SALES TAX CIRCULAR NO. 7 OF 1994,

DATE 9^TH MAY , 1994

SUBJECT:--   CLARIFICATION WITH REGARD TO SECTION 34 OF SALES TAX ACT, 1990.

A question has arisen whether additional tax provided in section 34 will be attracted in case of tax collected at import stage under section 65(1) in case the sales tax was not paid when the goods were cleared for consumption or ex-bonded from the warehouse sanctioned under section 13 of the Customs Act, 1969. There are two conflicting opinions inn this regard. One view is that additional tax is not leviable with respect to imports. The other view is that the failure to pay the tax on due date automatically attracts chargeability to additional tax.

2.      The question has been examined in consultation with the Law and Justice division and it is ruled as under:-

             Section 6(1) of the Sales Tax Act, deals with the scope and payment of the sales tax in respect of goods imported into Pakistan and it lays down that it is liable to sales tax to be realised in the same manner and at the same time as customs duty. Section 34 deals with the penalty for evasion of sales tax which is recoverable as additional tax.

             As is clear, section 6(1) provides for mode of realisation of sales tax on imported goods in accordance with the provisions of the Customs Act, 1969. For any deviation or evasion from section 6 of the Sales Tax Act, 1990, additional charge is provided under section 34 ibid. Customs Act, 1969 has been referred in connection with the mode of realisation and not otherwise. Therefore, in case of failure of payment of due amount of tax, additional tax is to be levied under section 34 of Sales Tax Act, 1990 notwithstanding that the provisions in respect of levy of additional tax do not exist in Customs Act, 1969.