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ACT I OF 2020 ACT I OF 2020 BALOCHISTAN FINANCE ACT, 2020 An Act to continue and revise certain taxes and fees and enacting the law of public finance management in the Province of Balochistan [Gazette of Balochistan Extraordinary, 15th July, 2020] No. PAB / Legis: II(01) / 2020, dated 15.7.2020.---The Balochistan Finance Bill, 2020 (Bill No.01 of 2020) having been passed by the Provincial Assembly of Balochistan on 29th June, 2020 was sent to the Hon'ble Governor Balochistan on the same date for assent under Article 116 of the Constitution of the Islamic Republic of Pakistan. Since the Hon'ble Governor has not assented to the Bill within the stipulated period of ten days, therefore, the same is deemed to have been assented to in terms of provisions of Article 116 of the Constitution of the Islamic Republic of Pakistan. Hence, the Balochistan Finance Bill, 2020 (Bill No.01 of 2020) is hereby published as an Act of the Provincial Assembly of Balochistan. Preamble.---Whereas it is expedient to continue and revise certain taxes, fees and public finance management Balochistan Province and for the matters connected therewith or ancillary thereto; It is hereby enacted as follows: - 5. Amendment in the Balochistan Sales Tax on Services Act, 2015 (Balochistan Act No. VI of 2015).---In the Balochistan Sales Tax on Services Act, 2015 (Act No VI of 2015), - (1) In section 30, for subsections (2) and (3), the following shall be substituted: - "(2) The Authority may, by notification in the official Gazette, specify a format of invoices to be issued by a registered person or class of registered persons and prescribe a procedure for authentication of such invoices. (3) The Authority or an officer authorized by the Authority in this behalf, may require a registered person or a class of registered persons to issue invoices electronically in such manner as may be prescribed, and to transmit such invoices to the Authority, subject to such conditions and restrictions as the Authority may specify by notification in the official Gazette." (2) In section 31, in subsection (1): - (a) for clauses (a), (b) and (c), the following shall be substituted: - (a) record of services provided, including exempt services, indicating the description, quantity and value of service, name, registration number and address of the person to whom services were rendered and the amount of tax charged; (b) record of goods and services received, including exempt goods and services, indicating description, quantity and value of goods and services, name, address and registration number of the service provider or supplier of goods and the amount of the tax charged; (c) record of goods imported indicating the description, quantity and value of goods and the amount of tax paid on imports;" (b) After clause (c), as so amended, the following new clauses shall be added, namely: - (d) Books of Prime Entry or subsidiary books including Cash Books; (e) double entry accounts including General Ledger; (f) Annual Audited Financial Statements prepared either on the basis of International Financial Reporting Standards (IFRSs) or International Public Sector Accounting Standards (IPSAS), as the case may be; (g) bank statements, banking instruments and the related reconciliation statements; (h) inventory records, utility bills, salary and labor bills, rent deeds and agreements; (i) record required to be maintained and the declarations filed under any other law for the time being in force; and (j) records of tax invoices and debit credit notes issued by the person; (k) records of tax invoices and debit credit notes received by the person; (l) records of customs documents (goods declaration under section 30 of the Customs Act, 1969 and its ancillary documents); (m) Minutes of various meetings including minutes of Board, Annual General Meeting (AGM), Extra Ordinary General Meeting; and (n) such other records as may be specified by the Authority."; (3) In section 33, subsection (1), after the word 'records', the words "or documents which are in his possession or control or in the possession or control of his agent; and where such record or documents have been kept on electronic data" shall be inserted; (4) In section 33, after subsection (3), the following new subsection (3A) shall be inserted namely: - "(3A) The officer authorized under subsection (1) may conduct audit proceedings electronically through video links or any other facility as may be notified by the Authority." (5) In section 35, for subsection (1), the following shall be substituted namely: - "(1) Every registered person shall furnish to the Authority, not later than the due date, a true, correct and properly filled-up return in the form notified by the Authority, indicating the tax due and paid during a tax period and such other information or particulars as may be notified by the Authority." (6) In section 48, in subsection (2), in the table, after S.No.2 and the entries relating thereto in columns 1, 2, 3 and 4, the following new entries shall be inserted: - 2A Where any person fails or refuses to issue a tax invoice as required in sub-rule (1) of rule 29 of the Balochistan Sales Tax on Services Rules, 2018. Such person shall be liable to pay a penalty of twenty thousand rupees on first default and fifty thousand rupees for each subsequent default. In case of three acts of such default, the business premises shall be liable to be sealed. General 2B Where any person either avoids, defies, fails to comply with e-invoicing system or Issues Invoices outside the e-invoicing system. Such person shall be liable to pay a penalty of up to one hundred thousand rupees, but not less than twenty-five thousand rupees. In case of three consecutive defaults, the place of business of such person may further be liable to sealing. 59A (7) In section 63, for subsection (4), the following shall be substituted, namely: - "(4) An appeal under subsection (1) may be filed manually or electronically as may be specified by the Authority."; (8) In section 66, (a) for subsection (2), the following words "The Appellate Tribunal shall consist of three members of such number of judicial and technical members as are determined and appointed by the Government having regard to the needs of the Tribunal." shall be substituted; (b) in subsection (4), after the word 'Member' the words "on the recommendations of a Government Committee as prescribed in section 3(4) of the Balochistan Revenue Authority Act, 2015" and further in clause (b), after the word 'authority', the words "or Federal Board of Revenue" shall be omitted; (c) in subsection (4), after clause (b), a new clause (bb) "is Associated Chartered Certified Accountant or Associated Chartered Accountant having at-least three years of experience in taxation;" shall be inserted; (d) after subsection (4), the following new subsection (4A) shall be inserted, namely: - "(4A) Notwithstanding anything contained in subsection (4), the Government may, for three years from the enforcement of this Act, appoint any person, as Technical Member, who has worked for a minimum of three years: (i) in the Federal Board of Revenue or Provincial Excise and Taxation Department or Balochistan Board of Revenue in the rank not below BS-20 for five years in aggregate, or (ii) as A Commissioner Inland Revenue (Appeals) under clause (c), subsection (1) of section 30 of the Sales Tax Act 1990, for three years with service of at least five years in BS-20, as an Accountant Member of the Appellate Tribunal." shall be inserted; (e) in subsection (6), full stop "." appearing at the end shall be substituted by colon ":" and thereafter the following two provisos shall be added: - "Provided that in the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior most Member of the Tribunal shall act as the Chairperson until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office: Provided further that where the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the senior most Member of the Tribunal shall discharge the functions of the Chairperson until the date on which the Chairperson resumes his duties." (f) in subsection (7) after the word "discharged" the words "in the prescribed manner, if not provided in this section" shall be inserted; (g) in subsection (9) after the word "may" and comma "," the words "subject to such conditions, limitations or restrictions as it may determine," shall be inserted; (h) in subsection (11) for the words "tax or penalty involved does not exceed five million rupees" the words and full stop "tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee, default surcharge or penalty determined in any order appealed against, does not exceed five hundred thousand rupees and which does not involve any question of law." shall be substituted; (i) in subsection (12) after the word "opinion" the words "or are equally divided" shall be substituted; (j) subsections (13) and (14) shall be omitted; (k) in subsection (16) after the word "may" the commas and words ", in consultation with Authority and Finance Department," shall be inserted; (l) after subsection (16), as so amended, the following new subsection (17) shall be added, namely: - "(17) No act or proceedings of the Appellate Tribunal shall be questioned or shall be invalid merely on the ground of the existence of any vacancy or defect in the constitution of the Appellate Tribunal." (9) After section (66), the following new section (66A) shall be inserted: - "66A- Member Qualification, Remuneration and Removal: - (1) Prior to appoint any person as Members of the Appellate Tribunal under section 66, the Government shall satisfy itself that such person does not have any financial or other interests which are likely to prejudicially affect his functions as such Member including Chairperson. (2) The salary, allowances and other terms and conditions of service of the Members including Chairperson of the Appellate Tribunal shall be such as may be prescribed by the Government: Provided that neither salary and allowances nor other terms and conditions of service of the Members of the Appellate Tribunal shall be varied to their disadvantage after their appointment. (3) Any Member may, by notice in his hand writing addressed to the Government resign from his office: Provided that the Member shall continue to hold office until the expiry of three months from the date of receipt of such notice by the Government or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest. (4) The Government may, after consultation with the Chief Justice of Balochistan High Court in case of Judicial Members only, remove Members from their office, who: - (a) has been adjudged an insolvent; or (b) has been convicted of an offence which, in the opinion of Government involves moral turpitude; or (c) has become physically or mentally incapable of acting as Member; or (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as Member; or (e) has so abused his position as to render his continuance in office prejudicial to the public interest: Provided that the Member shall not be removed on any of the grounds specified in clauses (d) and (e), unless he has been informed of the charges against him and has been given an opportunity of being heard. Provided further that, the Judicial Member shall not be removed from their office except by an order made by the Government on the ground of proved misbehavior or incapacity after an inquiry made by a Judge of the Balochistan High Court nominated by the Chief Justice of the Balochistan High Court on a reference made to him by the Government and of which the said Member had been given an opportunity of being heard. (5) The Government, with the concurrence of the Chief Justice of Balochistan High Court, may suspend from office, the Judicial Members of the Appellate Tribunal in respect of whom a reference has been made to the Chief Justice of the Balochistan High Court under subsection (4)." (10) In section 72, (a) in subsection (1), in clause (bb), after the word 'companies', the words "including running and demand finance" shall be inserted; (b) in subsection (1), in the proviso, the full stop at the end shall be substituted by a colon and thereafter the following second proviso shall be added: - "Provided further that in cases where Assessment of tax has been made under section 24 or where determination of tax not levied or short levied has been adjudged under section 52, action for the recovery of the tax and the default surcharge and penalty relating thereto shall not be made under this section for a period of thirty days from the date of the order of such assessment or determination."; (11) In Second Schedule, (a) against the Tariff Heading 9801.2000, in column 3 'rate of tax', for the figure and sign "15%", the following shall be substituted, and at the end of this entry in column 2 'Description', the following paragraph of 'Explanation' shall be inserted namely: - "(i) 'Chainaki Restaurants': - the amount of monthly tax shall be fixed at Rs. 3,000 without input tax credit or adjustment; (ii) Other restaurants including caf , coffee houses, food huts, ice-cream shops and eateries excluding chainaki restaurants: - 6% without input tax credit or adjustment" [Explanation: - For the purposes of this tariff heading, the term 'Chainaki Restaurant' means a restaurant, caf , coffee house, food hut, ice cream shop and eatery where its monthly electricity consumption is not more than Rs. 7,000 and the number of employees does not exceed two.]" (b) against the Tariff Heading 9814.2000, in paragraph of 'Excluding' as stated in column 2 of description, after the word "or", the words "or interest free loans" shall be inserted and in its column 3 'rate of tax' the figure and sign "15%" shall be substituted by "(i)- Rs. 60 per square yard in case the services mentioned are rendered in relation to residential building / property; and (ii)- Rs. 50 per square feet in case the services mentioned are rendered in relation to commercial building / property."; (c) against the Tariff Heading 9814.3000, in column 3 'rate of tax' the figure and sign "15%" shall be substituted by "(i)- Rs. 60 per square yard in case the services mentioned are rendered in relation to residential property; and (ii)- Rs. 50 per square feet in case the services mentioned are rendered in relation to commercial property."; (d) against the Tariff Headings 9815.4000, 9815.5000, 9815.7000 and 9815.8000, in column 2 of description, under the existing entries, the following paragraph shall be added namely: - "Excluding. - Where the services are rendered and funded under an agreement of foreign grant-in-aid or interest free loan."; (e) against the Tariff Heading 9824.0000, in column 2 of description, under the existing entries, the following two paragraphs shall be added, namely: - "Excluding. - Where the construction work is funded under an agreement of foreign grant-in-aid or interest free loan or involves construction of consular buildings. Explanation.- Notwithstanding the rate of 15% fixed in column 3 (rate of tax), the following reduced rate of 6%, will be applicable, for all services specified at tariff heading 9824.0000 without input tax credit or adjustment to the extent of contracts for which payment is made from the Provincial Consolidated Fund.". (f) In Second Schedule, against the Tariff Heading 9868.0000, in column 2 of description, under the existing entries, the following paragraph shall be added namely: - [Explanation. -Notwithstanding the rate of 15% fixed in column 3 (rate of tax), the following reduced rate of 6%, will be applicable, for all services specified at tariff heading 9868.0000 without input tax credit or adjustment].