Regional Tax Office (RTO) Islamabad has started issuing threatening arrest notices to certain service providers within Islamabad capital territory (ICT) for compulsory sales tax registration. Sources told Business Recorder here on Monday that the notices have been issued to certain service providers, who are liable to be registered with the RTO Islamabad under Islamabad Capital Territory (tax on services) Ordinance 2001.
However, it is astonishing to note that the threat of arrest notice has been issued to those service providers, who failed to respond to the first notice of the said RTO. Arresting a compliant taxpayer, who is not a tax evader or committed tax fraud, is very threatening for such taxpayers registered with the FBR. One of the latest notices served to the service provider in Islamabad said: "Kindly note that in case you fail to apply for registration, the following action will be taken:
1. You shall be compulsorily registered under Islamabad Capital Territory (tax on services) Ordinance, 2001 read with section 14 of Sales Tax Act, 1990, and under rule 6 of the Sales Tax Rules, 2006, without any further notice.
2. You shall render yourself liable to penalty under Islamabad Capital Territory (tax on services) Ordinance, 2001 react with clause 7 of section 33(1) of the Sales Tax Act, 1990. 3. You shall also render yourself liable to arrest and prosecution in terms of Islamabad Capital Territory (tax on services) Ordinance, 2001 read with section 37A of the Sales Tax Act, 1990," the notice added.
A service provider told Business Recorder that he is registered with the FBR and regularly files income tax return every year. He received a notice of sales tax registration from the RTO Islamabad. As it is a new law for Islamabad-based service providers, already registered with the FBR and we are in the process of seeking guidance from tax consultants about their strategy to deal with the issue. However, suddenly another notice has been received that the service provider would be arrested in case of non-compliance. This kind of harassment has never been witnessed in the history of the FBR, he said.
Service providers have asked the FBR to educate them on the registration of service providers under Islamabad Capital Territory (tax on services) Ordinance, 2001 instead of threatening them to arrest and prosecute them like criminals. Moreover, whether it is justified that the service providers who are regularly filing their income tax returns be threatened with the notices of arrest and prosecuted for compulsory sales tax registration.
If a service provider has delayed sales tax registration as service provider under Islamabad Capital Territory (tax on services) ordinance, 2001, is it justified that he should be considered as tax evader or criminal for arrest?
Islamabad based service providers said that they were not expecting such kind of harassment from the FBR new team of tax mangers appointed by the government. Service providers have requested the FBR Chairman, FBR Member Inland Revenue Policy and FBR Member IR Operations to check reasons behind threatening notices issued to the service providers in Islamabad.