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: shahidb9@gmail.com
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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;
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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
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•
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
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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
14
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
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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)
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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
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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
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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)
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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.
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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
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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.
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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) –
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(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;
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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.
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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
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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.
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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.
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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.
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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)
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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
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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
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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.
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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.
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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).
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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.
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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.
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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.
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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.
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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
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