On 6th May 2024, the Parliament amended Tax Laws under the Income Tax Ordinance, 2001, Sales Tax Act, 1990 and The Federal Excise Act, 2005. The article below will discuss all relevant changes to the Sales Tax Act, 1990.
SALES TAX ACT, 1990
Four types of amendments were undertaken in Sales Tax Act, 1990;
a) Introduction of a new Section
b) Replacement of Omitted Sections
c) Insertions within existing Sections
d) Substitute Sections
A. NEW SECTION
30DDDA. Directorate-General of law.- (1) The Directorate-General of law shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors, Law Officers and such other officers as the Board may, by notification in the official Gazette, appoint. (2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of law.";
B. REPLACEMENT OF OMITTED SECTION:
S. 43 | Section 43 omitted by Finance (Amended) Ordinance, 2009.
| 43A. Pecuniary jurisdiction in appeals.- (1) Subject to other provisions of this Act,- an appeal to the Commissioner (Appeals) shall lie where the value of assessment of tax or, as the case may be, refund of tax does not exceed ten million rupees; or an appeal to the Appellate Tribunal Inland Revenue shall lie where the value of assessment of tax or, as the case may be, refund of tax exceeds ten million rupees.
(2) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Commissioner (Appeals) in cases under clause (a) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001(XLIX of 2001).
(3) A person or, as the case may be, officer of Inland Revenue aggrieved by an order of the Appellate Tribunal in cases under clause (h) of sub-section (1) may file a reference before the High Court in accordance with section 133 of the Income Tax Ordinance, 2001 (XLIX of 2001).
(4) The cases pending before the Commissioner (Appeals) having the value of assessment of tax or, as the case may be, refund of tax exceeding ten million rupees shall on and from the 16th day of June, 2024 stand transferred to the Appellate Tribunal Inland Revenue.
(5) All cases transferred from the Commissioner (Appeals) to the Appellate Tribunal under sub-section (4) shall be decided by the Appellate Tribunal within the period provided for under section 132 of the Income Tax Ordinance, 2001 (XLIX of 2001) which period shall commence from the 16th day of June, 2024."; |
A. INSERTION WITHIN SECTIONS
S. 45B | 45B. Appeals. – (1) Any person, other than the Sales Tax Department, aggrieved by any decision or order passed under sections 10, 11, 25, 36, or 66, by an officer of Inland Revenue may, within thirty days of the date of receipt of such decision or order, prefer appeal to the Commissioner Inland Revenue (Appeals): | 45B. Appeals.– (1) Any person, other than the Sales Tax Department, aggrieved by any decision or order passed under sections 10, 11, 25, 36, or 66, by an officer of Inland Revenue may, within thirty days of the date of receipt of such decision or order, if the value of the assessment, or as the case may be, refund of the tax does not exceed ten million rupees, prefer appeal to the Commissioner Inland Revenue (Appeals): |
S. 48 | 48. Recovery of arrears of tax. --(1) Subject to sub-section (1A), where] any amount of tax is due from any person, the officer of Inland Revenue] may:
(f) recover such amount by attachment and sale of any moveable or immovable property of the guarantor, person, company, bank or financial institution, where a guarantor or any other person, company, bank or financial institution fails to make payment under such guarantee, bond or instrument
Provided that the Commissioner Inland Revenue or any officer of Inland Revenue shall not issue notice under this section or the rules made thereunder for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 45B in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the amount of tax due has been paid by the taxpayer. | 48. Recovery of arrears of tax. --(1) Subject to sub-section (1A), where] any amount of tax is due from any person, the officer of Inland Revenue] may:
(f) recover such amount by attachment and sale of any moveable or immovable property of the guarantor, person, company, bank or financial institution, where a guarantor or any other person, company, bank or financial institution fails to make payment under such guarantee, bond or instrument
Provided that the Commissioner Inland Revenue or any officer of Inland Revenue shall not issue notice under this section or the rules made thereunder for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 45B or, as the case may be, section 46 in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the amount of tax due has been paid by the taxpayer. |
B. SUBSTITUTED SECTIONS
S. 46 | 46. Appeals to Appellate Tribunal. – (1) Any person including an officer of Inland Revenue (not below the rank of an Additional Commissioner, aggrieved by any order passed by– – (a) the Commissioner Inland Revenue (Appeals) under section 45B, (b) the Commissioner Inland Revenue through adjudication or under any of the provisions of this Act or rules made thereunder, (c) the Board under section 45A, may, within sixty days of the receipt of such decision or order, prefer appeal to the Appellate Tribunal.
(2) The Appellate Tribunal may admit, hear and dispose of the appeal as per procedure laid down in sections 610[131 and 132 of the Income tax Ordinance, 2001(XLIX of 2001, and rules made thereunder.
(2A) All appeals and proceedings under this Act pending before the customs, Excise and Sales Tax Appellate Tribunal Constituted under section 194 of the customs Act 1969(IV of 1969) shall stand transferred to the Appellate Tribunal constituted under section 130 of the Income Tax Ordinance 2001 (XLIX of 2001) with effect from 28th Day of October, 2009. | 46. Appeals to Appellate Tribunal --(1) Subject to section 43A, any person, other than an SOE, aggrieved by any order passed by an officer of Inland Revenue, or the Board or Commissioner (Appeals) under this Act or the rules made there under may, within thirty days of the receipt of such order, prefer an appeal to the Appellate Tribunal or, as the case may be, a reference to the High Court:
Provided that ' where sub- section (11) of section 134A of Income Tax Ordinance, 2001(XLIX of 2001) shall apply, an SOE may prefer an appeal under this sub-section.";
(2A Omitted) |
S. 47 | 47. Reference to the High Court. — (1) Within ninety days of the communication of the order of the Appellate Tribunal under sub-section of section 46, the aggrieved person or any officer of Inland Revenue not below the rank of an Additional [Commissioner], authorized by the Commissioner may prefer an application in the prescribed form along with a statement of the case to the High Court, stating any question of law arising out of such order.
(2) The statement to the High Court referred to in sub-section (1), shall set out the facts, the determination of the Appellate Tribunal and the question of law, which arises out of its order. | 47. Reference to the High Court. - (1) Within thirty days of the communication of the order of the Appellate Tribunal or, as the case may be, Commissioner. (Appeals), the aggrieved person or the Commissioner may prefer an application in the prescribed form along with a statement of the case and complete record of the Appellate Tribunal or, 'as the case may be, Commissioner (Appeals) to the High Court, stating any question of law or a mixed question of law and fact arising out of such order.
(2) Provisions of section 133 of the Income Tax Ordinance, 2001 (XLIX of 2001) and rules made thereunder relating to a reference to the High Court shall, mutatis mutandis, apply to references to the High Court under this Act."; |
S. 47A | 47A. Alternative Dispute Resolution. -- (1) Notwithstanding any other provision of this Act, or the rules made thereunder, an aggrieved person in connection with any dispute pertaining to— the liability of tax of one hundred million rupees or above against the aggrieved person or admissibility of refund, as the case may be; (a) the extent of waiver of default surcharge and penalty; or any other specific relief required to resolve the dispute, may apply to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application, which is under litigation in any court of law or an appellate authority, except where criminal proceedings have been initiated.
(2) The application for dispute resolution shall be accompanied by an initial proposition for resolution of the dispute, including an offer of tax payment.
(3) The Board may, after examination of the application of an aggrieved person, appoint a committee, within fifteen days of receipt of such application in the Board, comprising, —
(i) a retired judge not below the rank of a judge of a High Court, who shall also be the Chairperson of the Committee, to be nominated by the Board from a panel notified by the Law and Justice Division for such purpose; (ii) Chief Commissioner Inland Revenue having jurisdiction over the case; and
(iii) person to be nominated by the registered person from a panel notified by the Board comprising – (a) chartered accountants, cost and management accountants and advocates having a minimum of ten years’ experience in the field of taxation; (b) officers of the Inland Revenue Service who stood retired in BPS 21 or above; or (c) reputable businessmen as nominated by Chambers of Commerce and Industry: Provided that the registered person shall not nominate a chartered accountant or an advocate if the said chartered accountant or the advocate is or has been an auditor.
(4) The Board shall communicate the order of appointment of committee to the aggrieved person, court of law or the appellate authority where the dispute is pending and the concerned Commissioner.
(5) The committee appointed under sub-section (3) shall examine the issue and may, if it deems necessary, conduct inquiry, seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit and shall decide the dispute by majority, within forty-five days of its appointment extendable by another fifteen days for the reasons to be recorded in writing.
(6) The decision by the committee under sub-section (5) shall not be cited or taken as a precedent in any other case or in the same case for a different tax year.
(7) The recovery of tax payable by a registered person in connection with any dispute for which a committee has been appointed under sub-section (3) shall be deemed to have been stayed on the constitution of committee till the final decision or dissolution of the committee, whichever is earlier.
(8) The decision of the committee under sub-section (5) shall be binding on the Commissioner when the aggrieved person, being satisfied with the decision, has withdrawn the appeal pending before the court of law or any appellate authority in respect of dispute as mentioned in subsection (1) and has communicated the order of withdrawal to the Commissioner:
Provided that if the order of withdrawal is not communicated to the Commissioner within sixty days of the service of decision of the committee upon the aggrieved person, the decision of the committee shall not be binding on the Commissioner.
(9) Subject to sub-section (10), the Commissioner shall also withdraw the appeal, if any, pending before any court of law or an appellate authority in respect of dispute as mentioned in sub-section (1) within thirty days of the communication of the order of withdrawal by the aggrieved person to the Commissioner.
(10) The aggrieved person shall make the payment of sales tax and other duty or taxes and within such time as decided by the committee under sub section (5) and all decisions and orders made or passed shall stand modified to that extent.
(11) If the committee fails to decide within the period of sixty days under sub-section (5), the Board shall dissolve the committee by an order in writing and the matter shall be decided by the court of law or the appellate authority where the dispute is pending under litigation.
(12) The Board shall communicate the order of dissolution of the committee to the aggrieved person, court of law or the appellate authority and the Commissioner.
(13) On receipt of the order of dissolution of the committee, the court of law or the appellate authority shall decide the appeal within six months of the communication of said order.
(14) The Board may prescribe the amount to be paid as remuneration for the services of the members of the committee, other than the member appointed under clause (ii) of sub-section (3). Sales Tax Act, 1990 113
(15) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.] | 47A. Alternative dispute resolution.- (1) A Notwithstanding any other provision of this Act; or the rules made thereunder, an aggrieved person in connection with any dispute pertaining to- the liability of tax of fifty million rupees or above against the aggrieved person or admissibility of refund, as the case may be; the extent of waiver of default surcharge and penalty; or any other specific relief required to resolve the dispute, may apply, except where criminal proceedings have been initiated, to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application:
Provided that where the aggrieved person is a state-owned enterprise (SOE), the limit of tax liability of fifty million rupees or above mentioned in clause (a) shall not apply and it shall be mandatory for such aggrieved SOE to apply to the Board for the appointment of a committee for the resolution of any dispute under this section:
Provided further that no suit, prosecution, or other legal proceedings shall lie against the SOE in relation to the dispute resolved under this section.
Explanation. - State-owned enterprise shall have the same, meaning as assigned thereto in the State-Owned Enterprises (Governance and Operations) Act, 2023 (VII of 2023).
(2) Provisions of section 134A of the Income Tax Ordinance, 2001 (XLIX of 2001) and rules made thereunder relating to alternative dispute resolution shall, mutatis mutandis, apply to applications for alternative dispute resolution under this Act"; and |
SUMMARY OF AMENDMENTS OF STA, 1990
B. REPLACEMENT OF OMMITTED SECTION
In view of insertion of a new Section 43A (Pecuniary Jurisdiction in Appeals) has been introduced which means the forum of the Appeal shall be based on the value of initial assessment). Therefore, Appeals having assessment or refund value below Rs 10 million can be contested before Commissioner Inland Revenue Appeals (CIR Appeals). Assessments involving assessment or refund value above Rs 10 million shall now be filed before Appellate Tribunal Inland Revenue (ATIR) directly. However, such appeals pending before CIR shall be deemed to have transferred to ATIR by 16 June 2024.
D. SUBSTITUTED SECTIONS
Section 46 (Appeal to the Appellate Tribunal) of the Act has been substituted. The time for filing before ATIR has now been reduced to 30 days from 60 days except state owned enterprise (SOE), state owned enterprise can file an appeal to ATIR where alternate dispute resolution committee fails to decide the case within stipulated period of 60 days.
Section 47 (Reference to the High Court) of the Act has been substituted regarding filing of a Reference before High Court. The significant changes are explained below:
a) Previously, only question of law could be referred by the tax payer or department to the High Court within 90 days. Now depending on where the Reference arises from mixed questions of law and fact from an order of CIR or ATIR can be filed within 30 days.
b) However, applicant is required to file complete record of Appellate Tribunal to the High Court within 15 days of filing of application
c) High Court shall be required to ensure that Reference application is decided within 6 months from the date of its filing, for this purpose High Court shall constitute sufficient number of benches.
d) The department shall not recover the tax for 30 days from the date of receipt of ATIR order
As per 47A (Alternate Dispute Resolution) The monetary limit for referring dispute to Alternate Dispute Resolution Committee has been reduced from Rs100 million or above to Rs 50 million or above. However, state owned entity shall be mandatorily liable to apply to the Board for the appointment of a committee for the resolution of any dispute without any monetary limit.
Previously only those matters that were pending before a forum inter alia, the Tribunal, High Court could apply to the ADRC however now as per the pecuniary jurisdiction except where criminal proceedings have been initiated bars application for ADRC.
An offer for tax payment and undertaking that applicant shall accept the decision of the ADRC shall be filed along with the application. Pending appeals and litigations in respect of any kind will be required to be withdrawn.
A state-owned entity may file an appeal to ATIR or High Court or the Supreme Court as the case may be upon resolution of ADRC, in case of failure of ADRC to decide the dispute within 60 days from its appointment.
Upon order of dissolution of ADRC, the Court of law or ATIR shall decide the appeal within 90 days of the communication of the order.
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