Transcript Slide 1
Issues in Registration and De-Registration
Mohammed Ashraf, ACCA Organized By Indirect Tax Committee of ITBAK
CONTENT
Benefits of Registration
Registration and allied matters
Consequent penalties
De Registration [excluding suspension and blacklisting]
Issues in Registration and allied matters
Issues in De Registration
Conclusion
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Purpose of Seminar – Ray of Hope Discourage litigation, Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser ……
in fees, expenses and waste of time
Abraham Lincoln
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SALES TAX ACT, 1990 Benefits of Registration Persons Required to be Registered Application for Registration Jurisdiction of Registration Exceptional Cases Change of Particulars Compulsory Registration Transfer of Registration Offences and Penalties De Registration
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BENEFITS OF REGISTRATION
Claim of Input Tax Credits and adjustment against Output Tax Liability
Documentation – Effective Inventory Control and Physical Supervision
Accurate reporting of activities in the Economy
Authentic or Genuine Supplier or Customer to be networked
Transacting Business with Government, Semi Government and Defence Department
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Registration – Sales Tax Act, 1990
Persons required to be Registered
Manufacturer – [Annual Turnover in last 12 months exceeds 5 Million] Retailer – [Annual Turnover in last 12 months exceeds 5 Million] Importer Any other person required to collect the levy of Sales Tax Commercial Exporter – [intends to obtain Refund against Zero Rated Supplies] 6
Registration – Sales Tax Act, 1990
Application for Registration
Prior to making any Taxable Supply STR – I to Central Registration Office or Local Registration Office [Electronically, Registered Mail and Courier] Application must specify the Jurisdiction 7
Registration – Sales Tax Act, 1990 Jurisdiction
Incorporated Business
– Registered Office
Incorporated Business with Single Manufacturing Unit
– Place of Manufacturing Unit or Place of Business Location
Unincorporated Business
– Where Business actually carried on
Unincorporated Business with Single Manufacturing Unit
– Any Place of Manufacturing Unit 8
Registration – Sales Tax Act, 1990
Exceptional Cases
Multiple Registration Certificate
– Issued earlier [STR – 1]
Importer of Exempt Goods
– No Registration
Supplier of Exempt Goods Only
– No Registration
Industrial importer manufacturing exempt products –
No Registration
Registration of Persons making supplies to FATA/PATA from FATA/PATA
– No Registration 9
Registration – Sales Tax Act, 1990 Exceptional Cases
Import of Reagents
– No Registration
Import of Newspapers
– No Registration
Import of Raw Material for Fertilizer
– No Registration 10
Registration – Sales Tax Act, 1990
Change in particulars
Application Form within 14 days of change – STR - 2 Special procedure for change of Category to Manufacturer – Verification of Manufacturing Facility, Confirmation of status as industrial consumer [Electricity and Gas Distribution Companies] Issuance of Revised Registration Certificate Effective date of revised registration – Date of Application 11
Registration – Sales Tax Act, 1990
Compulsory Registration
LRO issues of notice Form STR – 6 on completion of enquiry Opportunity of being heard Obligation of a Compulsory Registered Person = Registered Person Failure to Oblige means Notice under section 25 [Production of records or documents] to assess the amount of Sales Tax Payable under section 11 or any other action.
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Registration – Sales Tax Act, 1990
Transfer of Registration
Application Form – STR – 2 Subject of CRO’s Condition, Limitation or Restriction New Jurisdiction shall exercise powers as it has always such jurisdiction Old jurisdiction shall issue an intimation letter to new jurisdiction Application must specify the Jurisdiction 13
Offences and Penalties – Sales Tax Act, 1990
Failure to notify particulars of Registration – Rs5,000.00
Failure to Apply for Registration before making Taxable Supplies – Rs10,000 or 5% of Tax Involved Failure to Apply for Registration within 60 days of commencement of Taxable Supplies – Three years’ imprisonment or fine equal to amount of tax involved or both 14
De-Registration – Sales Tax Act, 1990
Cessation of Business, Supplies becomes Exempt or Taxable Turnover during last 12 months falls below the Taxable Limit– STR - 3 and Return under section 28 Application by Registered Person or Own motion of LRO LRO recommendation to CRO for cancellation of registration on non-filing of 6 consecutive return along with penalties LRO may conduct an audit or enquiry and direct the registered person to discharge any liability arose LRO recommends to CRO – Within 3 months of application or the date all the dues are cleared 15
FEDERAL EXCISE ACT, 2005 Benefits of Registration Persons Required to be Registered Application Jurisdiction Failure to get Registration Change of Particulars Transfer of Registration De Registration
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Benefits of Registration
Value Added Tax Mode – Input and Output Tax Adjustment Eligibility for adjustment of Input Sales Tax / FED against Output Sales Tax / FED No separate registration for sales tax registered persons 17
Persons Required to be Registered
Person engaged in production or manufacture liable to duty of excise regardless of annual turnover or volume of sales Person engaged in rendering services liable to duty of excise regardless of annual turnover or volume of sales 18
Application for Registration
Application Form FE – 1
Person intends to commence Manufacturing of Excisable Goods
Person intends to provide Excisable Services
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Jurisdiction for Registration
Incorporated Business
– Registered Office
Incorporated Business with Single Manufacturing Unit
– Place of Manufacturing Unit or Place of Business Location
Unincorporated Business
– Where Business actually carried on
Unincorporated Business with Single Manufacturing Unit
– Any Place of Manufacturing Unit
Incorporated and Unincorporated Business for excisable services
– Location of Head Office 20
Failure to get Registration
Collector issues notice on completion of enquiry
Opportunity of being heard – within 15 days of proposed registration
Further notice on receiving reply and non submission entail compulsory registration
Obligation of a Compulsory Registered Person = Registered Person
Failure to Oblige means Notice of Audit under section 46 to assess the recovery of amount of Excise Duty under section 14
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Change in Particulars
Notification within 14 days of change
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Transfer of Registration
Subject of Collector’s Condition, Limitation or Restriction New Registration Certificate from New Jurisdiction with reference of previous certificate Application may be made by registered person 23
De-Registration
Cessation of Manufacturing Excisable Goods or provide or Render Excisable Services – FE – III
Sales Tax Procedure shall mutatis mutandis apply on persons also registered under Sales Tax Act, 1990
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ISSUES IN SALES TAX ACT, 1990 Registration Change in Particulars Transfer of Registration De Registration
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Registration Issues
Why should I wait for Registration before any Taxable Supply? - Issue a Provisional Certificate, Complete the procedure - Business Activity should not be stopped No time limit for completion of verification or inquiry for registration as opposed to 15 days for rejection? FBR must realize that rejection of registration means no business! – Rejection should be replaced with resolution.
STR – I should not require a registered person to specify the jurisdiction instead the tax office should write the same in acknowledgment letter.
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Registration Issues
Conflict in registration procedure -
Business Activities
Manufacture, Importer, Exporter, Distributor, Retailer, Wholesaler, Service Provider
A person’s primary activity be more than one –
Why restriction for doing business?
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Registration Issues
Special Rules
Electric Power, Natural Gas, Trading Corporation of Pakistan, Rendering of services subject to provincial Sales Tax, Television and Radio, Ship Chandlers, Stevedores, Oil Marketing Companies [Sharing of Product], Vehicle Dealers, Ginned Cotton, Commercial Importer, Steel Melters, Re Rollers and Ship Breakers, Manufacturers of Biscuits, Confectionary and Snacks
Where is the nexus between business activity at registration stage and special activities covered under special rules?
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Change in Particulars Issue
Absence of objective criterion for assessment on change of business category to Manufacturer in the light of definition of manufacturer No time limit is specified for issuance of revised registration certificate on change of particulars of registration
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Transfer of Registration Issues
No time limit is specified for completion of transfer of registration process Non disclosure of CRO’s condition, limitation or restriction would increase the Taxpayer and Collector interaction which is against the present image of FBR
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De Registration Issues
No time limit is specified for conducting the audit of Final Return under section 28 in line with Rule 11, hence, the three months time limit is of no use.
Effective date of Registration as the case in change in particulars which is effective from date of application Obvious instructions regarding right and obligation of Registered person from the date of de-registration are almost absent
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Federal Excise Act, 2005
Registration Change in Particulars Transfer of Registration De Registration
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Registration Issues
Registration threshold is not harmonized with Sales Tax Act, 1990 where both laws are applicable? No time limit for issuance of Registration Certificate
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Change in Particulars Issue
No form prescribed No time limit for issuance of revised registration certificate Effective date of revised registration?
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Transfer of Registration Issues
No form prescribed No time limit is specified for completion of transfer of registration process Non disclosure of Collector’s condition, limitation or restriction would increase the Taxpayer and Collector interaction which is against the present image of FBR
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De Registration Issues
No Final Return with De Registration prescribed No time limit is specified for De Registration No procedure is specified for De Registration Obvious instructions regarding right and obligation of Registered person from the date of de-registration are almost absent
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COMMON LACUNA
A non corporate person having a single manufacturing unit, whose business premises and manufacturing unit are located in different areas, shall apply to the collector of the area in whose jurisdiction his manufacturing unit is located: Provided that a corporate person shall have the option to apply for transfer of registration to the collector having jurisdiction over the area where manufacturing unit is located. [Underlined Phrase of Rule 3(3) of Federal Excise Rules, 2005 and Rule 5(1)(c) of Sales Tax Rules, 2006]
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CONCLUSION
Principle Based Approach instead Rule Based Approach
Provision meant to serve
ease in doing business
Objective Facilitation not subjective imposition – In line with current approach of FBR
Institute of Internal Auditor’s Motto ought to be remembered by the registered persons on receiving a notice from Collector – In Allah [they used God] we trust others we Audit
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Thank You Mohammed Ashraf,
ACCA
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