Sales Tax Instructions

Sales Tax Instructions, 2009
SUBJECT:-
REMOVAL OF LONG OUTSTANDING DIFFICULTIES OF
TAXPAYERS.
Responding to numerous representations from trade and industry, the difficulties
and hardships experienced by different segments of taxpayer‘s community were
examined by the Board. Such difficulties and complications generally stemmed from the
fragmented and sectoral approach towards implementation of VAT system in the earlier
years as reflected in the adoption of fixed and simplified sales tax regimes for various
categories of taxpayers from time to time. Since most of the affected taxpayers have now
converted to VAT, there is a need to resolve their genuine problems pertaining to the
earlier years. For this purpose, four relief notifications have been issued in the Budget
2001-2002 as described below:-
2. S.R.O. 392(I)/2001, dated 18.06.2001: - A large number of taxpayers
worked under the fixed tax schemes during the financial years 1995-96, 1996-97 and
1997-98, and were subsequently covered under the Simplified Sales Tax Rules, 1999
during the year 1998-99. After expiry of the last of the fixed or simplified tax schemes on
30.6.1999, many of such taxpayers continued to discharge their tax liabilities in the same
manner and at the same rates as in the past but did not switch-over to VAT system. The
expectation of the taxpayers who continued to behave in this manner was that the
government would eventually revive the fixed tax schemes in due course, as it had done
in previous years. The announcement of the government‘s resolve for documentation of
the national economy in December 1999 created an awareness among taxpayers that the
fixed tax schemes were a thing of the past. Thereafter, such taxpayers gradually started
converting to genuine VAT system. Under SRO 392(I)/2001, dated 18.06.2001, those
amongst such taxpayers who converted to VAT system by 30.06.2000 will get relief in
respect of their past inadequate compliance provided they fulfill the conditions specified
therein.
3. S.R.O. 393(I)/2001, dated 18.06.2001:- This notification addresses the
difficulties of those persons who were working under any notified fixed sales tax regime
upto 1.7.1998 when the relevant legal provision was rescinded. As already mentioned,
most of the persons governed under the fixed tax regimes upto 30.6.1998 continued to
discharge their tax liabilities in accordance with the lapsed fixed tax notifications, and in
due course, the Simplified Sales Tax Rules, 1999 were notified vide SRO 458(I)99, dated
6.4.1999 which operated upto 30.06.1999. However, one category of taxpayers
previously covered under the fixed tax schemes was excluded from the Simplified Sales
Tax Rules, 1999 i.e. those with annual turnover in excess of Rs. 1 million. This
retrospective exclusion created difficulties for those persons who had been complying
under the old regime even after 1.7.1998. Now, the persons so excluded have been given