SYED ARSHAD ALI, J. This consolidated judgement shall dispose of instant Sales Tax Reference as well as the connected References as adjudication of common questions of law are involved therein. The particular of said references has been provided in Annexure 'A' to this judgement.
2. The petitioner department through the instant reference has proposed the following questions of law, asserted to have arisen out of impugned order dated 23.05.2022 passed by learned Appellate Tribunal Inland Revenue, Division Bench-I, Islamabad ("Tribunal') for our opinion; A. Whether vide the impugned order the L/Tribunal has not prejudiced the enquiry to be carried out by the appellant with regard to blacklisting/de-registration of the respondent taxpayer subsequent to suspension of registration order in terms of Section 21 of the Act read with Rule 12 of Chapter I of Sales Tax Rules, 2006?
B. Whether the letter by Assistant Collector Customs Dry Port Azakhel Nowshera does not constitute material evidence for satisfaction of the appellant in terms of Section 21 of the Act read with Rule 12 of Chapter I of Sales Tax Rules, 2006 to take immediate action to stop further leakage of legitimate government revenue?
C. Whether vide the impugned order the L/Tribunal has taken into account the show cause notice issued by the appellant subsequent to suspension order whereby a proper opportunity of being heard was provided to the respondent to explain its position before blacklisting of its registration?
D. Whether, in terms of Section 21 of the Act read with Rule 12 of Chapter I of Sales Tax Rules, 2006, a suspension of registration order constitutes a final order to be impugned before the L/Tribunal or is it the blacklisting/deregistration proceedings which are to be finalized one way or the other in view of the said provisions of the Act and Rules?
E. Whether in view of S.NO. 151 of Sixth Schedule to the Act, the respondent taxpayer was not required to keep the post dated cheque alive and whether vide the impugned order, the L/Tribunal has not rendered the said provision of law as nullity?
F. Whether, the bounced back cheque furnished by the respondent taxpayer does not tantamount to tax fraud in violation of S.No. 151 of Sixth Schedule to the Act? And if yes, whether the appellant has not lawfully suspended the registration of the respondent as mandated by Section 21 of the Act read with Rule 12 Chapter I of Sales Tax Rules, 2006.
G. Whether, the L/Tribunal has relied upon any evidence while pronouncing its judgement and whether any sort of discussion has been mentioned in its judgement pertaining to the evidence if any produced by the respondent taxpayer?
3. The present proceedings in the References arises of the order of the Commissioner Inland Revenue dated 28.02.2022 whereby; the Commissioner Inland Revenue while exercising its powers under Section 21(2) of the Sales Tax Act, 1990 ("the Act") read with Rule 12(a) of the Sales Tax Rules, 2006 ("Rules") notified vide SRO No.555(I)/2006 dated 05.06.2006 had ordered for suspension of the sales tax registration of the petitioner. The precise allegations in the impugned order are reproduced as under:- "That M/s A.K Tariq Foundry have submitted Post dated Cheques amounting to Rs.25,886,902/- and Rs. 15,493,692/- and Rs.4,955,855/- respectively for securing the exempted amount of sales tax in terms of S.No.151 of the 6th Schedule to the Sales Tax Act, 1990 read with Section 13(1) of the Sales Tax Act, 1990 at the time clearance of imported consignments covered in aforementioned letters. The exemption of sales tax was available subject to production of consumption certificate issued by the Commissioner Inland revenue, Regional Tax Office, Peshawar. Therefore, the Commissioner Inland Revenue, Regional Tax Office, Peshawar vide letter C. No. ST/CIR/Corp: zone/Misc. Corr/2022/ 1072 dated 28.01.2022 has informed that M/s A.K Tariq Foundry has filed to justify bothboth the in house consumption and supply of finished _goods thereof as required under the law and forwarded a request for encashment of the post dated cheques furnished at the time of custom clearance of import consignments accordingly.
That consequent upon receipt of Commissioner Inland Revenue Corporate Zone, Regional Tax Office, Peshawar aforementioned letter the above Post dated Cheques in respect of M/S A.K Tariq Foundry were presented at UBL Bank Limited UBL Building Hayatabad, Peshawar and Allied Bank Limited Saidabad Kohat Road, Peshawar and Allied Bank Limited Shahkas Wazir Dhand, Khyber Agency for encashment in favour of National Exchequer, However, the said Banks returned the cheques with the remarks "Account is inactive and having balance of Rs.14,656/- and another is "Customer Account closed mention Account does not exist in our branch" respectively."
4. The perusal of the impugned order would show that the only question of law for adjudication as to whether the allegations mentioned in suspension order dated 28.02.2022 can be a ground for deregistration of the blacklisting and suspension of registration. At this juncture, we would like to reproduce both the provisions of law under which the impugned actions were initiated culminating into the order suspending the registration of the petitioner: - "Section 21 of the Act. De-registration, blacklisting and suspension of registration.-- (1) The Board or any officer, authorized in this behalf, may subject to the rules, de-register a registered person or such class of registered persons not required to be registered under this Act.
(2) Notwithstanding anything contained in this Act, in cases where the Commissioner is satisfied that a registered person is found to have issued fake invoices or has otherwise committed tax fraud, he may blacklist such person or suspend his registration in accordance with such procedure as the Board may, by notification in the official Gazette, prescribe.
(3) During the period of suspension of registration, the invoices issued by such person shall not be entertained for the purposes of sales tax refund or input tax credit claimed against the invoices issued by him, whether prior or after such black listing, shall be rejected through a self-speaking appealable order and after affording an opportunity of being heard to such person.
(4) Notwithstanding anything contained in this Act, where the Board, the concerned Commissioner or any officer authorized by the Board in this behalf has reasons to believe that a registered person is engaged in issuing fake or flying invoices, claiming fraudulent input tax or refunds, does not physically exist or conduct actual business, or is committing any other fraudulent activity, the Board, concerned Commissioner or such Officer may after recording reasons in writing, block the refunds or input tax adjustments of such person and direct the concerned Commissioner having jurisdiction for further investigation and appropriate legal action.
Rule 12 of the Rules. Blacklisting and suspension of registration.- Where the Commissioner or Board has reasons to believe that the registered person is to be suspended or blacklisted, in order to ensure that the LTUs and RTOs follow a uniform policy for suspension and blacklisting of sales tax registered persons under section 21(2) of the Act and for subsequent proceedings in such cases, the following procedure shall be followed, namely:
(a) SUSPENSION
(i) Where a Commissioner, having jurisdiction, is satisfied that a registered person has issued fake invoices, evaded tax or committed tax fraud, registration of such person may be suspended by the Commissioner through the system, without prior notice, pending further inquiry. The basis for such satisfaction may inter alia include the following, namely:--
(A) non-availability of the registered person at the given address;
(B) refusal to allow access to business premises or refusal to furnish records to an authorized Inland Revenue Officer;
(C) abnormal tax profile, such as taking excessive input tax adjustments, continuous carry- forwards, or sudden increase in turnover;
(D) making substantial purchases from or making supplies to other blacklisted or suspended person;
(E) non-filing of sales tax returns;
(F) on recommendation of a commissioner of any other jurisdiction;
(G) any other reason to be specified by the Commissioner;
(ii) the suspension of registration shall take place through a written order of the Commissioner concerned, giving reasons for suspension. This order shall be endorsed to the registered person concerned, all other LTUs/RTOs, the FBR 's computer system, the STARR computer system and the Customs Wing computer system for information and necessary action as per law;
(iii) a registered person who does not file sales tax return for six consecutive months shall be caused to be suspended through the system without any notice;
(iv) in cases, where the buyers and suppliers of any such person, whose registration is being suspended, belongs to another LTU/ RTO, and these buyers / suppliers are also required to be suspended, the Commissioner shall intimate the Chief Commissioner of the concerned LTU/RTO in whose jurisdiction such buyers/suppliers fall, in writing explaining the complete facts of the case and the reasons on the basis of which these buyers/suppliers are to be suspended, to initiate proceedings for suspension/blacklisting of the buyers/suppliers;
(v) no input tax adjustment/refund shall be admissible to the registered person during the currency of suspension. Similarly, no input tax adjustment/refund shall be allowed to any other registered persons on the strength of invoices issued by such suspended person (whether issued prior to or after such suspension), during the currency of suspension;
(vi) the Commissioner shall, within seven days of issuance of order of suspension, issue a show cause notice (through registered post or courier service) to the registered person to afford an opportunity of hearing with fifteen days of the issuance of such notice clearly indicating that he will be blacklisted, in case--
(A) there is no response to the notice;
(B) he has not provided the required record; (C) he has not allowed access to his business record or premises; and
(D) any other reason specified by the Commissioner;
(vii) in case show cause notice is not issued within seven days of the order of suspension, the order of suspension shall become void ab-initio;
(viii) in case of non-availability of the suspended person at the given address, the notice may be affixed on the main notice Board of the LTU/RTO;
(ix) on receipt of the reply to the notice and after giving an opportunity of hearing to the registered person, if the Commissioner is satisfied, he may order for revoking of suspension of the registered person
(b) BLACKLISTING
(i) in case, after giving an opportunity of hearing, the offence is confirmed, the Commissioner shall issue an appealable self-speaking order for blacklisting of the registered person, and shall proceed to take legal and penal action under the relevant provisions of the Act;
(ii) the order of blacklisting shall contain the reasons for blacklisting, the time period for which any refund or input tax claimed by such person or by any other registered person on the strength of invoices issued by him from the date of his registration shall be inadmissible, any recovery to be paid or penalties to be imposed;
(iii) the order of blacklisting shall be issued within ninety days of the issuance of the notice of hearing. In case, the order of blacklisting is not issued within this time period the suspension of registered person shall become void ab-initio;
(iv) copies of the order shall be endorsed to the registered person concerned, all other LTUs/RTOs, the FBR/PRAL computer system, the STARR computer system and the Customs Wing computer system. Each LTU/RTO shall circulate all such lists to their refund sections, audit sections and other concerned staff to ensure that the order is implemented in letter and spirit by all concerned;
(v) all LTUs / RTOs shall further circulate the copies of the order along with a computer system- generated list of invoices issued by the blacklisted persons as referred to in the preceding clause, to all officers of Inland Revenue having jurisdiction over the registered persons who have claimed credit of input tax or refund on the strength of the invoices issued by the said blacklisted persons; and
(vi) the officer of Inland Revenue receiving the aforesaid list under clause (v) shall issue show- cause notice under section 11 and sub-section (3) of section 21 of the Act to a registered person for rejecting the input tax or refund claimed against the invoices so circulated and further proceed to decide the matter as per law through a self-speaking appealable order and after affording a reasonable opportunity of being heard to such person, in the manner as provided in the said sub- section (3)."
5. In order to appreciate the aforesaid legal preposition as to whether the circumstances as provided under Section 21 of the Act did exist for triggering of Section 21 of the sales tax for cancellation/suspension of the registration of the respondents. At this juncture, we would like to reproduce the factual as well as the legal dispensation relating to the charging levying and exemption of sales tax relating to the activities of the respondents.
6. All the respondents hail from Erstwhile Tribal Area and have also established their manufacturing unit at the Erstwhile Tribal Area, therefore, the import of raw material for sole consumption in the Erstwhile Federal Administered Tribal Area are immune from the levy of sales tax under the Act as well as income tax under the Income Tax Ordinance, 2001 ("the Ordinance").
7. Prior to the 25th amendment in the Constitution through Act No. XXXVII of 2018 dated 05.06.2018, there was a separate dispensation/mechanism for extension of laws to the erstwhile FATA. The relevant provision of the Constitution i.e. Article 247(3) for ease reference is reproduced as under: - "247 (3). No Act of [Majlis-e-Shoora (Parliament0) shall apply to any Federally Administered Tribal Area or to any part thereof unless the President so directs, and no Act of [Majlis-e-Shoora (Parliament)] or a Provincial Assembly shall apply to a Provincially Administered Tribal Area, or to any part thereof unless the Governor of the Province in which the Tribal Area is situate, with the approval of the President, so directs; and in giving such a direction with respect to any law, the President or, as the case may be, the Governor, may direct that the law shall, in its application to a Tribal Area, or to a specified part thereof have effect subject to such exceptions and modifications as may be specified in the direction".
8. There remained a judicial consensus that the Income Tax as well as Sales Tax Laws were never extended to the PATA/FATA, prior to the promulgation of 25th amendment thereby omitting Article 247 from the Constitution. However, there has been a long standing dispute between the Federal Board of Revenue ("FBR") and the trade community/business community of Erstwhile Tribal area regarding the imposition of income tax as well as sales tax on the import of raw material for the manufacturing units, which were located in the erstwhile FATA. This Court in its celebrated judgment authored by his Lordship Justice Yahya Afridi as he then was in the case of Messrs Taj Packages Company (Pyt) Ltd through Manager vs. The Government of Pakistan through Federal Secretary Finance and Revenue Division and 6 other (2016 PTD 203), has elaborately dealt with the issue of taxing the raw material/goods which were imported for the purpose of its consumption in the erstwhile FATA. The said judgment was also approved by the august Supreme Court of Pakistan in case titled Pakistan through Chairman, FBR and others Vs. Hazrat Hussain (2018 SCMR 939), wherein it has been unequivocally held that the business concerns/manufacturing units located in the PATA are immune from the impost of both, the income tax as well as sales taxes; that similarly, the goods or machinery, which they are importing for their home consumption are equally immune from the impost of both taxes at the import stage, however, in order to ensure that the consumption of goods do not cross the limits of non-tariff area, the respondents have to provide a security in form of post-dated-cheques equal to the value of the imported goods.
9. After 25th amendment in the Constitution, the trade community had raised voice for continuance of the said exemption from imposition of income tax and sales tax. The Federal Government through SRO.1212 (1)/2018 dated 05.10.2018 and SRO. 1213(1)/2018 dated 05.10.20218 had allowed the said exemption to the resident/domicile of the erstwhile FATA/PATA.
10. The exemptions granted through SR0.1212 (1)/2018 dated 05.10.2018 and SRO. 1213(1)/2018 dated 05.10.20218 were, later, reflected through insertion of entry No. 151 in the sixth schedule of Sales Tax Act, 1990, which is reproduced as under:- "151. (a) Supplies; and (b) imports of plant, machinery, equipment for installation in tribal areas and of industrial inputs by the industries located in the tribal areas, as defined in the Constitution of Islamic Republic of Pakistan, as may till 30th June, 2023, to which the provisions of the Act or the notifications issued thereunder, would have not applied had Article 247 of the Constitution not been omitted under the Constitution (Twenty-fifth Amendment) Act, 2018 (XXXVII of 2018): Provided that, in case of imports, the same shall be allowed clearance by the Customs authorities on presentation of a post-dated cheque for the amount of sales tax payable under the Sales Tax Act, 1990, and the same shall be returned to the importer after presentation of a consumption or installation certificate, as the case may be, in respect of goods imported as issued by the Commissioner Inland Revenue having jurisdiction: Provided further that if plant, machinery and equipment, on which exemption is availed under this serial number, is transferred or supplied outside the tribal areas, the tax exempted shall be paid at applicable rate on residual value."
11. Similarly, Section 40D was also inserted in the Sales Tax Act, 1990 through Tax Laws (Amendment) Act, 2020 relating to taxation of the goods, which were imported for tribal area in terms of entry No. 151 and later the same was being sold in the tariff area. The said provision is reproduced as under:- "40-D Provisions relating to goods supplied from tax. exempt areas.- (1) The conveyances carrying goods supplied from the tax-exempt areas, shall be accompanied by such documents in respect of the goods carried as may be prescribed under rules.
(2) The Regional Tax Office having jurisdiction may establish check-posts on the routes originating from tax exempt areas for the purpose of examining the goods carried and the documents related thereto. An officer not below the rank of Inspector, Inland Revenue, as authorized by the Commissioner, Inland Revenue, and assigned to such check posts, may stop vehicles on such routes as coming from tax exempt areas and examine documents for ascertaining their validity and conformity to the goods carried.
(3) In the absence of the prescribed documents or any discrepancy in such documents, the goods so carried shall be seized along with the vehicle carrying the goods by the officer as aforesaid under proper acknowledgment.
(4) The notices to the owner of the goods and the vehicle to show cause against imposition of penalty shall be issued within fifteen days of the seizure as aforesaid
(5) For the purposes of this section, the expression "tax exempt areas" means Azad Jammu and Kashmir, Gilgit Baltistan, Tribal Areas as defined in Article 246 of the Constitution of the Islamic Republic of Pakistan and such other areas as way be prescribed"; Entry No.74 of the 8th Schedule S.No.DescriptionHeading Nos. of the First Schedule to the Customs Act, 1969 (IV of 1969)Rate of Sales TaxCondition 5[74Goods supplied from tax-exempt areas of erstwhile FATA/PATA to the taxable areasRespective headings16% ]
12. The aforesaid legal dispensation would show that an industrial unit located in the erstwhile FATA, can import raw material for its consumption at the Erstwhile Tribal Area without payment of taxes and duties, however, against the said leviable taxes and duties a security in shape of post-dated cheque equal to the amount of leviable sales tax is to be provided. The importer is required to provide a consumption certificate issued by the relevant Commissioner Inland Revenue/RTO and the said cheques would be returned when the said consumption certificate is produced, however, this does not mean that the importer cannot sell the goods outside the triable territory as evident from the clear verbiage of Section 40-D and entry No.74 of the 8th Schedule that in such an event the importer has to pay the applicable duty.
13. The close perusal of first provision to Entry No.151 would show that the goods imported for consumption at the Erstwhile Tribal area would be released against post-dated-cheques for the amount of sales tax payable under the Act and the same shall be returned to the importer after presentation of a consumption or installation certificate as the case may be in respect of goods imported as issued by the Commissioner Inland Revenue having jurisdiction. The Act is completely silent that in what manner the said consumption certificate shall be issued.
14. Similarly, the aforesaid Entry No.151 does not envisage that on failure of importer to provide consumption certificate, the instrument/post-dated-cheque would be presented for encashment.
The Federal Board of Revenue through Circular No.05 of 2021 has provided guidelines for issuance of consumption certificate. The said notification is reproduced as under: - "Government of Pakistan Revenue Division Federal Board of Revenue Inland Revenue C.No.7(1)TIPU/IR/2020 Islamabad, March 26, 2021 Circular No. 05 of 2021 -- Operations (Sales Tax/Federal Excise)
Subject: Procedure for Issuance of Consumption Certificate for Import of Industrial Inputs by FATA/PATA-Domiciled Industries In order to earnestly implement and enforce the tax-related incentives and benefits extended by the Parliament to residents of FATA/PATA, Circular No. 9 of 2021 dated March 1, 2021, has been issued. The Circular takes account of safe arrival of industrial inputs imported by FATA/PATA domiciled industries from the port to the intended manufacturing sites. Section 13(1) read with Serial No. 151 of Table I of Sixth Schedule to the Sales Tax Act, 1990, exempts import of "industrial inputs" to FATAJPATA-located industries "on presentation of a post-dated cheque for the amount of sales tax payable under..., and the same shall be returned to the importer after presentation of a consumption...certificate...in respect of goods imported as issued by the Commissioner Inland Revenue having jurisdiction." This particular benefit is subject to a further condition that if the goods produced from the exempted raw materials are "transferred or supplied outside the tribal areas, the tax exempted shall be paid at the applicable rate."
2. This makes CONSUMPTION CERTIFICATE issued by Commissioner Inland Revenue (CIR) the centerpiece of the tax-exempt cycle of importation of industrial inputs, production of finished goods by FATA/PATAdomiciled industries and their ultimate consumption within the FATANATA regions. It is therefore that a standardized procedure for the issuance of Consumption Certificate is being rolled out so as to ensure fair operationalization of the exemptions enshrined in the law.
3. A FATA/PATA based manufacturer/Registered Person (RP), who is also an "active taxpayer" in terms of section 2(1) of the Sales Tax Act, 1990 (hereinafter "the STA, 1990'), and intending to import raw materials for consumption at his own manufacturing site would make a written application to the CIR concerned providing therein: - i. Production capacity of the manufacturing unit, and if the same has increased over time, the month from which the enhanced production capacity was installed along with particulars of the additional manufacturing capacity; ii. Month-wise quantity of (a) raw material imported, and (b) purchased locally since July, 2020 (or 1st month of the tax year); iii. Quantity of stock available from earlier imports; iv. Month-wise details of Gas and Electricity consumed since July, 2020 (or 13` month of the tax year); v. Month-wise particulars of goods produced; vi. Month-wise details of post-dated cheques (PDCs) deposited with Customs authorities, if any; vii. List of buyers of the goods produced; viii. Bank statement for the relevant periods; ix. Electricity & Gas bills for the relevant period; x. Month-wise proof of Federal Excise paid -- only in case of goods covered under the Federal Excise Act, 2005.
3. The CIR would ensure that particulars supplied by the RP are verified before the issuance of Consumption Certificate. In case any data are not verified, the RP would be given an opportunity to complete the application, provide the required information, and make up the deficiency. The Consumption Certificate issued will be directly mailed to the Collector Customs concerned with a copy thereof being duly marked to Member (IR Operations) and Member (Customs Operations), and under no circumstances will be handed over to the taxpayer. If the CIR decides to reject the application for a Consumption Certificate, the previous PDCs deposited would be encashed "
15. This Court is not convinced from the allegations of the petitioner department that failure on part of the respondents to provide consumption certificate, it will be automatically presumed that the petitioners have evaded the relevant taxes and duties under the Act and the Ordinance. Since, all the respondents are persons registered under the Act, therefore, they are required to maintain record as provided under Section 22[1] of the Act. Similarly, they are also required to file their returns under Self-Assessm ent Scheme provided under Section 26[2] of the Act. The petitioner department has the authority to access the said record and conduct the audit of the respondents under Section 25[3] of the Act. Similarly, the Board may also select person or class of persons for audit of tax affairs through computer ballet which may be random or parametric as the Board may deem fit in terms of Section 72B[4] of the Act. Any discrepancies relating to the short levy of the sales tax can be assessed under Section 11[5] of the Act by passing a proper assessment order against the taxpayer thereby adjudicating the actual tax liability along with the penalties as provided under Section 33 and default surcharge under Section 34 of the Act. Thus, a taxpayer cannot be termed as defaulter unless tax due is first assessed and determined under the provision of the Act. Similarly, under Section 25(5) of the Act during and after the audit proceedings, the taxpayer has the option to deposit the tax along with default surcharge and penalties to avoid further proceedings.
16. Sub-Section (2) of Section 21 only envisages for deregistration of blacklisting and suspension of the registration of a registered person only when the Commissioner is satisfied that a registered person is found to have issued fake invoice or has otherwise committed tax fraud, he may blacklist such a person or suspend his registration in accordance with the procedure as provided under Rule 12 of the Rules.
17. Admittedly in the present case, none of the aforesaid attributes are available to attract the cancellation/suspension of registration as provided under Section 21 of the Act. The impugned action of the Commissioner Inland Revenue prima-facie appears to be based on incorrect appreciation of law i.e. failure of the respondents to provide consumption certificate as required under Entry No.151 of the Sixth Schedule to the Act. Thus, the impugned order passed by Commissioner Inland Revenue is obviously based on alien consideration, therefore, the decision of the worthy Tribunal is based on correct appreciation of law which do not call for interference.
Resultantly this as well as connected References are answered in negative. The copy of this judgment be sent to the appellate tribunal in terms of Section 47(5) of the Act.
[1]22. Records.-- (1) A registered person making taxable supplies shall maintain and keep at his business premises or registered office in English or Urdu language the following records of goods purchased, imported and supplied (including zero-rated and exempt supplies) made by him or by his agent acting on his behalf in such form and manner as would permit ready ascertainment of his tax liability during a tax period
(a) records of supplies made shall indicate the description, quantity and value of goods, name and address of the person to whom supplies were made and the amount of the tax charged;
(b) records of goods purchased shall show the description, quantity and value of goods, name, address and registration number of the supplier and the amount of the tax on purchases;
(c) records of goods imported shall show the description, quantity and value of goods and the amount of tax paid on imports;]
(d) records of zero-rated and exempt supplies;
(da) double entry sales tax accounts;]
(e) invoices, credit notes, debit notes, bank statements, banking instruments in terms of section 73, inventory records, utility bills, salary and labour bills, cash book, rental agreements, sale purchase agreements and lease agreements;
(ea) Record relating to Gate passes, inward or outward and transport receipts;
(eb) Electronic version of records mentioned in clauses (a) to (ea) of this sub-section.
(f) such other records as may be specified by the Board: Provided that the persons paying retail tax shall keep such record as may be specified by the Board.
(1A) Notwithstanding anything in any other law for the time being in force, the Board may require, by notification in the official Gazette, a registered person or class of registered persons to declare and use only as many number of business bank accounts as may be specified by the Board in such notification to make or receive payments on account of purchase and sale transactions for the purpose of this Act or rules made thereunder and to make payment of due tax from such accounts only.
(2) The Board may, by notification in the official Gazette, specify for any class of taxable persons or any other person registered under this Act to keep such other records for the purposes of this Act.
(2A) The Board may, by notification in the Official Gazette, specify for any class of taxable persons registered under this Act to use such electronic fiscal cash registers as are approved by the Board in the manner as may be prescribed.
(3) The Board may, by notification in the official gazette, prescribe the procedure or software for electronically maintenance of records, filing of sales tax returns or refunds and for any other matter or approve any software for electronic maintenance of records and filing of returns or refunds by a person or class of such persons.
(4) The registered persons, whose accounts are subject to audit under the Companies Ordinance, 1984 (XLVII of 1984), shall be required to submit a copy of the annual audited accounts, along with a certificate by the auditors certifying the payment of due tax by the registered person.
[2]26. Return.-- (1) Every registered person shall furnish not later than the due date a true, complete and correct return in the prescribed form to a designated bank or any other office specified by the Board, indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed.
Provided that the Board may, by notification in the official Gazette, require any person or class of persons to submit return on quarterly basis: Provided further that the Board may, by notification in the official Gazette, require any person or class of persons to submit such return as may be prescribed annually in addition to the monthly return or quarterly return: Provided also that the return filed electronically on the web or any magnetic media or any other computer readable media as may be specified by the Board shall also be deemed to be a return for the purpose of subsection (1) and the Board may, by notification in the official Gazette, make rules for determining eligibility of the data of such returns and e-intermediaries who will digitize the data of such returns and transmit the same electronically under their digital signatures.
(3) A registered person may, subject to approval of the Commissioner Inland Revenue having jurisdiction, file a revised return within one hundred and twenty days of the filing of return under subsection (1) or, as the case may be, sub-section (2), or under clause (a) or clause (b) of section 27, to correct any omission or wrong declaration made therein Provided that the approval under this sub-section shall not be required if revised return is filed within sixty days of filing of return and either the tax payable therein is more than the amount paid or the refund claimed herein is less than the amount as claimed, under the return sought to be revised.
(4) Notwithstanding the penalties prescribed in section 33, if a registered person wishes to file revised return voluntarily along with deposit of the amount of tax short paid or amount of tax evaded along with default surcharge, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him: Provided that in case the registered person wishes to deposit the amount of tax as pointed out by the officer of Inland Revenue during the audit, or at any time before issuance of the show cause notice, he may deposit the evaded amount of tax, default surcharge under section (34), and twenty five percent of the penalty payable under section 33 along with the revised return: Provided further that in case the registered person wishes to deposit the amount after issuance of show cause notice, he shall deposit the evaded amount of sales tax, default surcharge under section 34, and full amount of leviable penalty under section 33 along with the revised return and thereafter, the show cause notice, shall stands abated.
(5) The Board may, by notification in the official Gazette, require any person or class of persons, for any goods of such description or class, to furnish such summary or details or particulars pertaining to the imports, purchases and supplies during any tax period or periods, in such format as may be specified.
[3]25. Access to record, documents, etc.-- (1) A person who is required to maintain any record or documents under this Act or any other law shall, as and when required by 5 Commissioner, produce record 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, he shall allow access to the officer of Inland Revenue authorized by the Commissioner and use of any machine on which such data is kept.
(2) The officer of Inland Revenue authorized by the Commissioner, on the basis of the record, obtained under sub-section (1), may, once in a year, conduct audit: Provided that in case the Commissioner has information or sufficient evidence showing that such registered person is involved in tax fraud or evasion of tax, he may authorize an officer of Inland Revenue, not below the rank of Assistant Commissioner, to conduct an inquiry or investigation under Section 38: Provided further that nothing in this Sub-Section shall bar the officer of Inland Revenue from conducting audit of the records of the registered person if the same were earlier audited by the office of the Auditor-General of Pakistan.
(2A) For the purpose of sub-section (2) of section 25, the Commissioner may conduct audit proceedings electronically through video links, or any other facility as prescribed by the Board.
(3) After completion of Audit under this section or any other provision of this Act, the officer of Inland Revenue may, after obtaining the registered person's explanation on all the issues raised in the audit shall pass an order under section 11.
(4A) After completion of the audit under this section or any other provision of law, the officer of Inland Revenue may, if considered necessary, after obtaining the registered person's explanation on all the issues raised in the audit shall pass an order under section 11 or section 36, as the case may be, imposing the correct amount of tax, charging default surcharge, imposing penalty and recovery of any amount erroneously refunded.
(5) Notwithstanding the penalties prescribed in section 33, if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge voluntarily, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him: Provided if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge during the audit, or at any time before issuance of show cause notice he may deposit the evaded amount of tax, default surcharge under section 34, and twenty five per cent of the penalty payable under section 33: Provided further that if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge after issuance of show cause notice, he shall deposit the evaded amount of tax, default surcharge under section 34, and full amount of the penalty payable under section 33 and thereafter, the show cause notice, shall stand abated.
Explanation.-- For the purpose of sections 25, 38, 38A, 38B and 45A and for removal of doubt, it is declared that the powers of the Board, Commissioner or officer of Inland Revenue under these sections are independent of the powers of the Board under section 72B and nothing contained in section 72B restricts the powers of the Board, Commissioner or Officer of Inland revenue to have access to premises, stocks, accounts, records, etc. under these sections or to conduct audit under these sections.
[4]72B. Selection of audit by the Board.-- (1) The Board may select persons or classes of persons for audit of tax affairs through computer ballot which may be random or parametric as the Board may deem fit.
(IA) Notwithstanding anything contained in this Act or any other law, for the time being in force, the Board shall keep the selection parameters confidential.
(2) Audit of tax affairs of persons selected under sub-section (1) shall be conducted as per procedure given in section 25 and all the provisions of this Act shall apply accordingly.
(3) For the removal of doubt, it is hereby declared that the Board shall be deemed always to have had, the power to select any persons or classes of persons for audit of tax affairs under this section.
[5]11. Assessment of Tax & Recovery of Tax not levied or short levied or erroneously refunded.--
(1) Where a person who is required to file a tax return fails to file the return for a tax period by the due date or pays an amount which, for some miscalculation is less than the amount of tax actually payable, an officer of Inland Revenue shall, after a notice to show cause to such person, make an order for assessm ent of tax, including imposition of penalty and default surcharge in accordance with sections 33 and 34: Provided that where a person required to file a tax return files the return after the due date and pays the amount of tax payable in accordance with the tax return along with default surcharge and penalty, the notice to show cause and the order of assessment shall abate.
(2) Where a person has not paid the tax due on supplies made by him or has made short payment or has claimed input tax credit or refund which is not admissible under this Act for reasons other than those specified in sub-section (1), an officer of Inland Revenue shall after a notice to show cause to such person, make an order for assessment of tax actually payable by that person or determine the amount of tax credit or tax refund which he has unlawfully claimed and shall impose a penalty and charge default surcharge in accordance with sections 33 and 34.
(3) Where by reason of some collusion or deliberate Act any tax or charge has not been levied or made or has been short levied or has been erroneously refunded, the person liable to pay any amount of tax or charge or the amount of fund erroneously made shall be served with the notice requiring him to show cause for payment of the amount specified in the notice.
(4) Where, by reason of any inadvertence, error or misconstruction any tax or charge has not been levied or made or has been short-levied or has been erroneously refunded, the person liable to the amount of tax or charge or the amount of refund erroneously made shall be served with a notice requiring him to show cause for payment of the amount specified in the notice; Provided that, where a tax or charge has not been levied under this sub section the amount of tax shall be recovered as tax fraction of the value of supply.
(4A) Where any person, required to withhold sales tax under the provisions of this Act or the rules made thereunder, fails to withhold the tax or withholds the same but fails to deposit the same in the prescribed manner, an officer of Inland Revenue shall after a notice to such person to show cause, determine the amount in default.
(5) No order under this section shall be made by an officer of Inland Revenue unless a notice to show cause is given within five years, of the end of the financial year in which the relevant date falls, to the person in default specifying the grounds on which it is intended to proceed against him and the officer of Sales Tax shall take into consideration the representation made by such person and provide him with an opportunity of being heard: Provided that order under this section shall be made within one hundred and twenty days of issuance of show cause notice or within such extended period as the Commissioner may, for reasons to be recorded in writing, fix provided that such extended period shall in no case exceed ninety days: Provided further that any period during which the proceedings are adjourned on account of a stay order or Alternative Dispute Resolution proceedings or the time taken through adjournment by the petitioner not exceeding sixty days shall be excluded from the computation of the period specified in the first proviso.
(6) Notwithstanding anything in sub-section (1), where a registered person fails to file a return, an officer of Inland Revenue, not below the rank of Assistant Commissioner, shall subject to such conditions as specified by the Federal Board of Revenue, determine the minimum tax liability of the registered person.
(7) For the purpose of this section, the expression "relevant date" means--
(a) the time of payment of tax or charge as provided under section 6; and
(b) in a case where tax or charge has been erroneously refunded, the date of its refund.