Tax experts told Business Recorder here on Saturday that the powers of the tax officials of Inland Revenue have been considerably enhanced through proposed amendment in the section 74 of the Sales Tax Act, 1990 through Finance Bill (2011-2012). At present, the tax officials are not allowed to condone the delay of the prescribed actions in time-barred cases, recovery of amount after expiry of specific period or issuance of show-cause notices to the taxpayers after laid down period of the Sales Tax Act 1990.
Similarly, if the adjudication proceedings against the taxpayer have not been initiated within the specified time period, the adjudicating authorities are not allowed to obtain the condonation of delay in taking action against the taxpayers. In the same manner, if a show-cause notice has not been timely issued to the taxpayer, the tax department is not allowed to condone the delay in issuance of the such notices by the tax department. At the same time, the recovery demand cannot be made against the taxpayers beyond a time period prescribed in section 36 of the Sales Tax Act. Due to proposed condonation powers, the tax officials can even initiate recovery proceedings even after expiry of the given time period. In cases of recovery of tax not levied or short-levied or erroneously refunded, the tax officials have to follow the prescribed time period of section 36 of the Sales Tax Act. However, any delay on the part of the department does not allow the tax officials to obtain condonation of their own delay in taking action against the taxpayers.
Therefore, the tax officials are bound to take actions against the taxpayers as per prescribed time limit specified in the Sales Tax Act. Contrary to this, if the department failed to take timely action, experts said, the FBR has allowed condonation powers to the actions of the tax authorities by including an explanation in section 74 of the Sales Tax Act. The time period has been prescribed for the tax officials to ensure timely actions by the tax department and discipline within the tax machinery. Due to prescribed action in the given time limit of the Sales Tax Act, the tax officials have to follow the specific time periods for taking actions. This not only ensures discipline among the tax officials but also avoids possibility of any misuse of the powers under the Sales Tax Act 1990.
In the presence of a new amendment, tax officials can seek condonation of delay in time period of their actions against the taxpayers, which would create new problems for the business and trade.
It is important to mention that the FBR has been authorised under section 74 to condone the delay for various actions to be taken under the Sales Tax Act, 1990. Appellate authorities have interpreted that the power of the Board under this section is restricted to condoning delay on the part of the registered person only and the Federal Board of Revenue cannot condone the delay on the part of the department. It is proposed to suitably amend section 74 by appending an explanation before the first proviso of the aforesaid section.
In section 74, after the proviso, the following explanation shall be added, namely:-"Explanation.- For the purpose of this section, the expression "any act or thing is to be done" includes any act or thing to be done by the registered person or by the authorities specified in section 30 of this Act."; it added.