To expedite recovery of sales tax from defaulters, the Federal Board of Revenue (FBR) has empowered its Inland Revenue (IR) field formations to recover sales tax arrears through the attachment of bank accounts from persons holding money on the behalf of the tax defaulter.
Through a notification issued here on Thursday, the FBR has amended Sales Tax Rules, 2006.
The FBR has extended the scope of recovery from sales tax defaulters under the new rules. Tax officials would now be empowered to take coercive measures including attachment of bank accounts from the third party who owes the money of the sales tax defaulter.
According to the new amendment, the provisions of rules 210A to 2101 of the Income Tax Rules, 2002 shall, mutatis mutandis, apply to Chapter XI of the Sales Tax Rules, 2006, for the purpose of recovery of sales tax arrears through bank account attachment.
The rules 210A to 2101 of the Income Tax Rules, 2002 are related to the recovery of tax from persons holding money on behalf of the taxpayers. Tax recovery means the recovery of a debt due to the Federal Government under the Income Tax Ordinance, 2001.
Under the sales tax rules, on expiry of 30 days from the date on which the Government dues are adjudged, the referring authority shall deduct the amount from any money owing to the person from whom such amount is recoverable and which may be at the disposal or in the control of such officer. Now, IR officials can recover sales tax arrears from persons holding money on the behalf of the taxpayer.
In case the government dues are not recovered in the manner prescribed, the referring authority shall serve upon the defaulter a notice, informing him that removal of any goods from his business premises shall be stopped with effect from the date specified in the notice till such time the dues are paid or recovered in full.
If the government dues still remain unpaid, the referring authority shall seal the business premises of the defaulter till such time the dues are paid or recovered in full. The said enforcement and recovery action could now also be taken against the persons holding money on the behalf of the defaulter.
Under the sales tax rules, the Recovery Officer, on receipt of the demand note, shall serve upon the defaulter a notice, and his movable and immovable property shall stand attached and subsequently shall be sold if the recovery is not otherwise affected. This enforcement provision would now also be applicable to persons holding money on the behalf of the taxpayer.