Adjustment restrictions hamper return filing by retailers

Adjustment restrictions hamper return filing by retailers

Retailers falling under Tier-1 have informed the Federal Board of Revenue (FBR) that they were unable to file monthly sales tax returns due to denial of adjustment by IRIS portal.

A number of retailers jointly sent a letter to FBR chairman apprising about unfavorable behavior of IRIS Portal by denying adjustment against credit notes issued by Tier-1 retailers.

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The retailers drew attention of the FBR chairman towards Section 9 of the Sales Tax Act, 1990 read with Rule 20 of the Sales Tax Rules, 2006, tax invoice issued by a registered person can be amended/modified/cancelled through issuance of credit note as a result of cancellation of supply of return of goods or a change in the nature of supply or change in the value of the supply.

They highlighted that sales made by Tier-1 retailers, as defined in clause 43A of Section 2 of the Sales Tax Act, 1990, to the end consumers are integrated with the FBR computerized system for real time reporting of sales in line with the Rules.

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The FBR chairman has been informed that in case of sales return, credit note (sales return invoice) is issued by Tier-1 retailers in accordance with the relevant provisions of the Sales Tax Act, 1990. “IRIS portal of the FBR is also accepting this position and accepting credit notes issued by Tier-1 retailers, however, surprisingly, sales tax adjustment, relating to credit notes, which have been allowed in one month are being added back in sales tax liability of the next month in the IRIS based sales tax return.”

The retailers said: “… this practice of the sales tax return portal is strictly against the law.”

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They said that if such illegal restrictions are imposed on Tier-1 retailers, who have invested huge amounts in hardware as well as software for integration of sales tax reporting with the FBR, how would it be possible for the FBR to attract other retailers to get themselves registered with the FBR. “Instead of appreciating the efforts of Tier-1 retailers, they are being denied their legal and legitimate right of sales tax adjustment on credit notes.”

Due to serious flaw in the online sales tax return filing portal, a majority of Tier-1 retailers are still unable to file sales tax return for the month of January 2022 onward.

The FBR chairman has been urged to direct concerned authorities to resolve the issue at the earliest to enable Tier-1 retailers to submit their sales tax return.

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