ISLAMABAD (May 06 2004): Giving major sales tax relief to unregistered retailers/taxpayers involved in litigation, the Central Board of Revenue (CBR) has floated two schemes to waive additional tax and penalties in full provided the taxpayers agree to deposit principal amount of sales tax along with 25 percent outstanding additional tax by June 20, 2004, and amnesty to retailers who apply for registration up to June 30, 2004, of past liabilities.
The first tax relief package for the taxpayers, notified through SRO 247(I)/2004 here on Wednesday may be availed by a large number of persons including those who did not pay sales tax for any reason, took inadmissible refund or adjustment of input tax, did not charge 'further tax' on supplies to unregistered persons or against whom any amount of sales tax is outstanding under audit objection, audit report, demand notice, or assessment/adjudication orders.
The concession may be available even if a case is pending in adjudication, appeal or at any other forum, and would not affect the persons' right of appeal after depositing liabilities under the notification.
The concessional package may also be availed by persons who wrongly claimed refund on the basis of fake or flying invoices and persons who avoided payment of 'further tax' by wrongly issuing invoices in the name of registered persons.
In case a registered person has already paid the whole of the principal amount of tax, relief would be available on payment of 25 percent of the additional tax on such amount.
Furthermore, if any person has already partially paid the principal amount of tax, relief would be available on payment of the remaining principal amount of tax and 25 percent of the additional tax (on the whole of the principal amount of tax).
SECOND SCHEME: Under the second scheme to encourage registration of retailers (SRO 246(I)/2004), those who apply for sales tax registration/enrolment up to June 30, 2004 would be exempted from all sales tax liabilities for the period prior to July 1, 2003.
Retailers will only pay tax at the rate of 2 percent of the turnover declared with the income tax department on supplies made after July 1, 2003 to the date of registration.
Moreover, no audit would be conducted for the period of exemption.
The tax relief package announced for retailers would help them in regularising past transactions and become tax compliant in future.
The notification also gives substantial relief to those retailers who had secured registration earlier. Under the SRO, the retailers have been divided into four different categories for availing tax relief.
Official sources told Business Recorder that taxpayers may be freed from unnecessary litigation and past liabilities by availing the relief.
The notifications would give tax relief to the taxpayers without forcing them to approach collector of sales tax or CBR.
Officials said that the tax relief for retailers is quite different from the concession given under the SRO.500(I)/2003 as the previous notification was not applicable to the registered persons against whom a case of tax fraud or the evasion was framed.
The issuance of SRO.246(I)/ 2004 and SRO.247(I)/2004 would not only release stuck up revenue in litigation, but would also encourage the taxpayers to avoid prolonged litigation with the department.
The CBR had received presentations from taxpayers, associations and trade bodies that there were many cases where taxpayers could not pay sales tax due to some inadvertent mistake, unawareness of amendments in the law, financial constraints or other circumstances.
In such cases, they should not be burdened with additional tax and penalty. A large number of such cases had piled up in adjudication or litigation at various stages. Such volume of litigation and consequent holding up of revenue is neither beneficial for the taxpayers nor for the department.
Taxpayers expressed their willingness to deposit the principal amount of sales tax involved if they were provided relief in the form of waiver of additional tax and penalty.
At the same time, the CBR noted that primary reason for reluctance of retailers to get registered with the sales tax department was uncertainty about past liabilities.
Keeping in view the hardship faced by the taxpayers, the CBR has issued two notifications aimed at granting relief, reducing litigation, freeing up revenue and encouraging registration of retailers.
Under the SRO.246(I)/2004, the retailers registered before July 1, 2000 would be exempted from sales tax, turnover tax, additional tax and penalty payable on supplies made prior to registration; retailers registered during July 1, 2000 to the day preceding the date of this notification, the extent of exemption would be whole amount of sales tax, turnover tax, additional tax and penalty payable on supplies made prior to July 1, 2000 and the amount in excess of 2 percent of the turnover declared with the income tax department for supplies made during July 1, 2000 to the day preceding the date of this notification.
The retailers who apply for registration from the date of this notification to June 30, 2004, the extent of exemption would be whole amount of sales tax, turnover tax, additional tax and penalty payable on supplies made prior to July 1, 2003 and the amount in excess of 2 percent of the turnover declared with the income tax department for supplies during July 1, 2003 to the date of registration.