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FBR CLARIFICATION REGARDING ISSUANCE OF SROs

Posted on June 13, 2014 By admin No Comments on FBR CLARIFICATION REGARDING ISSUANCE OF SROs

June 05, 2014

Certain quarters have raised doubts about the authority of the Federal Government regarding the issuance of notifications SRO 420(I)/2014, 421(I)/2014 and 422(I)/2014, all dated 04.06.2014 without approval of the Parliament.

It is clarified that the Federal Government has delegated powers to issue and withdraw notifications under the relevant provisions of the Sales Tax Act, 1990 and the Federal Excise Act, 2005. The notifications in question could have been issued at any time during the financial year.

In its Order dated 21.03.2014 in CMA No. 3821/2013 in Constitutional Petitions No. 33 & 34/2005, the Honorable Supreme Court had rightly held that there can be no taxation without approval or Parliament. As such, the Provisional Collection of Taxes Act, 1931 had been struck down as unconstitutional. Accordingly, the provisions of the Act were not pressed into service to alter the rate of duties and taxes at the time of presenting Finance Bill 2014-15 before the Parliament.

The present notifications do not impose any new taxation: SR0 420(I)/2014 dated 04.06.2014 only seeks to withdraw the concessionary rate of sales tax available to finished imported textile and leather goods (other than used and worn clothing). By this notification, the standard rate of sales tax (17%) has been made applicable.

Similarly, in case of SRO 421(I)/2014 dated 04.06.2014, the rate of sales tax applicable to steel melters, re-rollers and ship-breakers, etc. has been rationalized. The tax has not been imposed in excess of the standard rate of sales tax specified in section 3(1) of the Sales Tax Act, 1990.

The existing rates for steel sector and the imported textile and leather goods were also notified through SROs and amendments thereto were also required to be made through SROs and therefore, there is no irregularity or transgression of powers by the Federal Government in issuance of the above –mentioned notifications.

SRO 422(I)/2014 dated 4th June,2014 has been issued by the Federal Government in exercise of power conferred upon it by clause (b) of sub-section (3) of section 3 of the Federal Excise Act,2005 and it has modified the federal excise duty rates for cigarettes.

The exercise of powers by the Federal Government to make the above adjustments is an entirely valid exercise of the powers conferred by the Legislature.

Shahid Hussain Asad
Member (Policy-IR) / Official Spokesperson, FBR

Press Release Tags:FBR CLARIFICATION REGARDING ISSUANCE OF SROs, Federal Excise Act, federal excise duty rates, Finance Bill 2014-15, finished imported textile and leather goods, imported textile and leather goods, Provisional Collection of Taxes Act, Sales Tax Act, ship breakers

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