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Sales Tax (Amendment) Ordinance promulgated to avoid SC order

Sales Tax (Amendment) Ordinance promulgated to avoid SC order

ISLAMABAD: On the recommendations of the Finance Ministry, the government promulgated Sales Tax (Amendment) Ordinance 2014 in March this year to avoid implementation of the Supreme Court order.

The said amendment ordinance amended sub-section (2) of section 3 B of the Sales Tax Act 1990. An official source at Finance Ministry told this scribe here the other day that as a result, this amendment no amount incurred from sales tax by the government was to be paid or refunded to the consumers.

“Later, this amendment was further confirmed by the Finance Act 2014 duly enacted by the Parliament,” the source added. Relating the whole background of the issue to this scribe, the source said that the Supreme Court passed a short order in June last year, on a constitutional petition inter alia it was held that the 9 percent sales tax charged on CNG from the consumers of CNG was unconstitutional and contrary to Articles 3,9,24 and 77 of the Constitution as well as section 3 of the Sales Tax Act.

The source said that the Supreme Court referred to the proviso of rule 20(2) (C) of the Sales Tax Special Procedures Rules 2007, in addition to the sales tax prescribed under section of the Sales Tax Act 1990 which clearly said that any sales tax imposed or recovered from the consumers of CNG was unconstitutional.

“However, the source said that Supreme Court’s order was not related to 21% GST from CNG sector,” the source said, adding that the accurate correct position was that in the judgment in the above mentioned constitutional petition the Supreme Court directed the Federal Board of Revenue (FBR) to deposit the extra sales tax with the Supreme Court and passed no directions to refund directions the incurred sales tax back to consumers.

Consequently, the source said that on the recommendations of the Finance Ministry and to avoid implementation of the order of the Supreme Court, after afore-mentioned judgement, the government promulgated Sales Tax (Amendment) Ordinance 2014 and as per this amendment no amount is to be paid or refunded by the government. “In view of the above-stated legal and factual position no amount is supposed to be refunded,” the source added.