Chairman, Pakistan Chemicals and Dyes Merchant Association (PCDMA), Mohammad Haroon Agar has urged the government to withdraw clause 95 bar tax payers from filing of suit, prosecution and other legal proceedings from General Sales Tax Bill 2010.
The chairman submitted his objections and proposals on GST bill 2010 sent to chairman and all the members of National Assembly Standing Committee of Finance and finance minister, he said that this clause denies the tax payers his fundamental right to seek justice from any court inducing high courts.
Under clause (2) it bar tax payer to file any suit or legal proceedings against order passed or action taken by officer of IRS. He questioned that weather IRS considers itself and its officers above all laws of Pakistan and are not ready to face justice. Haroon Agar made a clause vise objections and proposals on GST Bill 2010 which includes :
a) Clause 4: Consideration: Sub clause (3) of said clause places the burden of proving that the consideration for a particular supply of goods is not less than the price at which the supplier ordinarily supplies those goods and services.
This sub clause should be withdrawn as it shall open the floodgate of corruption and harassment and is against the sprit of free trade where the consideration or price may be different for different buyers. b) Clause 37: Advance Payment of tax on import of goods: As the government intends to impose Value Addition Tax at Customs Stage through this clause, therefore, it should continue Special Procedures for commercial importers and other sectors in the present form.
This does not create any distortion as in current set-up Commercial importers pay value addition in advance and still have complete documentation as prescribed under Sales Tax Act. c) Clause 39 Carry Forward and refund of negative net amount for a tax period:
This clause allows Carry Forward of Excess Tax for a period of 6 months only and that too in a complex and cumbersome way. The clause shall lead to massive corruption and shall create opportunity for fraudulent refunds. The procedure of carry forward should be maintained as prevalent at present and tax-payer may be allowed to claim refund after 6 months only if so desired by them.
d) Clause48 & 49: Cancellation and Suspension of registration: AS it had been noticed in the past that many times registrations were wrongly cancelled or suspended by the Sales Tax department, it is suggested that these procedures be thoroughly examined and role of trade bodies be incorporated to avoid such incidents in future.
e) Clause 52 Sales Receipt: Sub Clause (20 requiring CNIC I NTN number to be mentioned in Sales Receipt should be withdrawn. The requirement for NTN and CNIC number should be removed as the job of tax-payer should ONLY be to generate maximum economic activity and to pay Sales tax on such taxable activity.
f) Clause 56 Records and Accounts: It is proposed that time limit for record keeping under sub-section 1(a) be reduced to 3 years and words "atleast" should be removed and subsection 1(b) should be withdrawn. g) Chapter X Recovery or Payment of Tax: The conditions for recovery seem to be very harsh. It is suggested that these clauses be amended in consultation with trade bodies.
h) Clause 71 Audit: In subsection the term forensic audit should be withdrawn. Also proviso "that such notice may be dispensed with by the Officer of Inland Revenue where tax fraud is suspected" should be withdrawn. These conditions are very harsh and shall lead to undue harassment and corruption. Also time frame for finalisation of such audit should be prescribed in the section.
i) Clauses 74 & 75: These clauses are very harsh and give extra-ordinary powers to IRS officers which shall lead to harassment and corruption. These powers should be discussed at length to avoid any chances of misuse and harassment.
j) Clauses 76 to 79: regarding appointment of Special Judges should be withdrawn.
k) Clause 84: is very harsh and should be withdrawn. l) Clause 88: Appeal to Appellate Tribunal: From sub section 5, the time limit for interim order staying recovery should be removed as it is against basic principle of justice.
m) Clause 89 Reference to High Court: This whole clause need to be evaluated thoroughly as it seems that government is trying to limit the scope/jurisdiction of High Court in such matters and also time limit for Stay orders should be removed under sub clause 8.
n) Chapter XIII Offences and Penalties: It is suggested that these should be discussed with trade bodies and should be brought in line with the existing Sales Tax Act. o) Clause 105 Adjustment of Input Tax: This whole clause should be withdrawn and Tax which is carried forward in the last return under Sales Tax Act 1990, be allowed to be carried forward in first return filed under GST act. These inputs had already been verified through e filing and there is no need to re-verify these inputs.
p) THE SECOND SCHEDULE; All the products and raw materials of five export sectors, which are currently zero-rated should be included in the second schedule.
The system of payment and refund failed miserably in the past and zero-rating for these sectors was introduced after surfacing of numerous cases of fraudulent refunds. After introduction of this scheme the incidents of fraudulent refunds have dropped considerably.
Also removal of zero-rating shall hurt the export sector due to increased liquidity requirement and shall cripple the economic activity in the country. Procedure for bringing local sales of these 5 export sectors should be discussed with concerned trade bodies.
He proposed that only the finished products should attract sales tax at full rate and the raw material for these 5 sectors which are currently zero-rated should be scrutinised along-with trade bodies to remove raw materials which find a greater usage in other sectors. Remaining raw materials may be taxed @3%.
This will result in taxation of these products at local stage, exports shall be zero-rated and due to low percentage of tax on raw materials, less refund shall be involved as in many cases the input shall be adjusted against output on local supply.