ION AND DE-REGISTRATION OF SALES TAX

REGULATORY PROCEDURES PROCEDURE FOR REGISTRATION AND DE-REGISTRATION OF SALES TAX

OCEDURE FOR REGISTRATION AND DE-REGISTRATION OF SALES TAX

PREPARED BY: LEGAL SERVICES CELL

Small and Medium Enterprise Development Authority Government of Pakistan www.smeda.org.pk Updated on June 1, 2008 HEAD OFFICE
6th Floor, LDA Plaza, Egerton Road, Lahore

Tel: (042) 111-111-456, Fax(042) 6304926-7 legal@smeda.org.pk

REGIONAL OFFICE PUNJAB 8th Floor, LDA Plaza, Egerton Road, Lahore.
Tel: (042) 111-111-456 Fax: (042) 6304926-7 helpdesk@smeda.org.pk

REGIONAL OFFICE SINDH 5th Floor,Baharia Complex-II, M.T.Khan Karachi.

Tel: (021) 111-111-456 Fax: (021) 5610572 helpdesk-khi@smeda.org.pk

REGIONAL OFFICE NWFP Ground floor State Life Building The Mall,Peshawar.
Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk

REGIONAL OFFICE BALOCHISTAN Banglow No.15-A Chaman Housing, Scheme, Airport, Road, Quetta.
Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

Table of Contents

1. 2. 3. 4. a) b) c) d) e) f)

Introduction to Smeda. Role of Legal Services Cell Flow Chart-I (Registration Procedure for normal Registration Who should register Application for registration How to fill in Form ST-1 Documents Required Mode of Filing application Registration and issuance of Registration Number

02 02 04 05 05 05 05 05 06 06 07 08 08 08 08 08 08 08 09 09 10 11 11 11 12

5. Flow Chart-II (Compulsory Registration) 6. Procedure for Compulsory Registration a) b) c) d) e) Written Report and issuance of Notice In case of compliance In case of non-compliance Effect of Compulsory Registration Cancellation of Compulsory Registration

7. Change in Particular of Registration 8. Transfer of Registration 9. Revised Registration Certificate 10.Flow Chart-III (De-Registration) 11.Procedure for De-registration a) De-registration on taxpayers application 12.Blacklisting and suspension of Registration 13. Addresses

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

1-INTRODUCTION OF SMEDA
The Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME development strategy. Since its inception in October 1998, SMEDA had adopted a sectoral SME development approach. A few priority sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved overhauling of the regulatory environment by taking into consideration other important aspects including finance, marketing, technology and human resource development. SMEDA has so far successfully formulated strategies for sectors, including fruits and vegetables, marble and granite, gems and jewellery, marine fisheries, leather and footwear, textiles, surgical instruments, transport and dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDAs areas of operation. Along with the sectoral focus a broad spectrum of services are now being offered to the SMEs by SMEDA, which are driven by factors like enhanced interaction amongst the stakeholders, need based sectoral research, over the counter support systems, exclusive business development facilities, training and development for SMEs and information dissemination through wide range of publications.

2-ROLE OF LEGAL SERVICES CELL

The Legal Services Cell [LSC] is a part of Business Development Division of SMEDA and plays a key role in providing an overall facilitation and support to SMEs. The LSC provides guidance based on field realities pertaining to SMEs in Pakistan and other parts of the world. LSC believes that information dissemination among the SMEs on the existing regulatory environment is of paramount importance and it can play a pivotal role in their sustainable development. In order to facilitate SMEs at the Micro Level LSC has developed user-friendly systems, which provide them detail description of the Laws, and Regulations including the process and steps required for compliance.

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

The purpose of this document is to provide SMEs with information pertaining to a Registration and de-Registration procedure under the Sales Tax Act, 1990. Individuals / Companies interested in enhancing their understanding about the procedures can also use the document and documentation required to comply with registration procedure. For convenience of the readers a process flow chart and sample of various forms are also included.

Partnership Registration

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

3-FLOW CHART-I

(REGISTRATION)

TYPES OF REGISTRATION UNDER SALES TAX ACT, 1990.

NORMAL REGISTRATION

COMPULSORY REGISTRATION

PERSONS REQUIRED REGISTERED.

TO

BE

A MANUFACTURER WHOSE ANNUAL TURNOVER FROM TAXABLE SUPPLIES, MADE IN ANY PERIOD DURING THE LAST TWELVE MONTHS, EXCEEDS 5 MILLON RUPEES. A RETAILER WHOSE VALUE OF SUPPLIES, IN ANY PERIOD DURING THE LAST TWELVE MONTHS EXCEEDS 5 MILLION. AN IMPORTER A WHOLESALER (INCLUDING DEALER) AND DISTRIBUTOR A PERSON REQUIRED UNDER ANY OTHER FEDERAL OR PROVINCIAL LAW, TO BE REGISTERED FOR THE PRUPOSE OF ANY DUTY OR TAX COLLECTED OR PAID AS IF IT WERE A LEVY OF SALES TAX TO BE COLLECTED UNDER THE ACT.

IF A PERSON, WHO IS REQUIRED TO BE REGISTERED UNDER THIS ACT, DOES NOT APPLY FOR REGISTRATION SHALL BE REGISTERED COMPULSORILY

REGISTRATION AS GIVEN IN FLOW CHART- II

1.

2.

3. 4.

APPLICATION FOR REGISTRATION SHALL BE MADE IN THE PPRESCRIBED FORM STR-1, IT SHALL BE FILLED IN AS PER INSTRUCTIONS PRINTED THEREON. THE APPLICATION FORM SHALL BE SUBMITTED TO THE LOCAL REGISTRATION OFFICE THROUGH MAIL OR COURIER SERVICE or through email. THE LOCAL REGISTRARTION OFFICE SHALL TRANSMIT THE APPLICATION TO THE CENTRAL REGISTRATION OFFICE AFTER INITIAL SCRUTINY. THE CENTRAL REGISTRATION OFFICE AFTER CONDUCTING INVESTIGATION, INQUIRY OR VERIFICATION AS TO THE PARTICULARS GIVEN IN THE APPLICATION FORM SHALL ISSUE THE CERTIFICATE OF REGISTRATION, CONTAINING THE REGISTRATION NUMBER THEREIN.

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

4-PROCEDURE FOR NORMAL REGISTRATION The procedure for registration under the Sales Tax Rules, 2005 has been simplified to the benefit of taxpayers. a) WHO SHOULD REGISTER? The following persons engaged in making of taxable supplies in Pakistan (including zero-rated supplies) are required to be registered under the Sales Tax Act, namely: All importers All wholesalers (including dealers) and distributors Manufacturers not falling in cottage industry. {Cottage industry is defined as having annual turnover below Rs.5 million and whose annual utility bill (including electricity , gas and telephone) does not exceed rupees six hundred thousand}. Retailers (having value of supplies of over 5 million rupees, in any tax period during the last 12 months. A person required under any Provincial or Federal Law to be registered for purpose of any duty or tax collected or paid as if it were a levy of sales tax, e.g. service providers like hotels, clubs, caterers, customs agents, ship chandlers, stevedores, courier services etc. Persons making zero-rated supplies, including commercial exporter who intends to obtain sales tax refund against his zero rated supplies. A person who is required to be registered by virtue of aforesaid criteria, but still avoids registration, can be compulsorily registered by the department, after proper enquiry, under sub rule 1 of Rule 6 of Sales Tax Rules, 2006. b) APPLICATION FOR REGISTRATION Application for registration is made in the prescribed form ST-1. This form is available at the concerned sales tax offices as well as on the CBR website. You can download the form by clicking at (http://www.cbr.gov.pk/newst/downloads/Registration%20Form.zip) c) HOW TO FILL IN THE FORM ST-1 Guidelines to fill in Form ST-1 are available at the back of the Form. You should carefully read these guidelines and fill in the Form in accordance with these guidelines. d) DOCUMENTS REQUIRED No documents are required to be attached with the application Form ST-1. The Central Registration Office has on line access to database of NTN as well as of NADRA. Therefore it verifies the particulars declared in the application with database. Note: Before the implementation of the new rules i.e., Sales Tax Rules, 2005 the applicant was required to appear personally. As per new rules personal appearance is no more required.

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

e) MODE OF FILING APPLICATION A person required to be registered under the Act shall, before making any taxable supplies, apply to the CRO, through electronic means as provided by the Board or otherwise, through owner, member or director, as the case may be. Such application shall be made in the form STR-1, as annexed to these rules, transmitted to the CRO electronically or through registered mail or courier service. Such application will specify the Collectorate in whose jurisdiction the registration is sought, as per criteria given below, namely: (a) In case of a corporate person, that is, a listed public limited company or an unlisted public limited company or a private limited company, the area where the registered office is located; (b) In case of a person not incorporated, the area where the business is actually carried on; and, (c) In case of a person not incorporated, having a single manufacturing unit, whose business premises and manufacturing unit are located in different areas, shall apply for registration in the Collectorate of the area in whose jurisdiction his manufacturing unit is located.

f) REGISTRATION AND ISSUANCE OF REGISTRATION NUMBER If the application for registration is complete in all respects, the Local Registration Office sends the same to the Central Registration Office (CRO). The CRO on completion of such verification or inquiry as it thinks necessary through concerned Local Registration Office, may register the applicant and issue a certificate of registration containing the registration number of the applicant in the prescribed form (Click for form of registration certificate (http://www.cbr.gov.pk/newst/downloads/Annex%20-B.doc) or reject the application within fifteen days from the date complete application is received in the LRO or CRO. The inquiry or verification referred above is about the particulars contained in the application for registration and shall be conducted through Deputy Collector or Assistant Collector within fifteen days of the submission of the completion of application.

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

5-FLOW CHART-II (COMPULSORY REGISTRATION)

A PERSON LIABLE TO BE REGISTERED BUT DOES NOT GET REGISTERED WITH THE SALES TAX DEPARTMENT OF ITS JURISDICTION.

INQUIRY BY THE LOCAL REGISTRATION OFFICE OR ANY OTHER OFFICE AS AUTHORISED BY THE CENTRAL BOARD OF REVENUE.

SHALL SUBMITT A WRITTEN REPORT TO LOCAL REGISTRATION OFFICE.

NOTICE FOR REGISTRATION SHALL BE ISSUED TO SUCH PERSON.

IN CASE OF NONCOMPLIANCE.

IN CASE OF COMPLIANCE.

CENTRAL REGISTRATION OFFICE SHALL COMPULSORILY REGISTER THE PERSON ALLOTING HIM THE REGISTRATION NUMBER.

OPPORTUNITY OF PERSONAL HEARING SHALL BE GIVEN.

LOCAL REGISTRATION OFFICE SHALL PASS AN ORDER DETERMINING THE COMPULSORY REGISTRATION LIABILITY RULE 7(3).

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

6-PROCEDURE FOR COMPULSORY REGISTRATION If a person, who is required to be registered under the Sales Tax Act, for example a manufacturer whos turnover is more than five million rupees, which is the threshold for retailers and manufacturers under the Sales Tax Act, does not apply for registration with the sales tax department, the department shall register that person compulsorily, and it will be called a compulsory registration. a) WRITTEN REPORT AND ISSUANCE OF NOTICE After such inquiry as deemed appropriate, if the Local Registration Office or any other office as may be authorized by the Central Board of Revenue or the Collector sales tax is satisfied that such person is required to be registered, it shall submit a written report to the Local Registration Office. On receipt of such report, the Local Registration Office shall issue a notice on a prescribed form, which shall contain the time and manners of compliance of the notice. b) IN CASE OF COMPLIANCE OF NOTICE In case the Local Registration Office receives a written reply from the said person within the time specified in notice, contesting his liability to be registered, the Local Registration Office shall grant such person opportunity of personal hearing, if so desired by the person, and shall thereafter pass an order whether or not such person is liable to compulsory registration. A copy of the said order shall be provided to the said person. c) IN CASE OF NON-COMPLIANCE OF NOTICE Where the person to whom the notice for compulsory registration is issued, does not respond within the time specified in the notice, the Local Registration Office will send the particulars of the person to the Central Registration Office, which shall compulsorily register the said person and allot him a registration number. Such registration number which shall be delivered to the said person either in person through Local Registration Office or through registered mail (acknowledgment due) or through courier service. d) EFFECT OF COMPULSORY REGISTRATION Where a person is compulsorily registered, he is bound to comply with all the provisions of the Sales Tax Act and the rules made thereunder from the date of his registration. In case of his failure to fulfill the requirement of the Act, the Local Registration Office may take any legal action against such person.

e) CANCELLATION OF COMPULSORY REGISTRATION Where, subsequently it is established that the person compulsorily registered was wrongly registered due to inadvertence, error or misconstruction, the Central Registration Office on the recommendation of the Local Registration Office shall cancel the registration of such person, and such person shall not be liable to pay any tax or penalty under the Sales Tax Act.

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

7-CHANGE IN THE PARTICULARS OF REGISTRTION.

The registered person is legally bound to intimate the sales tax department in case there is a change in the name, address or other particulars as stated in the registration application or certificate. The registered person shall notify the changes in the prescribed form STR-2, to the Central Registration Office. The registered person shall intimate the change within fourteen days of such change to the CRO. The change of business category as manufacturer shall be allowed after verification by LRO.

8-TRANSFER OF REGISTRATION
The Central Registration Office has the power to transfer the registration of a registered person from the jurisdiction of one Collector to another Collector or, as the case may be, to the Director General of Large Taxpayers Unit. On transfer of registration all the records and responsibilities relating to such registered person are transferred to the Collector or, as the case may be, to the Director General of Large Taxpayers Unit in whose jurisdiction the registration has been so transferred; and notwithstanding the actions already taken, being taken or otherwise pending immediately before the transfer in respect of such registered person under any of the provisions of the Act or the rules made there under in the Collectorate from where his registration has been transferred, the Collectorate, or as the case may be, the Director General of Large Tax payer Unit, in whose jurisdiction the registration is so transferred shall exercise the jurisdiction over such person in the manner as if he always had such jurisdiction.

In case of transfer of registration, the Central Registration Office issues a new certificate of registration to the taxpayer in lieu of the previous certificate. The new certificate will contain a reference to the previous certificate of registration. In case a registered person intends to shift his business activity from the jurisdiction of one Collector to another, or has any other valid reason for such transfer, an application is made to the Central Registration Office for transfer of registration. In such case, same procedure of transfer as stated above will be applicable. 9-Revised registration certificate In case of multiple registrations, the registered person may apply on form STR-1 for single registration to the CRO which after ascertaining tax liabilities from the concerned Collectorates shall issue revised registration certificate in which previous registration number shall be merged

Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

10-FLOW CHART-

DE-REGISTRATION
DEREGISTRATION BY THE TAXPAYER

WHERE THE REGISTERED PERSON 1. CEASES BUSINESS 2. STARTS MAKING EXEMPTSUPPLIES

FORM STR-3 SHALL BE SUBMITTED TO THE LOCAL REGISTRATION OFFICE FOR THE CANCELLATION OF THE REGISTRATION, BY THE REGISTERED PERSON

THE LOCAL REGISTRATION OFFICE, MAY RECOMMEND THE CECTRAL REGISTRATION OFFICE TO CANCEL THE REGISTRATION

THE REGISTRATION SHALL BE CANCELLED WITHIN THREE MONTHS FROM THE DATE OF SUCH APPLICATION OR WHEN ALL THE DUES HAVE BEEN PAID BY THE REGISTERED PERSON, WHICHEVER IS LATER

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Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

11-PROCEDURE FOR DEREGISTRATION

There are following two ways to get de-registered: a) DE-REGISTRATION ON TAXPAYERS APPLICATION Every registered taxpayer shall apply to the Local Registration Office for cancellation of his registration under the following circumstances: 1. End / cease of business 2. supplies become exempt The application for de-registration shall be made in form STR.-3, by the registered person to the Local Registration Office. The Local Registration Office may recommend to the Central Registration Office to cancel the registration of that person: from such date as may be specified but not later than three months from the date of such application, or the date all the dues outstanding against such person are deposited by him, whichever is later.

The Local Registration Office, upon completion of any audit or inquiry which may have been initiated consequent upon the application of the registered person for de-registration shall direct the applicant to discharge any outstanding liability which may have been raised against him by filing a final return under the provisions of the Act.

12-BLACKLISTING AND SUSPENSION OF REGISTRATION

Where a Collector has reasons to believe that a registered person is found to have issued fake invoices, or evaded tax or has committed tax fraud, he may, after confirming the facts and the veracity of the information and giving opportunity to such person to clarify his position, blacklist such person or suspend his registration.

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Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

ADDRESSES OF SALES TAX AND CUSTOMS OFFICES IN MAJOR CITIES OF PAKISTAN

Karachi Collectorate of Sales Tax & Federal Excise 18-Block-6, PECHS, Gulshan-e-Iqbal, NIPA, Chorangi, Karachi Phone: 021-4547585 Fax: 021-4557039 Lahore Collectorate of Sales Tax and Federal Excise 56-A, Shadman Market, Lahore Phone: 042- 7568182, 7566746, 7566703 Fax: 042-7553735, 7566933 Peshawar Collectorate Of Sales Tax and Federal Excise House #.23, Street #2, Sector J-1, Phase 2, near Bagh-I-Naran, Hyatabad, Peshawar Phone: 9217261, 9217262 Fax: 5751137 Quetta Collectorate of Sales Tax and Federal Excise Seerat Chowk, Quetta Phone: 9202750 Fax: 836235 Gujranwala Collectorate Of Sales Tax and Federal Excise G.T.Road, Gujranwala Phone, 0431-9200663 Fax: 666812 Sialkot Collectorate Of Sales Tax and Federal Excise Sambrial, Sialkot Phone: 570506, 520103 Fax: 5751137

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Procedure for Registration / De-Registration of Sales Tax

Legal Services Cell

Hayderabad Collectorate Of Sales Tax and Federal Excise A/ 49, Site area, Hyderabad Phone: 880626, 880388 Fax: 880988 Faisalabad Collectorate Of Sales Tax and Federal Excise Jinnah Garden Road, 3 civil lines, Faisalabad Phone: 627205 Fax: 627206 Multan Collectorate Of Sales Tax and Federal Excise Vehari Chowk, near General Bus stand, Bahawalpur Road, Multan Phone: 571934 Fax: 543708

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