Karachi, January 16, 2025 – Officers of Inland Revenue (IR) have been provided with extensive mechanisms under the Sales Tax Act, 1990, to ensure the recovery of outstanding sales tax arrears. These measures are outlined in Section 48 of the Act, offering a comprehensive framework to address cases of unpaid taxes.
Section 48: Recovery of Arrears of Tax
Under subsection (1) of Section 48, IR officers are empowered to employ various methods to recover dues. These include:
1. Deductions from Amounts Owed: IR officers can deduct the due tax directly from any funds payable to the defaulter that are within the control of the IR, Income Tax, Customs, or Central Excise Departments.
2. Third-Party Payments: Officers may issue a written notice to any person holding or likely to hold money on behalf of the defaulter, requiring them to pay the specified amount directly to the IR.
3. Restricting Goods Movement: The removal of goods from the defaulter’s business premises can be halted until the arrears are fully settled.
4. Blocking Imports and Bank Accounts: Officers may issue written notices to stop the clearance of imported or manufactured goods or to attach the defaulter’s bank accounts.
5. Sealing Business Premises: If required, the business premises of the defaulter can be sealed until the outstanding taxes are recovered.
6. Attachment and Sale of Assets: IR officers have the authority to attach and sell movable or immovable assets of the defaulter or any guarantor who fails to meet their obligations under guarantees or bonds.
Restrictions and Appeals
However, the Act also provides safeguards to taxpayers. IR officers cannot issue recovery notices if the taxpayer has filed an appeal under Section 45B or Section 46, provided the appeal remains undecided and the taxpayer has paid at least 10% of the disputed tax amount.
Write-Off Provisions
Subsection (1A) grants the Federal Board of Revenue (FBR) or its authorized officers the authority to write off arrears if they are deemed irrecoverable. This process is governed by rules prescribed by the Board.
Legal Authority
Subsection (2) empowers IR officers with the same authority as Civil Courts under the Code of Civil Procedure, 1908, for recovering amounts due under a decree. Subsection (3) extends these provisions to include assistance in tax collection and recovery under international agreements, treaties, or inter-governmental arrangements.
In conclusion, the Sales Tax Act, 1990, equips Inland Revenue officers with diverse and robust tools to recover sales tax arrears while maintaining provisions to protect taxpayer rights during appeals. This balanced approach ensures efficient tax collection while upholding procedural fairness.