PCDMA raises objections to new ST, FED return form

The Federal Board of Revenue (FBR) has made applicability of the new sales tax and federal excise returns retrospectively from July, 2011 which is not legally allowed under the tax laws. In a letter to the FBR here on Monday, Pakistan Chemicals and Dyes Merchants Association (PCDMA) has raised a legal objection in the new sales tax and federal excise return. The notification envisages application of the amended return from July 2011.
This is tantamount to retrospective application. Application of amendments to ST&FE return, if any, should only be applicable from the next tax period after the amendment is made in consultation with the trade bodies, it said. It further said that the proposed amendment seeks to make it mandatory for the registered manufacturers, importers and exporters to provide either the NTN or CNIC of their unregistered buyers/suppliers. First of all, there is no such requirement under Sales Tax Act, and a couple of years back attempt made by FBR to amend Section 23 for requirement of NTN/CNIC was not approved by National Assembly.
"Therefore, it seems to us like an attempt by FBR to go against the wishes of legislature and introduce this condition through backdoor. Secondly, imposition of such impractical restriction on registered sales shall greatly affect the registered turnover, thereby, bringing down the registered sales sharply and in turn bringing down the Sales Tax amount as well. Here it is pertinent to point out that on un-registered sales there is no loss of government revenue as full sales tax liability is discharged by registered person. Only there is no input claim made against such purchases. It seems that it is only FBR who does not know the whereabouts of the unregistered person. Thirdly, this condition is discriminatory as it is being imposed on certain classes of registered person," it said.
The association added that the amended Annexures A and C seek separate entry for each and every invoice and also seek entry of HS-Code number. This is impractical and adds unnecessary burden to registered person and shall further add to cost of doing business.