Issues in Registration and

De-Registration
Mohammed Ashraf, ACCA
Organized By Indirect Tax Committee of ITBAK

CONTENT

Benefits of Registration

Registration and allied matters

Consequent penalties

De Registration [excluding suspension and blacklisting]

Issues in Registration and allied matters

Issues in De Registration

Conclusion

Purpose of Seminar Ray of Hope

Discourage litigation, Persuade your neighbors
to compromise whenever you can.
Point out to them how the nominal winner is
often a real loser
in fees,
expenses and
waste of time
Abraham Lincoln
3

SALES TAX ACT, 1990

Benefits of Registration
Persons Required to be Registered
Application for Registration
Jurisdiction of Registration
Exceptional Cases
Change of Particulars
Compulsory Registration
Transfer of Registration
Offences and Penalties
De Registration
4

BENEFITS OF REGISTRATION

Claim of Input Tax Credits and adjustment against Output Tax

Liability

Documentation Effective Inventory Control and Physical

Supervision

Accurate reporting of activities in the Economy

Authentic or Genuine Supplier or Customer to be networked

Transacting Business with Government, Semi Government and

Defence Department
5

Registration Sales Tax Act, 1990

Persons required to be Registered

Manufacturer [Annual Turnover in last 12 months exceeds 5 Million]

Retailer [Annual Turnover in last 12 months exceeds 5 Million]

Importer

Any other person required to collect the levy of Sales Tax

Commercial Exporter [intends to obtain Refund against Zero Rated

Supplies]

Registration Sales Tax Act, 1990

Application for Registration

Prior to making any Taxable Supply

STR I to Central Registration Office or Local Registration

Office [Electronically, Registered Mail and Courier]

Application must specify the Jurisdiction

Registration Sales Tax Act, 1990

Jurisdiction

Incorporated Business Registered Office

Incorporated Business with Single Manufacturing Unit

Place of Manufacturing Unit or Place of Business Location

Unincorporated Business Where Business actually carried on

Unincorporated Business with Single Manufacturing Unit

Any Place of Manufacturing Unit
8

Registration Sales Tax Act, 1990

Exceptional Cases

Multiple Registration Certificate Issued earlier [STR 1]

Importer of Exempt Goods No Registration

Supplier of Exempt Goods Only No Registration

Industrial importer manufacturing exempt products No Registration

Registration of Persons making supplies to FATA/PATA from

FATA/PATA No Registration

Registration Sales Tax Act, 1990

Exceptional Cases
Import

of Reagents No Registration

Import

of Newspapers No Registration

Import

of Raw Material for Fertilizer No

Registration

10

Registration Sales Tax Act, 1990

Change in particulars

Application Form within 14 days of change STR - 2

Special procedure for change of Category to Manufacturer

Verification of Manufacturing Facility, Confirmation of status as
industrial consumer [Electricity and Gas Distribution Companies]

Issuance of Revised Registration Certificate

Effective date of revised registration Date of Application

11

Registration Sales Tax Act, 1990

Compulsory Registration

LRO issues of notice Form STR 6 on completion of enquiry

Opportunity of being heard

Obligation of a Compulsory Registered Person = Registered

Person

Failure to Oblige means Notice under section 25 [Production of

records or documents] to assess the amount of Sales Tax Payable
under section 11 or any other action.
12

Registration Sales Tax Act, 1990

Transfer of Registration

Application Form STR 2

Subject of CROs Condition, Limitation or Restriction

New Jurisdiction shall exercise powers as it has always such

jurisdiction

Old jurisdiction shall issue an intimation letter to new jurisdiction

Application must specify the Jurisdiction

13

Offences and Penalties Sales Tax Act, 1990

Failure

to notify particulars of Registration

Rs5,000.00
Failure to Apply for Registration before making
Taxable Supplies Rs10,000 or 5% of Tax
Involved
Failure to Apply for Registration within 60 days
of commencement of Taxable Supplies Three
years imprisonment or fine equal to amount of
tax involved or both
14

De-Registration Sales Tax Act, 1990

Cessation of Business, Supplies becomes Exempt or Taxable

Turnover during last 12 months falls below the Taxable Limit
STR - 3 and Return under section 28

Application by Registered Person or Own motion of LRO

LRO recommendation to CRO for cancellation of registration on

non-filing of 6 consecutive return along with penalties

LRO may conduct an audit or enquiry and direct the registered

person to discharge any liability arose

LRO recommends to CRO Within 3 months of application or

the date all the dues are cleared
15

FEDERAL EXCISE ACT, 2005

Benefits of Registration
Persons Required to be Registered
Application
Jurisdiction
Failure to get Registration
Change of Particulars
Transfer of Registration
De Registration

16

Benefits of Registration

Value Added Tax Mode Input and Output Tax

Adjustment

Eligibility for adjustment of Input Sales Tax / FED

against Output Sales Tax / FED

No separate registration for sales tax registered persons

17

Persons Required to be Registered

Person engaged in production or manufacture liable to

duty of excise regardless of annual turnover or volume
of sales

Person engaged in rendering services liable to duty of

excise regardless of annual turnover or volume of sales

18

Application for Registration

Application Form FE 1

Person intends to commence Manufacturing of

Excisable Goods

Person intends to provide Excisable Services

19

Jurisdiction for Registration

Incorporated Business Registered Office

Incorporated Business with Single Manufacturing Unit

Place of Manufacturing Unit or Place of Business Location

Unincorporated Business Where Business actually carried on

Unincorporated Business with Single Manufacturing Unit

Any Place of Manufacturing Unit

Incorporated and Unincorporated Business for excisable

services Location of Head Office
20

Failure to get Registration

Collector issues notice on completion of enquiry

Opportunity of being heard within 15 days of proposed

registration

Further notice on receiving reply and non submission entail

compulsory registration

Obligation of a Compulsory Registered Person = Registered

Person

Failure to Oblige means Notice of Audit under section 46 to assess

the recovery of amount of Excise Duty under section 14
21

Change in Particulars
Notification

within 14 days of change

22

Transfer of Registration
Subject

of Collectors Condition, Limitation or

Restriction

New

Registration Certificate from New

Jurisdiction with reference of previous certificate

Application

may be made by registered person

23

De-Registration

Cessation of Manufacturing Excisable Goods or provide or

Render Excisable Services FE III

Sales Tax Procedure shall mutatis mutandis apply on persons

also registered under Sales Tax Act, 1990

24

ISSUES IN SALES TAX ACT, 1990

Registration
Change in Particulars
Transfer of Registration
De Registration

25

Registration Issues
Why should I wait for Registration before any Taxable
Supply? - Issue a Provisional Certificate, Complete the
procedure - Business Activity should not be stopped
No time limit for completion of verification or inquiry for
registration as opposed to 15 days for rejection?
FBR must realize that rejection of registration means no
business! Rejection should be replaced with resolution.
STR I should not require a registered person to specify
the jurisdiction instead the tax office should write the same
in acknowledgment letter.
26

Registration Issues
Conflict in registration procedure - Business Activities
Manufacture,
Importer,
Exporter,
Distributor,
Retailer,
Wholesaler,
Service Provider
A persons primary activity be more than one
Why restriction for doing business?
27

Registration Issues
Special Rules
Electric Power,
Natural Gas,
Trading Corporation of Pakistan,
Rendering of services subject to provincial Sales Tax,
Television and Radio,
Ship Chandlers,
Stevedores,
Oil Marketing Companies [Sharing of Product],
Vehicle Dealers,
Ginned Cotton,
Commercial Importer,
Steel Melters, Re Rollers and Ship Breakers,
Manufacturers of Biscuits, Confectionary and Snacks
Where is the nexus between business activity at registration stage
and special activities covered under special rules?
28

Change in Particulars Issue

Absence of objective criterion for assessment on
change of business category to Manufacturer in the
light of definition of manufacturer
No time limit is specified for issuance of revised
registration certificate on change of particulars of
registration

29

Transfer of Registration Issues

No time limit is specified for completion of transfer of
registration process
Non-disclosure of CROs condition, limitation or
restriction would increase the Taxpayer and Collector
interaction which is against the present image of FBR

30

De Registration Issues
No time limit is specified for conducting the audit of
Final Return under section 28 in line with Rule 11,
hence, the three months time limit is of no use.
Effective date of Registration as the case in change in
particulars which is effective from date of application
Obvious instructions regarding right and obligation of
Registered person from the date of de-registration are
almost absent

31

Federal Excise Act, 2005

Registration
Change in Particulars
Transfer of Registration
De Registration

32

Registration Issues
Registration threshold is not harmonized with Sales
Tax Act, 1990 where both laws are applicable?
No time limit for issuance of Registration Certificate

33

Change in Particulars Issue

No form prescribed
No time limit for issuance of revised registration
certificate
Effective date of revised registration?

34

Transfer of Registration Issues

No form prescribed
No time limit is specified for completion of transfer of
registration process
Non-disclosure of Collectors condition, limitation or
restriction would increase the Taxpayer and Collector
interaction which is against the present image of FBR

35

De Registration Issues
No Final Return with De Registration prescribed
No time limit is specified for De Registration
No procedure is specified for De Registration
Obvious instructions regarding right and obligation of
Registered person from the date of de-registration are
almost absent

36

COMMON LACUNA
A non corporate person having a single manufacturing
unit, whose business premises and manufacturing unit
are located in different areas, shall apply to the
collector of the area in whose jurisdiction his
manufacturing unit is located:
Provided that a corporate person shall have the
option to apply for transfer of registration to the
collector having jurisdiction over the area where
manufacturing unit is located.
[Underlined Phrase of
Rule 3(3) of Federal Excise Rules, 2005 and
Rule 5(1)(c) of Sales Tax Rules, 2006]
37

CONCLUSION

Principle Based Approach instead Rule Based Approach

Provision meant to serve ease in doing business

Objective Facilitation not subjective imposition In line with

current approach of FBR

Institute of Internal Auditors Motto ought to be

remembered by the registered persons on receiving a notice
from Collector In Allah [they used God] we trust others we
Audit

38

Thank You
Mohammed Ashraf, ACCA

39