Section 34A of the Sales Tax Act, 1990, provides a mechanism for the exemption from penalty and default surcharge imposed under Sections 33 and 34 of the Act.
This section, updated up to June 30, 2021, through the Finance Act, 2021, empowers the Federal Government or the Federal Board of Revenue (FBR) to grant such exemptions through official notifications or special orders. The provision is designed to offer relief to individuals or classes of persons facing penalties and default surcharges under certain conditions.
The specific text of Section 34A is outlined as follows:
34A. Exemption from penalty and default surcharge.– The Federal Government may, by a notification in the official Gazette, or the Board by a special order published in Gazette for reasons to be recorded in writing, exempt any person or class of persons from payment of the whole or part of the penalty and default surcharge imposed under sections 33 and 34 subject to such conditions and limitations as may be specified in such notification or, as the case may be, special order.
Key components and implications of Section 34A include:
1. Authority for Exemption: Section 34A grants authority to either the Federal Government or the Federal Board of Revenue (FBR) to exempt any person or class of persons from payment of the whole or part of the penalty and default surcharge imposed under Sections 33 and 34.
2. Exemption by Notification or Special Order: The exemption can be granted through either a notification in the official Gazette by the Federal Government or a special order published in the Gazette by the Board. This dual authority provides flexibility in the issuance of exemptions.
3. Reasons to be Recorded in Writing: In the case of the Board issuing a special order, the reasons for granting the exemption must be recorded in writing. This requirement enhances transparency and accountability in the decision-making process.
4. Conditions and Limitations: The exemption is subject to the conditions and limitations specified in the notification or special order. This ensures that exemptions are granted with specific criteria and under defined circumstances.
5. Targeted Relief: Section 34A allows for targeted relief, addressing the unique circumstances of individuals or classes of persons facing penalties and default surcharges. The ability to tailor exemptions to specific cases enhances the effectiveness of this provision.
This section recognizes the need for a nuanced approach in dealing with penalties and default surcharges, understanding that there may be situations where relief is warranted based on specific conditions. The discretionary power granted to the Federal Government and the Board under Section 34A aims to strike a balance between enforcement and fairness in the application of sales tax regulations.
Businesses and individuals facing penalties and default surcharges under the Sales Tax Act, 1990, are advised to stay informed about the potential for exemptions and the specific conditions and limitations that may apply. Any application for exemption should align with the criteria outlined in the relevant notification or special order issued by the Federal Government or the Board.
