Earlier, the regime was introduced through the notification which was challenged in the court. The Supreme Court of Pakistan in the case of Mustafa Impex has observed that any notification issued without the approval from the economic committee of the federal government has no legal sanctity. Accordingly all such notifications having such lacking including SRO 608(i)/2013 i.e. retail sales tax regime were stands illegitimate, illegal and void ab initio.
The government in order to correct the legal deficiency has now proposed to incorporate the entire retail sales tax regime under the Sales Tax Act. 1990. The policy maker this time has also proposed to replace the powers for legal amendments under the Sales Tax Act from Federal Government to the Board subject to approval of the Minister In-charge of the Federal Government, by seeking appropriate amendment in all other relevant provisions of the Sales Tax Act, to avoid such litigation in future, he said.
Under the retails sales tax regime the retailers has an option to either opt standard sales tax input/output adjustment regime or may opt payment of two percent sales tax without any input tax adjustment on their entire turnover including exempt supplies. The persons intends to opt turnover tax regime may need to submit their option by 15th day of July every fiscal year. The 2 percent turnover sales tax regime is quite simplified and expectedly it may motivate undocumented retailers to avail this scheme and get their trade regularised.
Copyright Business Recorder, 2017