Sales Tax Instructions

Sales Tax Instructions, 2009
6. Period of five years after
issuance of show cause notice
under section 36 has been
extended from the date of serving
of audit observation to the date of
show cause notice. This extention
disrupts the concept of limitation
under the Sales Tax Act, 1990.
7. With the insertion of section
40(B), the concept of selfassessment
scheme of sales tax is
negated. Also search by a sales
tax officer conducted without
warrant has been protected
against suite, prosecution or other
legal proceedings. In the
presence of section 40, there is
no need of section 40(A).
8. Choice of registration should be
left with the taxpayers for
centralizing different registered
locations and should not be
registered in the Collectorate of
registered office of the company.
9. Option of turnover tax should
have been available to all newly
registered traders irrespective of
turnover threshold and the rate of
tax should have been fixed on
recommendation of FPCCI after
due consultation with
stakeholders.
10. The sales tax officer should have
not powers to access to record or
document required under any of
the Federal, Provincial or local
laws. Hence, sub-section 1 and 2
of section 38 should be
withdrawn.
Serving of audit observation brings to
the notice of the registered persons any
demand/ payment to be made by him
and provides him an opportunity to
deposit the amount demanded without
issuance of show cause notice, which
is now to be issued only if the
registered person does not pay the
amount so demanded. Therefore, the
period from the date of serving audit
observation to the date of issuance of
show cause notice is within limitation
period prescribed in section 36.
The use of powers under section 40(B)
will be selective and targeted against
persons indulged in fraudulent
activities. Hence, majority of the
registered person will continue to work
on self-assessment basis. Suit,
prosecution or other legal proceedings
against a Sales Tax Officer could be
instituted with the sanction of Federal
Government. No change has been
made in the budget.
Registration in the Collectorate of
registered office of the company is
consonant with the income tax law.
Hence, it will facilitate the registered
person to keep all his tax record at one
place.
Newly registered trader can opt for
turnover tax if their turnover threshold
falls within the specified limit.
Committee set up by FPCCI on sales
tax irritants had proposed/agreed at 2%
turnover tax.
Powers under section 38 of the Sales
Tax Act, 1990 are to be exercised by
the officer of the sales tax only after he
has been authorized in this behalf by
the Board or the Collector, which is
done in exceptional cases only. No
change has been made in the last