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KARACHI: No taxable goods, manufactured in tax-exempt areas, will be allowed to enter into Pakistan without registration and tax payments. According to the notification issued by the Federal Board of Revenue (FBR), the board may specify the location and other necessary particulars of check-posts, including mobile teams, if any, through a notification in the official gazette and the chief commissioners Inland Revenue of RTO Peshawar, RTO Abbottabad, RTO Rawalpindi, RTO Sialkot and RTO Quetta or any other RTO having jurisdiction over areas adjoining tax exempt areas, shall establish check-post or check-posts, as notified by the board under sub-rule (1), within the relevant regional territorial jurisdiction.

The check-posts will be established along the trade route and all vehicles carrying taxable goods will be subject to scrutiny by the authorized officer while entering into taxable areas from tax-exempt areas.

Under the SRO 96(1)/2021, the person bringing, or causing to bring, taxable goods from tax exempted area shall be required to be registered under the Act or, as the case may be, the Sales Tax Act, 1990 as adopted in Azad Jammu and Kashmir and all the provisions of the Acts ibid shall apply accordingly.

They will have to login to the FBR computerized system to electronically generate e-transport advice, with a unique identification number, in the form specified in STR 32.

The e-transport advice is to be issued prior to entry of the taxable goods into the taxable area. The E-transport advice will be valid for a period of up to one day for distances of up to 100 km in the taxable areas and one additional day for every 100 km or part thereof thereafter.

Previously, due to limited enforcement capability operators have been under declaring volumes in AJK and have also been shipping them across both the territories since long.

Therefore, the FBR took AJK tax authorities on board and issued the aforesaid SRO to check tax evasion on products coming from AJK into tariff areas. “It is a commendable initiative and will certainly challenge one of the biggest factors, contributing to the illegal trade in the country,” said Khurram Qamar, Director External Affairs at Philip Morris (Pakistan) Limited. “The mechanism simply means that transporters will be asked for evidence of tax payment at the time of entry into tariff areas and where sales tax has already been paid to AJK authorities, the transporter will show evidence and will have no further liability,” added Khurram.

“Also, for products where the transporter cannot prove tax payment the same will be charged at the entry points so in this manner tax collection will be ensured either at the AJK or PK level,” he added.

“Only those with vested interests are not happy with it, exposing the tax evaders. Certainly this won’t affect those who can produce tax challans but only those who have been evading taxes and will now have to pay taxes,” he added.

Needless to mention, the board has been working on this issue for the past two years and started conveying to the business circles that goods manufactured in AJK were not exempted from sales tax under the state’s laws.

The FBR clarified through instructions to its offices that the sales tax on supplies, originating from AJK, is payable in AJK under the Sales Tax Act 1990.

Moreover, on the basis of credible information, mobile teams may proceed to intercept, examine and search any conveyance on the routes emanating from tax exempt areas and all the relevant provisions of the Act and these rules shall apply accordingly. The adjudicating authority will have powers and authority to confiscate taxable goods which are brought into taxable areas in violation of the Act and these rules.

It said that the liability of tax payments on the person bringing taxable goods from tax exempt area and supplying the same in taxable area is adjustable and the provisions of this sub-rule shall not apply where the taxable goods are brought into the taxable area by manufacturer or importer to be sold at self-own, self-managed, self-administered or self-operated distribution, wholesale or retail outlet.

The taxable goods are brought into the taxable area by a manufacturer or importer to be sold at his self-owned, self-managed, self-administered or self-operated distribution, wholesale or retail outlet or outlets, duly declared in his STR-1 Form, such goods shall be accompanied by serially numbered stock advice in the form specified in STR-33 along with copy of STR-1 Form.

The registered person may also update the particulars of the vehicle while the goods are in transit after duly intimating the concerned commissioner Inland Revenue and providing reasons for the updating.

Only one e-transport advice may be generated against a single invoice or, as the case may be, a stock advice and one conveyance may carry multiple e-transport advice in case it is transporting taxable goods relating to multiple invoices or stock advice.

Every conveyance carrying taxable goods originating from tax-exempt areas and entering taxable areas shall carry the sales tax invoice prescribed under section 23 of the Act or as the case may be, under the Sales Tax Act, 1990 as adopted in Azad Jammu and Kashmir at the time of entering into taxable areas.

A summary report of examination of taxable goods under sub-rule (3) or as the case may be under sub-rule (4), shall be recorded online by an authorized officer mentioning the unique identification number of the e-transport advice in respect of the goods examined.

Copyright Business Recorder, 2021

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