In the name of Allah, the Compassionate, the Merciful
Thursday, 3rd November, 2011. 1
ONE DAY SEMINAR ON
The Sales Tax Act, 1990 ORGANIZED BY Karachi Tax Bar Association VENUE Regional Tax Office; Auditorium, Karachi.
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TOPICS SECTION 10 REFUND OF INPUT TAX
SECTION 66
REFUND TO BE CLAIMED WITHIN ONE YEAR
SECTION 73
CERTAIN TRANSACTIONS NOT ADMISSIBLE
AND
ALL PROVISIONS RELATING TO CRIMINAL PROCEEDINGS
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RESOURCE PERSON
MUHAMMAD SHAHID BAIG B.Com, LL.B, DTL, M.A(P.U), LL.M (London) Attorney At Law
BAIG’S LAW CONSULTANCY SERVICES F-09-12, C.M. CENTER, 01-MOZANG ROAD, LAHORE. CELL # 0323-4230723 E-mail:
[email protected]
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SECTION 73 CERTAIN TRANSACTONS NOT ADMISSIBLE (Substituted by Finance Act, 2004) • This is an overriding Provision (Non-obstante) which overrides Sales Tax Act 1990 and all other Laws for the time being in force.
Sub- section (1) says:-
• • • •
The payment for every transaction exceeding Rs 50,000/- shall be made by a:Crossed Cheque; Crossed Bank Draft; Crossed Pay Order; Or any other crossed Banking instrument.
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EXCLUSIONS AND CONDITIONS Exclusions: Utility Bills, i.e Sui Gas Bill, Electricity Bill, Telephone Bill. (Payment made in cash is admissible and input tax shall be allowed) Conditions: Transfer of amount, as per Sales Tax invoice, from the Business Bank A/c of the Buyer in favour of the Supplier. Proviso: (Inserted by Finance Act, 2005.) Further admissibility: • Online transfer from the Business Bank A/c of the Buyer to the Business Bank A/c of the supplier; 6
PAYMENTS THROUGH CREDIT CARDS • Online transferred Payments through credit cards shall also be treated as transactions through Banking Channel, if verifiable from the Bank statements of the buyer & the supplier. Sub-section (2): If Payment is not made through any of the above modes or; • In case of credit transactions, payment is not transferred in 180 days; • The buyer shall not be entitled to: Claim input tax credit 7
• Deduction: • Adjustment: • Refund: • Re-Payment: • Draw-back: • Or zero-rating of tax under the Sales Tax Act-1990. Sub-Section (3) • The amount so transferred shall be deposited in the Business Bank a/c of the supplier; otherwise the supplier shall not be entitled to: 8
• • • • • • •
Claim input tax credit Deduction Adjustment Refund Re-payment Draw-back Or zero-rating 9
EXPLANATION Explanation For Section 73, Business Bank a/c means “Bank a/c” utilized by the registered person for Business transactions, declared to the commissioner, in whose jurisdiction he is registered.
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CRIMINAL PROCEDINGS UNDER THE SALES TAX ACT, 1990
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SECTION 33 OFFENCES AND PENALTIES • The Chapter VII, Section 33 of the Sales Tax Act, 1990, deals with the offences and penalties. In this Section, 22 Situations have been provided where penalties can be levied, in addition to and not in derogation of any punishment to which the registered person may be liable under any other Law; out of which, there are EIGHT Situations where criminal proceedings can be initiated and upon conviction by a Special Judge, imprisonment can be awarded with or without fine. These Situations are:12
SERIAL NO. 5 • If any person fails to deposit the amount of tax due, even after the expiry of a period of 60 days of the issuance of the notices. • He may be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to 3 years or with fine which may extend to an amount equal to the amount of tax involved or with both. Related Sections:- 3,6,7 & 48 13
SERIAL NO. 7 • If any person fails to get himself registered within 60 days of the commencement of taxable activity. • He shall be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to 3 years or with fine which may extend to an amount equal to the amount of tax involved or with both. Related Section:- 14
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SERIAL NO. 11 • Any person who submits a false or forged document or destroys, alters, mutilates or falsifies the sales tax invoices and records or knowingly or fraudulently makes false statements, declarations, representation, personification or gives any false information or issues or uses document which are forged and false, • shall be liable to imprisonment for a term of 3 years or with fine equivalent to the amount of tax involved or with both. Related Section:- 2(37) 15
SERIAL NO. 12 • Any person who denies or obstructs the access of an authorized officer to the business premises, registered office, or to any other place where records are kept, or otherwise refuses access to the stocks, accounts, or records, or fails to represent the same when required under Sections 25, 38, 38A or 40B, • shall be liable, upon conviction by a Special Judge, to an imprisonment for a term which may extend to 5 years or with fine equivalent to the amount of loss of tax involved or with both. Related Sections:- 25, 38, 38A & 40B 16
SERIAL NO. 13 • Any person who commits or causes to commit or attempts to commit tax fraud, as detailed in Section 2(37) or abets or connives in commissioning of tax fraud, • shall be liable, on conviction by a Special Judge, to an imprisonment for a term which may extend to 5 years or with fine equivalent to the loss of tax involved or with both. Related Section:- 2(37) 17
SERIAL NO. 14 • Where any person violates any embargo placed on removal of goods in connection with the recovery of tax, • shall be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to one year or with fine which may extend to the amount equal to the amount of tax involved or with both. Related Section:- 48 18
SERIAL NO. 18 • Where any Officer of Inland Revenue authorized to act under the Sales Tax Acts, or omits or attempts to act or omits to act or commits in a manner causing loss to the sales tax revenue or otherwise or connives in any such act, • shall be liable, upon conviction by a Special Judge, to an imprisonment for a term which may extend to 3 years or with fine which may extend to the amount equal to the amount of tax involved or with both. Related Section:- General 19
SERIAL NO. 22 • Any person knowingly and without lawful authority gains access or attempts to gain access to the computer system etc. • shall, upon conviction by a Special Judge, be liable to imprisonment for one year or with fine which may extend to the amount equal to the loss of tax involved or with both. Related Section:- 50A
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WHAT IS CONVICTION? • The act or process of Judicially finding someone guilty of a crime; the state of having been proved guilty. • The Judgment that a Person is guilty of a crime A strong belief or opinion. (Black’s Law Dictionary – 8th Edition) 21
What is an “offence” Criminal Procedure Code- 1898 4(o) Offence means any act or omission made punishable by any Law for the time being in force. 4(f) Cognizable offence: Cognizable case Cognizable offence means an offence for and Cognizable case, means a case in which a police officer may in accordance with the 2nd schedule or under any Law for the time being in force, arrest without warrant. 22
FIR SECTION-154 OF THE CRIMINAL PROCEDURE CODE, 1898 Information in Cognizable Cases • Every information relating to the commission of a cognizable offence shall be recorded in writing in a register, in such form as the Provincial Government may prescribe which is known as FIR in common Parlance. • Purpose of FIR is to give information of Cognizable offence and to set the Law into motion. The other purpose of FIR is to provide a reliable base for initiation of investigation. Contents of FIR unless Proved by the maker , cannot be used against the accused as the FIR is 23 not a Substantive piece of evidence.
• FIR is a very important document for being considered in connection with an occurrence. This gives a first impression of the prosecution case and if it is spontaneous and straightforward it must go a long way in carrying the conviction with the court.
PROSECUTION A criminal Proceeding in which an accused person is tried. 24
TRIAL • A formal judicial examination of evidence and determination of legal Claims in an adversary Proceeding (A hearing involving a dispute between opposing parties).
WHAT IS TAX FRAUD Defined in clause (37) of Section 2 of the Sales Tax Act 1990: Tax Fraud means knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused) – 25
(i) (ii)
(iii)
doing of any act or causing to do any act; or Omitting to take any action or causing the omission to take any action, including the making of taxable supplies without getting registration under this Act; or falsifying or causing falsification the sales tax invoices, in contravention of duties or obligations imposed under this Act or rules or instructions issued thereunder with the intention of understating the tax liability or underpaying the tax liability for two consecutive tax periods or overstating the entitlement to tax credit or tax refund to cause loss of tax; 26
SECTION-37 POWER TO SUMMON PERSONS TO GIVE EVIDENCE AND PRODUCE DOCUMENTS IN INQUIRIES UNDER THE ACT Sub-Section (1) • Any officer can summon any person whose attendance is necessary to tender evidence or to Produce documents in any inquiry. Sub-Section (2) • Any person summoned shall be bound to attend in person or otherwise, as may be required. Proviso:• Exemptions from Personal Appearance. 27
CODE OF CIVIL PROCEDURE – 1908 • Section 132 • Section 133 Sub-Section (3) • Inquiry shall be deemed to be a judicial Proceeding.
PAKISTAN PENAL CODE 1860 •Section 193 •Section 228 28
SECTION – 37A POWER TO ARREST AND PROSECUTE • Any officer not below the rank of AC or any other officer of equal rank authorized by FBR, • On the basis of material evidence, if have reason to believe that any person has committed a Tax Fraud or any offence warranting Prosecution under the Sales Tax Act 1990 may cause arrest of such person. Sub-Section (2) • All arrests in accordance with the relevant Provisions of Cr. P.C- 1898. 29
Sub-Section – (3) • Omitted by Finance Act 2005. Sub-Section – (4) (Overriding Provision) • If the person concerned pays the tax due, Default surcharge & penalty, the commissioner may compound the offence. (COMPOUND) • To put together, combine or construct. • To settle a matter by a money Payment in lieu of other liability. • To agree for consideration not to Prosecute a crime. 30
37B PROCEDURE TO BE FOLLOWED ON ARREST OF A PERSON Sub-Section (1) • Intimation of arrest to the Special Judge to Produce the accused before the court, as directed. Sub-Section (2) • Overriding: Accused shall be produced before the S.J or J.M within 24 hours. Sub-Section (3) • Bail-Refusal-Admission. Proviso:• Cancellation of Bail after hearing the accused. 31
Sub-Section (4) • J.M may order Production of accused before the S.J. Sub-Section (5) • Remand by S.J/J.M. • Proviso – Maximum 14 days. Sub-Section (6) • Arrest to be recorded in the Register maintained as per Sub-Section (10). • If inquiry is completed in 24 hours, may ask for further detention. Sub-Section (7) • Powers of SHO While holding inquiry (Cr. P.C -1898) 32
Sub-Section (8) • If nothing adverse is found against the accused after holding the inquiry, I. O. shall report to Special Judge for his discharge and final report be submitted to immediate officer. Sub-Section (9) • Special Judge may or may not discharge the accused…. Sub-Section (10) • Register of arrest and detention in the prescribed form. Sub-Section (11) • After completion of inquiry, complaint (challan) shall be submitted before the Court. Sub-Section (12) • Any Magistrate 1st Class may record statement or confession of the accused during inquiry in accordance with33 Section 164 Cr.P.C.
SECTION 37C SPECIAL JUDGE • Sessions judge can be appointed as Special Judge by the Federal Government.
SECTION 37D COGNIZANCE OF OFFENCES BY SPECIAL JUDGE Special Judge may take cognizance of any offence punishable under this Act. (a) Upon a written report by the authorized officer (b) Upon receiving a complaint from any person (c) Upon his knowledge acquired during any proceedings before him…. Sub-Section (2) Upon receipt of report (37D(1)(a)). Special Judge shall 34 proceed with the trial of the accused.
Sub-Section (3) • Before proceeding under clauses (b) or (c) of sub-section (1), the Special Judge may hold preliminary inquiry through, Magistrate, officer of inland Revenue or Police officer. Sub-Section (4) • After conducting the above inquiry, if Special Judge is of the opinion that (a)There is no sufficient ground for proceeding, he may dismiss the complaint, or (b) If there is sufficient ground for proceeding, he may proceed against such person as per law. Sub-Section (5) • Holding of inquiry in accordance with Section 202 of 35 Cr.P.C. 1898.
SECTION 37E SPECIAL JUDGE TO HAVE EXCLUSIVE JURISDICTION. • No Court • other than the Special Judge having jurisdiction • shall try an offence punishable under this Act. 36
SECTION 37F Sub-Section (1) • Provisions of Cr.P.C., if not inconsistent with the provisions of Sales Tax Act, 1990, shall apply to the proceedings of the Court – The Court of Special Judge shall be deemed to be a Court of Sessions. Sub-Section (2) • For the purpose of sub section(1), the Code of Criminal Procedure, 1898, shall have effect as if an offence punishable under this Act were one of the offences referred to in sub-section(1) of section 337 of the said Code. 37
SECTION 37G Sub-Section (1) • High Court/Federal Government may transfer the case from one Court of Special Judge to other to promote the ends of justice. Sub-Section (2) • On transfer the Special judge may act upon the evidence already recorded or produced before the Court, which tried the case earlier.
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SECTION 37H PLACE OF SITTINGS • • • •
Special Judge may sit at Headquarters or other place for convenience of the parties and/or witnesses.
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SECTION 37 I Sub-Section (1) ANY PERSON, FEDERAL GOVERNMENT, FEDERAL BOARD OF REVENUE, COMMISSIONER, DIRECTOR (I&I), AUTHORIZED OFFICER (BY FBR) aggrieved by any order passed or decision made by a Special Judge may within 60 days prefer an appeal to the High Court. Sub-Section (2) • Except as otherwise provided in sub-Section (1), the provisions of Limitation Act, 1908, shall apply to an appeal under sub-Section (1). 40
APPELLATE JURISDICTION OF SUPREME COURT APPEAL TO SUPREME COURT-ARTICLE 185(3) • In a case to which clause 185(2) does not apply, an appeal shall lie to the Supreme Court from a judgment, decree, order or sentence of a High Court only if the Supreme Court grants leave to appeal. • Petition for leave to appeal under article 185(3) can be filed within 60 days of passing of the impugned judgment, order or sentence. 41
SECTION – 10 Sub-section (1) Refund of input Tax on zero-rated local Supplies & Exports • The refund of input tax exceeding the output tax shall be refunded within 45 days as provided in Chapter V of the Sales Tax Rules 2006. 1ST Proviso • In the cases other than zero-rated supplies and Exports, • Excess input tax may be carried forward to the next tax period; • Alongwith such excess input tax as is not adjustable u/s- 8B (i). 2nd Proviso • FBR is empowered to issue a notification to direct that Refund against Exports shall be paid alongwith Duty Drawback at the rates notified in the such notification. 42
Sub-Section- (2) • The refund shall be made after adjustment of all outstanding taxes administered by FBR. Sub-Section- (3) • Where there is reason to believe: • That a person has claimed inadmissible input tax or refund, • Proceedings shall be completed within 60-days. • For the purpose of enquiry or Audit or investigation regarding admissibility of the refund claim, the period of 60 days may be extended upto 120 days by the Additional Commissioner & FBR for reasons to be recorded in writing may extend this time upto 9- months. 43
SECTION-66 REFUND TO BE CLAIMED WITHIN ONE YEAR • The maximum time limit to claim refund in following situations is one year from the date of payment: • Paid/over-paid through inadvertence, error or misconception. • Refund of input adjustment could not be claimed within the relevant tax period. 1st Proviso: • Provided that the commissioner may allow the R.P to take such adjustment in the tax period, as may be specified by the commissioner. 44
2nd Proviso: • Where the refund has become due on account of any decision or Judgment of any officer, Court or Tribunal, the period of one-year shall be reckoned from the date of said judgment/Decision. 3rd Proviso: • Disposal of Refund claim within 90-days. 4th Proviso: • No refund, if incidence of tax has been passed on to the consumer.
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THANKS May Allah bless Pakistan with peace and prosperity 46
