Finance Act 2011 has also revised procedure of blacklisting of units involved in issuance of fake and flying invoices. Through amendment in section 21 of the Sales Tax Act 1990, Finance Act 2001 has notified that during the period of suspension of registration, the invoices issued by such person shall not be entertained for the purpose of sales tax refund or input tax credit, and once such person is blacklisted, the refund of input tax credit claimed against the invoices issued by him, whether prior or after such blacklisting, shall unless the registered buyer has fulfilled his responsibilities under section 73 be rejected through a self-speaking appealable order and after affording an opportunity of being heard to such a person.
Under the new section "153 payments for goods, services and contracts, Finance Act 2001 said that every prescribed person making a payment in full or part including payment by way of advance to a resident person on permanent establishment in Pakistan or a non-resident person for the sale of goods, for rendering of or providing of services, on the execution of a contract, other than a contract for the sale of goods or the rendering of or providing of services, shall at the time of making the payment deduction from the gross amount payable including tax, if any at the rate specified in Division III of Part III of the First Schedule.
Every exporter or an export house making a payment in full or part including a payment by way of advance to a resident person or permanent establishment in Pakistan of a non resident person for rendering of or providing of services of stitching, dying, printing, embroidery, washing, sizing and weaving, shall at the time of making the payment deduct tax from the gross amount payable at the rate specified in Division IV of Part III of the First Schedule.
The tax deducted under Clauses (a) and (c) of sub section (1) and under sub section (2) of the section on the income of a resident person of permanent establishment of a non-resident person, shall be final tax.
Provided that the tax deducted under clause (a) of sub section (1) shall be adjustable where payments are received on sale or supply of goods, by a company being a manufacturer of sub goods or public company listed on a registered stock exchange in Pakistan. The tax deducted shall be a minimum tax on transactions referred to a clause (b) of sub section (1); and tax deducted under clause (c) of sub section (1) shall be adjustable where payments are received by a public company listed on a registered stock exchange in Pakistan, on account of execution of contracts.
The communication may, on application made by the recipient of a payment referred to in sub section (1) and after making such inquiry as the Commissioner thinks fit, may allow in cases where tax deductible under sub section (1) is adjustable, by an order in writing any person to make the payment.
Sub section (1) shall not apply to a sale of goods where the sale is made by the importer of the goods and tax under section 148 in respect of such goods has been paid and the goods are sold in the same condition as they were when imported; payments made to traders of yarn by the taxpayers specified in the zero-rated regime of sales tax (as provided under clause (45A) of Part-IV of the Second Schedule, a refund of any security deposit; a payment made by the Federal Government, a Provincial Government or a Local Government to a contractor for construction materials supplied to the contractor by the said Government or the authority; a cotton ginner who deposits in the government treasury, an amount equal to the amount of tax deductible on the payment being made to him, and evidence to this effect is provided to the "prescribed person"; the purchase of an asset under a lease and buy back agreement by a Modaraba, leasing company, banking company or financial institution; or any payment for securitisation of receivables by a Special Purpose Vehicle to the Originator, section 153 added.