Karachi, December 18, 2024 – The government of Pakistan has introduced stringent measures to enforce compliance with the Sales Tax Act, 1990. Aimed at broadening the tax net, these measures target individuals and entities who fail to obtain mandatory registration. The proposed amendments, introduced as part of the Tax Laws (Amendment) Bill, 2024, include the addition of Section 14AE to the Sales Tax Act.
The proposed Section 14AE grants the Chief Commissioner extensive powers to take action against unregistered persons. According to sub-section (1), those failing to secure registration under the Sales Tax Act could face actions such as:
• Sealing of business premises,
• Seizure of movable property, or
• Appointment of a receiver to manage the taxable activities of the defaulter.
However, safeguards have been outlined to ensure fair implementation. Sub-section (2) mandates that such actions can only proceed after:
(a) Issuing a public notice detailing the date from which the premises will be sealed, property attached, or a receiver appointed.
(b) Convening a committee comprising the Chief Commissioner, the concerned Commissioner, and a representative from the Chamber of Commerce or relevant trade bodies. This committee must provide an open-court hearing to the affected individual.
(c) Making the decision public by publishing it on the Federal Board of Revenue’s (FBR) website and in newspapers.
In cases where defaulters comply by obtaining registration, sub-section (3) stipulates that the Chief Commissioner must issue an order to lift the imposed restrictions, such as removing an appointed receiver, within two working days.
Further, sub-section (4) offers an avenue for appeal. Aggrieved persons may challenge the decision within 30 days by submitting a representation to the FBR, ensuring an added layer of accountability.
The enforcement of these provisions will begin on a date to be notified by the FBR through the official Gazette, as per sub-section (5).
These measures reflect Pakistan’s commitment to strengthening its tax system by compelling registration among non-compliant entities. By focusing on registration enforcement, the government aims to reduce tax evasion, enhance revenue collection, and ensure equitable participation in the country’s tax regime. The proposed actions, while coercive, include mechanisms to balance enforcement with due process, creating a transparent system for improving registration compliance.