Karachi, November 28, 2023 – The Federal Board of Revenue (FBR) has announced the comprehensive procedure for the recovery of sales tax for the upcoming tax year 2024.
The FBR has issued an updated Sales Tax Act, 1990, outlining the recovery process in detail.
Recovery Procedures Outlined in Section 48 of the Sales Tax Act, 1990
The newly unveiled procedure is detailed in Section 48 of the Sales Tax Act, 1990. According to the provisions outlined in Section 48, the recovery of arrears of tax may involve several measures. These measures empower the officer of Inland Revenue to take various actions against individuals or entities with outstanding tax liabilities.
(1) Recovery Methods:
a) Deduction from Owed Money: The officer of Inland Revenue has the authority to deduct the amount owed from any money that the taxpayer may have at the disposal or under the control of the officer or any officer of the Income Tax, Customs, or Central Excise Department.
b) Notice for Payment: A written notice can be issued requiring any person holding or expected to hold money on behalf of the taxpayer to pay the specified amount to the officer.
c) Stoppage of Goods Removal: The officer can prevent the removal of goods from the business premises of the taxpayer until the outstanding tax is paid in full.
ca) Stoppage of Clearance of Imported or Manufactured Goods: The officer may issue a written notice instructing any person to halt the clearance of imported or manufactured goods or to attach bank accounts.
d) Sealing of Business Premises: In cases of non-payment, the officer is authorized to seal the business premises until the tax amount is settled.
e) Attachment and Sale of Property: Movable or immovable property of the taxpayer can be attached and sold to recover the outstanding tax amount.
f) Guarantor’s Liability: In situations where a guarantor, person, company, bank, or financial institution fails to make payments under a guarantee, bond, or instrument, the officer may recover the amount by attaching and selling the guarantor’s property.
Provisions for Appeals and Write-Offs:
The Sales Tax Act, 1990 includes provisions to protect taxpayers’ rights. The Commissioner Inland Revenue or any authorized officer cannot issue a recovery notice if the taxpayer has filed an appeal under section 45B, provided that ten percent of the tax amount due has been paid by the taxpayer.
Additionally, if arrears of tax, default surcharge, penalty, or any other amount cannot be recovered through the prescribed methods, the FBR or an authorized officer may write off the arrears according to the procedures specified by the FBR.
Legal Authority and International Cooperation:
For the purpose of recovery, the officer of Inland Revenue is granted powers equivalent to those of a Civil Court under the Code of Civil Procedure 1908. Moreover, the provisions of the recovery process extend to international cooperation, allowing assistance in the collection and recovery of taxes as per requests from foreign jurisdictions under tax treaties, bilateral or multilateral conventions, inter-governmental agreements, or similar mechanisms.
The unveiling of this detailed sales tax recovery procedure aims to streamline the process, enhance compliance, and ensure effective revenue collection for the tax year 2024.
