LAHORE: The exporters community has rejected amendments made to the SRO 350(I)/2024 dated 07-03-2024, treating their sales tax returns as invalid without first paying the sales tax liability of the non-filing supplier/seller.
This situation has triggered a chain reaction, creating chaos among businesses and effectively halting their operations, they added.
Additionally, they said, their regular buyers are also unwilling to engage in business with them, causing severe financial difficulties.
Final tax regime: Exporters concerned at exclusion of rice, maize
They said the amendments have put the buyer at a disadvantage by empowering the IRIS (computerized system) to consider the sales tax return of the buyer as provisional until the seller also files their sales tax return within the due date, and to delete the invoices issued to seller by the buyer and deny them input tax adjustment on account of non-filing of sales tax return by the seller within the due date. In such a scenario, they added, where the seller does not file their sales tax return within the due date, the IRIS is empowered to take the return as valid, after payment of the sales tax liability, so computed.
It may be noted that in some cases the state-owned enterprises such as DISCOs and gas distribution companies’ sales tax returns have also been deemed invalid on account of which the returns filed by them are deemed invalid.
Some exporters pointed out that the IRIS is effectively charging output tax of the supplier to the buyer, which is the responsibility of the supplier to pay and declare in their return and on top of that are not allowing the adjustment of input tax to the buyer, who has completed his transaction in compliance with the requirements.
They stressed that the buyer can be held liable in respect of default on part of the seller/supplier. For that to happen, the buyer should have knowledge or reasonable grounds to suspect that some or all of the tax payable in respect of the supply or any previous or subsequent supply of the goods supplied would go unpaid (of which the burden to prove shall lie on the sales tax department) in such a case the buyer and supplier would both be jointly and severally liable for payment of unpaid tax.
They said they lack control over the supplier, and once the transaction is completed at arm’s length and payment is made through the banking channel, they cannot be held accountable for the supplier’s failure to file sales tax return and deposit the sales tax amount into the government treasury. Penalizing the buyer for the supplier’s default is unjust, as the supplier is a separate legal entity, they maintained.
Copyright Business Recorder, 2024
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