LHC declares special tax scheme for retailers illegal

The Lahore High Court (LHC) has declared special tax scheme for retailers notified under SRO 608(I)/2014 as ultra vires to the constitution. According to comments on SRO 608(I)/2014 issued by Naveed Zafar Ashfaq Jaffery & Co, Chartered Accountants, the LHC, has rendered SRO 608(I)/2014 ultra-vires to the Constitution. Resultantly, the distinction amongst retailers as introduced vide SRO608(I)/2014 has been relinquished and all the retailers will now be treated at par.
A special scheme was announced for retailers in federal budget 2014-15. To give effect to the announcement, SRO 608(I)/2014 dated: 02-07-2014 was issued to substitute rules 3 to 10 of Sales Tax Special Procedure Rules, 2007 (Special Procedures). After the issuance of said SRO, the position was as follows: This scheme applies to all retailers including jewelers who make supplies from retail outlets to final consumers excluding vehicle dealers who shall pay sales tax on the basis of separate scheme and registered retailers exclusively engaged in the goods subject to extra tax, CA firm said.
Retailers are categorised into specified and unspecified. Only specified retailers are required to be registered. Following retailers are specified: Firstly, a retailer operating as a unit of a notional or international chain of stores. Secondly a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks. Thirdly, a retailer whose cumulative electricity bill during the immediately preceding 12 month exceeds Rs 600,000 and fourthly a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers
Specified retailers monthly return in normal manner, and unspecified - Not required to file monthly sales tax return, Naveed Zafar Ashfaq Jaffery & Co said. High Court, in their writ petition no. 26722-15, has rendered SRO 608(I)/2014 ultra-virus to the Constitution. Consequently, in our opinion, rules 3 to 10 of Special Procedures, as effective before issuance of SRO 608(I)/2014, will prevail as follows:
Application: This scheme applies to all retailers including jewelers who make supplies from retail outlets to final consumers excluding dealers of motorcycles, registered retailers exclusively engaged in the goods subject to extra tax, and manufacturer-cum-retailers selling their products through retail outlets. Registration: All retailers were required to be registered and returns were to be filed quarterly by 15th day of October, January, April and July. In other words, the distinction amongst retailers as introduced vide SRO 608(I)/2014 has been relinquished and all the retailers will now be treated at par, Naveed Zafar Ashfaq Jaffery & Co added.