Sales Tax Instructions

Sales Tax Instructions, 2009
1990 AND BOARD‘S CLARIFICATION THERETO
I am directed to refer to your letter C. No.01/Misc/Adj-Coll/Vol-I/2000, dated the
5 th July, 2001 on the subject cited above and to say that the issues raised in your letter
have been considered in the Board and it has been observed that:-
(i)
(ii)
(iii)
(iv)
(v)
clause (b) was inserted in sub-section (2) of section 3 of the Sales Tax Act,
1990 vide Finance Ordinance, 2001 and is thus a valid piece of legislation;
while vetting draft Ordinances or enactments, Law & Justice Division
invariably examines the ―constitutionality‖ of the proposed legal provisions.
Constitutionally, there is no bar on the legislature to empower the
Government to impose tax in ‗selective regimes‘ other by withdrawing
exemptions or by altering rates of tax;
by inserting the aforementioned provision, the legislature has not ‗abdicated
its responsibilities‘ or ‗effaced itself from its legislative functions‘. The
charging sections are very well there, and the Federal Government has
merely been given powers to change the rate of tax;
the said provision does not grant any power to the Federal Government to
charge any new tax., i.e. the Federal Government cannot exercise any powers
to levy and collect any tax, unless the enabling clause for such powers is not
already in the Sales Tax Act, 1990. Mere change of rate of tax does not
amount to excessive delegation of powers;
it has probably not been recalled that similar powers were available with
Federal Government till 1996. Sub-section 3, at the time of substitution by
the Finance Act, 1996 was as under:
―(2) Notwithstanding the provisions of subsection (1), the Federal
Government may, by notification in the official Gazette declare that:-
(a) in respect of any goods or class of goods imported into or produced in
Pakistan or any taxable supplies made by registered persons the tax shall
be charged at such higher or lower rate or rates as may be specified in the
notification;
(b) in respect of any goods or class of goods the tax shall be charged on the
whole sale or retail price as may be specified.‖
(vi)
(vii)
similar powers are also available with the Federal Government in case of
regulatory duty under Customs Act, 1969, and no question for ‗excessive
delegation of powers‘ has arisen there; and
Subsection (6) of section 3 of the Act uses the expression ―in lieu of ―, while
sub-section (4) of the said section 3 uses the expression ―in addition to or ‗in
lieu of‖. Similarly, empowerment of the Government to levy and collect
extra tax not exceeding 15% under subsection (5) of the said section is also a
taxing power of the Government.