Law in Pakistan Financial Ordinance, 2000

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To give effect to the financial proposals of the Federal Government for the year beginning on the first day of July 2000, and to amend certain laws.

WHEREAS it is expedient to make provision to give effect to the financial proposals of the Federal Government for the year beginning on the first day of July, 2000, and to amend certain laws for the purposes hereinafter appearing;

WHEREAS the National Assembly and the Senate stand suspended in pursuance of the Proclamation of Emergency of the fourteenth day of October, 1999, and the Provisional Constitution Order No. 1 of 1999;

WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action;

NOW, THEREFORE, in pursuance of Proclamation of Emergency of the fourteenth day of October, 1999, and Provisional Constitutional Order No. 1 of 1999, as well as order No. 9 of 1999, and in exercise of all powers enabling him in that behalf, the President of the Islamic Republic of Pakistan is pleased to make and promulgate the following ordinance.

1.         Short title, extent and commencement.- (1) This Ordinance may be called Finance Ordinance, 2000.

(2) It extends to the whole of Pakistan

(3)        It shall come into force at once.

2.         Amendment of Act I of 1944.- The following amendments shall be made in the

Central Excises Act, 1944 (I of 1944), namely:- (1)           in section 2, in clause (2), the comma, words and brackets “, Collector of Central Excise (Appeals)” shall be omitted;

(2) in section 3, in sub-section (1), in the proviso, for the full stop, at the end, a colon shall be substituted and after the proviso, amended as aforesaid, the following new proviso shall be added, namely:-

“Provided further that the duty in respect of goods imported into Pakistan shall be levied and collected in the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969 (IV of 1969), and the provisions of the said Act including section 31A thereof shall apply.”;

(3) in section 3B,- (i) for the words “two per cent” , the words “one and half per cent” shall be substituted;

(ii) in the Explanation,- (1) the bracket and figure “(i)” shall be omitted;

(2) for the semicolon and word “; and[” a full stop shall be substituted; and

(3) clause (ii) shall be omitted;

(4) for the section 33, the following shall be substituted, namely:-

“33 Power of adjudication.— (1) Subject to sub-section (2), in cases involving confiscation of goods or imposition of penalty under this Act or the rules made thereunder, the jurisdiction and powers of adjudication of the Central Excise Officers shall be as follows:-

(i) Collector       Without limit.

(ii) Additional Collector  Confiscation of goods the value of which does not exceed Rs.1,500,000/- excluding the value of conveyance and the value of non-dutiable goods, and imposition of the penalty under the rules.

(iii) Deputy Collector      Confiscation of goods the value of which does not exceed Rs.500,000/- excluding the value of conveyance and the value of non-dutiable goods, and imposition of the penalty under the rules.

(2)        The Board may, by notification in the official Gazette, vary the jurisdiction and powers of any Central Excise Officer or a class of Central Excise Officers.

(3)        A Collector, an Additional Collector and a Deputy Collector shall decide the case within forty-five days of the issuance of show cause notice or within such extended period for which reasons shall be recorded in writing, provided that such extended period shall in no case exceed ninety days.”;

Provided that the Board shall have powers to regulate the system of adjudication including transfer of cases and extension of time limit in exceptional circumstances.

(5) Section 35 shall be omitted;

(6) Section 35A shall be omitted;

(7) In section 35B,- (a) in sub-section (1), -

(i) after the word “person” the words “or central excise officer” shall be inserted;

(ii) in clause (a), for the words “the Collector of Central Excise” the words “a Central Excise Officer” shall be substituted;

(iv) clause (b) shall be omitted;

(v) in clause (d), for the figure and word “35-A” the figure and word “35E” shall be substituted; and

(vi) in the second proviso, for the word “ten” the word “fifty” shall be substituted;

(b) sub-section (2) shall be omitted;

(c) in sub-section (6), the words, brackets and figure “an appeal referred to in sub-section (2) or” shall be omitted; and

(d) after sub-section (6), amended as aforesaid, the following new sub-section shall be added, namely:-

“(7)       All cases pending before a Collector (Appeals), immediately before the commencement of the Finance Ordinance, 2000, shall stand transferred to Appellate Tribunal for disposal.”;

(8) in section 35C,- (a)    in sub-section (1), for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be inserted, namely:-

“Provided that appeal shall be decided within sixty days of filing the appeal or within such extended period as the Tribunal may, for reasons to be recorded in writing fix, provided that such extended period shall in no case exceed ninety days.”;

(b) in sub-section (3), for the words “Collector of Central Excise” the words “Central Excise Officer” shall be substituted;

(9) section 36 shall be omitted;

(10) in section 36B,-

(a) in sub-section (1), in the first proviso,- (i) the comma, words and brackets “, the Collector (Appeals) or” shall be omitted;

(ii) the words, brackets and commas “the Collector (Appeals) or, as the case may be,” shall be omitted;

(iii) the words “he or” shall be omitted;

(b) in the second proviso, the words “appellate authority” the words “Appellate Tribunal” shall be substituted;

(c) in the third proviso, the comma, words and brackets “, the Collector (Appeals) or” shall be omitted;

(d) Sub-section (2) shall be omitted;

(11) Chapter VI-A, and sections 36N, 36O, 36P, 36Q, 36R, 36S, 36T, 36U, 36V, 36W and 36X shall be omitted; and

(12) in the First Schedule, in paragraph 2, in the first table, in the first column, after heading 33.02, the following new heading number and the entries relating thereto in the second and third columns shall be inserted, namely:-

“38.14   Organic composite solvents      Rs.10 per and thinners, not elsewhere litre.”. specified or included; prepared paint or varnish removers.

3. Amendment of Act XV of 1963.- The following amendments shall be made in the Wealth-tax Act, 1963 (XV of 1963), namely:-

(1)        in section 2, in sub-section (10), after the comma, occurring for the first time, the words and comma “an Assistant Commissioner of Wealth-tax,” shall be inserted and shall be deemed always to have been so inserted;

(2)        in section 3, after the colon at the end, the following proviso shall be added, namely: -

“Provided that wealth-tax shall not be chargeable in respect of any assessment year commencing on or after the first day of July, 2001.”;

(3)        in section 13A, in sub-section (1), in the proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided further that nothing contained in this section shall apply in respect of any assessment year commencing on or after the first day of July, 2001.”;

(4)        in section 13D, after sub-section (3), the following new sub-section shall be added, namely:- “(4) Advance tax under this section shall not be payable in the financial year commencing on or after the first day of July, 2000.”;

(5)        in section 14, in sub-section (1A), in clause (a), the second proviso shall be omitted;

(6)        in section 14C, in sub-section (1), in the proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided further that nothing contained in this section shall apply in respect of any assessment year commencing on or after the first day of July, 2001.”; and

(7)        in section 14D, in sub-section (1), in the second proviso, for the full stop, at the end, a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided further that nothing contained in this section shall apply in respect of any assessment year commencing on or after the first day of July, 2001.”.

4.         Amendment of Act IV of 1969.- The following amendments shall be made in the Customs Act, 1969 (IV of 1969), namely:- 1. In section 2,

(a)        in clause (a) the words “, Collector (Appeals)” shall be omitted; and

(b)        in section 2, the clause (ff) shall be omitted;

2.         for section 5, the following shall be substituted, namely:-

“5. Delegation of powers.- (1) The Board may, by notification in the official Gazette and subject to such limitations or conditions as may be specified therein, empower by name or designation – (a)    any Additional Collector of Customs or Deputy Collector of Customs to exercise any of the powers of a Collector of Customs under this Act;

(b) any Deputy Collector of Customs or Assistant Collector of Customs to exercise any of the powers of an Additional Collector of Customs under this Act;

(c)        any Assistant Collector of Customs to exercise any of the powers of a Deputy Collector of Customs under this Act; and

(d)        any other officer of customs with any other designation..

(2) Unless the Board in any case otherwise directs, the Collector may authorize any officer subordinate to him to exercise within any specified area, any of the powers of the Collector or of any other officer of Customs under this Act.”’

3.         In section 25,- (i)            for sub-section (4), the following shall be substituted, namely:-

“(4) Where, in relation to the goods being valued, the appropriate officer is of the opinion that the importer has not, for the purposes of clause (a) of sub-section (3), demonstrated that the relationship did not influence the price or, for the purposes of clause (b) of sub-section (3), that the declared price at which the goods are imported does not closely approximate to one of the test values mentioned therein, the appropriate officer shall inform the importer of his reservations in writing and give the importer an opportunity to justify the price difference. If the importer fails to justify the price difference, the customs value cannot be determined under the provisions of sub-section(1).”;

(ii)         in sub-section 5,-           (a)        in clause (a),- (i) for the word “provision” the word “provisions” shall be substituted; and

(ii)         after the word “of”, occurring for the second time, the word “the” shall be inserted.;

(b)        after clause (c), the following new clause shall be added, namely:-

“(d)       If, in applying the provisions of this sub-section, there are two or more transaction values of identical goods that meet all the requirements of this sub-section and clauses (b), (d), (e) and (f) of sub-section (13), the customs value of the imported goods shall be the lowest such transaction value, adjusted as necessary in accordance with clauses (b) and (c).”;

(iii)        for sub-section (6), the following shall be substituted, namely:-

“(6) Transaction value of similar goods.- If the customs value of the imported goods cannot be determined under the provisions of sub-section (5), it shall, subject to clauses (c), (d), (e) and (f) of sub-section 13 and rules, be the transaction value of similar goods sold for export to Pakistan and exported at or about the same time as the goods being valued, and the provisions of clauses (a), (b) (c) and (d) of sub-section (5) shall, mutatis mutandis, also apply in respect of similar goods.”;

(iv)        in sub-section (7), in clause (a),- (a)        in sub-clause(ii), after the section, at the end, the word “and” shall be added; and

(b)        sub-clause (iii), shall be omitted.;

4.         In section 32,- (i)            in sub-section (2), for the word “three”, the word “five” shall be substituted;

(ii)         in sub-section (3), for the words “six months”, the words “three years” shall be substituted; and

(ii)         after sub-section(3), the following new sub-section shall be inserted, namely:-

“(3A)     Notwithstanding anything contained in sub-section (3), where any duty or charge has not been levied or has been short-levied or has been erroneously refunded and this is discovered as a result of an audit or examination of an importer’s accounts or by any means other than an examination of the documents provided by the importer at the time the goods were imported, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date requiring him to show cause why he should not pay the amount specified in the notice.”;

5.         in section 81, in sub-section (2), for the word and figure “one hundred and eighty days” the words “one year” shall be substituted.;

6.         after section 83, the following new section shall be inserted, namely:-

Financial Ordinance, 2000

“136. Reference to High Court.- (1) Within ninety days of the date upon which he is served with notice of an order under section 135, the assessee or the Commissioner may, by application in such form and accompanied by such documents as may be prescribed, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall, within ninety days of the receipt of such application, draw up a statement of the case and refer it to the High Court.

Explanation.- For the removal of doubts it is hereby declared that a reference application under this section may be made in respect of a question of law arising out of an order of the Appellate Tribunal made on or after the first day of July, 2000.

(2) If, on an application made under sub-section (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may within one hundred and twenty days from the date on which he is served with notice of the refusal, apply to the High Court and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, frame a question of law and the provisions of sub-sections (5), (6), (7) and (8) shall, so far as may be, apply as they apply to a reference made under sub-section (1).

(3) If on any application made under sub-section (1), the Appellate Tribunal rejects it on the ground that it is time-barred, the assessee or the Commissioner, as the case may be, may, within three months from the date on which he is served with notice of the rejection, apply to the High Court, and the High Court, if it is not satisfied of the correctness of the Appellate Tribunal’s decision, may require the Appellate Tribunal to treat the application as made within the time allowed under sub-section (1).

(4) If the High Court is not satisfied that the statement in a case referred under sub-section (1) is sufficient to enable it to determine the question raised thereby, the Court may refer the case back to the Appellate Tribunal to make such modification therein as the Court may direct.

(5) When any case has been referred to the High Court under this section, it shall be heard by a Bench of not less than two Judges of the High Court, and in respect of such case the provisions of section 98 of the Code of Civil Procedure, 1908 (V of 1908), shall, so far as may be, apply notwithstanding anything contained in the Letters Patent applicable to any High Court or in any other law for the time being in force.

(6) The High Court upon the hearing of any such case, shall decide the questions of law raised thereby and shall deliver its judgement thereon containing the grounds on which such decision is founded and shall send a copy of such judgement under the seal of the Court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgement.

(7) Where a reference is made to the High Court under this section, the costs shall be in the discretion of the Court.

(8) Notwithstanding that a reference has been made under this section to the High Court, tax shall, unless the recovery thereof has been stayed by the High Court, be payable in accordance with the assessment made in the case.

(9) Section 5 of the Limitation Act, 1908 (IX of 1908), shall apply to an application under sub-section (1) or sub-section (2).

(10) When an application is made under sub-section (1) by the assessee, it shall be accompanied by a fee of one hundred rupees.”;

(25)       in section 137, in sub-section (1), for the words “an appeal filed” the words and comma “a reference made, or any question of law framed,” shall be substituted;

(26) in section 138, in sub-section (5), in clauses (c) and (e) for the words “Central Board of Revenue” the words “Regional Commissioner” shall be substituted;

(27)       in section 138C, in sub-section (2A), for the full stop, at the end, colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that this Commission shall not perform its functions referred to in clause (c) after the 30th day of June, 2000.”;

(28)       in section 138D, after sub-section (3), the following new sub-section shall be added, namely:-      “(4)       No application under this section shall be made after the 30th day of June, 2000.”; and

(29)       section 138EE shall be omitted;

(30) in the First Schedule,- (i)      in Part-I,- (a) in paragraph A, in the proviso, in clause (a), sub-clause (ii) shall be omitted;

(b) paragraph AA shall be omitted;

(c)        in paragraph CCC, in sub-paragraph (i), in clause (d), for full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that for the assessment year commencing on or after the first day of July, 2001, the rate of tax shall be six per cent of the value of goods imported.”;

(d)        in paragraph CCCC,- (i)  the existing paragraph shall be re-numbered as sub-paragraph (a); and

(ii)         after sub-paragraph (a), re-numbered as aforesaid, the following new sub-paragraph shall be added, namely:- “(b)            for the assessment year commencing on or after the first day of July, 2001, the rates shall be as under:-

(i)         Part-I of Eighth  0.75% of such income   Schedule.

(ii)         Part-II of Eighth 1.0% of such income    Schedule

(iii)        Part-III of Eighth 1.25% of such income Schedule

(e)        after paragraph CCCC, the following new paragraph CCCCA shall be inserted, namely:-

“CCCCA.           In the case of every person to whom section 80CD applies and the income pertains to exports covered under: (i)         Part-I of Eighth 0.75% of           Schedule          such income

(ii) Part-II of Eighth 1% of Schedule                    such income

(iii)        Part-III of Eighth 1.25% of Schedule       such income.”;

(f)         in paragraph F, for the word “Five” the word “Six” shall be substituted;

(g)        for paragraph FF, the following shall be substituted namely:-

“FF.      Rate of collection of income tax under sub-sections (5A), (5AA) and (5AAB) of section 50 apply, excluding income to which paragraph FFA applies:

Where the income pertains to supply of goods to an exporter under a back to back inland letter   of credit and from exports            covered under:  Rates

(i)         Part-I of Eighth  0.75% of                       Schedule such income

(ii)         Part-II of Eighth 1% of   Schedule          such income

(iii)        Part-III of Eighth 1.25% of Schedule       such income.”;

(h)        paragraph HHH shall be omitted;

(ii)         in Part-III, after paragraph B, the following new paragraph shall be added, namely:-

“C.        In respect of the income year relevant to the assessment year commencing on or after the first day of July, 2000, a company, not being a banking company, shall pay surcharge equal to five per cent of the amount of income tax payable excluding the amount of presumptive income tax payable under section 80C or 80CC.”;

(31)       in the Second Schedule,- (i)       in Part-I,-

(a)        in clause (86B),- (i)         for the words “approved by the Central Board of Revenue” the words and comma “recognized by a Board of Education or a University or the University Grant Commission, as the case may be” shall be substituted;

(ii)         for the figure “2000″ the figure “2005″ shall be substituted; and

(iii) for the full stop, at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely,-

“Provided that a computer training institution or computer training scheme approved by the Central Board of Revenue before the first day of July, 2000, shall continue to avail exemption under this clause till the expiry of the specified period.”;

(b)        in clause (108), for the figure “2000″ the figure “2001″ shall be substituted;

(c)        in clause (117A), after the figures “1999″, the words and figures, “and between the first day of July, 2000 and the 30th day of June, 2001″, shall be added; and

(d)        clauses (154A), (155A) and (178) shall be omitted;

(ii)         in Part-II,- (a)     in clause (6AA),- (i)        for the word “two” the word “three” shall be substituted; and

(ii)         the words and comma “as raw material by an industrial undertaking exclusively for its own use,” appearing after the word “imported” shall be omitted.

(b)        clauses (14) and (15) shall be omitted;

(iii) in Part-III,- (a)           for the brackets, letter and figure “(A1)” the brackets, figure and letter “(1A)” shall be substituted; and

(b)        after clause (1A), the following new clause shall be added, namely:-

“(1B)     Reduction in tax in the cases of salaried tax payers.- (1) The income tax liability on income of salaried tax payers, where any income chargeable under the head “salary” exceeds 50% of total income as determined under paragraph A of Part-I of the First Schedule, shall be reduced at the following rates:-

S.No.    Income Slab      Reduction in Tax liability

1.         Where income does not exceed Rs.60,000                                             80%

2.         Where income exceeds Rs.60,000 but does not exceed Rs.80,000          70%

3.         Where income exceeds Rs.80,000 but does not exceed Rs.100,000         60%

4.         Where income exceeds Rs.100,000 but does not exceed Rs.150,000       50%

5.         Where income exceeds Rs.150,000 but does not exceed Rs.200,000       40%

6.         Where income exceeds Rs.200,000 but does not exceed Rs.300,000       30%

7.         Where income exceeds Rs.300,000 but does not exceed Rs.500,000       10%

8.         Where income exceeds Rs.500,000                                                        5%

(2)        in addition to the reduction specified in sub-clause (1), the tax payable by a full time teacher or a researcher, employed in a non profit education or research institution duly recognised by a Board of Education or a University or the University Grants Commission, shall be further reduced by an amount equal to 50% of the tax payable after the aforesaid reduction.

(3) The reduction in tax liability in sub-clauses (1) and (2) shall be applicable for the purposes of tax withholding under sub-section (1) of section 50 from the first day of July, 2000 and for the purposes of assessment from assessment year 2001-2002.”;

(iv)        in Part-IV,- (a)    in clause (9B), in the third proviso, for the word “four” the word “six” shall be substituted;

(b)        clauses (7), (17A) and (24) shall be omitted;

(c)        after clause (17), the following new clauses shall be inserted, namely:-

“(17B)   The provisions of sub-section (5) of section 50 shall not apply to such specially equipped motor vehicle or support equipment imported by a disabled person, as is allowed by the Federal Government.

(17C)    The provision of sub-section (5) of section 50 shall not apply in case of such goods imported into Pakistan as are exempt from customs duty and sales tax under SROs 360(I)/2000, 362(I)/2000 and 363(I)/2000 dated 17.6.2000.”;

(d)        after clause (32A), the following new clauses shall be added, namely:-

“(32B)   The provisions of section 80D shall not apply to a charitable institution which is approved under clause (d) of sub-section (1) of section 47 or clause (62) or is included in clause (62) or clause (91) of Part-I of the Second Schedule to this Ordinance.

(32C)    The provisions of section 80D shall not apply to an assessee who qualifies for exemption under clause (179) of Part-I of the Second Schedule to this Ordinance.”;

(32)       in the Third Schedule, in rule 5A, in the table, entry F shall be omitted; and

(33)       in the Eighth Schedule,- (a)        for the first paragraph the following shall be substituted, namely:-

“The rate of tax payable under sub-section (5A) of section 50, in respect of income of a person (being a resident), from export of goods shall be –

Where the income pertains The rate to exports covered under:

(a)        Part I.   0.75% of such income or the rate as prescribed by the Central Board of Revenue.

(b)        Part II    1.0% of such income or the rate as prescribed by the Central Board of Revenue.

(c)        Part III   1.25% of such income or the rate as prescribed by the Central Board of Revenue.”; and

(b)        in the table, in Part-III, in entry No. 2 the word “produced” shall be substituted by word “produced or manufactured”, and after entry No. (v), the following shall be added;

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