No refund, input adjustment to be entertained on invoice issued prior or after of blacklisting

KARACHI: Federal Board of Revenue (FBR) said invoices issued by a person prior or after blacklisting for sales tax will not be entertained for refunds or input adjustment.

The FBR issued Sales Tax Act, 1990 updated till June 30, 2019 incorporating amendments brought through Finance Act, 2019.

Section 21 of the Act explained blacklisting and suspension of a taxpayer for sales tax.

Section 21: De-registration, blacklisting and suspension of registration

Sub-Section (1): The Board or any officer, authorized in this behalf, may subject to the rules, de-register a registered person or such class of registered persons not required to be registered under this Act.

Sub-Section (2): Notwithstanding anything contained in this Act, in cases where the Commissioner is satisfied that a registered person is found to have issued fake invoices or has otherwise committed tax fraud, he may blacklist such person or suspend his registration in accordance with such procedure as the Board may by notification in the official Gazette, prescribe.

Sub-Section (3): During the period of suspension of registration, the invoices issued by such person shall not be entertained for the purposes of sales tax refund or input tax credit, and once such person is black listed, the refund or input tax credit claimed against the invoices issued by him, whether prior or after such black listing, shall be rejected through a self-speaking appealable order and after affording an opportunity of being heard to such person.

Sub-Section (4): Notwithstanding anything contained in this Act, where the Board, the concerned Commissioner or any officer authorized by the Board in this behalf has reasons to believe that a registered person is engaged in issuing fake or flying invoices, claiming fraudulent input tax or refunds, does not physically exist or conduct actual business, or is committing any other fraudulent activity, the Board, concerned Commissioner or such Officer may after recording reasons in writing, block the refunds or input tax adjustments of such person and direct the concerned Commissioner having jurisdiction for further investigation and appropriate legal action.

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