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Finance Bill 2008 – Full Text

Thursday, June 12, 2008 – ISLAMABAD: Finance Minister Naveed Qamar on Wednesday presented the Finance Bill to give effect to the financial proposals of the federal government for the year beginning on the first day of July, 2008, and to amend certain laws. Following is the text of the bill.

WHEREAS it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2008, and to amend certain laws for the purposes hereinafter appearing;

It is hereby enacted as follows:-

1. Short title, extent and commencement.- (1) This Act may be called the Finance Act, 2008.

(2) It extends to the whole of Pakistan.

(3) It shall, unless otherwise provided, come into force on the first day of July, 2008.

2. Amendment of Act XLV of 1860. In the Pakistan Penal Code, 1860 (Act XLV of 1860), after section 489F, the following new section shall be inserted, namely:

“489G. Counterfeiting or using documents resembling national prize bonds or unauthorized sale thereof. Whosoever counterfeits or causes to counterfeit, or performs any act to use for any purpose whatsoever or delivers to any person, any document purporting to be, or in any manner resembling to the national prize bonds or the serial number of national prize bonds, or promotes the sale of national prize bonds or serial number of national prize bonds, in contravention of the rules made for that purpose, shall be punishable with the imprisonment for a term which may extend to five years, or with fine not exceeding one hundred thousand rupees, or with both.”.

3. Amendment of Schedule II, Act V of 1898. In the Code of Criminal Procedure, 1898 (Act V of 1898), in Schedule II, after the entries relating to section 489F, the following new entries shall be inserted, namely:-

“489G Counterfeiting or using documents resembling national prize bonds or unauthorized sale thereof would (attract) imprisonment of either description for five years or fine of 100,000 rupees or both (through) Court of Sessions or Magistrate of the first class”

4. Amendment of Act VII of 1947. In the Foreign Exchange Regulation Act, 1947 (VII of 1947), after section 23J the following new section shall be inserted, namely:-

“23 K Powers to impose penalty, etc.-

(1) Without prejudice to provisions of sections 3AA, 23 or 23B if any person, in the opinion of State Bank, contravenes any provision of this Act, or any order, rule, regulation or direction issued there under the State Bank may, impose penalty which may extend to one million rupees for each contravention and where the contravention is a continuous one with a further penalty which may extend to twenty thousand rupees for each day during which such contravention continues.

(2) Where the person guilty of such contravention is a company or other body corporate, every director, manager, secretary or other officer or agent thereof shall also be deemed guilty of such contravention if the contravention was committed with his knowledge or consent or if he did not exercise due diligence to prevent the commission of the offence.

(3) If any person, fails to pay any penalty imposed on him or it, within the time stipulated in the order imposing the penalty, the State Bank may, without any notice to such person, recover the amount of such penalty from any account, or assets, monetary or otherwise, of the defaulter held with State Bank or any bank or a financial institution.

(4) If any bank or financial institution to which notice has been sent under sub-section (3) fails to debit the amount of penalty under the said sub-section, it shall itself be liable to pay such amount to the State Bank, as if it had itself committed the contravention under sub-section (1)”.

5. Amendment of Ordinance XXV of 1961.- In the Petroleum Products (Development Surcharge) Ordinance, 1961 (XXV of 1961), the following further amendments shall be made, namely:-

(1) in section 2, –

(a) after sub-section (4B), the following new sub-section shall be inserted, namely:-

“(4C) “licensee” means the licensee defined under the Compressed Natural Gas (CNG) (Production and Marketing) Rules, 1992, or the Liquefied Petroleum Gas (Production and Distribution) Rules, 2001, as the case may be, and as specified by rules made under section 6;”; and

(b) in sub-section (5), after the words “First Schedule”, the words “and includes Compressed Natural Gas and Liquefied Petroleum Gas” shall be inserted; and

(2) in section 3, after sub-section (1), the following new sub-section shall be added, namely:-

“(1A) Every licensee shall pay to the Federal Government a development surcharge that may be prescribed by the rules made under section 6.”.

6. Amendment of Ordinance X of 1965.- In the Provincial Employees’ Social Security Ordinance, 1965 (W.P. Ordinance No. X of 1965), the following further amendments shall be made, namely. –

(1) In section 2, –

(a) in clause (8), in sub-clause (f), for the word “five”, occurring twice, the word “ten” shall be substituted; and

(b) in clause (25a), for the words “two hundred ten”, the words “three hundred and sixty” shall be substituted;

(2) in section 20, –

(a) in sub-section (1), after the word “rate” the words “not more than six per cent” shall be inserted; and

(b) in the proviso, for the word “two”, the word “four” and for the word “five”, the word “ten” shall respectively be substituted; and

(3) in section 20A, in sub-section (1), for the words “two hundred ten”, the words “three hundred and sixty” shall be substituted.

7. Amendment of Ordinance VI of 1968.- In the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (W.P. Ordinance No. VI of 1968), the following further amendments shall be made, namely: –

(1) in section 1, in sub-section (1), the words “West Pakistan” shall be omitted; and

(2) in the Schedule, in standing order 15, in paragraph (5), the words, full stop and comma “subsistence allowance of not less than fifty percentum of wages. If the workman is found not guilty, he shall be deemed to have been on duty during the period of suspension and shall be entitled” shall be omitted.

8. Amendments of Act IV of 1969. – In the Customs Act, 1969 (IV of 1969), the following further amendments shall be made, namely:-

(1) after section 3D, the following new section shall be inserted, namely;

“3DD. Directorate General of Post Clearance Audit (PCA). – The Directorate General of Post Clearance Audit (PCA) shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.”;

(2) in section 21, clause (ab) shall be omitted;

(3) in section 155F, in sub-section (1), for the full stop at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that the Collector of Customs may, in exceptional circumstances, after recording reasons in writing, suspend the use of unique user identifier of any person forthwith on receipt of any complaint or information about violation of the Customs Act, 1969 (IV of 1969).”;

(4) in section 156, in sub-section (1), in the Table, in column (1), against serial number 43, in column (3), after the word “owner” occurring for the first time, the words “or any other such person having custody of the aforesaid goods” shall be inserted;

(5) in section 179, in sub-section (3), for the word “ninety”, occurring for the first time, the words “one hundred and twenty” shall be substituted;

(6) in section 194-C, in sub-section (4), in clause (c), for the word “five” the word “ten” shall be substituted;6

(7) in section 195-C, after sub-section (4), following new sub-section (4A) shall be inserted, namely;-

“(4A) Notwithstanding anything contained in sub-section (4), the Chairman may, on the application of an aggrieved person for reasons to be recorded in writing and on being satisfied that there is an error in the order or decision, pass such order as he deems just and equitable.”; and

(8) the amendments set out in the Schedule to this Act shall be made in the First Schedule to the Customs Act, 1969 (IV of 1969).

9. Amendment of Ordinance XVII of 1969.- The following further amendments shall be made in the Securities and Exchange Ordinance, 1969 (XVII of 1969), namely:-

(1) in section 2, in sub-section (1), in clause (cd), after the word “delivery” occurring for the first time, the words “or settlement” shall be inserted;

(2) for sections 15A and 15B, the following shall be substituted, namely:-

“15A. Prohibition of insider trading.-

(1) No person shall indulge in insider trading.

(2) Insider trading shall include, –

(a) an insider person transacting any deal, directly or indirectly, using inside information involving listed securities to which the inside information pertains, or using others to transact such deals;

(b) any other person to whom inside information has been passed or disclosed by an insider person transacting any deal, directly or indirectly, using inside information involving listed securities to which the inside information pertains, or using others to transact such deals;

(c) transaction by any person as specified in clauses (a) and (b), or any other person who knows, or ought to have known under normal and reasonable circumstances, that the information possessed and used for transacting any deal is inside information;

(d) an insider person suggesting or recommending to another person to engage in dealing in any listed securities to which the inside information possessed by the insider person pertains, without the inside information being disclosed to the person who has dealt in such securities.

(3) The following shall not be deemed as insider trading, –

(a) any transaction performed under an agreement that was concluded before the time of gaining access to inside information; or

(b) the disclosure of inside information by an insider person as required under law.

(4) No contract shall be void or unenforceable by reason only of an offence under this section.

15B. Inside information.-

1) “Inside information” means,

(a) information which has not been made public, relating, directly or indirectly to listed securities or one or more issuers and which, if it were made public, would be likely to have an effect on the prices of those listed securities or on the price of related securities;

(b) in relation to derivatives on commodities, information which has not been made public, relating, directly or indirectly, to one or more such derivatives and which are traded in accordance with accepted market practices on those markets; or

(c) in relation to persons responsible for the execution of orders concerning listed securities, information which is conveyed by a client to such person and related to the client’s pending orders.

15C. Insiders.-

(1) Insiders shall include, –

(a) sponsors, executive officers and directors of an issuer;

(b) sponsors, executive officers, directors and partners of a legal person or unincorporated business association, in which the issuer holds shares or voting rights, directly or indirectly, of twenty per cent or more;

(c) sponsors, executive officers, directors and partners of a legal person or unincorporated business association who holds, directly or indirectly, shares or voting rights of ten per cent or more in an issuer;

(d) sponsors, executive officers and directors of an organization, that has been engaged in the placement of listed securities or the public offer of securities or the issuing and marketing of such securities, who has had access to insider information during his employment till a period of one year after leaving employment;

(e) any natural person holding, directly or indirectly, ten per cent or more shares of an issuer;

(f) sponsors, executive officers and directors of credit institutions in which the issuer has an account;

(g) any person obtaining inside information as part of his employment or when discharging his usual duties in an official capacity, or in any other way relating to work performed under contract of employment or otherwise;

(h) any person obtaining inside information through unlawful means; and

(i) a spouse, lineal ascendant or descendant, partner or nominee of a person referred to in clauses (a) to (h).

15D. Listed companies responsibilities to disclose inside information.-

(1) Listed companies shall inform the public, in the manner specified by the Commission, as soon as possible of inside information which directly concerns the listed securities.

(2) Listed companies may delay the public disclosure of inside information, as referred to in sub-section (1) in order not to prejudice their legitimate interests, provided that such delay will not mislead the public and provided that the company is able to ensure the confidentiality of the information. The company shall inform the Commission of the decision to delay the public disclosure of inside information forthwith.

(3) Whenever a listed company or a person acting on its behalf, discloses any inside information to any third party in the normal exercise of employment, profession or duties, complete and effective public disclosure of that information must be made simultaneously in the manner specified by the Commission:

Provided that the provisions shall not apply if the person receiving the information owes a duty of confidentiality, regardless of whether such duty is based on a law, regulations, articles of association or contract.

(4) Listed companies or persons acting on its behalf, must maintain and regularly update a list of persons employed, under contract or otherwise in the manner specified by the Commission, who have access to inside information, and provide such list to the Commission whenever the Commission requests it.

(5) Persons discharging managerial responsibilities within a listed company and, where applicable, persons closely associated with them, shall notify the Commission of transactions conducted on their own account relating to the securities of such listed company in the manner specified by the Commission.

(6) The Exchanges shall adopt structural provisions, operating procedures and surveillance techniques to detect and prevent insider trading and market abuse practices, within such time as may be specified by the Commission and according to the regulations made hereunder.

15E. Liability for contravention.-

(1) Any person who contravenes the provisions of sub-section (1) of section 15A shall be liable to fine, to be imposed by the Commission, of rupees ten million or three times the amount of gain made or loss avoided by such person, or loss suffered by another person, whichever amount is higher.

(2) In addition to the fine imposed under sub-section (1), such person,-

(a) may be directed by the Commission, –

(i) to surrender to the Commission, an amount equivalent to the gain made or loss avoided by him; or

(ii) to pay any other person who has suffered a loss, an amount equivalent to the loss so suffered by such person; and

(b) may, where such person is an executive officer, director, auditor, advisor, consultant of a listed company, be removed from such office by an order of the Commission and debarred from auditing any listed company for a period of upto three years; or

(c) may, where such person is registered as a broker or agent, be liable to cancellation of registration.

(3) Where an insider person discloses inside information to any other person who is not required to possess such information for any reason, the insider person shall be liable to fine, to be imposed by the Commission, which may extend to rupees thirty million.

15F. Power to make Regulations.- The Commission may make regulations to regulate persons who produce or disseminate research concerning listed securities or issuers of listed securities and persons who produce or disseminate other information recommending or suggesting investment strategy, intended for distribution channels or for the general public.” ;

(3) in section 21, –

(a) in sub-section (1), in clause (b), after the word “any” occurring for the second time, the words “person or” shall be inserted;

(b) in sub-section (2), –

(i) after the word “Exchange”, occurring for the first time, the words “or any other person” shall be inserted; and

(ii) after the word “such”, occurring for the first time, the words “person or” shall be inserted;

(4) in section 32E, after sub-section (1), the following new sub-section (1A) shall be inserted, namely:-

“(1A) Without prejudice to the generality of the foregoing power and sub-section (2) of section 33, the rules made in pursuance of this section may inter alia provide for-

(a) the matters to be included in any scheme of demutualization and corporatization and the manner of its approval by the members of the stock exchange;

(b) the power of the Commission to approve any scheme of demutualization and corporatization including the power to impose any conditions;

(c) the process and procedure to be followed for purposes of demutualization and corporatization;

(d) matters regarding appointment of directors and chairman of the board of a stock exchange after demutualization, including but not limited to restrictions, if any, on such appointments;

(e) restriction of rights, if any, attached to the shares issued pursuant to corporatization;

(f) matters including restrictions, if any, on disinvestment, further issue and sale and purchase of shares of a stock exchange after demutualization;

(g) matters regarding limits or restriction on holding of shares by different categories of shareholders of a stock exchange, and the requirement for divestment of shares by shareholders in particular circumstances; and

(h) matters regarding trading rights on a stock exchange and restrictions if any in this regard.”.

10. Amendment of Ordinance, XX of 1969. – In the Minimum Wages for Unskilled Workers Ordinance, 1969 (W.P. Ordinance No. XX of 1969), in the Schedule, in column (2), for the figure “4600”, occurring thrice, the figure “6000” shall be substituted.

11. Amendments of Ordinance No. XXXVI of 1971. – In the Workers Welfare Fund Ordinance, 1971 (XXXVI of 1971), the following further amendments shall be made, namely: –

(1) in section 2, in clause (f) after sub-clause (iv), the following new sub-clause shall be added, namely.-

“(iva) any establishment, to which the West Pakistan Shops and Establishment Ordinance, 1969 (W.P. Ordinance No.VIII of 1969), for the time being applies;”;

(2) in section 4,

(a) in sub-section (1), the words “of so much” and “as is assessable under the Ordinance” shall be omitted;

(b) in sub-section (4) the words and comma “At the time of making an assessment under the Ordinance, or as soon thereafter as may be the” and “on the basis of the income so assessed” shall be omitted; and

(c) in sub-section (5) for the word “assessed” the word “total” shall be substituted and the words “subsequent to the assessment made under the Ordinance” shall be omitted; and

(3) in section 11-B, in sub-section (3) after the word “sanction” at the end the words “with the previous approval of the Governing Body” shall be added.

12. Amendments of Act XIV of 1976. – In the Employees’ Old-age Benefits Act, 1976 (XIV of 1976), the following further amendments shall be made, namely: –

(1) in section 1, in sub-section (4), –

(a) in clause (i), –

(i) for the word “ten”, occurring twice, the word “five” shall be substituted; and

(ii) for the colon at the end, a full stop shall be substituted and thereafter the proviso shall be omitted; and

(b) in clause (ia) for the word “twenty”, the word “five” shall be substituted;

(2) in section 9, in sub-section (1), for the word “six” the word “five” shall be substituted;

(3) in section 22, in sub-section (2), in clause (ii), for the full stop at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely: –

“Provided that nothing in this section shall apply to an employee insured under the provisions of this Act on or after 1st day of July, 2008.”;

(4) in section 47, clause (e) shall be omitted; and

(5) In the Schedule, –

(a) for paragraph (2), the following shall be substituted, namely: –

“(2) The monthly wages of an insured person, referred to in paragraph (1), shall be calculated on the basis of wages on which contributions were paid in respect of the twelve calendar months immediately preceding the date on which insured person fulfils the conditions for entitlement to any benefits under this Act:

Provided that the old-age pension or invalidity pension payable to an insured person and survivor’s pension payable to the survivors of the deceased insured person shall not be less than two thousand rupees per month for pension commencing on or after 1st day of July, 2008.”; and

(b) in paragraph (3) for the figure “2007” the figure “2008” shall be substituted.

13. Amendment of Ordinance XXXI of 1980.- In the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980), the following further amendments shall be made, namely: –

(1) after section 18, the following new section shall be inserted, namely: –

“18A. Power to issue directions.-(1) Notwithstanding anything contained in any other provision of this Ordinance, where the Registrar is satisfied that it is necessary and expedient so to do, –

(a) in the public interest; or

(b) to prevent the affairs of any modaraba from being conducted in a manner detrimental to the interest of holders of Modaraba Certificates; or

(c) to secure the proper management of any modaraba generally, he may issue such directions to a modaraba company or the modaraba companies generally, as he may deem fit, and the modaraba company and its management shall be bound to comply with such directions.

(2) The Registrar may, on a representation made to him or on his own motion, modify or withdraw any direction issued under sub-section (1) and in so modifying or cancelling any direction may impose such conditions as he thinks fit.”;

(2) after section 41, the following new sections shall be inserted, namely: –

“41A. Power to make regulations.- (1) The Commission may, by notification in official Gazette, make such regulations as are necessary to carry out the purposes of this Ordinance:

Provided that the power to make regulations conferred by this section shall be subject to the condition of previous publication and before making any regulations the draft thereof shall be published in the manner considered most appropriate by the Commission for eliciting public opinion thereon within a period of not less than fourteen days from the date of publication.

(2) Any regulation made under sub-section (1) may provide that a contravention thereof shall be punishable with a fine which may extend to one hundred thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.

41B. Power to issue directives, circulars, codes, guidelines, etc.- The Commission may issue such directives, circulars, codes, guidelines or notifications as are necessary to carry out the purposes of this Ordinance and the rules and regulations made under this Ordinance.”

14. Amendment of Ordinance XLVII of 1984. The following further amendments shall be made in the Companies Ordinance, 1984 (XLVII of 1984), namely:-

(1) in section 158,

(a) in sub-section (1), for the word “three” the word “four” shall be substituted; and

(b) in sub-section (4),

(i) in clause (a), for the word “twenty”, the word “fifty” shall be substituted, and for the word “fifty” the words “five hundred” shall be substituted; and

(ii) in clause (b), for the word “ten”, the words “one hundred” shall be substituted;

(2) in section 187,

(a) in clause (h), in sub-clause (iv), after the semicolon the word “and” shall be omitted;

(b) in clause (j), the words “member of a Stock Exchange” shall be omitted and for the words “member”, occurring for the second time the words and comma “person or is a sponsor, director or officer of a corporate brokerage house” shall be inserted; and

(c) after the proviso, the following new proviso shall be added, namely:-

“Provided further that the prohibition contained in clause (j) shall not apply where the company is a stock exchange.”;

(3) in section 206, in sub-section (2),

(a) in clause (b), the word “and”, at the end, shall be omitted; and

(b) in clause (c) for the full stop, at the end, a semicolon shall be substituted and thereafter the following new clauses shall be inserted, namely:-

“(d) an agreement or contract with an NBFC licensed to undertake asset management services in relation to an investment company registered with the Commission; and

(e) an agreement or contract with an NBFC licensed as a venture capital company in relation to a fund registered with the Commission.”;

(4) in section 208, in sub-section (2A), in clause (b), after the word “to” the words “such class of” shall be omitted;

(5) in section 233,

(a) in sub-section (1),for the word “three” the word “four” shall be substituted;

(b) in sub-section (4),

(i) after the word “shall”, occurring for the first time, the words “in the form and manner specified by the Commission” shall be inserted; and

(ii) the words “the registered address of” shall be omitted;

(6) in section 251, in sub-section (1), for the words “forty-five days of the declaration in the case of a listed company and within thirty days in the case of any other company”, the words “such time as specified by the Commission” shall be substituted;

(7) in section 282G, in sub-section (2), after the word “rules”, wherever occurring, the words “or regulations” shall be inserted;

(8) in section 282J, in sub-section (2), after the word “rules” the words “or regulations” shall be inserted;

(9) in section 282K, in sub-section (1), after the word “rules” the words “or regulations” shall be inserted; and

(10) in section 282M, in sub-section (1), after the word “rules” the words “or regulations” shall be inserted.

15. Amendments of Finance Act 1989 (V of 1989). The following further amendment shall be made in Finance Act 1989 (V of 1989), namely:

(1) In section 7,

(a) in sub-section (1), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that in case of a bank, the capital value tax shall be paid when general power of attorney is used to enforce the mortgage of property offered as collateral for obtaining loan.”;

(b) for clause (e) the following shall be substituted, namely:

“(e) urban area” means area falling within the limits of

(i) the Islamabad Capital Territory;

(ii) a Cantonment Board;

(iii) the rating areas as defined under the Urban Immovable Property Act, 1958 (W.P V of 1958) as in force in Punjab, NWFP, Sindh and Balochistan except where the rate under section 117 of the respective Provincial Local Government Ordinance, 2001 is zero;

(iv) in addition to (iii) up to forty kilometres from the outer limits of the Cantonment Boards in Karachi and up to forty kilometres from the notified rated areas of Karachi City District;

(v) in addition to (iii) up to thirty kilometres from the outer limits of the Cantonment Boards in Lahore and Faisalabad and up to thirty kilometres from the notified rated areas of Lahore and Faisalabad City District;

(vi) in addition to (iii) in all cases other than Karachi, Lahore and Faisalabad up to ten kilometres from the outer limits of the Cantonment Boards and up to ten kilometres from the notified rated areas; and

(vii) such areas the Federal Board of Revenue may, from time to time, by notification in the official Gazette, specify.”

16. Amendments of the Sales Tax Act, 1990. In the Sales Tax Act, 1990, the following further amendments shall be made, namely:-

(1) in section 2,

(i) for sub-section (2A), the following shall be substituted, namely:-

“(2A) “arrears”, in relation to a person, means, on any day, the sales tax due and payable by the person under this Act before that day but which has not yet been paid,”; and

(ii) for clause (3), the following shall be substituted, namely:

“(3) associates (associated persons)” means,

(i) subject to sub-clause (ii), where two persons associate and the relationship between the two is such that one may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person;

(ii) two persons shall not be associates solely by reason of the fact that one person is an employee of the other or both persons are employees of a third person;

(iii) without limiting the generality of sub-clause (i) and subject to sub-clause (iv), the following shall be treated as associates, namely:

(a) an individual and a relative of the individual;

(b) members of an association of persons;

(c) a member of an association of persons and the association, where the member, either alone or together with an associate or associates under another application of this section, controls fifty per cent or more of the rights to income or capital of the association;

(d) a trust and any person who benefits or may benefit under the trust;

(e) a shareholder in a company and the company, where the shareholder, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons

(i) fifty per cent or more of the voting power in the company;

(ii) fifty per cent or more of the rights to dividends; or

(iii) fifty per cent or more of the rights to capital; and

(f) two companies, where a person, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons

(i) fifty per cent or more of the voting power in both companies;

(ii) fifty per cent or more of the rights to dividends in both companies; or

(iii) fifty per cent or more of the rights to capital in both companies.

(iv) two persons shall not be associates under clause (a) or (b) of sub-clause (iii) where the Collector is satisfied that neither person may reasonably be expected to act in accordance with the intentions of the other.

(v) In this clause, “relative” in relation to an individual, means

(a) an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or

(b) a spouse of the individual or of any person specified in clause (a).”;

(iii) clause (3A) shall be renumbered as clause (3AA) and before clause (3AA), renumbered as aforesaid, the following shall be inserted, namely:-

“(3A) “association of persons” includes a firm, a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a company;”;

(iv) for clause (4), the following shall be substituted, namely:

“(4) “Board” means the Federal Board of Revenue established under section 3 of the Federal Board of Revenue Act, 2007;”;

(v) clause (5AA) shall be renumbered as (5AAA) and before clause (5AAA), renumbered as aforesaid, the following shall be inserted, namely:-

“(5AA) “company” means-

(a) a company as defined in the Companies Ordinance, 1984 (XL VII of 1984);

(b) a body corporate formed by or under any law in force in Pakistan;

(c) a modaraba;

(d) a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;

(e) a trust, a co-operative society or a finance society or any other society established or constituted by or under any law for the time being in force; or

(f) a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of the Income Tax Ordinance 2001 (XLIX of 2001);

(vi) for clause (6B), the following shall be substituted, namely:-

“(6B) “default surcharge” means the default surcharge levied under section 34;”;

(vii) in clause (9), for the words, “Federal Government”, the word “Board”, shall be substituted;

(viii) after clause (11), the following new clause shall be inserted, namely:-

“(11A) “firm” means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all;”;

(ix) in clause (13) the word “lawfully” shall be omitted;

(x) for clause (14), the following shall be substituted, namely:

“(14) “input tax”, in relation to a registered person, means-

(a) tax levied under this Act on supply of goods to the person;

(b) tax levied under this Act on the import of goods by the person;

(c) in relation to goods or services acquired by the person, tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise on the manufacture or production of the goods, or the rendering or providing of the services; and

(d) Provincial sales tax levied on services rendered or provided to the person;

(xi) for clause (20), the following shall be substituted, namely:

“(20) “output tax”, in relation to a registered person, means-

(a) tax levied under this Act on a supply of goods, made by the person;

(b) tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise on the manufacture or production of the goods, or the rendering or providing of the services, by the person;

(c) Provincial sales tax levied on services rendered or provided by the person;”

(xii) for clause (21), the following shall be substituted, namely:

“(21) “person” means,

(a) an individual;

(b) a company or association of persons incorporated, formed, organized or established in Pakistan or elsewhere;

(c) the Federal Government;

(d) a Provincial Government;

(e) a local authority in Pakistan; or

(f) a foreign government, a political subdivision of a foreign government, or public international organization;”;

(xiii) after clause (22), the following new clause shall be added, namely:-

“(22A) “Provincial sales tax” means tax levied under.-

(a) the Balochistan Sales Tax Ordinance, 2000 (I of 2000);

(b) Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001);

(c) the Punjab Sales Tax Ordinance, 2000 (Pb. Ord. II of 2000);

(d) the North West Frontier Province Sales Tax Ordinance, 2000 (III of 2000); and

(e) the Sindh Sales Tax Ordinance, 2000 (VIII of 2000);”;

(xiv) clause (28A) shall be omitted;

(xv) clause (29A) shall be renumbered as (29AA) and before clause (29AA), renumbered as aforesaid, the following shall be inserted, namely:-

“(29A) “sales tax” means-

(a) the tax, additional tax, or default surcharge levied under this Act;

(b) a fine, penalty or fee imposed or charged under this Act; and

(c) any other sum payable under the provisions of this Act or the rules made there under;”;

(xvi) in clause (31), for the word “resemble”, the word “resembles” shall be substituted;

(xvii) for clause (33), the following shall be substituted, namely:

“(33) “supply,” means a sale or other transfer of the right to dispose of goods as owner, including such sale or transfer under a hire purchase agreement: Provided that the Federal Government, may by notification in the official Gazette, specify such other transactions which shall or shall not constitute supply:”;

(xviii) for clause (34), the following shall be substituted, namely:

“(34) “tax”, unless the context requires otherwise, means sales tax;”;

(xix) for clause (35), the following shall be substituted, namely:

“(35) “taxable activity”, means any economic activity carried on by a person whether or not for profit, and includes-

(a) an activity carried on in the form of a business, trade or manufacture;

(b) an activity that involves the supply of goods, the rendering or providing of services or both to another person;

(c) a one-off adventure or concern in the nature of a trade; and

(d) anything done or undertaken during the commencement or termination of the economic activity, but does not include-

(a) the activities of an employee providing services in that capacity to an employer;

(b) an activity carried on by an individual as a private recreational pursuit or hobby; and

(c) an activity carried on by a person other than an individual which, if carried on by an individual, would fall within clause (b).”;

(xx) in clause (43), for semi colon, occurring first time, a comma shall be substituted;

(xxi) for clause (44), the following shall be substituted, namely:

“(44) “time of supply,” in relation to,

(a) a supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply;

(b) a supply of goods under a hire purchase agreement, means the time at which the agreement is entered into; and

(c) services, means the time at which the services are rendered or provided;”;

“(44A) “trust”, means an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner, or declared and accepted by the owner for the benefit of another, or of another and the owner, and includes a unit trust;

“(44AA) “unit trust”, means any trust under which beneficial interests are divided into units such that the entitlements of the beneficiaries to income or capital are determined by the number of units held”; and

(xxii) in clause (47), the comma and the words”, and a person who in addition to making retail supplies is engaged in wholesale business” shall be omitted.

(2) in section 3,-

(a) for the word “fifteen”, wherever occurring, the word “sixteen” shall be substituted; and

(b) sub-section (4) shall be omitted;

(3) section 3AA shall be omitted;

(4) in section 7, in sub-section (1), for the proviso, the following shall be substituted, namely:-

“Provided that where a registered person did not deduct input tax within the relevant period, he may claim such tax in the return for any of the six succeeding tax periods.”;

(5) in section 8, in sub-section (1), in clauses (a), (b) and (ca) after the word “goods” the words “or services” shall be inserted;

(6) in section 8B, in sub-section (1), in the first proviso, the words “after the start of production of a new unit”, shall be omitted;

(7) in section 10, in sub-section (1), for the first proviso, the following shall be substituted, namely:-

“Provided that in case of excess input tax against supplies other than zero-rated or exports, such excess input tax may be carried forward to the next tax period and shall be treated as input tax for that period and the Board may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, prescribe the procedure for refund of such excess input tax;”;

(8) in section 11, in sub-section (4),

(a) after the word “given”, the words “within five years” shall be inserted; and

(b) in the proviso, for the word “ninety”, occurring twice, the words, “one hundred and twenty”, shall be substituted;

(9) in section 13, in sub-section (2), in clause (a), after the word “or” occurring for the first time, the words “import or supply of” shall be inserted;

(10) in section 25, in sub-section (2), in the proviso, for the full stop at the end, a colon shall be substituted and thereafter the following new proviso shall be inserted, namely:-

“Provided further that nothing in this sub-section shall bar the sales tax officer 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”;

(11) in section 26, in sub-section (3), for the word “ninety”, the words “one hundred and twenty”, shall be substituted;

(12) section 26AA shall be omitted;

(13) in section 30, after clause (f), the following new clause shall be inserted, namely:-

“(ff) a Senior Auditor of Sales Tax;”;

(14) section 32AA shall be omitted;

(15) in section 33,

(a) the brackets and figure “(1)”, appearing for the first time, shall be omitted; and

(b) in the TABLE, in column (1), serial number 20 and the entries relating thereto in columns (2) and (3) shall be omitted;

(16) in section 34, in sub-section (1),

(a) in clause (a),

(i) the words and comma “for the first six months of default,” shall be omitted; and

(ii) after the word “one”, the words “and half” shall be inserted;

(c) after semi colon at the end, the word “and” shall be added; and

(ii) clause (b) shall be omitted;

(17) in section 36, in sub-section (3), in the proviso, for the word “ninety”, occurring twice, the words, “one hundred and twenty”, shall be substituted;

(18) in section 45A, in sub-section (2), for the words, brackets and figure “sub-section (1)”, the words “this section”, shall be substituted;

(19) in section 45-B, in sub-section (2), in the first and second provisos, for the word, “ninety”, occurring twice, the words, “one hundred and twenty”, shall be substituted;

(20) in section 46,

(a) for sub-section (1), the following shall be substituted, namely:-

“(1) Any person including an officer of Sales Tax not below the rank of an Additional Collector, aggrieved by any order passed by

(a) the Collector of Sales Tax (Appeals) under section 45B,

(b) the Collector of Sales Tax through adjudication or under any of the provisions of this Act or rules made there under,

(c) the Board under section 45A, may, within sixty days of the receipt of such decision or order, prefer appeal to the Appellate Tribunal.”;

(b) in sub-section (7), for the words, “six”, the word, “eight”, shall be substituted;

(c) in sub-section (9),

(i) in clause (a), for the words “fifteen hundred thousand”, the words “ten million” shall be substituted; and

(ii) in clause (b), for the words “fifteen hundred thousand”, the words “ten million” shall be substituted;

(21) in section 47A, after sub-section (4), the following new sub-section shall be inserted, namely:

“(4A) Notwithstanding anything contained in sub-section (4), the Chairman may on the application of an aggrieved person, for reasons to be recorded in writing, and on being satisfied that there is an error in order or decision may pass such order as he deems just and equitable.”;

(22) section 50 shall be numbered as sub-section (1) of that section and after sub-section (1), renumbered as aforesaid, the following new sub-section shall be added, namely:-

“(2) All rules made under sub-section (1) or any other provisions of this Act, shall be collected, arranged and published along with general orders and departmental instructions and rulings, etc, if any, at appropriat e intervals and sold to the public at reasonable price”;

(23) after section 58, the following shall be inserted, namely:-

“58A. Representatives. (1) For the purpose of this Act and subject to sub-sections (2) and (3), “representative” in respect of a registered person, means

(a) where the person is an individual under a legal disability, the guardian or manager who receives or is entitled to receive income on behalf, or for the benefit of the individual;

(b) where the person is a company (other than a trust, a Provincial Government, or local authority in Pakistan), a director or a manager or secretary or agent or accountant or any similar officer of the company;

(c) where the person is a trust declared by a duly executed instrument in writing whether testamentary or otherwise, any trustee of the trust;

(d) where the person is a Provincial Government, or local authority in Pakistan, any individual responsible for accounting for the receipt and payment of money or funds on behalf of the Provincial Government or local authority;

(e) where the person is an association of persons, a director or a manager or secretary or agent or accountant or any similar officer of the association or, in the case of a firm, any partner in the firm;

(f) where the person is the Federal Government, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Federal Government; or

(g) where the person is a public international organization, or a foreign government or political sub-division of a foreign government, any individual responsible for accounting for the receipt and payment of moneys or funds in Pakistan on behalf of the organization, government, or political sub-division of the government.

(2) Where the Court of Wards, the Administrator General, the Official Trustee, or any receiver or manager appointed by, or under, any order of a Court receives or is entitled to receive income on behalf, or for the benefit of any person, such Court of Wards, Administrator General, Official Trustee, receiver, or manager shall be the representative of the person for the purposes of this Act.

(3) Subject to sub-section (4), where a person is a non-resident person, the representative of the persons for the purpose of this Act for a tax year shall be any person in Pakistan:

(a) who is employed by, or on behalf of, the non-resident person;

(b) who has any business connection with the non-resident person;

(c) from or through whom the non-resident person is in receipt of any income, whether directly or indirectly;

(d) who holds, or controls the receipt or disposal of any money belonging to the non-resident person;

(e) who is the trustee of the non-resident person; or

(f) who is declared by the Collector by an order in writing to be the representative of the non-resident person.

(4) No person shall be declared as the representative of a non-resident person unless the person has been given an opportunity by the Collector of being heard.

58B. Liability and obligations of representatives. (1) Every representative of a person shall be responsible for performing any duties or obligations imposed by or under this Act on the person, including the payment of tax.

(2) Subject to section 58 and sub-section (5) of this section, any tax that, by virtue of sub-section (1), is payable by a representative of a registered person shall be recoverable from the representative only to the extent of any assets of the registered person that are in the possession or under the control of the representative.

(3) Every representative of a registered person who pays any tax owing by the registered person shall be entitled to recover the amount so paid from the registered person or to retain the amount so paid out of any moneys of the registered person that are in the representative’s possession or under the representative’s control.

(4) Any representative, or any person who apprehends that he may be assessed as a representative, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the “principal”), a sum equal to his estimated liability under this Act, and in the event of disagreement between the principal and such a representative or a person as to the amount to be so retained, such representative or person may obtain from the Collector a certificate stating the amount to be so retained pending final determination of the tax liability, and the certificate so obtained shall be his authority for retaining that amount.

(5) Every representative shall be personally liable for the payment of any tax due by the representative in a representative capacity if, while the amount remains unpaid, the representative

(a) alienates, charges or disposes of any moneys received or accrued in respect of which the tax is payable; or

(b) disposes of or parts with any moneys or funds belonging to the registered person that is in the possession of the representative or which comes to the representative after the tax is payable, if such tax could legally have been paid from or out of such moneys or funds.

(6) Nothing in this section shall relieve any person from performing any duties imposed by or under this Act on the person which the representative of the person has failed to perform.”

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