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Finance Ordinance 2002

 

An Ordinance to give effect to the financial proposals

of the Federal Government for the year beginning on the first day of July, 2002,

and to amend certain laws for the purposes and in a manner hereinafter appearing;

 

            WHEREAS it is expedient to make provisions to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2002, and to amend certain laws for the purposes hereinafter appearing;

 

            AND WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action;

 

            NOW, THERFORE, in pursuance of the Proclamation of Emergency of the fourteenth day of October, 1999, and the Provisional Constitutional Order No. 1 of 1999, read with the Provisional Constitution (Amendment) Order No. 9 of 1999, and in exercise of all powers enabling him in that behalf, the President of the Islamic Republic of Pakistan is pleased to make and promulgate the following Ordinance:-

 

1.                 Short title, extent and commencement.- 

 

(1)        This Ordinance may be called Finance Ordinance, 2002.

 

(2)                It extends to the whole of Pakistan.

 

(3)                It shall come into force at once except the provisions of section 3, section 5 and section 8  which shall come into force from the first day of July, 2002.

 

 

2.                  Amendment of Act I of 1944.-

 

The following amendments shall be made in the Central Excises Act, 1944 (I of 1944), namely:-

 

(1)                in section 4, in sub-section (4), after the words “section 25B thereof”, the words “including customs-duties payable thereon” shall be inserted;

 

(2)                in section 9,–

 

(a)                in clause (a), the commas, words and figure “, or of section 8,” shall be omitted; and

 

(b)                for the words “ten times the amount of value of goods and services”, the words “five times the amount of duty” shall be substituted;

 

(3)                      sections 31 and 32, shall be omitted;

 

(4)                      for section 33, the following shall be substituted, namely:-

 

33.      Power of adjudication.— (1)   Subject to sub-section (2), the adjudication powers of different central excise officers shall be as follows:-

 

 

(i)         Collector

Cases involving evasion of central excise duty (principal amount) or erroneous refund of central excise duty, without limit.

(ii)        Additional Collector

Cases involving evasion of central excise duty (principal amount) or erroneous refund of central excise duty provided the amount of duty involved does not exceed ten million rupees.

(iii)       Deputy Collector

(1)                Cases involving evasion of central excise duty (principal amount) or erroneous refund of central excise duty provided the amount of duty involved does not exceed two and half million rupees.

(2)                All cases of contravention of Act or rules where no evasion of duty is involved.

 

(2)        The Board may, by notification in the official Gazette, vary the jurisdiction and powers of any Central Excise Officer or a class of Central Excise Officers.

(3)        A Collector, an Additional Collector or a Deputy Collector shall decide the case within forty-five days of the issuance of show cause notice:

 

Provided that the Board shall have powers to regulate the system of adjudication including transfer of cases and extension of time limit in exceptional circumstances.

 

(5)        after section 34A, the following new sections shall be inserted, namely:-

 

“34B.    Appeals to Collector (Appeals).— (1)            Any person or Central Excise Officer aggrieved by any decision or order passed under this Act or the rules made thereunder by a Central Excise Officer upto the rank of Deputy Collector of Central Excise, other than a decision or order or notice given or action taken under section 11, may prefer appeal therefrom to the Collector (Appeals) within thirty days of the date of the receipt of such order:

 

            Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector (Appeals) if he is satisfied that the appellant had sufficient cause for not preferring the appeal within that period.

 

            (2)        An appeal under this section shall be accompanied by a fee of one thousand rupees and shall be in such form and shall be verified in such manner as may be prescribed.

 

            (3)        Any person desirous of appealing under sub-section (1) against any decision or order relating to any duty demanded in respect of goods which have ceased to be under central excise control, or to any penalty levied under the Act or the rules made thereunder, shall pending the appeal, deposit the duty demanded or the penalty levied or both such duty and such penalty:

 

            Provided that where, in any particular case, the appellate authority is of the opinion that the deposit of duty demanded or penalty levied will cause undue hardship to the appellant, it may dispense with such deposit or may allow payment in installments spreading over a period not exceeding six months either unconditionally or on such conditions, as it may deem fit to impose:

 

            Provided further that the order for such dispensation shall cease to have effect on the expiration of a period of six months following the date on which order for dispensation was passed or until the order of dispensation is withdrawn earlier or the case is finally decided earlier by the appellate authority.

 

34C.     Procedure in appeal.— (1)      The Collector (Appeals) shall give an opportunity to the appellant to be heard if he so desires.

 

(2)        The Collector (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeals, if the Collector (Appeals) is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

 

(3)        The Collector (Appeals) may, after making such further inquiry as may be necessary, pass such order as he thinks fit confirming, modifying or annulling the decision or order appealed against, or may refer the case back to the adjudicating authority with such directions as he may think fit for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary:

 

(4)        The order of the Collector (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision.

 

(5)        On the disposal of appeal, the Collector (Appeals) shall communicate the order passed by him to the appellant, the adjudicating authority and the Collector of Central Excise. and

 

(6)                in section 35B, in sub-section(1),—

 

(a)                after clause (a), the following new clause shall be inserted, namely:-

 

“(b) an order passed by the Collector (Appeals) under section 34B.

 

(b)        in clause (d),—

(i)                  for the colon, a full stop shall be substituted;

(ii)                the first proviso shall be omitted; and

(iii)               in the second

(iv)               proviso, the word “further” shall be omitted; and

(c)        in sub-section (6), for the words “seven hundred and fifty” the words “one thousand” shall be substituted;

 

(7)                in section 36C,–

(a)                in sub-section (2), for the word “thirty” the word “sixty” shall be substituted; and

 

(b)                in sub-section (3), for the words “two hundred” the words “one thousand” shall be substituted; and

 

(8)                in section 37, in sub-section (2),–

 

(a)                in clause (xii), the proviso shall be omitted; and

 

(b)                clause (xviii) shall be omitted.

 

 

3.                 Amendment of Ordinance XXV of 1961.- 

 

The following amendments shall be made in the Petroleum Products (Petroleum Development Levy) Ordinance, 1961 (XXV of 1961), namely:-

 

(1)                                        in section 2, for clause (4), the following shall be substituted; namely:-

 

“(4)      “fixed sale price” means such ex-refinery sale price or, as the case may be, ex-installation, ex-retail outlet or ex-depot sale price as –

 

(a)                the Federal Government, by notification in the official Gazette.; or

 

(b)                a company specified in the Second Schedule and authorised by the Federal Government, in respect of any petroleum product specified in the First Schedule, through electronic and press media, may declare to be the fixed sale price.

 

(2)                in section 3A-

(a)                in sub-section (2), in clause (b), the words “and Salt” shall be omitted; and

(b)                in sub-section (3), the words “and Salt” shall be omitted; and

(3)        the Third Schedule shall be omitted.

 

 

4.       Amendment of Act IV of 1969.-

 

The following further amendments shall be made in the Customs Act, 1969 (IV of 1969), namely :-

 

(1)        in section 2,-

(a)        in clause (a) after the word and comma “Board,” the words and brackets “the Collector (Appeals)” shall be inserted;

 

(b)        after clause (a), amended as aforesaid, the following new clause shall be inserted, namely:-

(ai)       “advance ruling” means classification determined by the Board or any officer, or committee authorized by the Board for the assessment of the goods intended to be imported or exported.

(c)                after clause (f), the following new clause shall be inserted, namely:-

“(ff) “Collector (Appeals)” means a person appointed to be a Collector of Customs (Appeals) under section 3. and

(d)        for clause (ia) the following shall be substituted, namely :-

 

“(ia)      “customs documents” include bill of entry, bill of export, applications for claim for refund, duty drawback and repayment of duty, baggage declaration form and documents such as bill of lading, commercial invoice and packing list or similar other forms or documents used for customs clearance and includes such documents electronically filed.

(2)        in section 13, in sub-section (1), after the word “deposited” the words “without payment of customs-duty” shall be added;

 

(3)        in section 24, the comma and wo1rds “,excise duty and sales tax” shall be omitted;

 

(4)        in section 30, in clause (b), in the  first proviso, after the word “delivered” the words “at the port of first entry” shall be inserted;

 

(5)                      in section 79, in first proviso, for the word “shall” the words “may subject to the conditions prescribed by the Collector” shall be substituted;

 

(6)        in section 80, after sub-section(2), a new sub-section(3) shall be inserted, namely:-

 

            “(3)      The classification determined for the purpose of assessment of goods under sub-sections(1) and (2) may include classification given in an advance ruling in such manner as the Federal Government may by rule prescribe.”.

 

(7)        for section 179, the following shall be substituted, namely:-

            “179. Power of adjudication.- (1) Subject to sub-section (2), in cases involving confiscation of goods or imposition of penalty under this Act or the rules made thereunder, the jurisdiction and powers of adjudication of the Officers of Customs in terms of amount of duties and other taxes involved, excluding the conveyance, shall be as follows :-

 

(i)         Collector           Without limit.

 

(ii)        Additional Collector       not exceeding one million rupees.

 

(iii)       Deputy Collector           not exceeding four hundred thousand rupees.

 

(iv)       Assistant Collector        not exceeding fifty thousand rupees.

 

(v)        Superintendent  not exceeding ten thousand rupees.

 

(vi)       Principal Appraiser        not exceeding ten thousand rupees.

(2)        The Board may, by notification in the official Gazette, fix or vary the jurisdiction and powers of any Officer of Customs or a class of officers.

 

(3)        The cases shall be decided within ninety days of the receipt of the contravention report or within such period extended by the Collector for which reasons shall be recorded in writing, but such extended period shall in no case exceed ninety days.

 

(4)        The Board shall have the powers to regulate the system of adjudication including transfer of cases and extension of time-limit in exceptional circumstances.

 

(8)        in section 182, for the full stop, at the end, a colon shall be substituted and thereafter following proviso shall be added, namely:-

 

“Provided that the Board may authorise the use of confiscated vehicles for operational purposes by the Board or, with approval of the Board, its subordinate offices.

 

(9)        in section 185G, in sub-section (2), before the word “shall” the words“or an advocate authorised by the Board or by an officer subordinate to it” shall be inserted;

 

(10)      after section 192, the following new sections shall be added, namely :-

 

            “193.   Appeals to Collector (Appeals).- (1) Any person including an officer of customs aggrieved by any decision or order passed under section 179 of the Act by an officer of customs lower in rank than an Additional Collector of Customs may prefer appeal to the Collector(Appeals) within thirty days of the date of communication to him of such decision or order:

 

Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector (Appeals) if he is satisfied that the appellant had sufficient cause for not preferring the appeal within that period.

 

            (2)        An appeal under this section shall be in such form and shall be verified in such manner as may be prescribed by rules made in this behalf.

 

            (3)        An appeal made under this Act shall be accompanied by a fee of one thousand rupees to be paid in the manner that may be prescribed by the Board.

 

            193A.   Procedure in appeal. (1) The Collector (Appeals) shall give an opportunity to the appellant to be heard if he so desires.

 

            (2)        The Collector (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the ground of appeal, if the Collector (Appeals) is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

 

            (3)        The Collector (Appeals) may, after making such further inquiry as may be necessary, pass such order as he thinks fit, confirming, modifying or annulling the decision or order appealed against, or may refer the case back to the adjudicating authority with such direction as he may think fit for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary:

 

Provided that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:

 

            Provided further that, where the Collector (Appeals) is of opinion that any duty has not been levied or has been short-levied or erroneously refunded, no order requiring the appellant to pay any duty not levied, short-levied or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in section 32 to show cause against the proposed order.

 

    (4)        The order of the Collector (Appeals) disposing of the appeal shall be in writing and shall state that points for determination, the decision thereon and the reasons for the decision.

 

            (5)        On the disposal of the appeal, the Collector (Appeals) shall communicate the order passed by him to the appellant, the adjudicating authority and the Collector of Customs.

 

(11)      in section 194-A,-

 

(a)        in sub-section (1).-

 

(i)                  after clause (a), the following new clause shall be inserted, namely:-

 

“(ab) an order passed by the Collector (Appeals) under section 193”;

 

(ii)        the first proviso shall be omitted; and

 

(iii)       in the second proviso the word “further” shall be omitted;

 

(b)        after sub-section (1), amended as aforesaid, the following new sub-section shall be added, namely :-

 

            “(2) The Board or the Collector of Customs may, if it or, as the case may be, he is of the opinion that an order passed by the Collector (Appeals) under section 193 is not legal or proper, direct the appropriate officer to appeal on its or, as the case may be, his behalf to the Appellate Tribunal against such order.

 

(c)        in sub-section (6) for the words “seven hundred fifty” words “one thousand” shall be substituted;

 

(12)      in section 195-B, for the proviso, the following shall be substituted, namely:-

 

“Provided that where in any particular case the Collector (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he, or it, may deem fit to impose so as to safeguard the interest of revenue.

 

(13)      in section 196,-

 

(a)        in sub-section (2) for the words “thirty” the words “sixty” shall be substituted;

(c)                in sub-section (3), for the words “two hundred” the words “one thousand” shall be substituted;

 

(14)      in section 204 for the word “ten” the word “one hundred” shall be substituted;

 

(15)      in section 205 for the word “five” the word “one hundred” shall be substituted; and

 

(16)      for the First Schedule, the Schedule specified in the Schedule to this Ordinance shall be substituted.

 

 

5.       Amendment of the Income Tax Ordinance XXXI of 1979.- 

 

The following further amendments shall be made in the Income Tax Ordinance, 1979 (XXXI of 1979), namely:-

 

(1)        in section 2,-

 

(a)                in clause (20), in sub-clause (b), the comma and words “, and any distribution to its shareholders or modaraba certificate holders of shares by way of bonus or bonus shares” shall be omitted;

 

(b)                in clause (24),-

 

(a)                in sub-clause (c),-

 

(i)         after the word “Ordinance” the word and commas “but does not include, in case of a shareholder of a domestic company, the amount representing the face value of any bonus share or the amount of any bonus declared, issued or paid by the company to its shareholders with a view to increasing its paid up share – capital” shall be added; and

 

(ii)        for the semicolon and word “; and” a full stop shall be substituted; and

 

(b)        clause (d) shall be omitted;

 

(2)        in section 20, in sub-section (1), in clause (ee), after the word “income” occurring for the second time, the words “and share towards appreciation in the value of property” shall be inserted;

 

(3)        in section 35, in the proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following further proviso shall be added, namely:-

 

“Provided further that in respect of loss for any assessment year commencing on or after first day of July, 1995, and ending on the thirtieth day of June, 2001, sustained by an assessee, being a banking company wholly owned by the Federal Government as on the first day of June, 2002, and approved by the State Bank of Pakistan for the purpose of this proviso, this section shall have effect as if for the words “six assessment years”, the words “ten assessment years” were substituted.

 

(4)        in section 44AA, in sub-section (2), for the word “fifty” the word “one hundred” shall be substituted;

 

(5)        in section 44AAA, in sub-section (1),–

 

(a)        after the words “mark up”, the words, brackets and comma “or share in rental income and share towards appreciation in the value of house (excluding return of capital, if any)” shall be inserted;

 

(b)        the words “not exceeding six hundred thousand rupees” shall be omitted; and

 

(c)        in the proviso, in clause (a), for the word “fifty” the words “one hundred” shall be substituted;

 

(6)        in section 50, in sub-section (6A), the commas and words “, and in case of bonus or bonus shares, collect,” shall be omitted;

 

(7)        after section 62B, the following new sub-section shall be inserted, namely:-

 

            "62BB. Powers of tax authorities to modify orders, etc.— (1) Where a question of law has been decided by a High Court or the Appellate Tribunal in the case of an assessee, on or after first day of July 2002, the Deputy Commissioner may, notwithstanding that the Commissioner has preferred an appeal against the decision of the High Court or made an application for reference against the order of the Appellate Tribunal, as the case may be, follow the said decision in the case of the said assessee in so far as it applies to said question of law arising in any assessment pending before the Deputy Commissioner until the decision of the High Court or of the Appellate Tribunal is reversed or modified.

 

            (2) In case the decision of High Court or, as the case may be, the Appellate Tribunal referred to in sub-section (1), is reversed or modified, the Deputy Commissioner may, notwithstanding the expiry of period of limitation prescribed for making any assessment or order, within a period of one year from the date of receipt of decision, modify the assessment or order in which the said decision was applied so that it conforms to the final decision.

 

(8)        in section 80C, in sub-section (2), for the proviso the following shall be substituted, namely:-

            “Provided that nothing in this section shall apply to any amounts referred to in sub-clauses (ia), (iia) and (iii) of clause (a) in respect of any assessment year commencing on, or after, the first day of July, 2002:

 

            Provided further that nothing in this section shall apply to any amounts referred to in sub-clause (iv) of clause (a) in respect of any assessment year commencing on, or after, the first day of July, 2003.

 

(9)        in sections 92, 94 and 95, for the word “Collector”, wherever occurring, the words and brackets “District Officer (Revenue)” shall be substituted;

 

(10)      in section 129, for sub-section (2), the following shall be substituted, namely:-

 

            “(2)      No appeal under sub-section (1) shall be made by a taxpayer against an order of assessment unless the taxpayer has paid,–

 

(a)                the amount of tax due under section 54; and

 

(b)                an amount equal to-

 

(i)         fifteen percent of the amount of tax assessed as is in excess of the tax due under section 54, or

 

(ii)        twenty percent of the amount of tax assessed for the immediately preceding assessment year and where a person has not been assessed to tax for that assessment year, thirty percent of the amount of tax mentioned in clause (a),

 

whichever is less. and

 

(11)      in the First Schedule,-

 

(1)        in Part-I, in paragraph A1,

 

(a)        after the word “on”, the words “or after” shall be omitted;

 

(b)        in the proviso,-

 

(i)         after clause (e), the following new clause shall be inserted, namely:-

 

“(ea)     notwithstanding anything contained in this Ordinance, the rebate for any allowance under section 47 shall be computed at the average rate of tax and allowed accordingly.

 

(ii)        in clause (f), after the word “on”, the commas and words “, or after,” shall be omitted; and

 

(2)        in Part-IV, in paragraph A, after sub-paragraph (2E), the following new sub-paragraph shall be added, namely:-

 

“(2F) the provisions of sub-paragraphs (2), (2C), (2D) and (2E) shall not to  apply for any assessment year commencing on or after the first day of July, 2003. and

 

(12)      in the Second Schedule,

 

            (a)        in Part-I —

 

(i)         clauses (7C) and (16) shall be omitted;

 

(ii)        in clause (29), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be inserted, namely:-

 

“Provided that exemption under this clause shall not apply in respect of entertainment allowance received on or after the first day of July, 2002.

 

(iii)       in clause (29A), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of entertainment allowance received on or after the first day of July, 2002.

 

(iv)       in clause (30), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of entertainment allowance received on or after the first day of July, 2002.

 

(v)        in clause (31), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of entertainment allowance received on or after the first day of July, 2002.

 

(vi)       in clause (32), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of senior post allowance received on or after the first day of July, 2002.

 

(vii)      in clause (33), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of senior post allowance received on or after the first day of July, 2002.

 

(viii)      in clause (33B), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of senior post allowance and entertainment allowance received on or after the first day of July, 2002.

 

(ix)       clauses (38A), (41) and (47) shall be omitted;

 

(x)        in clause (54A), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause in respect of the Federal and Provincial Ministers shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

 

(xi)       in clause (54B), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause in respect of the Federal and Provincial Ministers shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

 

(xii)      clauses (77C), (77D), (77E), (79A), (79B), (80A), (86A), (91A), (91B), (102C) and (102F) shall be omitted;

 

(xiii)      in clause (109), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

 

(xiv)     in clause (110), in the proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following further proviso shall be added, namely:-

 

“Provided further that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

 

(xv)      in clause (111), in the proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following further proviso shall be added, namely:-

 

“Provided further that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

 

(xvi)     in clause (111A), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

 

(xvii)     clauses (116B) and (117A) shall be omitted;

 

(xviii)    in clause (118), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

 

(xix)     clauses (121A), (121B), (121C), (125D), (125E), (126), (126A), (126B), (126D), (128), (129B), (134) and (135) shall be omitted; and

 

(xx).     in clause (140), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

 

“Provided that exemption under this clause shall not apply in respect of any assessment year commencing on or after the first day of July, 2003.

 

(xxi)     clauses (140A), (140B), (141), (167C) and (183) shall be omitted; and

 

            (b)        in Part-IV, clause (63) shall be omitted;

 

 

6.       Amendment of the Sales Tax Act, 1990.

 

The following further amendments shall be made in the Sales Tax Act, 1990, namely:—

 

            In the said Act,—

 

(1)                in section 2,—

 

(i)                  in clause (9a), for  the full stop, at the end, a colon shall be substituted and the following proviso shall be added, namely:-

“Provided that a person liable to be enrolled but not enrolled under this Act shall remain liable to further tax under sub-section (1A) of section 3 and shall not be entitled to any benefit available to an enrolled person under any of the provisions of this Act or the rules made thereunder.

 

(ii)                in clause (14), for sub-clause (c), the following shall be substituted, and shall be deemed to have been so substituted on the 18th June, 2001, namely,

 

“(c)      levied under the Sales Tax Act, 1990 of Pakistan as adapted in the State of Azad Jammu and Kashmir, on the supply of goods received by that person; and

 

(d)        chargeable as duties of excise under section 3 of the Central Excises Act, 1944 (I of 1944), on such excisable services as are notified by the Federal Government under the third proviso to sub-section (1) thereof and on which such duties are charged, levied and paid as if it were a tax payable under section 3 of this Act.

 

(iii)               for clause (25), the following shall be substituted, namely,—

 

“(25)     “registered person” means a person who is registered or is liable to be registered under this Act:

 

Provided that a person liable to be registered but not registered under this Act shall remain liable to further tax under sub-section (1A) of section 3 and shall not be entitled to any benefit available to a registered person under any of the provisions of this Act or the rules made thereunder.

 

(2)                in section 3,—

 

(a)        in sub-section (1A),  the words, bracket and a letter “clause (a) of” shall be  omitted;

 

(b)        in the proviso,—

 

(i)                  in clause (3),—

 

(a)        in sub-clause (iv), the word “and” at the end shall be omitted; and

 

(b)        in sub-clause (v), the word “and” at the end shall be omitted and thereafter, the following new entries shall be added, namely,—

 

“(vi)      vegetable ghee and cooking oil; and

 

(vii)      fertilizers;”

 

(c)        in sub-section (5), the brackets, letter and word “clause (c) of” shall be omitted;

 

(3)        in section 3A, in sub-section (3), for the colon, at the end, a full stop shall be substituted and the proviso shall be omitted;

 

(4)        in section 3AA,—

 

a.                   in sub-section (4), for the colon, at the end, a full stop shall be substituted and the proviso shall be omitted; and

 

b.                   sub-section (5) shall be omitted;

 

(5)        section 3AAA shall be omitted;

 

(6)        in section 4, after clause (b), the following new clause shall be added, namely,—

 

“(c)      such other goods as the Federal Government may, by Notification in the Official Gazette, specify:”;

 

(7)        in section 7,—

 

(a)                in sub-section (2), after clause (ii), the following new clause shall be added, namely:—

 

“(iii) in case of goods purchased in auction, he holds a treasury challan showing payment of sales tax. and

 

(b)                after sub-section (2) amended as above, the following new sub-section shall be added, namely:—

 

            “(3) Notwithstanding anything in sub-sections (1) and (2), the Federal Government may, by a special order, subject to such conditions, limitations or restrictions as may be specified therein allow a registered person to deduct input tax paid by him from the output tax determined or to be determined as due from him under this Act.

 

(8)        after section 11, the following new section shall be inserted, namely:

 

“11A.   Short-paid amounts recoverable without notice.– Notwithstanding any of the provisions of this Act, where a registered or enrolled person pays the amount of tax less than the due tax as indicated in his return, the short-paid amount of tax shall be recovered without giving a show cause notice to such person provided that no additional tax or penalty shall be charged unless a show cause notice is given to such person.

 

(9)        in section 45,—

 

(a)        against serial No.(iii), in entry (b), for the colon, at the end, a full stop shall be substituted;

 

(b)        after serial No. (iii) and the entries relating thereto, the following new serial number and the entries relating thereto shall be added, namely:

 

            “(iv)      An officer of sales                     Such cases as may be

                        tax with any other                      notified by the Board.

                        designation

 

(10)      in section 45A, in sub-section (2), for the figure “45” the figure “45B” shall be substituted;

 

(11)      after section 45A, the following new section shall be inserted, namely:—

 

“45-B. Appeals.— (1) Any person, including the Sales Tax Department, aggrieved by any decision or order passed under sections 11, 36 or 45, by an officer of Sales Tax below in rank to Additional Collector may, within thirty days of the date of receipt of such decision or order, prefer appeal to the Collector of Sales Tax (Appeals):

 

            Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector of Sales Tax (Appeals) if he is satisfied that the appellant has sufficient cause for not preferring the appeal within the specified period:

 

Provided further that the appeal shall be accompanied by a fee of one thousand rupees to be paid in such manner as the Board may prescribe.

 

(2)        The Collector of Sales Tax (Appeals) may, after giving both parties to the appeal an opportunity of being heard, pass such order as he thinks fit, confirming, varying, altering, setting aside or annulling the decision or order appealed against.

 

(3)        In deciding an appeal, the Collector of Sales Tax (Appeals) may make such further inquiry as may be necessary provided that  he shall not remand the case for denovo consideration.

 

(4)        Any person desirous of preferring an appeal under sub-section (1) against any decision or order relating to any tax demanded or any penalty imposed under this Act shall, before presenting the appeal, deposit the tax demanded and the penalty imposed under such decision or order:

 

Provided that, where in any case, the Collector of Sales Tax (Appeals) is satisfied that the deposit of tax demanded or the penalty as aforesaid is likely to cause undue hardship to the appellant, he may dispense with such deposit subject to such conditions or restrictions he may deem fit to impose:

 

            Provided further that in any particular case, the Collector of Sales Tax (Appeals) may direct that pending decision of the appeal, the tax demanded or penalty imposed, shall be paid by the appellant in suitable instalments spreading over a period not exceeding six months from the date of such direction. 

 

 (12)     in section 46,—

 

(a)        for sub-section (1), the following shall be substituted, namely:—

 

“(1)      Any person including the Sales Tax Department, aggrieved by—

 

(a)        any decision or order passed by a Collector or an Additional Collector of Sales Tax under sections 11, 36 or 45;

 

(b)        any order passed by the Collector of Sales Tax (Appeals) under section 45B; and

 

(c)        any order passed by the Board or the Collector of Sales Tax  under section 45A,

 

may, within sixty days of the receipt of such decision or order, prefer appeal to the Appellate Tribunal. and

 

(b)        in sub-section (3) for the words “seven hundred and fifty” the words “one thousand” shall be substituted;  

 

            (13)      in section 47, in sub-section (3) for the word “hundred” the word “thousand” shall            be substituted;

 

(14)      after section 47, the following new section shall be inserted, namely:—

 

“47A.  Alternate dispute resolution.- (1)       Notwithstanding  any other provision of this Act, or the rules made thereunder, the Board may, of its own motion or on an application in writing by a registered person or a class of such persons, opting under this section for the resolution of any hardship relating to levy and payment of tax, may appoint a Committee consisting of —

 

(a)                an officer of Sales Tax department not below the rank of Collector;

 

(b)                one or two persons from among the notified panel of chartered accountants, advocates, representatives of trade bodies or associations, or any other reputable taxpayer; and

 

(c)                a Member of the Board:

 

Provided that no Committee shall be constituted in cases where the matter has been decided by a High Court or the Supreme Court.

 

(2)        The Board may constitute as many committees as may be required.

 

(3)        A Dispute Resolution Committee constituted under sub-section (1) and (2), shall examine the questions of fact and law and may, if it deems necessary conduct inquiry, seek expert opinion, direct the Collector to conduct an audit or a special audit by chartered accountants or cost accountants and make recommendations in respect of the following, namely:—

 

(a)                the liability of tax against the registered person, or admissibility of refunds, as the case may be;

 

(b)                the extent of waiver of additional tax and penalty by stating reasons and circumstances leading to the recommendation;

 

(c)                the quantum of input tax admissible in terms of sub-section (3) to section 7;

 

(d)                relaxation of any procedural or technical irregularities and condonation of any prescribed time limitation; and

 

(e)                any other specific relief required to resolve the dispute.

 

(4)        The Board may, on the recommendations of the Committee, pass such order as it may deem fit for the resolution of dispute. 

 

(5)        After the payment or the recovery of the tax liability determined and ordered by the Board under sub-section (4) all other decisions, orders and judgements made or passed shall stand modified to that extent and all proceedings under the Act or the rules made thereunder by any authority or forum shall abate.

 

(6)        The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

 

(15)      in section 48, in sub-section (1), the words and comma “levied, penalty imposed or demand raised under any bond or other instrument executed under this Act” shall be omitted;

 

(16)      in section 61, the words “the importation of” shall be omitted;

 

(17)      in section 66,—

 

(a)                after the colon, the following new proviso shall be inserted, namely:

 

“Provided that in a case where a registered person did not deduct input tax within the relevant tax period, the Collector may, after satisfying himself that input tax adjustment is due and admissible, allow the registered person to take such adjustment in the tax period as specified by the Collector.and

 

(b)                in the second proviso, after the word “Provided” the word “further” shall be inserted;

 

(18)      after section 73, the following new section shall be added, namely:

 

“74.     Condonation of time-limit.— Where any time or period has been specified under any of the provisions of the Act or rules made thereunder within which any application is to be made or any act or thing is to be done, the Central Board of Revenue may, in any case or class of cases, permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate.

 

(19)      in the Third Schedule,—

 

(a)                for the word, brackets and letter “clause (c)” the word, brackets, and letter “clause (a)” shall be substituted; and

 

(b)                in serial No. 6 in column (1), in column (2), after the brackets figures and word “(IV of 1969)” the words, comma and figures “excluding supplies made to government hospitals on or after the 21st day of March, 2002” shall be added;

 

(20)      in the Fifth Schedule, in serial No. 6, in column (1), in the entry relating thereto in column (2), after the word “Zones”, the words “and to petroleum and gas sector Exploration and Production companies, their contractors and sub-contractors” shall be inserted;

(21)            in the Sixth Schedule,—

 

(a)        in serial No. 3A in column (1), in column (3), for the figures “0407.0020” the figures “0407.0010” shall be substituted;

 

(b)        in serial No. 4 in column (1),—

 

(i)                  in column (2), after the words “Canola seed” the words “for sowing” shall be omitted; and

 

(ii)        in column (3),—

 

(a)                for the figures “1207.9900” the figures “12.05” shall be substituted;

 

(b)                for the figures “1211.9020” the figures “1211.9000” shall be substituted; and

 

(c)                for the figures “1212.9200” the figures “1212.9900” shall be substituted;

 

(c)                against serial No. 6, in column (1), for the entry relating thereto in column (2), the following shall be substituted, namely: –

 

“Desi Ghee derived from milk; butter not sold under brand name or trade mark and supply of locally produced crude vegetable oil, except cooking oil, without having undergone any process except the process of washing.

 

(d)                   against serial No. 11, in column (1), in column (3), for the existing entries the words “Respective headings” shall be substituted;

 

(e)                against serial No. 26, in column (1), in column (3), for the entries the figures, comma and word “99.19, 99.20 and 99.21” shall be substituted;

 

(f)                 against serial No. 27, in column (1), in column (3), for the figures “9906.0010” the figures “99.18” shall be substituted;

 

(g)                against serial No. 28, in column (1), in column (3), for the figures “9904.0010” the figures “99.16” shall be substituted;

 

(h)                against serial No. 30, in column (1), in column (3), for the figures “9902.0060” the figures “99.09” shall be substituted;

 

(i)                  against serial No. 31 in column (1), in column (3), for the figures “9902.0070” the figures “99.10” shall be substituted;

 

(j)                  against serial No. 40 in column (1), in column (3), for the existing entries the figures commas and word “99.01, 99.02, 99.03 and 99.06” shall be substituted;

 

(k)                against serial No. 40A in column (1), in columns (2) and column (3), for the figures “9901.0070”, occurring twice, the figure “99.05” shall be substituted;

 

(l)                  against serial No. 46 in column (1), in column (3), for the figures, commas and word “9903.0010, 9903.0020 and 9903.0030”, the figures commas and word “99.12, 99.13 and 99.14” shall be substituted;

 

(m)              against serial No. 46A in column (1), in column (3), for the figures, commas and word “9903.0010, 9903.0030 and 9903.0040”, the figures commas and word “99.12, 99.14 and 99.15” shall be substituted;

 

(n)                against serial No. 47 in column (1), in column (3), for the existing entries the figures, commas and word “99.07, 99.08, 99.09 and 99.11” shall be substituted;

 

(o)                against serial No. 49 in column (1), in column (3), for the entries the words “Respective headings” shall be substituted;

 

(p)                against serial No. 53 in column (1), in column (3), for the existing entries the words “Respective headings” shall be substituted; and

 

(q)                against serial No. 59 in column (1), in column (3), for the existing entries the figures, commas and word “99.24 and 99.25” shall be substituted.

 

 

7.       Amendment of (IV of 1999).-

 

In the Finance Act, 1999 (IV of 1999), section 18 shall be omitted.

 

 

8.       Amendment of the Income Tax Ordinance XLIX of 2001.- 

 

The following amendments shall be made in the Income Tax Ordinance, 2001 (XLIX of 2001), namely:-

 

(1)        in section 2,-

 

            (a)        in clause (1),-

 

(i)         in sub-clause (b), for the words, brackets, letters and figure, “clauses (a), (d) and (e) of sub-section (20)” the words, brackets, letters and figure “sub-clauses (a), (d) and (e) of clause (19)” shall be substituted;

 

(ii)        in sub-clause (c), for the words, brackets, letters and figure “clause (c) of sub-section (20)”, the words, brackets, letter and figure “sub-clause (c) of clause (19)” shall be substituted;

 

(b)        after clause (1), amended as aforesaid, the following new clause shall be inserted, namely:-

 

“(1A) “amalgamation”  means the merger of one or more banking companies or non-banking financial institutions, in either case being a public company, or a company incorporated under any law, other than Companies Ordinance, 1984 (XLVII of 1984), for the time being in force, (the company or companies which so merge being referred to as the “amalgamating company” or companies and the company with which they merge or which is formed as a result of merger, as the “amalgamated company”) in such manner that —

 

(a)                the assets of the amalgamating company or companies immediately before the amalgamation become the assets of the amalgamated company by virtue of the amalgamation, otherwise than by purchase of such assets by the amalgamated company or as a result of distribution of such assets to the amalgamated company after the winding up of the amalgamating company or companies;

 

(b)                the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation; and

 

(c)                the scheme of amalgamation is approved by the State Bank of Pakistan or by the Securities and Exchange Commission of Pakistan.

 

            (c)        for clause (5), the following shall be substituted, namely:-

 

            “(5) “assessment” includes re-assessment and amended assessment and the cognate expressions shall be construed accordingly.

 

(d)        after clause (5), amended as aforesaid, the following new clauses shall be inserted, namely:-

 

            “(5A)    “assessment year” means assessment year as defined in the repealed Ordinance.

 

            “(5B)    “assets management company” means a company registered under the Assets Management Companies Rules, 1995.

 

(e)        after clause (11), the following new clause shall be inserted, namely:-

 

“(11A) “charitable purpose” includes relief of the poor, education, medical relief and the advancement of any other object of general public utility.

 

(f)        for clause (13), the following shall be substituted, namely:-

 

“(13)     “Commissioner” means a person appointed as a Commissioner of Income Tax under section 208, and includes a taxation officer vested with all or any of the powers and functions of the Commissioner;

 

(13A)   “Commissioner (Appeals)” means a person appointed as a Commissioner of Income Tax (Appeals) under section 208.

 

            (g)        in clause (19),-

 

(i)                  in sub-clause (b), the comma and words “,and any distribution to its shareholders of shares by way of bonus or bonus shares” shall be omitted;

 

(ii)        in sub-clause (c), in paragraphs (i) and (iii) for the word “clause”, the word “sub-clause” shall be substituted;

 

(h)        in clause (24), for the figures, brackets and word “1980 (XXXI of 1980)” the figures, brackets and word “1984 (XLVII of 1984)” shall be substituted;

 

(i)         for clause (29) the following shall be substituted, namely:-

 

“(29)     “income” includes any amount chargeable to tax under this Ordinance, any amount subject to collection of tax under sections 148, 153, 154 and 156, sub-section (5) of section 234, and any loss of income but does not include, in case of a shareholder of a domestic company, the amount representing the face value of any bonus share or the amount of any bonus declared, issued or paid by the company to the shareholders with a view to increasing its paid up share capital.

 

(j)         after clause (29), substituted as aforesaid, the following new clause shall be inserted, namely:-

 

“(29A)  “income year” means income year as defined in the repealed Ordinance.

 

(k)         after clause (30), the following new clauses shall be inserted, namely:-

 

“(30A) “investment company” means a company registered under the Investment Companies and Investment Advisors Rules, 1971;

 

 (30B)     “leasing company” means a company licensed under the Leasing Companies (Establishment and Regulation) Rules, 2000.

 

(l)         after clause (35), the following new clause shall be inserted, namely:-

 

“(35A)  “Mutual Fund” means a mutual fund set up by the Investment Corporation of Pakistan or by an investment company.

 

            (m)       for clause (36), the following shall be substituted, namely:-

 

“(36)     “non-profit organization” means any person, other than an individual, which is —

 

(a)        established for religious, educational, charitable, welfare or development purposes, or for the promotion of an amateur sport;

 

(b)        formed and registered under any law as a non-profit organization;

 

(c)        approved by the Commissioner for specified period, on an application made by such person in the prescribed form and manner, accompanied by the prescribed documents and, on requisition, such other documents as may be required by the Commissioner;

 

and none of the assets of such person confers, or may confer, a private benefit to any other person.

 

(n)        in clause (41)-,

 

(i)         in sub-clause (d), for the word “months” the word “days” shall be substituted;

(ii)        in sub-clause (e), for the comma, occurring for the first time, the bracket and comma “),” shall be substituted;

 

(o)        in clause (46), in sub-clause (a), after the word “amount” a comma shall be inserted;

 

(p)        in clause (47), in sub-clause (b), commas and words “, and was on the Central Depository System,” shall be omitted;

 

(q)        after clause (48), the following new clause shall be inserted, namely:-

 

            “(48A)  “Regional Commissioner” means a person appointed as a Regional Commissioner of Income Tax under section 208, and includes a Director-General of Income Tax and Sales Tax.

 

(r)        after clause (49), the following new clause shall be inserted, namely:-

 

“(49A)  “repealed Ordinance” means Income Tax Ordinance, 1979 (XXXI of 1979).

 

(s)        in clause (54),-

 

(i)         for the word “”royalties””, the word ““royalty”” shall be substituted; and

 

(ii)        in sub-clauses (f) and (g), for the word “clauses” the word “sub-clauses” shall be substituted;

 

(t)         in clause (59), after the word “holder”, the comma and words “, a unit holder of a unit trust” shall be inserted;

 

(u)        in clause (65), for the words and comma “Deputy Commissioner of Income Tax, Additional Commissioner of Income Tax” the words and comma “Additional Commissioner of Income Tax, Deputy Commissioner of Income Tax” shall be substituted;

 

(v)        in clause (66), in clause (b), after the figure “X”, the words and figure “and Chapter XII” shall be inserted; and

 

(w)       after clause (73), the following new clause shall be added, namely:-

 

“(74) “Venture Capital Company” and “Venture Capital Fund” shall have the same meanings as are assigned to them under the Venture Capital Company and Venture Capital Funds Rules, 2001.

 

(2)        in section 11, in sub-section (1), clauses (b) to (e) shall be substituted by the following namely;

                       

“(b)      Income from Property;

 

(c)        Income from Business;

                       

(d)        Capital Gains; and

 

(e)        Income from Other Sources.”

 

(3)        in section 12, in sub-section (5), in clause (c), after the word “employee”, occurring for the second time, the words “or to a third party under an agreement with the employee or an associate of the employee” shall be added;

 

(4)        in section 13,-

 

(a)        for sub-section (3), the following shall be substituted, namely:-

 

“(3) Where, in a tax year, a motor vehicle is provided by an employer to an employee wholly or partly for the private use of the employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include an amount computed as may be prescribed.

 

(b)        sub-section (4) shall be omitted;

 

(c)        in sub-section (5),-

 

(i)         for the words “the domestic assistant” the words and commas “such housekeeper, driver, gardener or other domestic assistant” shall be substituted; and

 

(ii)        after the words “by the employee”, the words “to the employer” shall be inserted;

 

(d)        for sub-section (7), the following shall be substituted, namely:-

 

“(7)  Where a loan is made, on or after the 1st day of July, 2002, by an employer to an employee and either no profit on loan is payable by the employee or the rate of profit on loan is less than the benchmark rate, the amount chargeable to tax to the employee under the head “Salary” for a tax year shall include an amount equal to-

 

(a)        the profit on loan computed at the benchmark rate, where no profit on loan is payable by the employee, or

 

(b)        the difference between the amount of profit on loan paid by the employee in that tax year and the amount of profit on loan computed at the benchmark rate,

 

as the case may be.

 

(e)        in sub-section (8), for the word “property”, occurring twice, the words “any asset or property” shall be substituted;

 

(f)        in sub-section (10), for the word “owed” the word “owing” shall be substituted;

 

(g)        for sub-section (12), the following shall be substituted, namely:-

 

“(12) Where, in the tax year, accommodation or housing is provided by an employer to an employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include an amount computed as may be prescribed.

 

(h)        in sub-section (13), after the word “perquisite”, occurring for the second time, the commas and words “, except where the rules, if any, provide otherwise” shall be inserted;

 

(i)         for sub-section (14), the following shall be substituted, namely:-

 

“(14) In this section,-

 

            (a) “benchmark rate” means —

 

(i)                  for the tax year commencing on the first day of July, 2002, a rate of five percent per annum; and

 

(ii)        for the tax years next following the tax year referred to in sub-clause (i), the rate for each successive year taken at one percent above the rate applicable for the immediately preceding tax year, but not exceeding such rate, if any, as the Federal Government may, by notification, specify in respect of any tax year;

 

(b)        “services” includes the provision of any facility; and

(c)        “utilities” includes electricity, gas, water and telephone.

 

(5)        in section 17, in sub-section (1), in clause (f), after the word “rent”, occurring for the second time, the words “and share towards appreciation in the value of property” shall be inserted;

 

(6)        in section 18, in sub-section (1), in clause (e), after the word “modaraba”, the words “management company” shall be added;

 

(7)        in section 19, in sub-section (1), in clause (a), after the word “on” the word “by” shall be inserted;

 

(8)        in section 20, after sub-section (2), the following new sub-section shall be added, namely:-

 

“(3) Subject to this Ordinance, where any expenditure is incurred by an amalgamated company on legal and financial advisory services and other administrative cost relating to planning and implementation of amalgamation, a deduction shall be allowed for such expenditure.

 

(9)        in section 21, in clause (l), for the words and comma “five hundred rupees or on account of postage or utility bills”, the words and commas “five thousand rupees or on account of freight charges, travel fare, postage, utilities or payment of taxes, duties, fees, fines or any other statutory obligation” shall be substituted;

 

(10)      in section 22,-

 

(a)        for sub-section (12), the following shall be substituted, namely:-

 

            “(12)  The depreciation deductions allowed to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person shall be deductible only against the lease rental income derived in respect of such assets. and

 

(b)        in sub-section (13),-

 

(i)         in clause (a), for the words “seven hundred and fifty thousand” the words “one million” shall be substituted; and

 

(ii)        for clause (c), the following shall be substituted, namely:-

 

“(c) any asset owned by a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person is treated as used in the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution’s business; and";

 

(11)      in section 23, for sub-section (4), the following shall be substituted, namely:-

 

            “(4) A deduction allowed under this section to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution and leased to another person shall be deducted only against the leased rental income derived in respect of such assets.

 

(12)      in section 24, in sub-section (6), for the word “depreciation” the word “amortization” shall be substituted;

 

(13)      in section 26, in sub-section (2), for the word “activities”, the word “activity” shall be substituted;

 

(14)      in section 35, in sub-section (4), for the words “fair market” the words “net realisable” shall be substituted;

 

(15)      in section 37, in sub-section (5),-

 

(a)        for clause (a) the following shall be substituted, namely:-

 

“(a)      any stock-in-trade (not being stocks and shares), consumable stores or raw materials held for the purpose of business.

 

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