax registration due to heavy rate of Sales Tax at 15% and all such persons in trade have no In-put on major purchases of raw material for consumption and to claim for adjustments their major items of consumption (purchases) which are exempted from charge and levy of Sales Tax. Sweetmeat manufacturers, Bakery Products, Restaurants and other Snacks use several items of raw-material (ingredients) which are not subjected to Sales Tax being exempt as such having no claim of in-put tax except in very few items like Vegetable Oil/Ghee, Sugar, Gas, Electricity/Power and packing material etc. It is suggested that Special Procedure be framed for the manufacturers/retailers dealing in such items in line with Special Procedure for the Trade of Jewellers and others. It is suggested that 75% of their sales be exempted because of consumption of exempted item and the present rate of 15% on their total turnover is excessive and unjust. ALTERNATE DISPUTE RESOLUTION UNDER SECTION 47-A This scheme is new though similar with the previous scheme of settlement commission, the success of this scheme is possible provided the following suggestions be taken into consideration and amendments be made accordingly:--‑ (A) 1. Formation of Committees Committees shall consist of four members (1) Commissioner of Income Tax, (2) Advocate, (3) Chartered Accountant and (4) Member from Chamber of Commerce or its nominee in several committees. As the present committees are not consisting of Advocate and member or nominees of Chamber of Commerce. (B) Committees shall have powers to decide and resolve the dispute and no approval may be required from C.B.R. as committees should be independent Chairman and Members should be impartial and their decision should be final, except that the order or decision may be issued through C.B.R. (C) Order ,of the Committee be made appealable before the Tribunal. That the suggestion is made to ensure the taxpayers that the committees should be fair, impartial and independent and shall work without any influence of C.B.R. COLLECTOR APPEALS Collector of Sales Tax Appeals may be under the administrative control of the Tribunal or Ministry of Law and may not be under the control or influence of C.B.R. as the Collector of Appeal performs judicial duty as such should be independent in taking fair and independent decision and such amendment to this effect shall create confidence between Appellate Authority as well as the appellant, in the present circumstances, it is not denied that the Collector Appeal feels the responsibility in reducing tax amount, which is against the sprit of judicial system. DEFAULT SURCHARGE UNDER SECTION 34 It is suggested that the rate of default surcharge tax may be reduced to 1% per month considering the rate of Bank interest in the country. SECTION 36(1) This is proposed to restrict the period of 5 years to 3 years as amended subsection (2) of section 36 in the year 2005 and bring it at part. SECTION 45-B SUBSECTION (4) Provision of subsection (4) of section 45-B of the Sales Tax Act, 1990 requires deposit of 15% of the principal amount of tax before presenting appeal, which is not judicious and is likely denial of justice and to put the appellant in compulsion for payment of 15% of disputed tax before presenting the appeal which is not fair and proper. It is suggested to amend subsection (4) accordingly in the interest of natural justice. SECTION 52 Advocates and Chartered Accountants have qualification to represent cases/appeals and appear before the Appellate Tribunal or an Officer of Sales Tax and/or any Revenue Authority, Advocates being authorized to appear in any Revenue Court, section 52 requires authorization and not the Vakalatnama of the Advocate. It is suggested that all representations should be through advocates/Chartered Accountants or Practitioners to be registered in line with Income Tax Practitioners registration under the Income Tax Ordinance, 2001 with minimum academic qualification of graduation in Commerce or master degree in Economics. It is suggested to amend rules for registration of Practitioners in ' Sales Tax and not to allow representation by non-qualified persons those are involved in corruption and merely attend cases merely on authorization letter. LIMITATION TO CLAIM REFUND SECTION 66 Presently law requires Refund to be claimed within one year, this time be extended to four years. This suggestion is in the interest of Revenue. SECTION 67--DELAYED REFUND Extra 6% per annum of the amount of refund due payable from the date following the expiry to the day preceding the day of payment of refund be reduced to 3% in consideration of suggestion for relief suggested in charging Default Surcharge at 12% per annum or 1% per month. SECTION 73 CERTAIN TRANSACTIONS NOT ADMISSIBLE Subsection (2) of section 73 of the Act, 1990 restricted buyers entitlement of claim input tax credit, adjustment or deduction or refund repayment or draw back or zero rating of tax under the Sales Tax 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 180 days of issuance of the tax invoice. It is suggested that time period be extended to one year as against 180 days and in case of defaulter the time period of payment should be the date of decree of the Court and payment. GENERAL Registered Taxpayers under Sales Tax Act are quite minimum Continue ..