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New draft rules for sales tax registration issued

ISLAMABAD (February 18 2003) : The Central Board of Revenue (CBR) has made it mandatory for all registered persons to apply afresh for renewal of registration and allocation of sales tax registration number before April 30, 2003 under the revised draft of 'Registration and De-registration Rules 2003'.

The registration certificates/numbers issued under the existing rules would expire on June 30, 2003.

The CBR has also agreed in principle to empower the collectors of sales tax to circulate the orders pertaining to blacklisted persons through electronic and print media.

The powers to publicise the names of blacklisted persons vis-a-vis electronic/print media was not present in the previous draft of the above-mentioned rules.

The tax authorities have claimed that the draft of the new Registration and De-registration Rules 2003 has been further modified to provide better and prompt service to the registered persons.

The CBR has given another opportunity to the taxpayers to study the amended draft and submit their views before issuance of formal notification in February 2003.

The CBR officials said that a large number of persons were registered under the Sales Tax Act, 1990 during the last few years as a result of ongoing drive of broadening tax-base.

However, the particulars of many registered persons have either changed or become obsolete or redundant.

To update the database of all the existing registered persons and for new registrants, CBR would soon issue 'Registration and De-registration Rules', which would be instrumental proving better services to the registered persons, CBR added.

In the first draft of these rules, there was no penal action recommended under provisional registration.

Now, the Collector may allow provisional registration for a period of thirty days if the application is not supported by any of the documents required provided the application is received through a registered association/chamber with an undertaking that particulars declared in the application are correct and supporting documents, to be listed in the undertaking would be produced within thirty days of the filing of the application.

In case of failure, the provisionally registered person shall be responsible for payment of sales tax evaded, if any besides the penal action as per provisions of Section 33 and Section 37A of the Sales Tax Act, 1990.

Previously, the CBR did not specified the authority responsible for attestation of photocopies, while it has now been pointed out that documents could be attested by Notary Public or any gazetted officer or president of the respective association.

Furthermore, the revised blueprint of rules have introduced a new provision that a person who has applied for de-registration would file monthly sales tax returns for a consecutive period of six months with a note in each sales tax return that an application for de-registration has been made and thereafter file a final return whenever an order for filing of final return is issued by the competent authority.

The revised draft of New Registration and De-Registration Rules issued on Monday.

In exercise of the powers conferred by section 50 of the Sales Tax Act, 1990, read with sections 15 to 21 and section 28 thereof and in supersession of SRO 550(I)/96 dated 1-7-1996, the Central Board of Revenue is pleased to make the following rules, namely:

1. Short title, application and commencement.

(1) These rules may be called the Registration and De-registration Rules, 2003.

(2) They shall apply to all persons who;

(a) are either already registered or required to be registered under section 14 of the Act;

(b) opt for voluntary registration;

(c) opt for separate registration of branches, divisions or manufacturing units;

(d) are subjected to compulsory registration; or

(e) are liable to be de-registered under section 21 of the Act.

(3) They shall come into force at once.

2. Definitions.

(1) Unless there is any thing repugnant to the context or subject, for the purposes of these rules, –

(a) “Act” means the Sales Tax Act, 1990;

(b) “Annex” means the annex appended to these rules;

(c) “application for registration” means application for registration of a taxpayer in the form set out at Annex “A”; and

(d) “registration certificate” means a certificate of registration in the form set out at Annex “B”.

(2) Any other term or expression not defined here but used in these rules shall have the same meaning as has been assigned to it under the Act or any other rules or, orders or instructions issued thereunder.

3. Application for registration.

(1) A person liable to be registered under section 14 of the Act or who opts for voluntary registration or who is required to be registered compulsorily shall apply for registration in the form set out at Annex “A” which shall be submitted duly filled in as per instructions laid down hereinafter, to the Collector-

(a) having jurisdiction in the area where his registered office is located, in case he keeps his all business records at such office; and

(b) having jurisdiction in the area where the business premises are located, if the business records are kept at such premises.

Provided that a sole proprietor or partnership firm, having a single manufacturing unit, whose business premises and manufacturing unit are located in different areas, shall apply to the Collector of the area in whose jurisdiction his manufacturing unit is located.

(2) Where the application for registration is complete in all respects, the applicant shall be registered after such verification, inquiry or investigation as is deemed necessary by the Collector or his authorised officer and a certificate of registration containing his registration number shall be issued to him as set out in Annex “B”.

(3) Where an applicant has unsold or un-consumed stocks of tax-paid inputs on which he desires to claim the benefit of section 59 of the Act, he shall declare such stocks to the Collector in a statement in the form set out at Annex-C, to be appended with his application for registration.

4. Application for separate registration of branches, divisions or manufacturing units.

(1) In case a registered person who conducts his taxable activity through distinct different branches, divisions or manufacturing units is desirous of getting them registered separately, he shall, subject to the provisions of Sales Tax General Order No 10 of 1998, dated 22nd December, 1998, file separate applications for their registration to the Collector of Sales Tax having jurisdiction in the area where such branch, division or manufacturing unit is located.

(2) The applications for registration filed under sub-rule (1) shall be processed in the respective Collectorate and such branch, division or, as the case may be, manufacturing unit shall be registered by the Collector subject to the following conditions: –

(a) the registered person shall keep the relevant business records at the business premises of the branch, division or, as the case may be, manufacturing unit which is separately registered; and

(b) the registered person shall file tax return in respect of each registered branch, division or manufacturing unit in the designated branch of National Bank of Pakistan located in the jurisdiction of the Collectorate where it is separately registered; and

(c) subject to the provisions of Sales Tax General Order No 1 of 1998, dated 17th July, 1998, exchange or transfer of raw materials or other goods between different registered branches, divisions or manufacturing units shall be treated as supplies between separate registered persons.

5. Provisional Registration.

The Collector may allow provisional registration for a period of thirty days if the application is not supported by any of the documents required provided the application is received through a registered Association or Chamber of Commerce and Industry with an undertaking that particulars declared in the application are correct and supporting documents, to be listed in the undertaking shall be produced within thirty days of the filing of the application.

In case of failure, the provisionally registered person shall be responsible for payment of sales tax evaded, if any besides the penal action as per provisions of sub-section (iv & v) of section 33 and section 37A of the Sales Tax Act, 1990.

6. Compulsory registration.

(1) Where an officer not below the rank of Assistant Collector is of the opinion that any person is liable to compulsory registration under section 19 of the Act, he may issue notice to such person in the form set-out at annex-D.

(2) In case the officer, issuing the notice, receives written reply from the said person within the time specified in the notice, contesting his liability to registration, he shall grant such person an opportunity of personal hearing if so desired by the person and after hearing him, shall pass an order whether or not such person is liable to compulsory registration. A copy of the order shall invariably be given to the said person.

(3) Where the person to whom a notice has been given under sub-rule (1), does not respond within the time specified in the notice, the officer issuing the notice may compulsorily register such person without any further notice and allot him a registration number and in such a case the registration certificate shall be got delivered either in person or through courier services or registered mail within ten days of the date of compulsory registration.

(4) A compulsory registered person shall file the sales tax return and comply with all the other provisions of the Sales Tax Act, 1990 from the date of compulsory registration.

In case of failure to comply with the provisions of the Sales Tax Act, 1990 the authorised officer may issue notice under section 25 of the Sales Tax Act, 1990 for production of records or documents and appear in person and shall assess the amount of sales tax payable as per provisions of section 11 of the Sales Tax Act, 1990.

(5) Action under sub-rule (3) shall not affect the rights of a person envisaged under the proviso to section 19 of the Act.

7. Documents to be attached.

Photocopies of the following documents duly attested by a Notary Public or any Gazetted Officer or President of the respective Association, shall be attached with the application for registration and the applicant or his authorised representative shall produce the originals as and when required by the Assistant Collector incharge.

i) Previous registration certificate, if any;

ii) National Identity card of owner/each director/partner;

iii) National Tax Number Certificate;

iv) Certificate of membership of Chamber of Commerce and Industry, or of the concerned trade/industrial association or group as applicable;

v) Documents of ownership or lease of the business/manufacturing premises;

vi) Memorandum and article of association of the company, if applicable;

vii) National Identity card of the authorised representative, if different from persons at (ii) above;

viii) Income tax return or assessment order for the previous year or a certificate of sound financial position issued by the bank of the applicant or by President of Chamber/respective trade Association or group;

ix) Electricity, Gas and Telephone bill showing payment of charges for any previous month; and

x) Any other document specifically relevant to the applicant as required by the Assistant Collector after taking permission from the Collector.

8. De-registration.

(1) A registered person is liable to be de-registered if-

(a) he ceases to carry on his business;

(b) his supplies become exempt from tax;

(c) his taxable turnover during the last twelve months is below two and a half million rupees as manufacturer and his value of supplies during the last twelve months is below five million rupees as retailer;

(2) A person liable to be de-registered shall make an application in the form set out at Annex – E to the concerned Collector specifying the grounds for his de-registration.

(3) On receipt of application under sub-rule (2) an officer not below the rank of an Auditor or Deputy Superintendent shall be assigned to either conduct audit of the relevant records of the applicant or to do such enquiry as is necessary to ascertain whether the applicant qualifies for de-registration provided that such audit or enquiry shall unless otherwise extended by the Collector, be completed within a period of six weeks.

(4) A person who has applied for de-registration shall file monthly sales tax returns for a consecutive period of six months with a note in each sales tax return that an application for de-registration has been made and thereafter file a final return whenever an order for filing of final return is issued by the competent authority.

Provided that the Collector if satisfied that application for de-registration is complete in all respects, he may provisionally allow de-registration with immediate effect subject to undertaking by the applicant to pay his liabilities if any, by filing final return as prescribed in sub-rule (5) of the rule whenever required by registration authority.

(5) If on the basis of audit or inquiry held under sub-rule (3), the Collector is satisfied that the applicant is liable to be de-registered, he shall direct him to furnish a final return under section 28 of the Act so as to discharge his outstanding liabilities, if any.

(6) On the basis of the final return, if the Collector is satisfied that the applicant has settled his tax liabilities, he shall be de-registered-

(7) In case the applicant has been de-registered due to cessation of business or his supplies have become exempt from tax, he shall be de-registered from such date as may be determined by the Collector.

(8) In case the applicant seeks de-registration on the ground that his turnover has fallen below the prescribed threshold, he shall be de-registered from the beginning of the next financial year in accordance with sub-section (2) of section 21 of the Act.

9. Transfer of Registration.

(1) The Board may, subject to such conditions, limitations or restrictions as it may deem fit to impose, on its own motion or otherwise, by notification in the official Gazette, transfer the registration of a registered person from the jurisdiction of one Collector to another Collector or, as the case may be, to the Director General of Large Taxpayers Unit.

(2) On transfer of registration,

(a) all the records and liabilities relating to such registered person shall be transferred to the Collector or, as the case may be, to the Director General of Large Taxpayers Unit in whose jurisdiction the registration has been so transferred; and

(b) Notwithstanding the actions already taken, being taken or otherwise pending immediately before the transfer in respect of such registered person under any of the provisions of the Act or the rules made thereunder in the Collectorate from where his registration has been transferred, the Collector, or as the case may be, the Director General of Large Tax Payers Unit, in whose jurisdiction the registration is so transferred shall exercise the jurisdiction over such person in the manner as if he always had such jurisdiction.

(3) The Collector or, as the case may be, the Director General of Large Taxpayers Unit, to whose jurisdiction the registration of a person is transferred shall, after such enquiry as he may deem fit, issue a new certificate of registration in lieu of the previous certificate and such new certificate shall contain a reference to the previous certificate of registration.

(4) In case a registered person intends to shift his business activity from the jurisdiction of one Collector to another, or he has any other valid reason for such transfer, he shall apply to the Board for transfer of his registration and the provisions of this rule shall, mutatis mutandis, apply to such cases and the Board shall exercise the powers under sub-rule (1).

10. Application for amendment in registration certificate.

A person seeking amendment in registration certificate or adding/selling machinery or entering into partnership in any other business shall apply in the form setout at Annex – F alongwith sales tax return showing payment of fee and amendment required and such application shall be decided as early as possible after such enquiry, audit or verification as the Assistant Collector incharge may deem proper provided that such application shall be decided upon within thirty days of its receipt.

11. Blacklisting and cancellation of Registration.

(1) The Collector may order for blacklisting of registered person for any of the following reasons and may circulate such orders through electronic and print media in order to protect the interests of public exchequer and other suppliers and buyers:

(a) The registered person is not available at the declared address.

(b) Fails to file return with tax payment of respond to any notice or provide the requisite information.

(c) Fails to maintain or produce the records required to be maintained or produced under the Act or Rules or instructions issued on the subject.

(d) There is a reasonable doubt that registered person is involved in tax evasion or tax fraud.

(2) Such black listed person shall from the date of black listing cease to be a sales tax registered person for the purposes of the Act till final decision;

Provided that decision about withdrawal of orders for blacklisting or issuance of show cause notice for cancellation of registration besides any other action under the Act shall be issued to the registered person with ten days of the completion of investigation on submission of requisite documents by such blacklisted registered person.

12. Instructions or orders by the Collector.

The Collectors may issue such instructions or orders as may be necessary to implement and carry out the purposes of these rules in their respective jurisdiction under intimation to the Central Board of Revenue and respective Chamber of Commerce and Industry and the Association of concerned registered persons.

13. Renewal of Registration.

All persons registered are required to apply afresh before 30-04-2003 for renewal of their registration and allocation of sales tax registration number under the rules.

The registration certificates and registration number issued under the superseded rules shall cease to exist on 30th June, 2003.

14. Miscellaneous.

For filling up the form of application for registration as set out at Annex 'A' the instructions laid down at Annex 'G' shall be followed.

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