An Act to consolidate and amend the law relating to duties of excise

WHEREAS it is expedient to consolidate and amend the law relating to duties of excise on goods manufactured, produced, imported or consumed and services provided or rendered in Pakistan;

It is hereby enacted as follows:–

CHAPTER I

PRELIMINARY

 1. Short title, extent and commencement.– (1)This Act may be called the Federal Excise Act, 2005,

(2) It extends to the whole of Pakistan

(3) It shall come into force on 1^st day of July, 2005.

2. Definitions.– In this Act, unless there is anything repugnant in the subject or context,—

(1) “adjudicating authority” means any authority competent to pass any order or decision under this Act or the rules made thereunder, but does not include the Board or Appellate Tribunal;

(2) “adjustment” means deduction of amount of duty paid on goods used in the manufacture or production of other goods from the amount of duty payable on such other goods in the prescribed manner;

(3) “Appellate Tribunal” means the Customs, Excise and Sales Tax Appellate Tribunal constituted under section 194 of the Customs Act, 1969 (IV of 1969);

(4) “Board” means the Central Board of Revenue constituted under the Central Board of Revenue Act, 1924 (IV of 1924);

(5) “Collector” means an officer of Federal Excise notified as Collector of Federal Excise under this Act;

(6) “conveyance” means any means of transport used for carrying goods or passengers such as vessel, aircraft, vehicle or animal etc.;

(7) “default surcharge” means surcharge levied under section 8;

(8) “distributor” means a person appointed by a manufacturer in or for a specified area to purchase goods from him for sale to a wholesale dealer in that area;

(9) “duty” means any sum payable under the provisions of this Act or the rules made thereunder and includes the default surcharge and the duty chargeable at the rate of zero per cent;

(10) “establishment” includes an undertaking, firm or company, whether incorporated or not, an association of persons and an individual;

(11) “factory” means any premises, including the precincts thereof, wherein or in any part of which goods are manufactured, or wherein or in any part of which any manufacturing process connected with the production of the goods is being carried on or is ordinarily carried on;

(12) “Federal Excise Officer” means any officer of the Federal Excise Department, or any person (including an officer of the Provincial Government) invested by the Board with any of the powers of a Federal Excise Officer under this Act or rules made thereunder;

(13) “goods” means goods leviable to excise duty under this Act or as specified in the First Schedule and includes goods manufactured or produced in non-tariff area and brought for use or consumption to tariff area;

(14) “goods insurance” includes fire, marine, theft, accident and other such miscellaneous insurance;

(15) “import” and “export” mean respectively bringing into, and taking out of Pakistan by sea, land or air and shall be deemed to have always been so defined;

(16) “manufacture” includes,–

(a) any process incidental or ancillary to the completion of a manufactured product;

(b) any process of re‑manufacture, remaking, reconditioning or repair and the processes of packing or repacking such product, and, in relation to tobacco, includes the preparation of cigarettes, cigars, cheroots, biris, cigarette and pipe or hookah tobacco, chewing tobacco or snuff, and the word “manufacturer” shall be construed accordingly and shall include,–

(i) any person who employs hired labour in the production or manufacture of goods; or

(ii) any person who engages in the production or manufacture of goods on his own account if such goods are intended for sale; and

(c) any person who, whether or not he carries out any process of manufacture himself or through his employees or any other person, gets any process of manufacture carried out on his behalf by any person who is not in his employment:

Provided that any person so dealing in goods shall be deemed to have manufactured for all purposes of this Act, such goods in which he deals in any capacity whatever;

(17) “non-tariff area” means Azad Jammu andKashmir, Northern Areas and such other territories or areas to which this Act does not apply;

(18) “person” includes a company, an association, a body of individuals, whether incorporated or not, a public or local authority, a Provincial Government or the Federal Government;

(19) “prescribed” means prescribed under this Act or by rules made thereunder;

(20) “registered person” means a person who is registered or is required to be registered under this Act provided that a person who is not registered but is required to be registered shall not be entitled to any benefit or privilege under this Act or rules made thereunder, unless he is registered and such benefit and privilege, unless allowed by Board, shall be confined to period of registration;

(21) “sale” and “purchase” with their grammatical variations and cognate expressions, mean any transfer of the possession of goods or rendering and providing of services by one person to another in the ordinary course of trade or business for cash or deferred payment or other consideration;

(22) “Schedule” means the schedule appended to this Act;

(23) “services” means services, facilities and utilities leviable to excise duty under this Act or as specified in the First Schedule read with Chapter 98 of the Pakistan Customs Tariff, including the services, facilities and utilities originating from Pakistan or its tariff area or terminating in Pakistan or its tariff area;

(24) “tariff area” means area other than the non-tariff area;

(25) “wholesale dealer” means a person who buys or sells goods wholesale for the purpose of trade or manufacture, and includes a broker or commission agent who, in addition to making contracts for the sale or purchase of goods for others, stocks such goods belonging to others as an agent for the purpose of sale; and

(26) “zero-rated” means duty of Federal excise levied and charged at the rate of zero per cent under section 5 of this Act.

CHAPTER II

LEVY, COLLECTION AND PAYMENT OF DUTY

3. Duties specified in the First Schedule to be levied.–– (1) Subject to the provisions of this Act and rules made thereunder, there shall be levied and collected in such manner as may be prescribed duties of excise on,—

(a) goods produced or manufactured inPakistan;

(b) goods imported intoPakistan;

(c) such goods as the Federal Government may, by notification in the official Gazette, specify, as are produced or manufactured in the non-tariff areas and are brought to the tariff areas for sale or consumption therein; and

(d) services, provided or rendered inPakistan;

at the rate of fifty per cent ad valorem except the goods and services specified in the First Schedule, which shall be charged toFederal excise duty as, and at the rates, set-forth therein.

(2) 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)The Board may, by notification in the official Gazette, in lieu of levying and collecting under sub‑section (1) duties of exciseon goods and services, as the case may be, levy and collect duties,—

(a) on the production capacity of plants, machinery, undertakings, establishments or installations producing or manufacturing such goods; or

(b) on fixed basis, as it may deem fit, on any goods or class of goods or on any services or class of services, payable by any establishment or undertaking producing or manufacturing such goods or providing or rendering such services.

(4) Without prejudice to other provisions of this Act, the Federal Government may levy and collect duty on any class or classes of goods or services by notification in the official Gazette at such higher or lower rate or rates as may be specified in such notification.

Explanation.– Subject to sub-section (1), for the purpose of this section, “goods” means the goods specified in CHAPTERS 1 TO 97 and “services” means the services specified in CHAPTER 98 of the First Schedule to the Customs Act, 1969 (IV of 1969).

4. Filing of return and payment of duty etc.— (1) At the close of a month every registered person shall prepare a return in such form as may be specified by the Board and furnish the same to the Collector within three days after payment of the amount of duty due from him for a month.

(2) Duty shall be deposited in the designated branch of the bank on the prescribed challan after properly filling up all columns of the challan mentioning registration number on its right top by seventh day of the succeeding or by such date as may be specified by the Board provided that any shortfall in the days of the month during which duty has been collected shall be forgone.

(3) If during any month, there is a change in the rate of duty, a separate return showing the application of different rates of duty shall be used in respect of each portion of such month.

(4) A person may file a revised return for the correction of any bonafide error or mistake in the entries or declaration of the original return.

(5) The Board may, by notification in the official Gazette, require any person or class of persons for any goods or class of goods to furnish such summary or details of particulars pertaining to imports, purchases, utilization, consumption, production, sales or disposal of such goods during any month or months in such format and manner as may be specified and provisions of this sub-section may be invoked mutatis mutandis in respect of services.

(6) The Board may by an order, specify the manner and procedure for filing of return for the purpose of this Act or rules made thereunder and for payment of duty by electronic means. The Board may specify the manner and procedure for the submission, receipt and transmission of any information for the purpose of this Act or rules made thereunder by electronic means.

(7) Every amount of duty due from any person on any other account shall also be deposited on the prescribed challan in the bank branch designated and in the same manner as aforesaid.

5. Zero rate of duty and drawback of duty etc.— (1)Notwithstanding the provisions of section 3, the goods exported out of Pakistan or such goods as may be, by a notification in the official Gazette, specified by the Federal Government shall be charged to duty at the rate of zero per cent and adjustment of duty in terms of section 6shall be admissible on such goods.

(2) The Board may, by notification in the official Gazette, grant drawback of duty paid on any goods used in the manufacture of any goods manufactured in and exported out of Pakistan, or shipped as provisions or stores for consumption on board a ship or aircraft proceeding to a destination outside Pakistan, at such rate or rates and subject to such conditions and limitations as may be specified in the notification.

6. Adjustment of duties of excise.— (1) For the purpose of determining net liability of duty in respect of any goods, the duty already paid on goods specified in the First Schedule and used directly as input goods for the manufacture or production of such goods shall be deducted from the amount of duty calculated on such goods.

(2) Adjustment of duty of excise under sub-section (1) shall be admissible only if a person registered under this Act holds a valid proof to the effect that he has paid the price of goods purchased by him including the amount of duty and received the price of goods sold by him including the amount of duty through banking channels including online payment whether through credit card or otherwise.

(3) Notwithstanding the provisions of sub-section (1), the Board may, by a notification in the official Gazette, disallow or restrict whole or part of the amount of or otherwise regulate the adjustment of duty in respect of any goods or class of goods.

7. Application of the provisions of the Sales Tax Act, 1990.— In case of goods specified in the Second Schedule or such services as may be specified by the Board through a notification in the official Gazette,—

(a)a registered person manufacturing or producing such goods or providing or rendering such services shall be entitled to deduct input tax paid during the tax period from the amount of duty of excise due from him on such goods or services in respect of that tax period;

(b)a registered person shall be entitled to deduct the amount of duty of excise paid or payable by him on such goods or services as are acquired by him during a tax period from the output tax due from him in respect of that tax period;

(c)a registered person supplying such goods or providing or rendering such services shall be entitled to deduct duty of excisepaid or payable on such goods or services as are acquired by him during the tax period from the amount of duty of excise due from him on such goods manufactured or produced or services as are provided or rendered by him during that period; and

(d)a person shall be entitled to deduct duty of excise paid or payable, on such goods or services as are acquired by him during a month, from the amount of duty of excise due from him on such goods manufactured or produced or such services as are provided or rendered by him, during that month.

Explanation.— For the purposes of this section, the expressions “input tax”, “output tax” and “tax period” shall have the same meanings as are assigned to them in the Sales Tax Act, 1990, provided that the date for payment of duty under this Act shall be the date specified under sub-section (1) of section 4.

8. Default surcharge.– If a person fails to pay the duty within the prescribed time, he shall, in addition to the duty payable under section 3, be liable to pay default surcharge at the rate of one per cent per month for the first six months and at the rate of one and half per cent per month thereafter.

Explanation.– For the purpose of this section, the period of default shall be reckoned from the day following the due date on which the duty was payable to the preceding day on which the duty is actually paid.

9. Liability for payment of duty in the case of private companies or business enterprises or in case of sale of business ownership.– (1) Notwithstanding anything contained in any other law for the time being in force, where any private company or business enterprise is closed or discontinued or otherwise ceases to exist and any amount of duty chargeable on the company or business enterprise, whether before, or in the course of, or after its liquidation cannot be recovered from the company or business enterprise, every person who was a owner of, or partner in, or director of, the company or business enterprise shall, jointly and severally with such persons, be liable for the payment of such duty.

(2) In the case of sale or transfer of ownership of a business or part thereof involving any charge of duty to another person as an ongoing concern, the chargeable duty shall be paid by the person to whom such sale is made or ownership is transferred provided that if any amount of duty payable by such person remains unpaid, such unpaid amount of duty shall be the first charge on the assets of the business and shall be payable by the transferee of business:

Provided that no business enterprise or a part thereof shall be sold or transferred unless the outstanding duty is paid and a no objection certificate in this behalf from the Collector concerned is obtained.

(3) In case of termination of a business or part thereof involving any outstanding charge of duty, a person terminating such business or part thereof shall be required to account for and pay the outstanding charge of duty as if no such termination has taken place.

10. Applicable value and rate of duty.— The value and the rate of duty applicable to any goods or services shall be the value, retail price, tariff value and the rate of duty in force,–

(a) in the case of goods, on the date on which the goods are cleared for export or for home consumption;

(b) in the case of services, on the date on which the services are provided or rendered; and

(c) in the case of goods produced or manufactured outside the areas to which this Act has been applied and brought to such areas for sale or consumption therein, the date on which the goods are brought to those areas.

11. Collection of excess duty etc.– Every person who for any reason whatever has collected or collects any duty, which is not payable as duty or which is in excess of the duty actually payable and the incidence of which has been passed on to the consumer, shall pay the amount so collected to the Federal Government and all the provisions of this Act or rules made thereunder shall apply for the recovery of such amount and claim for refund of any such amount paid or recovered shall not be admissible on any ground whatever.

Determination of value for the purposes of duty.– (1) Where any goods are liable to duty under this Act at a rate dependent on their value, duty shall be assessed and paid on the basis of wholesale cash price of that goods and where such price is not available, of identical or similar goods, on which the goods are capable of being sold to a general body of retail traders and if there is no such body, to the general body of consumers on the day of its sale, without any deduction whatever except the amounts of duty and sales tax then payable.

(2) Where any services are liable to duty under this Act at a rate dependent on the charges therefor, the duty shall be paid on total amount of charges for the services including the ancillary facilities or utilities, if any, irrespective whether such services have been rendered or provided on payment of charge or free of charge or on any concessional basis.

(3) Where any goods are chargeable to duty at the import stage, duty shall be assessed and paid on the value determined in accordance with section 25 of the Customs Act, 1969 (IV of 1969), including customs duties payable thereon.

(4) Where any goods are chargeable to a duty on the basis of retail price, duty thereon shall be paid on the retail price fixed by the manufacturer, inclusive of all charges and taxes, other than sales tax levied and collected under section 3 of the Sales Tax Act, 1990, at which any particular brand or variety of such goods should be sold to the general body of consumers or, if more than one such price is so fixed for the same brand or variety, the highest of such price and such retail price shall, unless otherwise directed by the Board, be legibly, prominently and indelibly indicated on each good, packet, container, package, cover or label of such goods:

Provided that where so and as specified by the Board, any goods or class of goods liable to duty on local production as percentage of retail price, the provisions of this sub-section shall mutatis mutandis apply in case such goods are imported from abroad.

(5) The Board may fix the minimum price of any goods or class of goods, for the purpose of levying and collecting of duty and duty on such goods shall be paid accordingly.

Registration.— (1) Any person engaged in the production or manufacture of goods or providing or rendering services liable to duty of excise under this Act shall, unless otherwise specified, be required to obtain registration in the prescribed manner regardless of his annual turnover or volume of sales of such goods or services.

(2) Where a person who is already registered under the Sales Tax Act, 1990, shall not be required to take separate registration for excise purpose and his sales tax registration shall be deemed to be a registration for the purpose of this Act:

Provided that provisions of the Sales Tax Act, 1990, including those relating to exemption threshold shall not apply where a person obtains or is liable to obtain registration for the purposes of this Act but does not have or is not liable to registration under the Sales Tax Act, 1990.

Recovery of unpaid duty or of erroneously refunded duty or arrears of duty, etc.—(1) Where any person has not levied or paid any duty or has short levied or short paid such duty or where any amount of duty has been refunded erroneously, such person shall be serviced with notice requiring him to show cause for payment of such duty provided that such notice shall be issued within three years from the relevant date.

(2) The Federal Excise Officer, empowered in this behalf, shall after considering the objections of the person served with a notice to show cause under sub-section (1), determine the amount of duty payable by him and such person shall pay the amount so determined along with default surcharge and penalty as specified by such officer under the provisions of this Act.

(3) Where any amount of duty levied and penalty imposed or any other amount payable under this Act is due from any person, such amount or sum shall be recovered in such manner as is prescribed under this Act or rules made thereunder.

(4) Notwithstanding anything contained under any other law for the time being in force, where any business or activity involving liability to charge, levy and pay duty under this Act is sold, discontinued or liquidated, the amount of unpaid or recoverable duty shall be the first charge on the assets of the business.

Explanation.—For the purpose of this section, the expression “relevant date” means the date on which the payment of duty was due under sub-section (3) and in case where any amount of duty has been erroneously refunded, the date of its refund.

Application of the Customs Act, 1969 (IV of 1969) to Federal excise duties.– The Federal Government may, by notification in the official Gazette, declare that any or all of the provisions of the Customs Act, 1969 (IV of 1969), shall, with such modifications and alterations it may specify, consider necessary or desirable to adapt them to the circumstances, be applicable in regard to like matters in respect of the duties levied by sections 3 and 8.

Exemptions.– (1) All goods imported, produced or manufactured in Pakistan and services provided or rendered except such goods and services as are specified in the First Schedule shall be exempt from whole of excise duties:

Provided that goods and services specified in the Third Schedule shall be exempt from duty subject to such conditions and restrictions, if any, specified therein and no adjustment in terms of section 6 shall be admissible in respect of goods exempt from duty of excise whether conditionally or otherwise.

(2) The Federal Government may by notification in the official Gazette, exempt subject to such conditions as may be specified therein, any goods or class of goods or any services or class of services from the whole or any part of the duty leviable under this Act.

(3) The Board may, by special order, exempt from the payment of the whole or any part of the duty leviable under this Act, under circumstances of exceptional nature, any goods or services on which such duty is leviable.

(4) Notwithstanding the provisions of sub-sections (2) and (3), the Federal Government or the Board may, by a notification in the official Gazette, for reasons to be recorded, exempt any person or class of persons from payment of the whole or part of the default surcharge imposed under section 8 subject to such conditions or limitations as may be specified in such notification.

Records.—(1) Every person registered for the purposes of this Act shall maintain and keep for a period of three years at his business premises or registered office in English or Urdu language the following records of excisable goods purchased, manufactured and cleared (including those cleared without payment of excise duty) by him or by his agent acting on his behalf in such form and manner as would permit ready ascertainment of his liability of duty, namely:—

(a) records of clearances and sales made indicating the description, quantity and value of goods, name and address of the person to whom sales were made and the amount of the duty charged;

(b) records of goods purchased showing the description, quantity and value of goods, name, address and registration number of the supplier and the amount of the duty, if any, on purchases;

(c) records of goods cleared and sold without payment of duty;

(d) records of invoices, bills, accounts, agreements, contracts, orders and other allied business matters;

(e) records of production, stocks and inventory;

(f) records of imports and exports; and

(g) such other records as may be specified by the Board.

For any person or class of persons registered under this Act, or for any goods or class of goods the Board may specify or prescribe,—

(a) to keep any other records for the purposes of this Act;

(b) to use such electronic fiscal cash registers as may be approved by the Board; and

(c) the procedure or software for electronic maintenance of records and filing of statements, documents or information by any person or class of persons.

(3) Provisions of sub-sections (1) and (2) shall apply mutatis mutandis on services provided or rendered by a person registered under this Act.

Invoices.—(1) A person registered under this Act shall issue for each transaction a serially numbered invoice at the time of clearance or sale of goods, including goods chargeable to duty at the rate of zero per cent, or providing or rendering services containing the following particulars, namely:–

(a) name, address and registration number of the seller;

(b) name, address and registration number of the buyer;

(c) date of issue of the invoice;

(d) description and quantity of goods or as the case may be, description of services;

(e) value exclusive of excise duty;

(f) amount of excise duty; and

(g) value inclusive of excise duty.

(2) Notwithstanding sub-section (1), where a registered person is also engaged in making supplies taxable under the Sales Tax Act, 1990, such person shall not be required to issue a separate invoice for excise purposes and the amount of excise duty and other related information may in such cases be mentioned on the invoice issued for sales tax purposes.

(3) The Board may, by notification in the official Gazette, specify such modified invoices for different persons or classes of persons as it may deem necessary.

(4) The Board may, by notification in the official Gazette, specify goods in respect of which a copy of the invoice shall be carried or accompanied with the conveyance during their transportation or movement in such manner and subject to such conditions as may be specified in this behalf either in such notification or otherwise.

CHAPTER III

OFFENCES AND PENALTIES

Offences, penalties, fines and allied matters.—(1) Any person who fails to file or files an incorrect return within the period specified in sub-section (1) of section 4 or fails to make payment or makes short payment of duty on any account, shall pay a penalty of ten thousand rupees in addition to the amount of duty due from him and without prejudice to other liabilities which may be determined against him or action which may be taken against him under this Act and rules made thereunder.

(2) Any person who,––

(a) makes, orally or in writing, or signs any declaration, certificate or other document required by this Act or rules made thereunder or by any Federal Excise officer to do so, which is untrue or incorrect in any particular or which is incomplete by omitting any material particular therefrom;

(b) counterfeits or falsifies, or uses, when counterfeited or falsified, any document which is or may be required under this Act or rules made thereunder or any document used in the transaction of any business or matter relevant to this Act or rules made thereunder; and

(c) fails or refuses to give or produce to the Federal Excise officer any information or document required to be given or produced under this Act or rules made thereunder; shall be guilty of an offence and for every such offence shall be liable to fine which may extend to twenty thousand rupees and in case of offence under clause (b), the fine may extend to one hundred thousand rupees and he shall be punishable with imprisonment for a term which may extend to five years or with both.

Any person who,—

(a) illegally removes, stores, keeps, or withdraws or in any way assists or is concerned in the illegal removal or withdrawal of any goods in the manner other than the manner prescribed under this Act or rules made thereunder;

(b) is in any way concerned in conveying, removing, depositing or dealing with any goods with intent to defraud the Government of any duty of excise due thereon, or to violate any of the provisions of this Act or rules made thereunder;

(c) is in any way concerned in any fraudulent evasion or attempt at fraudulent evasion of any duty of excise;

(d) claims, takes or avails adjustment of duty not admissible under this Act or the rules made thereunder; and

(e) is in any way concerned in the manufacture of any dutiable goods in contravention of the provisions of this Act or rules made thereunder;

shall be guilty of an offence and for each such offence, shall be liable to fine which may extend to fifty thousand rupees or five times of the duty involved, whichever is higher and to punishment with imprisonment which may extend to five years or both.

Any person who, without the approval of the Collector, directly or otherwise destroys, damages, erases or otherwise manipulates data stored in or used in connection with a computer or otherwise uses a computer, the purpose or effect of which is to reduce, avoid or evade any liability to duty of excise which would otherwise have been imposed by this Act, or to defeat any provisions of this Act or rules made thereunder shall be guilty of an offence and shall be liable to fine which may extend to seventy five thousand rupees or ten times of the duty involved, whichever is higher and to punishment with imprisonment which may extend to five years or both.

If any person obtains, attempts to obtain or abets in obtaining, or does anything whereby there might be obtained by another person, any amount by way of refund or drawback of any duty in respect of any goods which is not lawfully payable or allowable in respect thereof or which is greater than the amount so payable or allowable, he shall be guilty of an offence and shall be liable to fine which may extend to one hundred thousand rupees or five times of duty involved, whichever is higher and to punishment with imprisonment which may extend to five years or both.

Any person who obstructs any Federal Excise officer or other public servant or any person acting in his aid or assistance, or duly employed for the prevention of offences under this Act or rules made thereunder in the execution of his duty or in the due seizing of any goods liable to seizure under this Act or rules made thereunder, shall be guilty of an offence and for each such offence, shall be liable to fine which may extend to fifty thousand rupees or five times of duty involved, whichever is higher and to punishment which may extend to three years or both.

Where an offence under this Act or rules made thereunder has been committed by a company, firm, or other body of persons, any person who at the time of the commission of the offence was a director, manager, or other similar officer or a partner of the company, firm, or other body of persons or was purporting to act in that capacity shall be deemed to be guilty of that offence unless he proves that the offence was committed without his consent or connivance and that he exercised all such diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.

Unless otherwise legally proved, where any person is liable under this Act to any penalty or punishment for any act, omission, neglect or default, he shall be liable to the same punishment, penalty or forfeiture for every such act, omission, neglect or default of any agent or employee.

(9) Where any goods are chargeable to duty on the basis of retail price under this Act and the retail price is not indicated on the goods in the manner specified therein or in the rules made thereunder, the duty shall be charged at the rate of 500 per cent advalorem in case of cigarettes, and 40 per cent ad valorem in case of goods other than cigarettes:

Provided that in cases where a registered person does not intend to print retail price for any genuine reasons, he may voluntarily pay duty on the said higher rates as applicable to him and declare his duty payments in the return accordingly and other provisions of this section shall not apply in such cases.

(10) Where any person is engaged in the manufacture or production of cigarettes in the manner contrary to this Act or rules made thereunder or otherwise evades duty of excise on cigarettes or is engaged in the manufacture or production of counterfeited cigarettes, the machinery, equipments, instruments or devices used in such manufacture or production shall, after outright confiscation, be destroyed in such manner as may be approved by the Collector and no person shall be entitled to any claim on any ground whatsoever, or be otherwise entitled to any compensation in respect of such machinery or equipments, instruments or devices and such confiscation or destruction shall be without prejudice to any other penal action which may be taken under the law against the person or in respect of the cigarettes or conveyance involved in or otherwise linked or connected with the case.

(11) Any goods in respect of which any of the provisions of this Act or rules made or notifications issued thereunder has been contravened shall be liable to confiscation alongwith the conveyance, if any, in which such goods are laden or have been or being carried and all confiscations in this regard shall vest with the Federal Government.

(12) Any person who attempts to commit any offence punishable under this Act, or abets the commission of the offence, shall be liable to the punishment provided for the offence.

Appointment of Special Judges for trial of offences.– (1) The Federal Government may, by notification in the official Gazette, appoint as many Special Judges as it may consider necessary, and, where it appoints more than one Special Judge, shall specify in the notification the territorial limits within which each one of them shall exercise jurisdiction.

(2) A Special Judge shall be a person who is or has been or is qualified to be a Sessions Judge.

Trial of offences by Special Judge.— (1) On the appointment of a Special Judge for any area, an offence punishable under this Act shall be tried exclusively by the Special Judge and all cases pending in any other court in such area immediately before such appointment shall stand transferred to such Special Judge.

(2) The provisions of the Code of Criminal Procedure, 1898 (Act V of 1898), except those of Chapter XXXVIII of that Code, shall apply to the proceedings of the court of a Special Judge and, for the purposes of the said provisions, the court of a Special Judge shall be deemed to be a Court of Session trying cases, and a person conducting prosecution before the court of a Special Judge shall be deemed to be a Public Prosecutor.

(3) For the purposes of sub‑section (2), the Code of Criminal Procedure, 1898 (Act V of 1898), shall have effect as if an offence punishable under this Act were one of the offences referred to in sub‑section (1) of section 337 of the Code.

(4) A Special Judge shall take cognizance of, and have jurisdiction to try an offence triable under sub‑section (1) only upon a complaint in writing made by such Federal Excise Officers as may be authorised by the Board in this behalf, by a general or special order in writing.

(5) The provisions of Chapter XX of the Code of Criminal Procedure, 1898 (Act V of 1898), shall apply to trial of cases under this Act in so far as they are not inconsistent with the provisions of this Act.

(6) The Federal Government may, by order in writing, direct the transfer, at any stage of the trial, of any case from the court of one Special Judge to the court of another Special Judge for disposal, whenever it appears to the Federal Government that such transfer will promote the ends of justice or tend to the general convenience of parties or witnesses.

(7) In respect of a case transferred to a Special Judge by virtue of sub‑section (1) or under sub‑section (6), such Judge shall not, by reason of the said transfer, be bound to recall and rehear any witness who has given evidence in the case before the transfer and may act on the evidence already recorded by or produced before the court which tried the case before the transfer.

22. Power to arrest and prosecute.– (1) Any Federal Excise Officer authorized by the Board in this behalf who has reason to believe that any person has committed an offence under this Act may arrest such person after obtaining permission in writing from the Collector concerned:

Provided that the Federal Excise Officer shall immediately intimate the fact of the arrest of a person to the Special Judge who may direct such Officer to produce that person at such time and place and on such date as the Special Judge considers expedient and such Officer shall act accordingly.

(2) Notwithstanding anything contained in proviso to sub-section (1), any person arrested under this Act shall be produced before the Special Judge or, if there is no Special Judge within a reasonable distance, to the nearest Judicial Magistrate, within twenty-four hours of such arrest, excluding the time necessary for the journey from the place of arrest to the Court of the Special Judge or, as the case may be, of such Magistrate.

(3) When any person is produced under sub-section (2) before the Special Judge, he may, on the request of such person, after perusing the record, if any, and after giving the prosecution an opportunity of being heard, admit him to bail on his executing a bond, with or without sureties, or refuse to admit him to bail and direct his detention at such place as he deems fit:

Provided that nothing herein contained shall preclude the Special Judge from canceling the bail of any such person at a subsequent stage if, for any reason, he considers such cancellation necessary, but before passing such order he shall afford such person an opportunity of being heard, unless for reasons to be recorded he considers that the affording of such opportunity shall defeat the purposes of this Act.

(4) When such person is produced under sub-section (2) before a Judicial Magistrate, such Magistrate may, after authorizing his detention in such custody, at such place and for such period as he considers necessary or proper for facilitating his earliest production before the Special Judge, direct his production before the Special Judge on a date and time to be fixed by him or direct such person to be forthwith taken to, and produced before, the Special Judge and he shall be so taken.

(5) Nothing in sub-section (3) or sub-section (4) shall preclude the Special Judge or the Magistrate from remanding any such person to the custody of the Federal Excise Officer holding inquiry against that person if such Officer makes a request in writing, to that effect and the Special Judge or the Judicial Magistrate, after perusing the record, if any, and hearing such person, is of the opinion that for the completion of inquiry or investigation it is necessary to make such an order, provided that in no case the period of such custody shall exceed fourteen days.

(6) When any person is arrested under this Act, the Federal Excise Officer shall record the fact of arrest and other relevant particulars in the register mentioned in sub-section (10) and shall immediately proceed to inquire into the charge against such person and if he completes the inquiry within twenty-four hours of his arrest, excluding the time necessary for journey as aforesaid, he may, after producing such person before the Special Judge or the nearest Judicial Magistrate make a request for his further detention in his custody.

(7) While holding an inquiry under sub-section (6), the Federal Excise Officer shall exercise the same powers as are exercisable by an officer in charge of a police-station under the Code of Criminal Procedure, 1898 (Act V of 1898), but such Officer shall exercise such powers subject to the foregoing provisions of this section while holding an inquiry under this Act.

(8) If a Federal Excise Officer, after holding an inquiry, is of the opinion that there is no sufficient evidence or reasonable grounds to proceed against a person he shall make a report to this effect to the Collector and with his approval may release him on his executing a bond with or without sureties and shall direct such person to appear, as and when required, before the Special Judge and may make a report to the Special Judge for the discharge of such person and shall make a full report of the case to his immediate superior.

(9) The Special Judge to whom a report has been made under sub-section (8) may, after the perusal of record of the inquiry and hearing the prosecution, agree with such report and discharge the accused or, if he is of the opinion that there is sufficient ground for proceeding against such person, proceed with his trial and direct the prosecution to produce evidence.

(10) The Federal Excise Officer empowered to hold inquiry under this section shall maintain a register to be called “Register of Arrests and Detention” in the prescribed form in which he shall enter the name and other particulars of every person arrested under this Act, together with the time and date of arrest, the details of the information received, the details of things, goods or documents, recovered from his custody, the name of the witnesses and the explanation, if any, given by him and the manner in which the inquiry has been conducted from day to day, and such register or authenticated copies of its aforesaid entries shall be produced before the Special Judge whenever such Officer is so directed by him.

(11) After completing the inquiry, the Federal Excise Officer shall, as early as possible, submit to the Special Judge a complaint in the same form and manner, in which the officer in charge of a police-station submits a report before a court.

(12) Any Magistrate of the first class may record any statement or confession during inquiry under this Act, in accordance with the provisions of section 164 of the Code of Criminal Procedure, 1898 (Act V of 1898).

(13) Without prejudice to the foregoing provisions of this section, the Federal Government may, by notification in the official Gazette, authorize any other officer working under the Board to exercise the powers and perform the functions of a FederalExcise Officer under this section, subject to such conditions, if any, that it may deem fit to impose.

(14) Notwithstanding any provision of this Act, where any person has committed an offence liable to penalty or punishment under this Act, the Collector may, either before or after the initiation of any proceedings for the recovery of duty or prosecution of such person, compound the offence if he pays the amount of duty along with such default surcharge and penalty as is determined under the provisions of this Act.

23. Power to summon persons to give evidence and produce documents in inquiries.– (1) Any Federal Excise Officer duly empowered by the Board in this behalf shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing or information in any inquiry which such officer is making for any of the purposes of this Act.

(2) All persons so summoned shall be bound to attend, either in person or by an authorized agent, as such Officer may direct, and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required:

Provided that the exemptions under sections 132 and 133 of the Code of Civil Procedure (V of 1908) shall be applicable to requisitions for attendance under this section.

(3) Every such inquiry as aforesaid shall be deemed to be a “judicial proceeding” within the meaning of section 193 and section 228 of the Pakistan Penal Code (XLV of 1860).

24. Officers required to assist Federal Excise Officers.– All officers of Police and Customs, sales tax, the civil armed forces and all officers of Government engaged in the collection of land‑revenue, and all village officers shall assist the Federal Excise Officers in the execution of this Act as and when required by such Officers.

CHAPTER IV

SEARCHES, ARRESTS AND SEIZURES

25. Searches and arrests how to be made.– All searches or arrests made under this Act or any rules made thereunder and all arrests made under this Act shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (V of 1898).

26. Power to seize.– (1) The counterfeited cigarettes or cigarettes which have been manufactured unlawfully or on which duty has not been paid as required under this Act and rules made thereunder, shall be liable to seizure besides the conveyance which has been used for the movement, carriage or transportation of such cigarettes.

(2) For the purpose of this section, ‘conveyance’ shall include all of its fixtures, fittings and accessories etc.

27. Confiscation of cigarettes.– (1)The cigarettes seized for the reasons of counterfeiting shall be liable to outright confiscation and shall be destroyed in the manner prescribed in sub-section (10) of section 19.

(2) In case of cigarettes seized on account of evasion of duty, the owner shall be given an option to pay penalties and fines as provided under section 19 and meet other obligations as provided under other relevant provisions of the Act and rules made thereunder, for release of such cigarettes in lieu of confiscation provided that if such release is not claimed or availed, no reduction or abatement in respect of amounts of duty, penalties and fine shall be admissible in case such cigarettes are auctioned.

(3) In case confiscated cigarettes are rendered unfit for human consumption or become otherwise unfit for sale, the Collector may allow destruction of such cigarettes in such manner as he may deem appropriate.

28. Power to release seized conveyance.– (1) Where any conveyance is seized which is liable to confiscation, the adjudicating authority may, subject to such conditions as may be prescribed, order its release pending adjudication of the case and on furnishing a guarantee by the owner of the seized conveyance, from a scheduled bank valid for at least one year equal to the value of such conveyance.

(2) In respect of cases pending before the Special Judge, release of conveyance under sub-section (1) shall not be allowed without prior permission of the Special Judge.

CHAPTER V

POWERS, ADJUDICATION AND APPEALS

29. Appointment of Federal excise officers and delegation of powers.—(1) For the purposes of this Act and rules made thereunder, the Board may, by notification in the official Gazette, appoint, in relation to any area or jurisdiction specified in the notification, any person to be –

(a) a Collector of Federal Excise;

(b) a Collector of Federal Excise (Appeals);

(c) an Additional Collector of Federal Excise;

(d) a Deputy Collector of Federal Excise;

(e) an Assistant Collector of Federal Excise; and

(f) an Officer of Federal Excise with any other designation.

(2) Notwithstanding the other designations of the officers of Federal Excise used in this Act or the rules made thereunder:

(a) the Directorate General (Intelligence & Investigation) Customs & Excise shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette;

(b) the Directorate General of Inspection & Internal Audit shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette; and

(c) the Directorate General of Training & Research shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and other officers with any other designation as the Board may appoint by notification in the official Gazette.

(3) 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 Federal Excise or Deputy Collector of Federal Excise to exercise any of the powers of a Collector of Federal Excise;

(b) any Deputy Collector of Federal Excise or Assistant Collector of Federal Excise to exercise any of the powers of an Additional Collector of Federal Excise;

(c) any Assistant Collector of Federal Excise to exercise any of the powers of a Deputy Collector of Federal Excise; and

(d) any other officer of Federal Excise to exercise any of the powers of a Collector, Additional Collector, Deputy Collector or Assistant Collector of Federal Excise;

under this Act and the rules made thereunder.

(4) Unless the Board in any case otherwise directs, the Collector may, with the prior approval of the Board, 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 Federal Excise under this Act.

(5) The officer to whom any powers of any senior officer are delegated under this section shall not further delegate such powers.

30. Use of powers of subordinate officer.— (1) An officer appointed under this Act shall exercise such powers and discharge such duties as are conferred or imposed on him under this Act and he shall also be competent to exercise all powers and discharge all duties or functions conferred or imposed upon any officer subordinate to him.

(2) Notwithstanding anything contained in this Act or the rules made thereunder, the Board may, by general or special order, impose such limitations or conditions on the exercise of such powers and discharge of such duties by any Federal Excise Officer as it deems fit.

31. Power of adjudication.— (1) The adjudication powers of different Federal Excise Officers shall be as follows:–

 (Sales Tax Act, 1990, as on 1^st July, 2008. The amendments through the Finance Act, 2008, have been shown in blue)

 The Sales Tax Act, 1990

(Act No. III of 1951 as Amended by Act VII of 1990)

 Chapter I

PRELIMINARY

 1. Short title, extent and commencement. –

(1) This Act may be called the Sales Tax Act, 1990.

(2) It extends to the whole of Pakistan.

 (3) It shall come into force on such date as the Federal Government may, by notification in the official Gazette, appoint.

 2. Definitions.―

 In this Act, unless there is anything repugnant in the subject or context,–

 (1) ‘Appellate Tribunal’ means the Customs, Excise and Sales Tax Appellate Tribunal constituted under section 194 of the Customs Act;

 (2)  ‘appropriate officer’ means an officer of Sales Tax authorised by the Board by notification in the official Gazette to perform certain functions under this Act;

 (2A) “arrears”, in relation to a person, means, on any day, the sales tax due and payable by the person under this Act before that day but which has not yet been paid,

 (3) “associates (associated persons)”  means, –

 (i) subject to sub-clause (ii), where two persons associate and the relationship between the two is  such that one may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person;

 (ii)  two persons shall not be associates solely by reason of the fact that one person is an employee of the other or both persons are employees of a third person;

 (iii) without limiting the generality of sub-clause (i) and subject to sub-clause (iv), the following shall be treated as associates, namely: –

 (a)  an individual and a relative of the individual;

 (b)  members of an association of persons;

 (c)  a member of an association of persons and the association, where the member, either alone or together with an associate or associates under another application of this section, controls fifty per cent or more of the rights to income or capital of the association;

 (d)  a trust and any person who benefits or may benefit under the trust;

 (e)  a shareholder in a company and the company, where the shareholder, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons–

 (i)  fifty  per cent  or more of the voting power in the company;

 (ii)  fifty per cent or more of the rights to dividends; or

 (iii)  fifty per cent or more of the rights to capital; and

 (f)  two companies, where a person, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons –

 (i)  fifty  per cent  or more of the voting power in both companies;

 (ii)  fifty per cent or more of the rights to dividends in both companies; or

 (iii)  fifty per cent or more of the rights to capital in both companies.

 (iv)  two persons shall not be associates under sub clause (a) or (b) of paragraph (iii) where the Collector is satisfied that neither person may reasonably be expected to act in accordance with the intentions of the other.

 (v)  In this clause, “relative” in relation to an individual, means–

 (a)  an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or

 (b)  a spouse of the individual or of any person specified in sub-clause (a).

 (3A) “association of persons” includes a firm, a Hindu undivided family, any artificial juridical person and body of persons formed under a foreign law, but does not include a company;

 (3AA) ‘banking company’ means a banking company as defined in the Banking Companies Ordinance, 1962 (LVII of 1962) and includes any body corporate which transacts the business of banking in Pakistan.

 (4)  “Board” means the Federal Board of Revenue established under section 3 of the Federal Board of Revenue Act, 2007;

 (5) ‘Collector’ means the Collector of Sales Tax appointed under section 30;

 (5A) “common taxpayer identification number” means the registration number or any other number allocated to a registered person;

 (5AA) “company” means—

 (a)  a company as defined in the Companies Ordinance, 1984 (XL VII of 1984);

 (b)  a body corporate formed by or under any law in force in Pakistan;

 (c)  a modaraba;

 (d)  a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;

 (e)  a trust, a co-operative society or a finance society or any other society established or constituted by or under any law for the time being in force; or

 (f)  a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of the Income Tax Ordinance 2001 (XLIX of 2001);

 (5AAA) “computerized system” means any comprehensive information technology system to be used by the Board or any other office as may be notified by the Board, for carrying out the purposes of this Act;

 (5AB) ”cottage industry” means a manufacturer whose annual turnover from taxable supplies made in any tax period during the last twelve months ending any tax period does not exceed five million rupees or whose annual utility (electricity, gas and telephone) bills during the last twelve months ending any tax period do not exceed seven hundred thousand rupees;

 (6) ‘Customs Act’ means the Customs Act, 1969 (IV of 1969), and where appropriate all rules and notifications made under that Act;

 (6A) ‘defaulter’ means a person and, in  the case of company or firm, every director, or partner of the company, or  as the case may be, of the firm, of which he is a director or partner or a proprietor and includes guarantors or successors, who fail to pay the arrears;

 (6B) “default surcharge” means the default surcharge levied under section 34;

 (7) ‘distributor’ means a person appointed by a manufacturer, importer or any other person for a specified area to purchase goods from him for further supply and includes a person who in addition to being a distributor is also engaged in supply of goods as a wholesaler or a retailer;

 (8) ‘document’ includes any electronic data, computer programmes, computer tapes, computer disks, micro-films or any other medium for the storage of such data;

 (9) ‘due date’ in relation to the furnishing of a return under section 26 (***) and section 26AA means the 15^th day of the month following the end of the tax period, or such other date as the  Board may, by notification in the official Gazette, specify;

 (9a) (***)

 (9A) “e-intermediary” means a person appointed as e-intermediary under section 52A for filing of electronic returns and such other documents as may be prescribed by the Board from time to time, on behalf of a person registered under section 14;

 (9aa) (***)

 (10) ‘establishment’ means an undertaking, firm  or company, whether incorporated or not, an association of persons or an individual;

 (11) ‘exempt supply’ means a supply which is exempt from tax under section 13;

 (11A) “firm” means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all;

 (12) ‘goods’ include every kind of movable property other than actionable claims, money, stocks, shares and securities;

 (13) ‘importer’ means any person who imports any goods into Pakistan;

 (14) “input tax”, in relation to a registered person, means—

 (a)  tax levied under this Act on supply of goods to the person;

 (b)  tax levied under this Act on the import of goods by the person;

 (c)  in relation to goods or services acquired by the person, tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise on the manufacture or production of the goods, or the rendering or providing of the services;

 (d)  Provincial sales tax levied on services rendered or provided to the person; and

 (e)  levied under the Sales Tax Act, 1990 as adapted in the State of Azad JammuandKashmir, on the supply of goods received by the person;

 (15) ‘Local Sales Tax Office’ means the office of Superintendent of Sales Tax, or such other office as the Board may, by notification in the official Gazette, specify;

 (16) ‘manufacture’ or ‘produce’ includes -

 (a) any process in which an article singly or in combination with other articles, materials, components, is either converted into another distinct article or product or  is so changed, transformed or reshaped that it becomes capable of being put to use differently or distinctly and includes any process incidental or ancillary to the completion of a manufactured product;

 (b) process of printing, publishing, lithography and engraving; and

 (c) process and operations of assembling, mixing, cutting, diluting, bottling, packaging, repacking or preparation of goods in any other manner;

 (17) ‘manufacturer’ or ‘producer’ means a person who engages, whether exclusively or not, in the production or manufacture of goods whether or not the raw material of which the goods are produced or manufactured are owned by him; and shall include–

 (a) a person who by any process or operation assembles, mixes, cuts, dilutes, bottles, packages, repackages or prepares goods by any other manner;

 (b) an assignee or trustee in bankruptcy, liquidator, executor, or curator or any manufacturer or producer and any person who disposes of his assets in any fiduciary capacity; and

 (c) any person, firm or company which owns, holds, claims or uses any patent, proprietary, or other right to goods being manufactured, whether in his or its name, or on his or its behalf, as the case may be, whether or not such person, firm or company sells, distributes, consigns or otherwise disposes of the goods:

 Provided that for the purpose of refund under this Act, only such person shall be treated as manufacturer-cum-exporter who owns or has his own manufacturing facility  to manufacture or produce the goods exported or to be exported;

 (18) ‘Officer of Sales Tax’ means an officer appointed under section 30;

 (19) ‘open market price’ means the consideration in money which that supply or a similar supply would generally fetch in an open market;

 (20) “output tax”, in relation to a registered person, means-

 (a)  tax levied under this Act on a  supply of goods, made by the person;

 (b)  tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise  on the manufacture or production of the goods, or the rendering  or providing of the services, by the person;

 (c)  Provincial sales tax levied on services rendered or provided by the person;

 (21) “person” means,–

 (a)  an individual;

 (b)  a company or association of persons incorporated, formed, organized or established in Pakistan or elsewhere;

 (c)  the Federal Government;

 (d)  a Provincial Government;

 (e)  a local authority in Pakistan; or

 (f)  a foreign government, a political subdivision of a foreign government, or public international organization;”;

 (22) ‘Prescribed’ means prescribed by rules made under this Act;

 (22A) “Provincial sales tax” means tax levied under.–

 (a)  the Balochistan Sales Tax Ordinance, 2000 (I of 2000);

 (b) Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001);

 (c)  the Punjab Sales Tax Ordinance , 2000 (Pb. Ord. II of 2000);

 (d)  the North WestFrontierProvinceSales Tax Ordinance, 2000 (III of 2000); and

 (e)  the Sindh Sales Tax Ordinance, 2000 (VIII of 2000);

 (23) ‘registered office’ means the office or other place of business specified by the registered person in the application made by him for registration under this Act or through any subsequent application to the Collector;

 (24) ‘registration number’ means the  number allocated to the registered person for the purpose of this Act;

(25) ‘registered person’ means a person who is registered or is liable to be registered under this Act:

 Provided that a person liable to  be registered but not registered under this Act shall not be entitled to any benefit available to a registered person under any of the provisions of this Act or the rules made thereunder;

 (26) * * *

 (27) ‘retail price’, with reference to the Third Schedule, means the price fixed by the manufacturer, inclusive of all duties, charges and taxes (other than sales tax) at which any particular brand or variety of any article should be sold to the general body of consumers or, if more than one such price is so fixed for the same brand or variety, the highest of such price;

 (28) ‘retailer’ means a person, supplying goods to general public for the purpose of consumption:

 Provided that any person, who combines the business of import and retail or manufacture or production with retail, shall notify and advertise wholesale prices and retail prices separately, and declare the address of retail outlets, and his total turnover per annum shall be taken into account for the purposes of registration under section 14.

 (28A) omitted

 (29)  ‘return’ means any return required to be furnished under Chapter-V of this Act;

 (29A) “sales tax” means—

 (a)  the tax, additional tax, or default surcharge levied under this Act;

 (b)  a fine, penalty or fee imposed or charged under this Act; and

 (c)  any other sum payable under the provisions of this Act or the rules made thereunder;

 (29AA) “sales tax account” means an account representing the double entry recording of sales tax transactions in the books of account;

 (30)  ‘Schedule’ means a Schedule appended to this Act;

 (31)  ‘similar supply’, in relation to the open market price of goods, means any other supply of goods which closely or substantially resembles the characteristics, quantity, components and materials of the aforementioned goods;

 (31A) ‘special audit’ means an audit conducted under section 32A;

 (32)  ‘Special Judge’ means the Special Judge appointed  under Section 185 of the Customs Act;

 (33) “supply” means a sale or other transfer of the right to dispose of goods as owner, including such sale or transfer under a hire purchase agreement, and also includes—

 (a)  putting to private, business or non-business use of goods produced or manufactured in the course of taxable activity for purposes other than those of making a taxable supply;

 (b)  auction or disposal of goods to satisfy a debt owed by a person; and

 (c)  possession of taxable goods held immediately before a person ceases to be a registered person:

 Provided that the Federal Government, may  by notification in the official Gazette, specify such other transactions which shall or shall not constitute supply;

 (34) “tax”, unless the context requires otherwise, means sales tax;

 (35) “taxable activity”, means any economic activity carried on by a person whether or not for profit, and includes—

 (a)  an activity carried on in the form of a business, trade or manufacture;

 (b)  an activity that involves the  supply of goods, the rendering or providing of services, or both to another person;

 (c)  a one-off adventure or concern in the nature of a trade; and

 (d)  anything done or undertaken during the commencement or termination of the economic activity, but does not include—

 (a)  the activities of an employee providing services in that capacity to an employer;

 (b)  an activity carried on by an individual as a private recreational pursuit or hobby; and

 (c)  an activity carried on by a person other than an individual which, if carried on by an individual, would fall within sub-clause (b).

 (36) ‘tax fraction’ means the amount worked out in accordance with the following formula:-

a
100 + a

 (‘a’ is the rate of tax specified in section 3);

 (37) ‘tax fraud’ means knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused) –

 (i) doing of any act or causing to do any act; or

 (ii) omitting to take any action or  causing the omission to take any action, including the making of taxable supplies without getting registration under this Act; or

 (iii)  falsifying or causing falsification the sales tax invoices, in contravention of duties or obligations imposed under this Act or rules or instructions issued thereunder with the intention of understating the tax liability or underpaying the tax liability for two consecutive tax periods or overstating the entitlement to tax credit or tax refund to cause loss of tax;

 (38) (***)

 (39)  ‘taxable goods’ means all goods other than those which have been exempted under section 13;

 (40)  ‘tax invoice’ means a document required to be issued under section 23;

 (41) ‘taxable supply’ means a supply of taxable goods made by an importer, manufacturer, wholesaler (including dealer), distributor or retailer other than a supply of goods which is exempt under section 13 and includes a supply of goods chargeable to tax at the rate of zero per cent under section 4;

 (42) (***)

 (43) ‘tax period’ means  a period of one month or  such other period as the Federal Government may, by notification in the official Gazette, specify;

 (44) “time of supply,” in relation to,–

 (a)  a supply of goods, other than under hire purchase agreement, means the time at which the  goods are delivered or made available to the recipient of the supply;

 (b)  a supply of goods under a hire purchase agreement, means the time at which the agreement is entered into; and

 (c) services, means the time at which the services are rendered or provided;

 (44A)  “trust”, means an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner, or declared and accepted by the owner for the benefit of another, or of another and the owner, and includes a unit trust;

 (44AA)  “unit trust”,  means any trust under which beneficial interests are divided into units such that the entitlements of the beneficiaries to income or capital are determined by the number of units held;

 (45) (***)

 (46) ‘value of supply’ means:–

 (a) in respect of a taxable supply, the consideration in money including all Federal and Provincial duties and taxes, if any, which the supplier receives from the recipient for that supply but excluding the amount of tax:

 Provided that–

 (i)  in case the consideration for a supply is in kind or is partly in kind and partly in money, the value of the supply shall mean the open market price of the supply excluding the amount of tax;

 (ii)  in case the supplier and recipient are associated persons and the supply is made for no consideration or for a consideration which is lower than the open market price, the value of supply shall mean the open market price of the supply excluding the amount of tax; and

 (iii)  in case a taxable supply is made to a consumer from general public on installment basis on a price inclusive of mark up or surcharge rendering it higher than open market price, the value of supply shall mean the open market price of the supply excluding the amount of tax.

 (b) in case of trade discounts, the discounted price excluding the amount of tax; provided the tax invoice shows the discounted price and the related tax and the discount  allowed is in conformity with the normal business practices;

 (c) in case where for any special nature of transaction it is difficult to ascertain the value of a supply, the open market price;

 (d) in case of imported goods, the value determined under section 25 of the Customs Act, including the amount of customs-duties and central excise duty levied thereon;

 (e) in case where there is sufficient reason to believe that the value of a supply has not been correctly declared in the invoice, the value determined by the Valuation Committee comprising representatives of trade and the Sales Tax Department constituted by the Collector; and

 (f) in case the goods other than taxable goods are supplied to a registered person for processing, the value of supply of such processed goods shall mean the price excluding the amount of sales tax which such goods will fetch on sale in the market:

 (g) in case of a taxable supply, with reference to retail tax, the price of taxable goods excluding the amount of retail tax, which a supplier will charge at the time of making taxable supply by him, or such other price as the Board may, by a notification in the official Gazette, specify:

 Provided that, where the Board  deems it necessary it may, by notification in the official Gazette, fix the value of any imported goods or taxable supplies or class of supplies  and for that purpose fix different values for different classes or description of same type of imported goods or supplies:

 Provided further that where the value at which import or supply is made is higher than the value fixed by the Board, the value of goods shall, unless otherwise directed by the Board, be the value at which the import or supply is made;

 (47) ‘wholesaler’ includes a dealer  and means any person who carries on, whether regularly or otherwise, the business of buying and selling goods by wholesale or of supplying or distributing goods, directly or indirectly, by wholesale for cash or deferred payment or for commission or other valuable consideration or stores such goods belonging to others  as an agent for the purpose of sale; and includes a person supplying taxable goods to a person who deducts income tax at source under the Income Tax Ordinance, 2001 (XLIX of 2001) [***]; and

 (48) ‘zero-rated supply’ means a taxable supply which is charged to tax at the rate of zero per cent under section 4.

 Chapter-II

SCOPE AND PAYMENT OF TAX

 3. Scope of tax.—

 (1) Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of sixteen per cent of the value of–

 (a) taxable supplies made by a registered person in the course or furtherance of any taxable activity carried on by him; and

 (b) goods imported into Pakistan.

 (1A) (***)

 (2) Notwithstanding the provisions of sub-section (1):–

 (a) taxable supplies specified in the Third Schedule shall be charged to tax at the rate of sixteen per cent of the retail price which alongwith the amount of sales tax  shall be legibly, prominently and indelibly printed or embossed by the manufacturer on each article, packet, container, package, cover or label, as the case may be:

 Provided that the Federal Government, may, by notification in the official Gazette, exclude  any taxable supply from the said Schedule or include any taxable supply therein; and

 (b) the Federal Government may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, declare that in respect of any goods or class of goods imported into or produced or any taxable supplies made by a registered person or a class of registered persons, the tax shall be charged, collected and paid in such manner and at such higher or lower rate or rates as may be specified in the said notification.

 (3) The liability to pay the tax shall be,–

 (a)  in the case of supply of  goods, of the person making the supply, and

 (b) in the case of goods imported into Pakistan, of the person importing the goods.

 (3A) Notwithstanding anything contained in clause (a) sub-section (3), the Federal Government may, by a notification in the official Gazette, specify the goods in respect of which the liability to pay tax shall be of the person receiving the supply.

 (4) Omitted

 (5) The Federal Government may, in  addition to the tax levied under subsection (1), sub-section (2) and sub-section (4), levy and collect such extra amount of tax not exceeding fifteen per cent of the value of such goods or class of goods and on such persons or class of persons, in such mode, manner and at time, and subject to such conditions and limitations as it may, by rules, prescribe.

 (6) The Federal Government or the Board may, in lieu of the tax under subsection (1), by notification in the official Gazette, levy and collect such amount of tax as it may deem fit on any supplies or class of supplies or on any goods or class of goods and may also specify the mode, manner or time of payment of such amount of tax.

 (7) The Federal Government may, by  notification in the official Gazette, specify any person or class of persons as withholding agent for the purpose of deduction and deposit of tax at the specified rate in such manner and subject to such conditions or restrictions as the Federal Government may prescribe in this behalf.

 3A. Omitted

 3AA. Omitted

 3AAA. Omitted

 3B. Collection of excess sales tax etc.―

 (1) Any person who has collected or collects any tax or  charge, whether under misapprehension of any provision of this Act  or otherwise, which was not payable as tax or charge or which is in excess of the tax or charge actually payable and the incidence of which  has been passed on to the consumer, shall pay the amount of tax or charge so collected to the Federal Government.

 (2) Any amount payable to the Federal Government under sub-section (1) shall be deemed to be an arrear of tax or charge payable under this Act and shall be recoverable accordingly and no  claim for refund in respect of such amount shall be admissible.

 (3) The burden of proof that the incidence of tax or charge referred to in sub-section (1) has been or has not been passed to the consumer shall be on the person collecting the tax or charge.

 4. Zero rating.—

 Notwithstanding the  provisions of section 3, the following goods shall be charged to tax at the rate of zero per cent:–

 (a) goods exported, or the goods specified in the Fifth Schedule;

 (b) supply of stores and provisions for consumption aboard a conveyance proceeding to a destination outside Pakistan as specified in section 24 of the Customs Act, 1969 (IV of 1969);

 (c) such other goods as the Federal Government may, by notification in the official Gazette, specify:

 (d) such other goods as may be specified by the Federal Board of Revenue through a general order as are supplied to a registered person or class of registered persons engaged in the manufacture and supply of zero-rated goods.

 Provided that nothing in this section shall apply in respect of a supply of goods which –

 (i) are exported, but have been or are intended to be re-imported into Pakistan; or

 (ii) have been entered for export under Section 131 of the Customs Act, 1969 (IV of 1969), but are not exported; or

 (iii) have been exported to a country specified by the Federal Government, by Notification in the official Gazette:

 Provided further that the Federal Government may, by a notification in the official Gazette, restrict the amount of credit for input tax actually paid and claimed by a person making a zero-rated supply of goods otherwise chargeable to sales tax.

 5. Change in the rate of tax.—

 If there is a change in the rate of tax–

 (a) a taxable supply made by a registered person shall be charged to tax at such rate as is in force at the time of supply;

 (b) imported goods shall be charged to tax at such rate as is in force,–

 (i) in case the goods are entered for home consumption, on the date on which a goods declaration is presented under section 79 of the Customs Act, 1969 (IV of 1969);

 (ii) in case the goods are cleared from warehouse, on the date on which a goods declaration for  clearance of such goods is presented under section 104 of the Customs Act, 1969 (IV of 1969):

 Provided that where a goods declaration is presented in advance of the arrival of the conveyance by which the goods are imported, the tax shall be charged as is in force on the date on which the manifest of the conveyance is delivered:

 Provided further that if the tax is not paid within seven days of the presenting of the goods declaration under section 104 of the Customs Act, the tax shall be charged at the rate as is in force on the date on which tax is actually paid.

 6. Time and manner of payment.―

 (1) The tax in respect of goods imported into Pakistan shall be charged and paid in the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969 and the provisions of the said Act including section 31A thereof, shall, so far as they relate to collection, payment and enforcement  of tax under this Act on such goods where no specific provision exists in this Act, apply.

 (1A) Notwithstanding anything contained in any other law for the time being in force, including but not limited to the Protection of Economic Reforms Act, 1992 (XII of 1992), and notwithstanding any decision or judgment of any forum, authority or court whether passed, before or after the promulgation of the Finance Act, 1998 (III of 1998), the provisions of section 31-A of the Customs Act, 1969 (IV of 1969), referred to in sub-section (1) shall be incorporated in and shall be deemed to have always been so incorporated in this Act and no person shall be entitled to any exemption from or adjustment of or refund of tax on account of the absence of such a provision in this Act, or in consequence of any decision or judgment of any forum, authority or court passed on that ground or on the basis of the doctrine of promissory estoppel or on account of any promise or commitment made or understanding given whether in writing or otherwise, by any government department or authority.

 (2) The tax in respect of taxable supplies made during a tax period shall be paid by the registered person at the time of filing the return in respect of that period under Chapter-V:

Provided that the Board may, by a  notification in the Official Gazette, direct that the tax in respect of all or such classes of supplies (other than zerorated supplies) of all or such taxable goods, as may be specified in the aforesaid notification, shall be charged, collected and paid in any other way, mode, manner or at time as may be specified therein.

(3) The tax due on taxable supplies shall be paid by any of the following modes, namely:–

(i) through deposit in a bank designated by the Board; and

(ii) through such other mode and manner as may be specified by the Board.

7. Determination of tax liability.―

(1) Subject to the provisions of section 8B, for the purpose of determining his tax liability in respect of taxable supplies made during a tax period, a registered person shall, subject to the provisions of section 73, be entitled to deduct input tax paid or payable during  the tax period for the purpose of taxable supplies made, or to be made, by him from the output tax that is due from him in respect of that tax period and to make such other adjustments as are specified in Section 9:

Provided that where a registered person did not deduct input tax within the relevant period, he may claim such  tax in the return  for any of the six succeeding tax periods.

(2) A registered person shall not be entitled to deduct input tax from output tax unless,–

(i) in case of a claim for input tax in respect of a taxable supply made, he holds a tax invoice in his name and bearing his registration number in respect of such supply for which a return is furnished;

(ii) in case of goods imported into Pakistan, he  holds bill of entry or goods declaration in his name and showing his sales tax registration number, duly cleared by the customs under section 79 or section 104 of the Customs Act, 1969 (IV of 1969);

 (iii) in case of goods purchased in auction, he holds a treasury challan, in his name and bearing his registration number, showing payment of sales tax;

 (3) Notwithstanding anything in sub-sections (1) and (2), the Federal Government may, by a special order, subject to such conditions, limitations or restrictions as may be specified therein allow a registered person to deduct input tax paid by him from the output tax determined or to be determined as due from him under this Act.

 (4) Notwithstanding anything contained in this Act or rules made thereunder, the Federal Government may, by notification in the official Gazette, subject to such conditions, limitations or restrictions as may be specified therein, allow a registered person or class of persons to deduct such amount of input tax from the output tax as may be specified in the said notification.

 7A. Levy and collection of tax on specified goods on value addition.—

 (1) Notwithstanding anything contained  in this Act or the rules made thereunder, the Federal Government may specify, by notification in the official Gazette, that sales tax chargeable on the supply of goods of such description or class shall, with such limitations or restrictions as may be prescribed, be levied and collected on the difference between the value of supply for which the goods are acquired and the value of supply for which the goods, either in the same state or on further manufacture, are supplied.

 (2) Notwithstanding anything contained  in this Act or the rules made thereunder, the Federal Government may, by notification in the official Gazette, and subject to the conditions, limitations, restrictions and procedure mentioned therein, specify the minimum value addition required to be declared by certain persons or categories of persons, for supply of goods of such description, or class as may be prescribed, and to waive the requirement of audit or scrutiny of records if such minimum value addition is declared.

 8. Tax credit not allowed.—

 (1) Notwithstanding anything contained in this Act,  a registered person shall not be entitled to reclaim or deduct input tax paid on –

 (a) the goods  or services used or to be used for any purpose other than for taxable supplies made or to be made by him;

 (b)  any other goods  or services which the Federal Government may, by a notification in the official Gazette, specify;

 (c) the goods under sub-section (5) of section 3:

 (ca) the goods  or services in respect of which sales tax has not been deposited in the Government treasury by the respective supplier;

 (d) fake invoices; and

 (e) purchases made by such registered person, in case he fails to furnish the information required by the Board through a notification issued under sub-section (5) of section 26.

 (2) If a registered person deals in taxable and non-taxable supplies, he can reclaim only such proportion of the input tax as is attributable to taxable supplies in such manner as may be specified by the Board.

 (3) No person other than a registered  person shall make any deduction or reclaim input tax in respect of taxable supplies made or to be made by him.

 (4) (***)

 (5) Notwithstanding anything contained in any other law for the time being in force or any decision of any Court, for the purposes of this section, no input tax credit shall be allowed to the persons who paid fixed tax under any provisions of this Act as it existed  at any time prior to the first day of December, 1998.

 (6) Notwithstanding anything contained in any other law for the time being in force or any provision of this Act, the Federal Government may, by notification in the official Gazette, specify any goods or class of goods which a registered person cannot supply to any person who is not registered under this Act.

 (7) (***)

 8A. Joint and several liability of registered persons in supply chain where tax unpaid.–

 Where a registered person receiving a taxable supply from another registered person is in the knowledge or has reasonable grounds to suspect that some or all of the tax payable in respect  of that supply or  any previous or subsequent supply of the goods supplied would go unpaid,  such person as well as the person making the taxable supply shall be jointly and severally liable for payment of such unpaid amount of tax:

 Provided that the Board  may by notification in the official gazette, exempt any transaction or transactions from the provisions of this section.

 8B. Adjustable input tax.–  (1) Notwithstanding anything contained in this Act, in relation to a tax period, a registered person shall not be allowed to adjust input tax in excess  of ninety per cent of the output tax for that tax period:

 Provided that the tax charged on the acquisition of fixed assets shall be adjustable against the output tax in twelve equal monthly installments [***]:

 Provided further that the Board may, by notification in the official Gazette, exclude any person or class of persons from the purview of subsection (1).

 (2) A registered person, subject to section (1), may be allowed adjustment of input tax not allowed under sub-section (1) subject to the following conditions, namely:–

 (i) in the case of registered persons, whose accounts are subject to audit under the Companies Ordinance, 1984, upon furnishing a statement along with annual audited accounts, duly certified by the auditors, showing value additions less than the limit prescribed under sub-section (1) above; or

 (ii) in case of other registered persons, subject to the conditions and restrictions as may be specified  by the Board by  notification in the official Gazette.

 (3)        The adjustment or refund of input tax mentioned in sub-section (2), if any, shall be made on yearly basis in the second month following the end of the financial year of the registered person.

 (4)        Notwithstanding anything contained in sub-section (1) and (2), the Board may, by notification in the official Gazette, prescribe any other limit of input tax adjustment for any person or class of persons.

 (5)        Any auditor found guilty of misconduct in furnishing the certificate mentioned in sub-section (2) shall be referred to the Council for disciplinary action under section 20D of Chartered Accountants, Ordinance, 1961 (X of 1961).

 9. Debit and credit note.—

 Where a registered person has issued a  tax invoice in respect of a supply made by him and as a result of cancellation of supply or return of goods or a change in the nature of supply or change in the value of the supply or some such event the amount shown in the tax invoice or the return needs to be modified, the registered person may, subject to such conditions and limitations as the Board may impose, issue  a debit or credit note and make corresponding adjustment against output tax in the return.

 (10)   Refund of input tax.— (1) If the input tax paid by a registered person on taxable purchases made during a tax period exceeds the output tax on account of zero rated local supplies or export made during that tax period, the excess amount of input tax shall be refunded to the registered person not later than forty-five days of filing of refund claim in such manner and subject to such conditions as the Board may, by notification in the official Gazette specify:

 Provided that in case of excess input tax against supplies other than zero-rated or exports, such excess input tax may be carried forward to the next tax period, alongwith the input tax as is not adjustable in terms of subsection (1) of section 8B, and shall be treated as input tax for that period and the Board may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, prescribe the procedure for refund of such excess input tax;

 Provided further that the Board may, from such date and subject to such conditions and restrictions as it may impose, by notification in the official Gazette, direct that refund of input tax against exports shall be paid along with duty drawback at the rates notified in the said notification.

 (2) If a registered person is liable to pay any tax, default surcharge or penalty payable under any law administered by the Board, the refund of input tax shall be made after adjustment of unpaid outstanding amount of tax or, as the case may, default surcharge and penalty.

 (3) Where there is reason to believe that a person has claimed input tax credit or refund which was not admissible to him, the proceedings against him shall be completed within sixty days. For the purposes of enquiry or audit or investigation regarding admissibility of  the refund claim, the period of sixty days may be extended up to one hundred and twenty days by an officer not below the rank of an Additional Collector of Sales Tax and the Board may, for reasons to be recorded in written, extend the aforesaid period which shall in no case exceed nine months.

 11. Assessment of Tax.―

 (1) Where a person who is required to file a tax return fails to file the return for a tax period by the due date or pays an amount which, for some miscalculation is less than  the amount of tax actually payable, an officer of Sales Tax shall, after a notice to show cause to such person, make an order for assessment of tax, including imposition of penalty and default surcharge in accordance with section 33 and 34:

Provided that where a person required to file a tax return files the return after the due date and pays the amount of tax payable in accordance with the tax return alongwith default surcharge and penalty, the notice to show cause and the order of assessment shall abate.

(2)  Where a person has not paid the tax due on supplies made by him or has made short payment or has claimed input tax credit or refund which is not admissible under this Act for reasons other than those specified in sub-section (1), an officer of Sales Tax shall make an assessment of sales tax actually payable by that person or  determine the amount of tax credit or tax refund which he has unlawfully claimed  and shall impose a  penalty and charge default surcharge in accordance with section 33 and 34.

(3)  (* * * )

(4) No order under this section shall be made by  an officer of Sales Tax unless a notice to show cause is given  within five years to the person in default specifying the grounds on which it is intended to proceed against him and the officer of Sales Tax shall take  into consideration the representation made by such person and provide him with an opportunity of being heard:

Provided that order under this section shall be made within one hundred and twenty days of issuance of show cause notice or within such extended period as the Collector may, for reasons to be recorded in writing, fix provided that such extended period  shall in no case exceed  one hundred and twenty days.

(5) Notwithstanding anything in sub-section (1), where a registered person fails to file a return, an officer of Sales Tax Department, not below the rank of Assistant Collector, shall subject to  such conditions as specified by the Central Board of Revenue, determine  the minimum tax liability of the registered person.

11A. Short paid amounts recoverable without notice.–

Notwithstanding any of the provisions of this Act, where a registered person pays the amount of tax less than the tax due as indicated in his return, the short paid amount of tax along with default surcharge shall be recovered from such person by stopping removal  of any goods from his business premises and through attachment of his business bank accounts, without giving him a show cause notice and without prejudice to any other action prescribed under section 48 of this Act or the rules made thereunder:

Provided that no penalty under section 33 of this Act shall be imposed unless a show cause notice is given to such person.

12. Omitted

13. Exemption.―

(1) Notwithstanding the provisions of section 3, supply of goods or import of goods specified in the Sixth Schedule shall, subject to such conditions as may be specified by the Federal Government, be exempt from tax under this Act.

(2) Notwithstanding the provisions of sub-section (1)–

(a) the Federal Government may, by notification in the official Gazette, exempt any taxable supplies made or  import or supply of any goods or class of goods, from the whole or any part of the tax chargeable under this Act, subject to the conditions and limitations specified therein; and

(b) the Board may, by special order in each case stating the reasons, exempt any import or supply of goods of such description or class, as may be specified from the payment of the whole or any part of the tax chargeable under this Act.

(3) The exemption from tax chargeable under sub-section (2) may be allowed from any previous date specified in the notification issued under clause (a) or, as the case may be, order made under clause (b) of that sub-section.

(4) (*****)

Chapter-III

REGISTRATION

 14. Registration. –

 Under this Act, registration will be required for such persons and be regulated in such manner and subject to rules as the Board may, by notification in the official Gazette, prescribe.

 15. Omitted

 16. Omitted

 17. Omitted

 18. Omitted

 19. Omitted

 20. Omitted

 21. De-registration, blacklisting and suspension of registration.—

 (1) The Board or any officer, authorized in this behalf, may subject to the rules, de-register a registered person or such class of registered persons not required to be registered under this Act.

 (2) Notwithstanding anything contained in this Act, in cases where the Collector is satisfied that a registered person is found to have issued fake invoices [***] or has otherwise committed tax fraud, he may blacklist such person or suspend his registration in accordance with such procedure as the Board may, by notification in the official Gazette, prescribe.

 Chapter-IV

BOOK KEEPING AND INVOICING REQUIREMENTS

 22. Records.–

 (1) A registered person making taxable supplies shall maintain and keep at his business premises or registered office in English or Urdu language the following records of goods purchased, imported and supplies (including zerorated and exempt supplies) made by him or by his agent acting on his behalf in such form and manner as would permit ready ascertainment of his tax liability during a tax period -

 (a) records of supplies made shall  indicate the description, quantity and value of goods, name and address of the person to whom supplies were made and the amount of the tax charged;

 (b) records of goods purchased shall show the description, quantity and value of goods, name, address and registration number of the supplier and the amount of the tax on purchases;

 (c) records of goods imported shall show the description, quantity and value of goods and the amount of tax paid on imports;

 (d) records of zero-rated and exempt supplies;

 (da) double entry sales tax accounts;

 (e) invoices, credit notes, debit  notes, bank statements, banking instruments in terms of section 73, inventory records, utility bills, salary and labour bills, rental agreements, sale purchase agreements and lease agreements; and

 (f) such other records as may be specified by the Board:

 Provided that the persons paying retail tax shall keep such record as may be specified by the Board.

 (1A) Notwithstanding anything in any  other law for the time being in force, the Board may require, by notification in the official Gazette, a registered person or class  of registered persons to  declare and use only as many number of business bank accounts as may be specified by the Board in such notification to make or receive payments on account of purchase and sale transactions for the purpose of this Act or rules made thereunder and to make payment of due tax from such accounts only.

 (2) The Board may, by notification in the official Gazette, specify for any class of taxable persons or any other person registered under this Act to keep such other records for the purposes of this Act.

 (2A) The Board may, by notification in the Official Gazette, specify for any class of taxable persons registered under this Act to use such electronic fiscal cash registers as are approved by  the Board in the manner as may be prescribed.

 (3) The Board may, by notification in the official gazette, prescribe the procedure or software for electronically maintenance of records, filing of sales tax returns or refunds and for any other matter or approve any software for electronic maintenance of records and filing of returns or refunds by a person or class of such persons.

 (4).     The registered persons, whose accounts are subject to audit under the Companies Ordinance, 1984, shall be required to submit a copy of the annual audited accounts, along with  a certificate by the auditors certifying the payment of due tax by the registered person.

 23. Tax Invoices.-

 (1) A registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, namely:-

 (a) name, address and registration number of the supplier;

 (b) name, address and registration number of the recipient;

 (c) date of issue of invoice;

(d) description and quantity of goods;

 (e) value exclusive of tax;

 (f) amount of sales tax; and

 (ff) (***)

 (g) value inclusive of tax:

 Provided that the Board may, by  notification in the official Gazette, specify such modified invoices for different persons or classes of persons:

Provided further that not more than one tax invoice shall be issued for a taxable supply.

(2) No person other than a registered person or a person paying (***) retail tax shall issue an invoice under this section.

(3) A registered person making a taxable supply may, subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify, issue invoices to another registered person electronically and to the Board as well as to the Collector, as may be specified.

(4) The Board may, by notification in the Official Gazette, prescribe the manner and procedure for regulating the issuance and authentication of tax invoices.

24. Retention of record and documents for five years.-

A person who is required to maintain any record or documents under this Act, shall retain the record and documents for a period of five years after the end of the tax period to which such record or documents relate.

25. Access to record, documents, etc.-

(1) A person who is required to maintain any record or documents under this Act or any other law shall, as and when required by an officer of Sales Tax, produce record or documents which are in his possession or control or in the possession or control of his agent; and where such record or documents have been kept on electronic data, he shall allow access to such officer of Sales Tax and use of any machine on which such data is kept.

(2) The officer of Sales Tax, on the basis of the record, obtained under subsection (1), may, once in a year, conduct audit:

Provided that in case the Collector has information or sufficient evidence showing that such registered person is involved in tax fraud or evasion of tax, he may authorize an officer of sales tax, not below the rank of Assistant Collector, to conduct an inquiry or investigation under section 38:

Provided further that nothing in this sub-section shall bar the sales tax officer from conducting audit of the records of the registered person if the same were earlier audited by the office of the Auditor-General of Pakistan;

(3) The Assistant Collector (Audit), shall issue audit observation pointing out the contraventions of the Act or rules, as the case may be, and the amount of tax evaded therein, on the basis of scrutiny of such records, as prescribed under the Act or rules or in any other manner by the Board. The registered person may, within a period of fifteen days of the receipt of audit observation, submit his point of view in writing.

(4) If, within the period prescribed in sub-section (3), no reply is received or the reply furnished by the registered  person is found unsatisfactory, the Assistant Collector shall issue an audit report specifying the amount of tax or charge that has not been levied or has been short levied or has been erroneously refunded or any other violation of any provision of Act or rules made thereunder.

(5) Notwithstanding the penalties prescribed in section 33, if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge voluntarily, whenever it comes to his notice, before receipt of  notice of audit, no penalty  shall be recovered from him:

 Provided if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge during the audit, or at any time before issuance of show cause notice in lieu of the audit report, he may deposit the evaded amount of tax, default surcharge under section 34, and twenty five per cent of the penalty payable under section 33:

Provided further that if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge after issuance of show cause notice, he shall deposit the evaded amount of tax, default surcharge under section 34, and  full amount of the penalty payable under section 33 and thereafter, the show cause notice, shall stand abated.

25A. Drawing of samples.-

Where an authorized officer of sales tax considers it necessary to take a sample of any goods or raw materials, for the purpose of determining their liability to sales tax or for the purpose  of establishing their value or for any other reason, he may remove a minimum quantity of goods or raw materials sufficient to enable a proper examination or analysis to be made. At the time of taking the sample the person in possession of the goods shall be informed and given the opportunity to sign the representative samples, so drawn, and take a corresponding sample for his record. Any sample taken under this section shall be taken against a proper receipt a copy each of which shall be kept in the record by the registered person and the collectorate.

Chapter-V

RETURNS

 26. (****) Return.–

 (1) Every registered person shall furnish not later than the due date a true and correct return in the prescribed form to a designated bank or any other office specified by the Board, indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed:

 Provided that the Board may, by  notification in the official Gazette, require any person or class of persons to submit return on quarterly basis:

 Provided further that the Board may, by notification in the official Gazette, require any person or class of persons to submit such return as may be prescribed annually in addition to the monthly return or quarterly return:

 Provided also that the return filed electronically on the web or any magnetic media or any other computer readable media as may be specified by the Board shall also  be deemed to be a return for the purpose of subsection (1) and the Board may, by notification in the official Gazette, make rules for determining eligibility of the data of such returns and e-intermediaries who will digitize the data of such returns and transmit the same electronically under their digital signatures.

 (2) If there is a change in the rate of tax during a tax period, a separate return in respect of each portion of tax period showing the application of different rates of tax shall be furnished.

 (3) A registered person may, subject to approval of the Collector of Sales Tax having jurisdiction, file a revised return within one hundred and twenty days of the filing of return under sub-section (1) or, as the case may be, sub-section (2), to correct any omission or wrong declaration made therein.

 (4) Notwithstanding the penalties prescribed in section 33, if a registered person wishes to file revised return  voluntarily along with deposit of the amount of tax short paid or amount of tax evaded  along with default surcharge, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him:

 Provided that in case the registered person wishes to deposit the amount of tax as pointed out by the officer of sales tax during the audit, or at any time before issuance of the show cause notice in lieu of the audit report, he may deposit the evaded amount of tax, default surcharge under section 34, and twenty-five per cent of the penalty payable under section 33 along with the revised return:

 Provided further that in case the registered person wishes to deposit the amount after issuance of show cause  notice, he shall deposit the evaded amount of sales tax, default surcharge  under section 34,  and full amount of the leviable penalty  under section 33 along with the revised return and thereafter, the show cause notice, shall stand abated.

 (5) The Board may, by notification in the official Gazette,  require any person or class of persons, for any goods of such description or class, to furnish such summary or details or particulars pertaining to the imports, purchases and supplies during any tax period or periods, in such format as may be specified.

 26A. Omitted

 26AA. Omitted

 27. Special Returns.–

 In addition to the return specified under section 26–

 (a) a person registered (***) under this Act shall furnish special return within such date and in such form indicating information such as quantity manufactured  or produced, purchases made, goods supplied or payment of arrears made, etc, for such period as the Board may, by a notification in official gazette, specify; and

 (b) the collector may require any person whether, registered or not, to furnish a return (whether on his own behalf or as an agent or trustee) in a prescribed form and  such person shall furnish the return not later than the date specified in this regard.

 28. Final Return.-

 If a person applies for de-registration in terms of section 21, he shall before such de-registration, furnish a final return to the Collector in the specified form in such manner and at such time as directed by the Collector].

 29. Return deemed to have been made.-

 A return purporting to be made on behalf of a person by  his duly appointed representative shall, for all purposes, be deemed to have been made by such person or under his authority unless proved to the contrary.

 Chapter-VI

APPOINTMENT OF OFFICER OF SALES TAX & THEIR POWERS

 30. Appointment of officer.—

 For the purposes of this Act, the board may, by notification in the official Gazette, appoint in relation to any area, any case or class of cases specified in the notification, any person to be-

 (a) a Collector of Sales Tax;

 (b) a Collector of Sales Tax (Appeals);

 (c) an Additional Collector of Sales Tax;

 (d) a Deputy Collector of Sales Tax;

 (e) an Assistant Collector of Sales Tax;

 (f) a Superintendent of Sales Tax;

 (ff) a Senior Auditor of Sales Tax;

 (g) an officer of sales tax with any other designation.

 30A. Directorate General, (Intelligence and Investigation) CBR. The Directorate General (Intelligence and Investigation) CBR shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.

 30B. Directorate General Internal Audit. The Directorate General Internal Audit shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.

 30C. Directorate General of Training and Research. The Directorate General of Training and Research shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.

 30D. Directorate General of Valuation. The Directorate General of Valuation shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.

 30DD.  Directorate of  Post Clearance Audit.– The Directorate of Post clearance Audit shall consist of a Director and as many Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.

 30E. Powers and Functions of Directorate etc. The Board may, by notification in the  official Gazette, specify the functions, jurisdiction and powers of the Directorates General as specified in the preceding sections and their officers by notification in the official Gazette.

 31. Powers.– An officer of sales tax appointed under section 30 shall exercise such powers and discharge such duties as are conferred or imposed upon him under this Act; and he shall also be competent to exercise all powers and discharge all duties conferred or imposed upon any officer subordinate to him:

 Provided that, notwithstanding anything contained in this Act or the rules, the Board may, by general or special order, impose such limitations or conditions on the exercise of such powers and discharge of such duties as it deems fit.

 32. 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 Sales Tax or Deputy Collector of Sales Tax to exercise any of the powers of a Collector of Sales Tax under this Act;

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

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

 (d) any other officer of Sales Tax to exercise any of the powers of an Assistant Collector of Sales Tax under this Act.

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

 (3) The officer to whom any powers are delegated under this section shall not further delegate such powers.

 32A. Special Audit by Chartered Accountants or Cost Accountants– (1) The Board may, by notification in the official Gazette, appoint a Chartered Accountant as defined under Chartered Accountants Ordinance, 1961 (X of 1961) or a firm of Chartered Accountants or a Cost and Management Accountant within the meaning of the Cost and Management Accountants Act, 1966 (XIV of 1966) or a firm of Cost and Management  Accountants, for conducting special audit of records of registered person:

 Provided that the Board may, by notification in the official Gazette, appoint a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961), or a Cost and Management Accountant within the meaning of the Cost and Management Accountants Act, 1966 (XIV of 1966), or a firm of Cost and Management Accountants to conduct audit of refund claims.

 (2) Notwithstanding that records of a registered person have been audited by an officer appointed under section 30, the Board or a collector may direct an auditor appointed under sub-section (1) to audit the records of any registered person.

 (3) An auditor appointed under sub-section  (1), shall have the powers of an officer of sales tax under sections 25, 37 and 38.

 32AA. Omitted

 Chapter-VII

OFFENCES AND PENALTIES

 33. Offences and penalties.—

 [***] Whoever commits any offence described in column (1) of the Table below shall, in addition to and not in derogation of any punishment to which he may be liable under any other law, be liable to the penalty mentioned against that offence in column (2) thereof:—

 TABLE

34. Default Surcharge.–

(1) Notwithstanding the provisions of section 11, if a registered person does not pay the tax due or any part thereof, whether wilfully or otherwise, in time or in the manner specified under this Act, rules or notifications issued thereunder or claims a tax credit, refund or makes an adjustment which is not admissible to him, or incorrectly applies the rate of zero per cent to supplies made by him, he shall, in addition to the tax due, pay default surcharge at the rate mentioned below:—

(a) [***] the person liable to pay any amount of tax or charge or the amount of refund erroneously made, shall pay default surcharge at the rate of one  and half per cent per month, of the amount of tax due or the amount of refund erroneously made; and

(b)  Omitted

(c) in case, the default is on account of tax fraud, the person who has committed tax fraud shall pay default surcharge at the rate of two per cent per month, of the amount of tax evaded or the amount of refund fraudulently claimed, till such time the entire liability including the amount of default surcharge is paid.

(2) For the purpose of calculation of default surcharge,—

 (a) in the case of inadmissible input tax credit or refund, the period of default shall be reckoned from the date of adjustment of such credit or, as the case may be, refund is received; and

 (b) in the case of non-payment of  tax or part thereof, the period of default shall be reckoned from the 16^th day of a month (following the due date of the tax period to which the default relates) to the day preceding the date on which the tax due is actually paid.

 Explanation.— For the purpose of this section tax due does not include the amount of penalty.

 34A.    Exemption from penalty and default surcharge.–

 The Federal Government may, by a notification in the official Gazette, or the Board by a special order published in Gazette for reasons to be recorded in writing, exempt any person or class of persons from payment of the whole or part of the penalty and default surcharge imposed under sections 33 and 34 subject to such conditions and limitations as may be specified in such notification or, as the case may be, special order.

 35. Omitted.

 35A. Omitted.

 36. Recovery of tax not levied or short-levied or erroneously refunded.– (1) Where by reason of some collusion or a deliberate act any tax or charge has not been levied or  made or has been short-levied or has been erroneously refunded, the person liable to pay any amount of tax or charge or the amount of refund erroneously made shall be served with a notice, within five years of the relevant date, requiring him to show cause for payment of the amount specified in the notice.

 (2) Where, by reason of any inadvertence, error or misconstruction, any tax or charge has not been levied or made or has been short-levied or has been erroneously refunded, the person liable to pay the amount of tax or charge or the amount of refund erroneously made shall be served with a notice within three years of the relevant date, requiring him to show cause for payment of the amount specified in the notice:

 Provided that, where a tax or charge has not been levied under this subsection, the amount of tax shall be recovered as tax fraction of the value of  supply.

 (3) The officer of Sales Tax empowered in this behalf shall, after considering the objections of the person served with a notice to show cause under subsection (1) or sub-section (2), determine the amount of tax or charge payable by him and such person shall pay the amount so determined.

 Provided that order under this section shall be made within one hundred and twenty days of issuance of show cause notice or within such extended period as the Collector [***] may, for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed one hundred and twenty days:

 [***]

 (4) For the purpose of this section, the expression “relevant date” means–

 (a) the time of payment of tax or charge as provided under section 6; and

 (b) in a case where tax or charge has been erroneously refunded, the date of its refund.

 37. Power to summon persons to give evidence and produce documents in inquiries under the Act.–

 (1) Any officer of sales tax shall have powers to summon any person whose attendance he considers necessary either to tender evidence or to produce documents or any other thing in any inquiry which such officer is making for any of the purposes of this Act.

 (2) Any person summoned under sub-section (1) shall be bound to attend either in person or by an authorised  agent, as the officer of sales tax may direct;

 Provided that a person who is exempt from personal appearance in a court under section 132 and 133 of the Code of Civil Procedure (V of 1908), shall not be required to appear in person.

 (3) Any inquiry before an officer of sales tax shall be deemed to be a judicial proceeding within the meaning of section 193 and 228 of the Pakistan Penal Code (Act XLV of 1860).

 37A. Power to arrest and prosecute.–

 (1) An officer of Sales Tax, not below the rank of an Assistant Collector of Sales Tax or any other officer of equal  rank authorised by the Board in this behalf, who on the basis of material evidence has reason to believe that any person has committed a tax fraud or any offence warranting prosecution under this Act] [***], may cause arrest of such person.

 (2) All arrests made under this Act shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (Act V of 1898).

 (3) [***]

 (4) Notwithstanding anything contained in sub-section (1) to subsection (3) or any other provision of this Act, where any person has committed a tax fraud or any offence warranting prosecution under this Act, the Collector may, either before or after the institution of any proceedings for recovery of tax, compound the offence if such person  pays the amount of tax due alongwith such default surcharge and penalty as is determined under the provisions of this Act.

 (5) Where the person suspected of  tax fraud or any offence warranting prosecution under this Act is a company,  every director or officer of that company whom the authorised officer  has reason to believe is personally responsible for actions of the company contributing the tax fraud or any offence warranting prosecution under this Act shall be liable to arrest;

 Provided that any arrest under this sub-section shall not absolve the company from the liabilities of  payment of tax, default  surcharge and penalty imposed under this Act.

 37B. Procedure to be followed on arrest of a person.–

 (1) When a Sales Tax Officer authorised in this behalf arrests a person under Section 37A, he shall immediately intimate the fact of the arrest of that person to the Special Judge who may direct  such Officer to produce that person at such time and place and on such date  as the Special Judge considers expedient and such Officer shall act accordingly.

 (2) Notwithstanding anything contained in the sub-section (1), any person arrested under this Act shall be produced before the Special Judge or, if there is no Special Judge within  a reasonable distance, to the nearest Judicial Magistrate within twenty-four hours of such arrest, excluding the time necessary for the journey from the place of arrest to the Court of the Special Judge or, as the case may be, of such Magistrate.

 (3) When any person is produced under sub-section (2) before the Special Judge, he may, on the request of such person, after perusing the record, if any and after giving the prosecution an opportunity of being heard, admit him to bail on his executing a bond, with or without sureties, or refuse to admit him to bail and direct his detention at such place as he deems fit:

 Provided that nothing herein contained shall preclude the Special Judge from canceling the bail of any such person at a subsequent stage if, for any reason, he considers such cancellation necessary, but before passing such order he shall afford such person an opportunity of being heard, unless for reasons to be recorded he considered that the affording of such opportunity shall defeat the purpose of this Act.

 (4) When such person is produced under  sub-section (2) before a Judicial Magistrate, such Magistrate may, after authorising his detention in such custody at such place and for such period as he considers necessary or proper for facilitating his earliest production before the Special Judge, direct his production before the Special Judge on a date and time to be fixed by him or direct such person  to be forthwith taken to, and produced before, the Special Judge and he shall be so taken.

 (5) Nothing in sub-section (3) or sub-section (4) shall preclude the Special Judge or the Judicial Magistrate from remanding any such person to the custody of the Sales Tax Officer holding  inquiry against that person if such officer makes a request in writing to that effect, and the Special Judge or the Judicial Magistrate, after perusing the record, if any, and hearing such person, is of the opinion that for the completion of inquiry or investigation it is necessary to make such order:

 Provided that in no case the period of such custody shall exceed fourteen days.

 (6) When any person is arrested under this Act, the Sales Tax Officer shall record the fact of arrest and other relevant particulars in the register specified in sub-section (10) and shall immediately proceed to inquire into the charge against such person and if he completes the inquiry within twenty-four hours of his arrest, excluding the time necessary for journey as aforesaid, he may, after producing such person before the Special Judge or the nearest Judicial Magistrate, make a request for his further detention in his custody.

 (7) While holding an inquiry under sub-section (6), the Sales Tax Officer shall exercise the same powers as are exercisable by an officer in charge of a police station under the Code of Criminal Procedure, 1898 (Act V of 1898), but such officer shall exercise such powers subject to the foregoing provisions of this section while holding an inquiry under this Act.

 (8) If the Sales Tax Officer,  after holding an inquiry as aforesaid, is of the opinion that there is no sufficient evidence or reasonable ground for suspicion against such person, he shall release  him on his executing a bond, with or without sureties, and shall direct such person to appear, as and when required, before the Special Judge, and make a report to the Special Judge for the discharge of such person and shall make a full report of the case to his immediate superior.

 (9) The Special Judge to whom a report has been made under sub-section (8) may, after the perusal of record of the inquiry, and hearing the prosecution, agree with such report and discharge the accused or, if he is of the opinion that there is sufficient ground for proceedings against such person, proceed with his trial and direct the prosecution to produce evidence.

 (10) The Sales Tax Officer empowered to hold inquiry under this section shall maintain a register to be called “Register of Arrests and Detentions” in the prescribed form in which he shall enter the name and other particulars of every person arrested under this Act, together with the time and date of arrest, the details of the information received, the details of things, goods or documents, recovered from his custody, the name of the witnesses and the explanation, if any, given by him and  the manner in which the inquiry has been conducted from day to day; and, such register or authenticated copies of its aforesaid entries shall be produced before the Special Judge, whenever such Officer is so directed by him.

 (11) After completing the  inquiry, the Sales Tax Officer shall, as early as possible, submit to Special Judge a complaint in the same form and manner in which the officer in charge of a police station submits a report, before a court.

 (12) Any Magistrate of the first class may record any statement or confession during inquiry under this Act, in accordance with the provisions of Section 164 of the Code of Criminal Procedure, 1898 (Act V of 1898).

 (13) Without prejudice to the foregoing provisions to this section, the Federal Government may, by notification in the official Gazette, authorise any other officer working under the Board to  exercise the powers and perform the functions of a Sales Tax Officer under this section, subject to such conditions, if any, that it may deem fit to impose.

 37C. Omitted.

 38. Authorised officers to have access to premises, stocks, accounts and records.–

 (1) Any officer authorised in this behalf by the Board or the Collector shall have free access to business or manufacturing premises, registered office or any other place where any stocks, business records or documents required under this Act are kept or maintained belonging to any registered person or a person liable for registration or whose  business activities are covered under this Act or who may be required for any inquiry or investigation in any tax fraud committed by him or his agent or  any other person; and such officer may, at any time, inspect the goods,  stocks, records, data, documents, correspondence, accounts and statements, utility bills, bank statements, information regarding nature and sources  of funds or assets with which his business is financed, and any other records or documents, including those which are required under any of the Federal, Provincial or local laws maintained in any form or mode and may take into his custody such records, statements, diskettes, documents or any part thereof, in original or copies thereof in such form as the authorised officer may deem fit against a signed receipt.

 (2) The registered person, his agent or any other person specified in subsection (1) shall be bound to answer any question or furnish such information or explanation as may be asked by the authorised officer.

 (3) The department of’ direct and indirect taxes or any other Government department, local bodies, autonomous bodies, corporations or such other institutions shall supply requisite information and render necessary assistance to the authorised officer in the course  of inquiry or investigation under this section.

 38A. Power to call for information.—

 The Collector may, by notice in writing, require any person, including a banking company, to furnish such information or such statement in connection with any investigation or inquiry in cases of tax fraud, as may be specified in such notice:

 Provided that the Collector may require any regulatory authority to provide information concerning the licenses and authorizations issued by it.

 38B. Obligation to produce documents and provide information.—

 (1) Notwithstanding anything contained in this Act or any other law for the time being in force, any person required to maintain the record under the Act, on demand by an officer, not below the rank of a Deputy Collector of Sales Tax, by notice in writing, as and when specified in the notice, shall,–

 (a) produce for examination, such  documents or records which the officer of Sales Tax considers necessary or relevant to the audit, inquiry or investigation under the Act;

 (b) allow the officer of Sales Tax to take extracts from or make copies of such documents or records; and

 (c)  appear before the officer of Sales Tax and answer any question put to him concerning the documents and records relating to the audit or inquiry or investigation referred to in clause (a) above.

 (2) An officer of Sales Tax conducting an audit, inquiry or, as the case may be, an investigation under the Act, may require in writing any person, department, company or organization to furnish such information as is held by that person, department, company or organization, which, in the opinion of the officer of Sales Tax, is relevant to such audit, inquiry or investigation.

 (3) The Board may require, in writing, any person, department, company or organization, as the case may be, to provide any information or data held by that person, department, company or organization, which, in the opinion of the Board, is required for purposes of formulation of policy or administering the Customs, Sales Tax, Federal Excise or Income Tax.

 (4) Every person, department, company  or organization shall furnish the information requisitioned by the Board or the officer of Sales Tax under subsection (2) or (3), within the time specified in the notice issued by the Board or, as the case may be, the officer of Sales Tax.

 39. Omitted

 40. Searches under warrant-

 (1) Where any officer of sales tax has reason to believe that any documents or things which in his opinion, may be useful for, or relevant to, any proceedings under this Act are kept in any place, he may after obtaining a warrant from the magistrate, enter that place and cause a search to be made at any time.

 (2) The search made under sub-section (1) shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (V of 1898).

 40A. Omitted.

 40B. Posting of Sales Tax Officer.–

 Subject to such conditions and restrictions, as deemed fit to impose, the Board, may post Officer of Sales Tax to the premises of registered person or class of such persons to monitor production, sale of taxable goods and the stock position:

 Provided that if a Collector, on the basis of material evidence, has reason to believe that a registered person is involved in evasion of sales tax or tax fraud, he may, by recording the reason in writing, post an Officer of Sales Tax to the premises of such registered person to monitor production or sale of taxable goods and the stocks position.

 41. Omitted.

 42. Omitted.

 Chapter-VIII

APPEALS

 43. Omitted.

 44. Omitted.

 45. Power of Adjudication.–

 (1) In cases involving assessment of tax, charging of default surcharge, imposition of penalty and recovery of amount erroneously refunded or any other contravention under this Act  or the rules made thereunder, the jurisdiction and powers of adjudication  of the Sales Tax Officers shall be as follows:-

 (i)  Additional Collector           Cases falling under sub-section (2) of section 11 and section 36 without any restriction as to the amount of tax  involved or amount erroneously refunded.

 (ii)  Deputy Collector                (a) Cases falling under sub-section (1) of section 11.

 (b) Cases falling under  sub-section (2) of section 11 and section 36 provided that the amount of tax involved or the amount erroneously refunded exceeds one million rupees, but does not exceed two and a half million rupees.

 (iii)  Assistant Collector           Cases falling under sub-section (2) of section 11 and section 36 provided that the amount of tax involved or the amount erroneously refunded exceeds ten thousand rupees, but does not exceed one million rupees.

 (iv)  Superintendent                  Cases falling under sub-section (2) of section 11 and section 36 provided that the amount of tax involved or the amount erroneously refunded does not exceed ten thousand rupees.

 (v)  An Officer of Sales tax with any other designation  Such cases as may be notified by the Board.

 Provided that the Board may, by notification in the official Gazette, vary the jurisdiction and powers of any officer of Sales Tax or a class of officers of Sales Tax.

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

 Explanation. – For the purpose of this section, tax means the principal amount of sales tax other than default surcharge, and in case where only default surcharge is involved, the amount of default surcharge.

 (2) Notwithstanding anything contained in sub-section (4) of section 11 and sub-section (3) of section 36 or any other provision of the Act or any other law for the time being in force and notwithstanding any decision or judgment of any forum, authority or court, the time for adjudication in all the cases pending as on 30^th June, 2006, shall be  deemed always to have been extended up to 31^st December, 2006, from the date on which the time-limit prescribed under sub-section (4) of section 11 and sub-section (3) of section 36, expires.

 45A. Power of the Board and Collector to call for records.–

 (1) The Board may, of its own motion, call for and examine the record of any departmental proceedings under this Act or the rules made thereunder for the purpose of satisfying itself as to the legality or propriety  of any decision or order passed therein by an Officer of Sales Tax, it may pass such order as it may think fit:

 Provided that no order imposing  or enhancing any penalty or fine requiring payment of a greater amount of sales tax than the originally levied shall be passed unless the person affected by such order has been given an opportunity of showing cause and of being heard.

 (2) No proceeding under  this section shall be initiated in a case where an appeal under Section 45B or Section 46 is pending.

 (3) No order shall be made under this Section after the expiry of five years from the date of original decision or order of the sub-ordinate officer referred to in sub-section (1).

 (4) The Collector may,  suo moto,  call for and examine the record of any proceeding under this Act or the rules  made thereunder for the purpose of satisfying himself as to the legality or propriety of any decision or order passed by an officer of Sales Tax subordinate to him, and pass such order as he may deem fit.

 45B. Appeals.—

 (1) Any person, other than the Sales Tax Department, aggrieved by any decision or order passed under sections 10, 11, 36, 45 or 66, by an officer of Sales Tax may, within thirty days of the date of receipt of such decision or order, prefer appeal to the Collector of Sales Tax (Appeals):

 Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector  of Sales Tax (Appeals) if  he is satisfied that the appellant has sufficient cause for not preferring the appeal within the specified period:

 Provided further that the appeal shall be accompanied by a fee of one thousand rupees to be paid in such manner as the Board may prescribe.

 (2) The Collector of Sales Tax (Appeals) may, after giving both parties to the appeal an opportunity of  being heard, pass such order as he thinks fit, confirming, varying, altering, setting aside or annulling the decision or order appealed against:

 Provided that such order shall be passed not later than one hundred and twenty days from the date of filing of appeal or within such extended period as the Collector (Appeals) may, for reasons to be recorded in writing fix:

 Provided further that such extended period shall, in no case, exceed one hundred and twenty days.

 (3) In deciding an appeal, the Collector of Sales Tax (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for denovo consideration.

 (4) (*****)

 46. Appeals to Appellate Tribunal.–

 (1) Any person including an officer of Sales Tax not below the rank of an Additional Collector, aggrieved by any order passed by–

 (a)  the Collector of Sales Tax (Appeals) under section 45B,

 (b)  the Collector of Sales Tax through adjudication or under any of  the provisions of this Act or rules made thereunder,

 (c)  the Board under section 45A, may, within sixty days of the receipt of such decision or order, prefer appeal to the Appellate Tribunal.

 (2) The Appellate Tribunal may admit an appeal preferred after the period of limitation specified in sub-section (1) if it is satisfied that there was sufficient cause for not presenting it within the specified period.

 (3) The appeal shall be accompanied by a fee of one thousand rupees paid in such manner as the Board may prescribe.

 (4) The Appellate Tribunal, after giving the parties to the appeal, an opportunity of being heard may pass such orders in relation to the matter before it as it thinks fit:

 Provided that when any such order amounts to an interim order staying the recovery of tax, such order shall cease to have effect on the expiration of a period of six months following the day on which it is made unless the case is finally decided, or the interim order is withdrawn by the Tribunal earlier:

 Provided further that such interim order or orders, as the case may be, shall cease to have effect on the expiration of a total period of six months following the day on which the first interim order is made, unless the case is finally decided, or the interim order is withdrawn by the Appellate Tribunal earlier.

 (5) The Appellate Tribunal shall send a copy of its order disposing the appeal to the appellant and to the concerned Officer of Sales Tax.

 (6) All appeals relating to the Sales Tax Act, 1951, pending before the Income Tax Appellate Tribunal at the commencement of the Finance Act, 1997 shall stand transferred for disposal to the Appellate Tribunal.

 (7) Order under this section shall be passed within  eight months of filing of appeal.

 (8) Subject to the provisions of this Act or any other law for the time being in force, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of the Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.

 (9) The Chairman or any other member of the Appellate Tribunal authorized in this behalf by the Chairman may, sitting singly, dispose of any case which has been allotted to the bench of which he is member where —

 (a) in any disputed case, other than a case where the determination of any question having a relation to the  rate of sales tax or to the value of taxable goods for purposes of assessment is in issue or is one of the points in issue, the difference in tax involved or the tax involved does not exceed ten million rupees; or

 (b) the amount of fine or penalty involved does not exceed ten million rupees.

 47. Reference to the High Court.—

 (1) Within ninety days of the communication of the order  of the Appellate Tribunal under sub-section (5) of section 46, the aggrieved person or any officer of Sales Tax not below the rank of an Additional Collector, authorized by the Collector may prefer an application in the prescribed form along with a statement of the case to the High Court, stating any question of law arising out of such order.

 (2) The statement to the High Court referred to in sub-section (1), shall set out the facts, the determination of the Appellate Tribunal and the question of law, which arises out of its order.

 (3) Where, on an application made under sub-section (1), the High Court is satisfied that a question of law arises out of the  order referred to in subsection (1), may proceed to hear the case.

(4) A reference to the High Court under this section shall be heard by a bench of not less than two judges of the High Court and, in respect of the reference, the provisions of section 98 of the Code of Civil Procedure, 1908 (V of 1908) shall apply, so far as may be, notwithstanding anything contained in any other law for the time being in force.

(5) The High Court upon hearing a reference under this section shall pass the question of law raised by the reference and deliver judgment thereon specifying the grounds on which such judgment is based and the order of the Tribunal shall stand modified accordingly. The Court shall send a copy of the judgment under the seal of the Court to the Appellate Tribunal.

(6) The cost of any reference to the High Court shall be in the discretion of the Court.

(7) Notwithstanding that a reference has been made to the High Court, the tax shall be payable in accordance with the order of the Appellate Tribunal:

Provided that, if the amount of tax is reduced as a result of the judgment in the reference by the High Court, and amount of tax found refundable by the High Court, the High Court may on application by an Additional Collector authorized by the Collector within thirty days of the receipt of the judgment of the High Court that he intends to seek leave to appeal to the Supreme Court, make an order authorizing the Collector to postpone the  refund until the disposal of the appeal by the Supreme Court.

(8) Where recovery of tax has been stayed by the High Court by an order, such order shall cease to have effect  on the expiration of  a period of six months following the day on which it is made unless the reference is decided, or such order is withdrawn, by the High Court earlier.

(9) Section 5 of the Limitation Act, 1908 (IX of 1908), shall apply to an application made to the High Court under sub-section (I).

(10) An application under sub-section (1) by a person other than the Additional Collector authorized by the Collector shall be accompanied by a fee of one hundred rupees.

(11) Notwithstanding anything contained in any provision of this Act, where any reference or appeal was filed with the approval of Collector by the officer of lower rank than the Collector, and the reference or appeal is pending before an appellate forum or the Court, such reference or appeal shall always be deemed to have been so filed by the Collector.

47A  Alternative dispute resolution.—

(1) Notwithstanding any other provisions of this Act, or the rules made thereunder, any registered person aggrieved in connection with any dispute pertaining to:–

(a)  the liability of tax against the  registered person, or admissibility of refunds, as the case may be;

(b)   the extent of waiver of default surcharge and penalty;

(c)   the quantum of input tax admissible in terms of sub-section (3) of section 7;

(d)   relaxation of any procedural or technical  irregularities and condonation of any prescribed time limitation; and

(e) any other specific relief required to resolve the dispute, may apply to the Board for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application, which is under litigation in any Court of Law or  an Appellate authority, except in the cases where first information reports  (FIRs) have been lodged under the Act or criminal proceedings initiated or  where interpretation of question of law having larger revenue impact in the opinion of the Federal Board of Revenue is involved, may apply to the Federal Board of Revenue for the appointment of a committee for the resolution of dispute in appeal and only such application may be entertained for dispute resolution under the provisions of this section.

 (2) The Board may, after  examination of the application of a registered person, appoint  a committee within thirty days of receipt of such application in the Board,  consisting of an officer of sales tax not below the rank of an Additional Collector and  two persons from the notified panel consisting of retired Judges not below District and Sessions Judge, chartered or cost accountants, advocates, representatives of trade bodies or associations, or any other reputable taxpayers, for the resolution of dispute.

(3) The committee constituted under sub-section (2) shall examine the issue and may, if it deems necessary, conduct inquiry, seek expert opinion, direct any officer of sales tax or any other person to conduct an audit and make recommendations within sixty days of its constitution, in respect of the resolution of the dispute as it may deem fit:

Provided that the Board may extend the period of sixty days stipulated for making the recommendations for another sixty days on specific request of the committee.

(4) The Board may, on the recommendation of the committee, pass such order, as it may deem appropriate.

 (4A) Notwithstanding anything contained in sub-section (4), the Chairman may on the application of an aggrieved person, for reasons to be recorded in writing, and on being satisfied that there is an error in order or decision may pass such order may be deemed just and equitable.

 (5) The registered person may make payment of sales tax and other duty and taxes as determined by the Board in its order under sub-section (4), and such order of the Board shall be submitted before the forum, tribunal or the Court where the matter is subjudice for consideration of orders as deemed appropriate.

(6)  The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

 Chapter-IX

RECOVERY OF ARREARS

 48. Recovery of arrears of tax.-

 (1) subject to sub-section (1A), where any amount of tax  is due from any person, the officer of Sales Tax may:-

 (a) deduct the amount from any money owing to person from whom such amount is recoverable and which may be at the disposal or in the control of such officer or any officer of Income Tax, Customs or Central Excise Department;

 (b) require by a notice in writing any person who holds or may subsequently hold any money for or on account of the person from whom tax may be recoverable to pay to such officer the amount specified in the notice;

 (c) stop removal of any goods from  the business premises of such person till such time the amount of tax is paid or recovered in full;

 (ca) require by a notice in writing any person to stop clearance of imported goods or manufactured goods or attach bank accounts;

 (d) seal the business premises till such time the amount of tax is paid or- recovered in full;

 (e) attach and sell or sell without attachment any movable or immovable property of the registered person from whom tax is due; and

 (f) recover such amount by attachment and sale of any moveable or- immovable property of the guarantor, person, company, bank or financial institution where a guarantor or any other person, company, bank or financial institution fails to make payment under such guarantee, bond or instrument.

 (1A) If any arrears of tax, default surcharge, penalty or any other amount which is adjudged or payable by any person and which cannot be recovered in the manner prescribed above, the Board or any officer authorized by the Board, may, write off the arrears in the manner as may be prescribed by the Board.

 (2) For the purpose of recovery of tax, penalty or any other demand raised under this Act, the officer of sales tax shall have the same powers which under the Code of Civil Procedure 1908 (V of 1908), aCivil Courthas for the purpose of recovery of an amount due under a decree.

 Chapter-X

MISCELLANEOUS

 49. Sales of taxable activity or transfer of ownership.–

 (1) In case of termination of taxable activity or part thereof or its sale or transfer of ownership to a non-registered person, the possession of taxable goods or part thereof by the registered person shall  be deemed to be a taxable supply and the registered person shall be required to account for and pay the tax on the taxable goods held by him:

 Provided that if the tax payable  by such registered person remains unpaid, the amount of unpaid tax shall be the first charge on the assets of the business and shall be payable by the transferee of business

 (2) In the case of sale or transfer of  ownership of a taxable activity or part thereof to another registered person as an ongoing concern, sales tax chargeable on taxable goods or part thereof shall be accounted for and paid by the registered person to whom such sale is made or ownership is transferred.

 49A. Liquidators.-

 (1) Every person (hereinafter referred to as a “liquidator”) who is-

 (a) a liquidator of a company;

 (b) a receiver appointed by a Court or appointed out of Court;

 (c) a trustee for a bankrupt; or

 (d) a mortgagee in possession, shall, within fourteen days of being appointed or taking possession of an asset in Pakistan, whichever occurs first, give written notice thereof to the Collector.

 (2) The Collector shall, within three months of being notified under sub-section (1), notify the liquidator, in writing, of the amount which appears to the Collector to be sufficient to provide for any sales tax which is or will become payable by the person whose assets are in the possession of the liquidator.

 (3) A liquidator shall not, without leave  of the Collector, part with any asset held as liquidator until the liquidator has been notified under sub-section (2).

 (4) A liquidator-

 (a) shall set aside, out of the proceeds of sale of any asset by the liquidator, the amount notified by  the Collector under sub-section

 (2), or such amount as is subsequently agreed to by the Collector; and

 (b) shall be liable to the extent of the amount set aside for the sales tax liability of the person who owned the asset.

 (5) A liquidator shall be personally liable to the extent of any amount required to be set-aside under sub-section (4) for the tax referred to in sub-section (2) if, and to the extent that, the liquidator fails to comply with the requirements of this section.

 (6) Where the proceeds of sale of any asset are less than the amount notified by the Collector under sub-section (2), the application of sub-section (4) and (5) shall be limited to the proceeds of sale.

 (7) This section shall have effect  notwithstanding anything contained in any other law for the time being in force.

 50. Power to make rules.–

 (1) The Board may, by notification in  the official Gazette, make rules for carrying out the purposes of this Act including rules for charging fee for processing return, claims and other documents and for preparation of copies thereof.

 (2) All rules made under sub-section (1) or any other provisions of this Act, shall be collected, arranged and published along with general orders and departmental instructions and rulings, if any, at appropriate intervals and sold to the public at reasonable price

 50A. Computerized system.—

 (1) The Board may prescribe the use of computerized system for carrying out the purposes of this Act, including the receipt of applications for registration, returns and such other declarations or information required to be provided under this Act and the rules made thereunder, from such date and for such registered persons or class of persons as the Board may, by notification in the official Gazette, specify.

 (2) The Board may make rules for regulating the conduct and transaction of business in relation to the submission  of returns or other information to the Board by the persons required to transmit or receive any information through the computerized system, including matters such as grant  of authorization, suspension and cancellation of authorization and for security of the information transmitted or received through the computerized system.

 (3) Unless otherwise proved, the information received in the computerized system from or on behalf of any registered person shall, for all official and legal purposes, be deemed to have been furnished by and received from such registered person.

 (4) The business information gathered  through computerized system shall be confidential to be used only for official and legal purposes and no unauthorized person shall claim for any access to such information.

 51. Bar of suits, prosecution and other legal proceedings.– (1) No suit shall he brought in any Civil Court to set aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of any tax made under this Act.

 (2) No suit, prosecution or other legal proceeding shall lie against the Federal Government or against any public servant in respect of any order passed in good faith under this Act.

 (3) Notwithstanding anything in any other law for the time being in force, no investigation or inquiry shall be undertaken or initiated by any governmental agency against any officer or official for anything done in his official capacity under this Act, rules, instructions or direction made or issued thereunder without the prior approval of the Board.

 52. Appearance by authorised representative.–

 A registered person required to appear before the Appellate Tribunal or an officer of Sales Tax in connection with any proceedings under this Act may, in writing, authorise any person 1[having such qualification as may be prescribed] to represent him or appear on his behalf.

 52A. e-intermediaries to be appointed.—

 (1) Subject to such conditions, limitations and restrictions, the Board may, by a notification in the official Gazette, appoint a person to electronically file return under Chapter V and such other documents electronically, as may be prescribed from time to time, on behalf of a person registered under section 14.

 (2) A person registered under section 14 may authorize an e-intermediary to electronically file return or any other documents, as specified in sub-section (1).

 (3) The return or such other documents filed by an e-intermediary on behalf of a registered person shall be deemed to  have been filed by that registered person.

 (4) Where this Act requires anything to be done by the registered person and if such thing is done by an e-intermediary authorized by the registered person under sub-section (2), unless the contrary is proved, shall be deemed to have been done with the knowledge and consent of such registered person so that in any proceedings under this Act, the registered person shall  be liable as if the thing has been done by him.

 (5) Where an e-intermediary, authorized by a registered person under subsection (2) to act on his behalf, knowingly or willfully submits a false or incorrect information or document or  declaration with an  intent to avoid payment of tax due or any part thereof or claiming a tax credit or a refund that is not due to the registered person, such e-intermediary shall be jointly and severally responsible for recovery of  the amount of tax short paid or the amount refunded in excess as a result of such incorrect or false information or document or declaration, without prejudice to any other action that may be taken against him under the relevant provisions of the law.

 (6) The Board may, by notification in the official Gazette, prescribe rules for the conduct and transaction of business of  e- intermediaries, including their appointment, suspension and cancellation of appointment, subject to such conditions as specified therein.

 53. Estate of deceased person.–

 The tax liability of a deceased registered person under the Act shall be the first charge on his estate in the hands of his successors.

 54. Estate in bankruptcy.–

 (1) If a registered person is declared bankrupt, the tax liability under this Act shall pass on to the estate in bankruptcy if it continues to operate the business.

 (2) If tax liability is incurred by an estate in bankruptcy, the tax is deemed to be a current expenditure in the operations of the estate in bankruptcy and shall be paid before the claims preferred by other creditors are settled.

 55. Removal of difficulties.–

 If any difficulty arises in giving effect to the provisions of this Act or the rules made or notifications issued thereunder, the Board may through a general order or otherwise, issue instructions or directions, not inconsistent with the provisions of this Act, for such actions to be taken by an officer of sales tax or any other person as it considers necessary or expedient for the purpose of removing the difficulty.

 56. Service of order, decisions, etc.–

 Any adjudication order or decision made or any summons or notice issued under this Act shall be served:

 (a) by tendering the adjudication order, decision, summons or notice or sending it by registered post or courier service to the person for whom it is intended or to his agent; and

 (b) if the adjudication order, decision, summons or notice cannot he served in any manner provided in clause (a), by affixing it on the notice board of the local Sales Tax Office.

 57. Correction of clerical errors, etc.–

 Clerical or arithmetical errors in  any assessment, adjudication, order or decision may, at any time, be corrected by the officer of Sales Tax who made the assessment or adjudication or passed such order or decision or by his successor in office :

 Provided that before such correction, a notice shall be given to the registered person or to a person affected by such correction.

 58. Liability for payment of tax in the case of private companies or business enterprises.–

Notwithstanding anything contained in the Companies ordinance 1984 (XLVII of 1984), where any private company or business enterprise is wound up and any tax chargeable on the company or business enterprise, whether before, or in the course, or after its liquidation, in respect of any tax period cannot be recovered from the company or business enterprise, every person who was a owner of, or partner in,  or director of, the company or business enterprise during the relevant period  shall, Jointly and severally with such persons be liable for the payment of such tax.

58A. Representatives.—(1) For the purpose of this Act and subject to subsections (2) and (3), the expression “representative” in respect of a registered person, means—

(a)  where the person is an individual under a legal disability, the guardian or manager who receives or is entitled to receive income on behalf, or for the benefit of the individual;

(b)  where the person is a company (other than a trust, a Provincial Government, or local authority in Pakistan), a director or a manager or secretary  or agent or accountant or any similar officer of the company;

 (c)  where the person is a trust declared by a duly executed instrument in writing whether  testamentary or otherwise, any trustee of the trust;

 (d)  where the person is a Provincial Government, or local authority in Pakistan, any individual responsible for accounting for the receipt and payment of money or funds on behalf of the Provincial Government or local authority;

 (e)  where the person is an association of persons, a director or a manager or secretary or agent or accountant or any similar officer of the association or, in the case of a firm, any partner in the firm;

 (f)  where the person is the Federal Government, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Federal Government; or

 (g)  where the person is a public  international organization, or a foreign government or political sub-division of a foreign government, any individual responsible for accounting for the receipt and payment of moneys or funds in Pakistan on behalf of the organization, government, or  political subdivision of the government.

 (2) Where the Court of Wards, the Administrator General, the Official Trustee, or any receiver or manager appointed  by, or under, any order of a Court receives or is entitled to receive income on behalf, or for the benefit of any person, such Court of Wards, Administrator General, Official Trustee, receiver, or manager shall be the representative of the person for the purposes of this Act.

 (3) Subject to sub-section (4), where  a person is a non-resident person, the representative of the persons for the purpose of this Act for a tax year shall be any person in Pakistan—

 (a)  who is employed by, or on behalf of, the non-resident person;

 (b)  who has any business connection with the non-resident person;

 (c)  from or through whom the non-resident person is in receipt of any income, whether directly or indirectly;

 (d)  who holds, or controls the  receipt or disposal of any money belonging to the non-resident person;

 (e)  who is the trustee of the non-resident person; or

 (f)  who is declared by the Collector by an order in writing to be the representative of the non-resident person.

 (4) No person shall be declared as the representative of a non-resident person unless the person has been given  an opportunity by the Collector of being heard.

 58B.  Liability and obligations of representatives.—(1) Every representative of a person  shall be responsible for performing any duties or obligations imposed by or under this Act on the person, including the payment of tax.

 (2) Subject to section 58 and sub-section (5) of this section, any tax that, by virtue of sub-section (1), is payable by a representative of a registered person shall be recoverable from the representative only to the extent of any assets of the registered person that are in the possession or under the control of the representative.

 (3) Every representative of a registered person who pays any tax owing by the registered person shall be entitled to recover the amount so paid from the registered person or to retain the amount so paid out of any moneys of the registered person that are in the representative’s possession or under the representative’s control.

 (4) Any representative, or any person who apprehends that he may be assessed as a representative, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the “principal”), a sum equal to his estimated liability under this Act, and in the event of disagreement  between the principal and such a representative or a person as to the amount to be so retained, such representative or person may obtain from the Collector a certificate stating the amount to be so retained pending final determination of the tax liability, and the certificate so obtained shall be his authority for retaining that amount.

 (5) Every representative shall be personally liable for the payment of any tax due by the representative in a representative capacity if, while the amount remains unpaid, the representative—

 (a)  alienates, charges or disposes of any moneys received or accrued in respect of which the tax is payable; or

 (b)  disposes of or parts with any moneys or funds belonging to the registered person that is in the possession of the representative or which comes to the representative after the tax is payable, if such tax could legally have been  paid from or out of such moneys or funds.

 (6) Nothing in this section shall relieve any person from performing any duties imposed by or under this Act on the person which the representative of the person has failed to perform.

 59. Tax paid on stocks acquired before registration.–

 The tax paid on goods purchased by a person who is subsequently required to be registered under section 14 due to new liabilities or levies or gets voluntary registration under this Act or the rules made thereunder, shall be treated as input tax, provided that such goods were purchased by him from a registered person against an invoice issued under section 23 during a period of thirty days before making an application for registration and constitute his verifiable unsold stock on the date of compulsory registration or on the date of application for registration or for voluntary registration:

 Provided that where a person imports goods, the tax paid by him thereon during a period of ninety days before making an application for registration shall be treated as an input tax subject to the condition that he holds the bill of entry relating to such goods and also that these are verifiable unsold or unconsumed stocks on the date of compulsory registration or on the date of application for registration or for voluntary registration.

 60. Powers to deliver certain goods without payment of tax.– Subject to such conditions, limitations or restrictions as it thinks fit Federal Government may authorise the import of goods or class of goods, without payment of the whole or any part of the tax payable thereon to the following persons, namely:-

 (i) registered importers importing such goods temporarily with a view to subsequent exportation;

 (ii) registered manufacturer-cum-exporters who import raw materials and intermediary products for further manufacture of goods meant for export;

 (iii) (* * *)

 61. Repayment of tax in certain cases.–

 Subject to such conditions, limitations or restrictions as it thinks fit to impose, the Board may authorise the repayment in whole or in part of the tax paid on any goods of such class or description as it may determine, which have been used in the production, manufacture, processing, repair or refitting in Pakistan of goods of such class or description as it may determine.

 61A.  Repayment of tax to persons registered in Azad Jammu and Kashmir.—Subject to such conditions, limitations or restrictions as it may deem fit to impose, the Board may authorize the repayment in whole or in part of the input tax paid on any goods acquired in or imported into Pakistan by the persons registered in Azad Jammu andKashmiras are engaged in making of zero-rated supplies.”;

 62. Drawback allowable on re-export.–

 When any goods which have  been imported into Pakistan and on which tax has been paid on importation are re-exported outside Pakistan and such goods are capable of being identified, seven-eighth of such tax shall, except as otherwise hereinafter provided, be repaid as drawback, and the provisions of Customs Act, 1969 (IV of 1969), relating to drawback of customs duties shall, so far as may apply to such tax, as they apply for the purposes of that Act:

 Provided that no such drawback shall be repaid unless the re-export is made within a period of two years from the date of importation as shown in the records of the Custom House:

 Provided further that the Board may, on sufficient cause being shown, in any case extend the said period by a further period of one year.

 63. Drawback on goods taken into use between importation and reexportation. Notwithstanding anything contained in section 62, the repayment of sales tax as drawback in respect of goods which have been taken into use between importation and re-exportation shall be subject to such orders, conditions or limitations as may be passed or imposed by the Board in each case -

 (a) modifying the amount of tax which shall be repaid as drawback on any such goods or class of goods; or

 (b) prohibiting the repayment of tax as drawback on any such goods or class of goods; or

 (c) varying the condition for the grant of drawback on any such goods or class of such goods by restricting the period after importation within which the goods must be re-exported.

 64. Power to declare what goods are identifiable and to prohibit drawback in case of specified foreign territory.—

 The Federal Government may, from time to time, by notification in the official Gazette, prohibit the payment of drawback upon the exportation of goods or any specified goods or class of goods to any specified foreign port or territory.

 65. Exemption of tax not levied or short levied as a result of general practice.–

 Notwithstanding anything contained in this Act, if in respect of any supply the Federal Government is satisfied that inadvertently and as a general practice:-

 (a) tax has not been charged in any area on any supply which was otherwise taxable, or according to the said practice the amount charged was less than the amount that should have actually been charged;

 (b) the registered person did not recover any tax prior to the date it was discovered that the supply was liable to tax; and

 (c) the registered person  started paying the tax from the date when it was found that the supply was chargeable to tax; It may, by a notification in the official Gazette, direct that the tax not levied or short levied as a result of that inadvertent practice, shall not be required to be paid for the period prior to the discovery of such inadvertent practice.

 66. Refund to be claimed within one year.–

 No refund of tax claimed to have been paid or over paid through inadvertence, error or misconstruction or refund on account of input adjustment not claimed within the relevant tax period, shall  be allowed, unless the claim is made within one year of the date of payment:

 Provided that in a case where a  registered person did not deduct input tax within the relevant tax period, the  Collector may, after satisfying himself that input tax adjustment is due and admissible, allow the registered person to take such adjustment in the tax period as specified by the Collector:

 Provided further that in a case where the refund has become due on account of any decision or judgement of any officer of sales tax or court or the Tribunal, the period of one year shall be reckoned from the date of judgement or decision of such officer, court or Tribunal:

 Provided further that the application or claim filed under this section shall be disposed of within a period not exceeding ninety days from the date of filing of such application or claim.

 67. Delayed Refund.–

 Where a refund due under section 10 is not made within the time specified in this behalf, there shall be paid to the claimant in addition  to the amount of refund due to him, a further sum equal to six per cent  per annum of the amount of refund due, from the date following the expiry of the time specified as aforesaid, to the day preceding the day of payment of refund:

 Provided that where there is reason to believe that a person has claimed the refund which is not admissible to him, the provision regarding the payment of such additional amount shall not apply till the investigation of the claim is completed and the claim is either accepted or rejected.

 68. Liability of the registered person for the acts of his agent.–

 When any person is expressly or impliedly authorised by a registered person to be his agent for all or any of the purposes of this Act, the registered person shall be responsible for the act done by his agent.

 69. Issuance of duplicate of sales tax documents.—An officer of sales tax not below the rank of Assistant Collector may,  on payment of one hundred rupees, issue an attested duplicate of any sales tax document as is available with the department or has been filed under this Act or rules made thereunder to a relevant registered person applying for the same.

 70. Computation of limitation period.–

 In computing the period of limitation prescribed for any appeal or application under this Act, the day on which the order complained of was served and, if the concerned person was not furnished with a copy of the order, the time requisite for obtaining a copy of such order shall be excluded.

 71. Special procedure.—

 (1) Notwithstanding anything  contained in this Act,  the Federal Government may, by notification in the official  Gazette, prescribe special procedure for scope and payment of tax, registration, book keeping and invoicing requirements and returns, etc. in respect of such supplies as may be specified therein.

 (2) * * *

 (3) Notwithstanding anything contained in this Act or any other law for the time being in force or any decision of any  court the trade enrolment Certificate Schemes immediately in force before the commencement of the Finance Act, 1999, shall be deemed to be validly made under this Act.

 72. Officers of sales tax to follow Board’s orders, etc.–

 All officers of sales tax and other persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the Board:

 Provided that no such orders, instructions or directions shall be given so as to interfere with the discretion of officers  of sales tax in the  exercise of their quasi-judicial functions.

 73. Certain transactions not admissible.—

 (1) Notwithstanding anything contained in this Act or any other law for the time being in force, payment of the amount for a transaction exceeding value of fifty thousand rupees, excluding payment against a utility bill, shall be made by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking  instrument showing transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer:

 Provided that online transfer of payment from the business account of buyer to the business account of supplier as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective buyer and the supplier.

 (2) The buyer shall not be entitled to  claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act if payment for the amount is  made otherwise than in the manner prescribed in sub-section (1), provided that payment in case of a transaction on credit is so transferred within one hundred and eighty days of issuance of the tax invoice.

 (3) The amount transferred in terms of this section shall be deposited in the business bank account of the supplier, otherwise the supplier shall not be entitled to claim input tax credit,  adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act.

 Explanation— For the purpose of this section, the term “business bank account” shall mean a bank account utilized by the registered person for business transactions, declared to the Collector in whose jurisdiction he is registered.

 74. Condonation of time-limit.—

 Where any time or period has been specified under any of the provisions of the Act or rules made thereunder within which any application is to be made or any act or thing is to be done, the  Board may, in any case or class of cases, permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate:

 Provided that the Board may, by notification in the official Gazette, and subject to such limitations or conditions as  may be specified therein, empower any Collector to exercise the powers under this section in any case or class of cases.

 75. Application of the provisions of Act IV of 1969 to Sales Tax.—

 The Federal Government may, by notification in the official Gazette, declare that any of the provision of the Customs Act, 1969 (IV of 1969), relating to the levy of, and exemption from, customs duties, draw-back of duty, warehousing, confiscation, and procedure relating to offences and appeals shall, with such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, be applicable in regard to like matters in respect of the tax imposed by section 3

 AN

ORDINANCE

Updated Upto 15th of August, 2009

to consolidate and amend the law relating to income tax

WHEREAS it is expedient to consolidate and amend the law relating to income tax and to provide for matters ancillary thereto or connected therewith;

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

NOW, THEREFORE, in pursuance of the Proclamation of Emergency of the fourteenth day of October, 1999, and the Provisional Constitution Order No. 1 of 1999, read with Provisional Constitutional Amendment 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:-

CHAPTER I

PRELIMINARY

 1. Short title, extent and commencement.-

 (1) This Ordinance may be called the Income Tax Ordinance, 2001.

 (2) It extends to the whole ofPakistan.

 (3) It shall come into force on such date as the Federal Government may, by notification in Official Gazette, appoint.

 2. Definitions.- In this Ordinance, unless there is anything repugnant in the subject or context –

 (1) “accumulated profits” in relation to a dividend, includes –

 (a) any reserve made up wholly or partly of any allowance, deduction, or exemption admissible under this Ordinance;

 (b) for the purposes of 1[sub-clauses (a), (d) and (e) of clause (19)], all profits of the company including income and gains of a trust up to the date of such distribution or such payment, as the case may be; and

 (c) for the purposes of 2[sub-clause (c) of clause (19)], includes all profits of the company including income and gains of a trust up to the date of its liquidation; 3[(1A)  “amalgamation” means the merger of one or more banking companies or non-banking financial institutions, in either case being a public company, or a company incorporated under any law, other than Companies Ordinance, 1984 (XLVII of 1984), for the time being in force, (the company or companies which so merge being referred to as the “amalgamating company” or companies and the company with which they merge or which is formed as a result of merger, as the “amalgamated company”) in such manner that --

 (a) the assets of the amalgamating company or companies immediately before the amalgamation become the assets of the amalgamated company by virtue of the amalgamation, otherwise than by purchase of such assets by the amalgamated company or as a result of distribution of such assets to the amalgamated company after the winding up of the amalgamating company or companies;

 (b) the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation; and

 (c) the scheme of amalgamation is approved by the State bank ofPakistanor by the Securities and Exchange Commission ofPakistan;]

 (2) “Appellate Tribunal” means the Appellate Tribunal established under section 130;

 (3) “approved gratuity fund” means a gratuity fund approved by the Commissioner in accordance with Part III of the Sixth Schedule;

 (4) “approved superannuation fund” means a superannuation fund, or any part of a superannuation fund, approved by the Commissioner in accordance with Part II of the Sixth Schedule;

 4[(5)  “assessment” includes re-assessment and amended assessment and the cognate expressions shall be construed accordingly;] 5[(5A)  “assessment year” means assessment year as defined in the repealed Ordinance;] 6[(5B)  “asset management company” means a company registered under the Assets Management Companies Rules, 1995;]

(6) “association of persons” means an association of persons as defined in section 80;

(7) “banking company” means a banking company as defined in the Banking Companies Ordinance, 1962 (LVII of 1962) and includes any body corporate which transacts the business of banking inPakistan;

(8) “bonus shares” includes bonus units in a unit trust;

(9) “business” includes any trade, commerce, manufacture, profession, vocation or adventure or concern in the nature of trade, commerce, manufacture, profession or vocation, but does not include employment;

(10) “capital asset” means a capital asset as defined in section 37;

(11) “Central Board of Revenue” means the Central Board of Revenue established under the Central Board of Revenue Act, 1924 (IV of 1924);

7(11A) “charitable purpose” includes relief of the poor, education, medical relief and the advancement of any other object of general public utility;]

(12) “company” means a company as defined in section 80;

8[(13)  “Commissioner” means a person appointed as a Commissioner of Income Tax under section 208, and includes a taxation officer vested with all or any of the powers, and functions of the Commissioner;]

9[(13A) “Commissioner (Appeals)” means a person appointed as a Commissioner of Income Tax (Appeals) under section 208;]

(14) “co-operative society” means a co-operative society registered under the Co-operative Societies Act, 1925 (VII of 1925) or under any other law for the time being in force inPakistanfor the registration of co-operative societies;

(15) “debt” means any amount owing, including accounts payable and the amounts owing under promissory notes, bills of exchange, debentures, securities, bonds or other financial instruments;

(16) “deductible allowance” means an allowance that is deductible from total income under Part IX of Chapter III;

(17) “depreciable asset” means a depreciable asset as defined in section 22;

(18) “disposal” in relation to an asset, means a disposal as defined in  section 75;

(19) “dividend” includes -

(a) any distribution by a company of accumulated profits to its  shareholders, whether capitalised or not, if such distribution  entails the release by the company to its shareholders of all or any part of the assets including money of the company;

(b) any distribution by a company, to its shareholders of debentures, debenture-stock or deposit certificate in any form, whether with or without profit 10[ ], to the extent to which the company possesses accumulated profits whether capitalised or not;

(c) any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not;

(d) any distribution by a company to its shareholders on the reduction of its capital, to the extent to which the company possesses accumulated profits, whether such accumulated profits have been capitalised or not; or

(e) any payment by a private company or trust of any sum (whether as representing a part of the assets of the company or trust, or otherwise) by way of advance or loan to a shareholder or any payment by any such company or trust on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company or trust, in either case, possesses accumulated profits; but does not include -

(i) a distribution made in accordance with 11[sub-clause] (c) or (d) in respect of any share for full cash consideration, or redemption of debentures or debenture stock, where the holder of the share or debenture is not entitled in the event of liquidation to participate in the surplus assets;

(ii) any advance or loan made to a shareholder by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company; and

(iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of 12[sub-clause] (c) to the extent to which it is so set off;

(20) “employee” means any individual engaged in employment;

(21) “employer” means any person who engages and remunerates an employee;

(22) “employment includes –

(a) a directorship or any other office involved in the management of a company;

(b) a position entitling the holder to a fixed or ascertainable  remuneration; or

(c) the holding or acting in any public office;

(23) “fee for technical services” means any consideration, whether periodical or lump sum, for the rendering of any managerial, technical or consultancy services including the services of technical or other personnel, but does not include –

(a) consideration for services rendered in relation to a construction, assembly or like project undertaken by the  recipient; or

(b) consideration which would be income of the recipient chargeable under the head “Salary”;

(24) “financial institution” means an institution notified under the Companies Ordinance,13[1984 (XLVII of 1984)] by the Federal Government in the official Gazette as a financial institution;

(25) “finance society” includes a co-operative society which accepts money on deposit or otherwise for the purposes of advancing loans or making investments in the ordinary course of business;

(26) “firm” means a firm as defined in section 80;

(27) “foreign-source income” means foreign-source income as defined in sub-section (16) of section 101.

(28) “House Building Finance Corporation” means the Corporation constituted under the House Building Finance Corporation Act, 1952 (XVIII of 1952);

14[(29)  “income” includes any amount chargeable to tax under this Ordinance, any amount subject to collection of tax under section 148, 153, 154 and 156, sub-section (5) of section 234, and any loss of income but does not include, in case of a shareholder of a domestic company, the amount representing the face value of any bonus share or the amount of any bonus declared, issue or paid by the company to the shareholders with a view to increasing its paid up share capital;]

15[(29A)  “income year” means income year as defined in the repealed Ordinance;]

(30) “intangible” means an intangible as defined in section 24;

16[(30A)  “leasing company” means a company licensed under the Leasing Companies (Establishment and Regulation) Rules, 2000;]

(31) “liquidation” in relation to a company, includes the termination of a trust;

17[(31A) “investment company” means a company registered under the Investment Companies and Investment Advisors Rules, 1971;]

(32) “member” in relation to an association of persons, includes a partner in a firm;

(33) “minor child” means an individual who is under the age of eighteen years at the end of a tax year;

(34) “modaraba” means a modaraba as defined in the Modaraba Companies and Modarabas (Floatation and Control) Ordinance,1980 (XXXI of 1980);

(35) “modaraba certificate” means a modaraba certificate as defined in the Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980 (XXXI of 1980);

18[(35A) “Mutual Fund” means a mutual fund set up by the Investment Corporation of Pakistan or by an investment company;]

19[(36) “non-profit organization” means any person other than an individual, which is - -

(a) established for religious, educational, charitable, welfare or development purposes, or for the promotion of an amateur sport;

(b) formed and registered under any law as a non-profit  organization;

(c) approved by the Commissioner for specified period, on an application made by such person in the prescribed form and manner, accompanied by the prescribed documents and, on requisition, such other documents as may be required by the Commissioner; and none of the assets of such person confers, or may confer, a private benefit to any other person;]

(37) “non-resident person” means a non-resident person as defined in Section 81;

(38) “non-resident taxpayer” means a taxpayer who is a non-resident person;

(39) “Originator” means Originator as defined in the Asset Backed Securitization Rules, 1999;

(40) “Pakistan-source income” means Pakistan-source income as          defined in section 101;

(41) “permanent establishment” in relation to a person, means a place of business through which the business of the person is wholly or partly carried on, and includes –

(a) a place of management, branch, office, factory or workshop, other than a liaison office except where the office engages in the negotiation of contracts (other than contracts of purchase);

(b) a mine, oil or gas well,  quarry or any other place of extraction of natural resources;

(c) a building site, a construction, assembly or installation project or supervisory activities connected with such site or project;

(d) the furnishing of services, including consultancy services, by any person through employees or other personnel engaged by the person for such purpose, but only where activities of that nature continue for the same or a connected project within Pakistan for a period or periods aggregating more than ninety 20[days] within any twelve-month period;

(e) a person acting inPakistanon behalf of the person (hereinafter referred to as the “agent” 21[),] other than an agent of independent status acting in the ordinary course of business as such, if the agent –

(i) has and habitually exercises an authority to conclude contracts on behalf of the other person;

(ii) has no such authority, but habitually maintains a stock-in-trade or other merchandise from which the agent regularly delivers goods or merchandise on behalf of the other person; or

(f) any substantial equipment installed, or other asset or property capable of activity giving rise to income;

 (42) “person” means a person as defined in section 80;

 (43) “pre-commencement expenditure” means a pre-commencement  expenditure as defined in section 25;

 (44) “prescribed” means prescribed by rules made under this Ordinance;

 (45) “private company” means a company that is not a public company;

 (46) “profit on a debt” means –24

 (a) any profit, yield, interest, discount, premium or other amount 22[,] owing under a debt, other than a return of capital; or

 (b) any service fee or other charge in respect of a debt, including any fee or charge incurred in respect of a credit facility which has not been utilised;

 (47) “public company” means –

(a) a company in which not less than fifty per cent of the shares are held by the Federal Government;

(b) a company whose shares were traded on a registered stock exchange in Pakistan at any time in the tax year and which remained listed on that exchange 23[ ] at the end of that year;  or

(c) a unit trust whose units are widely available to the public and any other public trust;

(48) “recognised provident fund” means a provident fund recognised by  the Commissioner in accordance with Part I of the Sixth Schedule;

24[(48A) “Regional Commissioner” means a person appointed as a Regional Commissioner of Income Tax under section 208 and includes a Director-General of Income Tax and Sales Tax;]

(49) “rent” means rent as defined in sub -section  (2) of section 15 and includes an amount treated as rent under section 16;

25[(49A) “repealed Ordinance” means Income Tax Ordinance, 1979 (XXXI of 1979);]

(50) “resident company” means a resident company as defined in section 83;

(51) “resident individual means a resident individual as defined in section 82;

(52) “resident person” means a resident person as defined in section 81;

(53) “resident taxpayer” means a taxpayer who is a resident person; (54)“26[royalty]” means any amount paid or payable, however described or computed, whether periodical or a lump sum, as consideration for -

(a) the use of, or right to use any patent, invention, design or model, secret formula or process, trademark or other like property or right;

(b) the use of, or right  to use any copyright of a literary, artistic or scientific work, including films or video tapes for use in connection with television or tapes in connection with radio broadcasting, but shall not include consideration for the sale, distribution or exhibition of cinematograph films;

(c) the receipt of, or right to receive, any visual images or sounds, or both, transmitted by satellite, cable, optic fiber or similar technology in connection with television, radio or internet broadcasting;

(d) the supply of any technical, industrial, commercial or scientific knowledge, experience or skill;

(e) the use of or right to use any industrial, commercial or scientific equipment;

(f) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as mentioned in  27[sub-clauses] (a) through (e);

(g) the disposal of any property or right referred to in 28[subclauses] (a) through (e);

(55) “salary” means salary as defined in section 12;

(56) “Schedule” means a Schedule to this Ordinance;

(57) “securitization” means securitization as defined in the Asset Backed Securitization Rules, 1999;

(58) “share” in relation to a company, includes a modaraba certificate and the interest of a beneficiary in a trust (including units in a trust);

(59) “shareholder” in relation to a company, includes a modaraba certificate holder 29[, a unit holder of a unit trust] and a beneficiary of a trust;

(60) “Special Purpose Vehicle” means a Special Purpose Vehicle as defined in the Asset Backed Securitization Rules, 1999;

(61) “speculation business” means a speculation business as defined in section 19;

(62) “stock-in-trade” means stock-i n-trade as defined in section 35;

(63) “tax” means any tax imposed under Chapter II, and includes any penalty, fee or other charge or any sum or amount leviable or payable under this Ordinance;

 (64) “taxable income” means taxable income as defined in section 9;

 (65) “taxation officer” means any 30[Additional Commissioner of Income Tax, Deputy Commissioner of Income Tax], Assistant Commissioner of Income Tax, Income Tax Officer, Special Officer or any other officer however designated appointed by the Central Board of Revenue for the purposes of this Ordinance;

 (66) “taxpayer” means any person who derives an amount chargeable to tax under this Ordinance, and includes –

 (a) any representative of a person who derives an amount chargeable to tax under this Ordinance;

 (b) any person who is required to deduct or collect tax under Part V of Chapter X

31[and Chapter XII]; or

(c) any person required to furnish a return of income or pay tax under this Ordinance;

 (67) “tax treaty” means an agreement referred to in section 107;

 (68) “tax year” means the tax year as defined in sub-section (1) of  section 74 and, in relation to a person, includes a special year or a transitional year that the person is permitted to use under section 74;

 (69) “total income” means total income as defined in section 10;

 (70) “trust” means a “trust” as defined in section 80;

 (71) “underlying ownership” means an underlying ownership as defined in section 98;

 (72) “units” means units in a unit trust; and

 (73) “unit trust” means a unit trust as defined in section 80.

 32[(74) “Venture Capital Company” and “Venture Capital Fund” shall have the same meanings as are assigned to them under the Venture Capital Company and Venture Capital Funds Rules, 2001;]

 3. Ordinance to override other laws.-  The provisions of this Ordinance shall apply notwithstanding anything to the contrary contained in any other law for the time being in force.

 CHAPTER II

CHARGE OF TAX

 4. Tax on taxable income.-

 (1)   Subject to this Ordinance, income tax shall be imposed for each tax year, at the rate or rates  specified in Division I or II of Part I of the First Schedule, as the case may be, on every person who has taxable income for the year.

 (2) The income tax payable by a taxpayer for a tax year shall be computed by applying the rate or rates of tax applicable to the taxpayer under this Ordinance to the taxable income of the taxpayer for the year, and from the resulting amount shall be subtracted any tax credits allowed to the taxpayer for the year.

 (3) Where a taxpayer is allowed more than one tax credit for a tax year, the credits shall be applied in the following order –

 (a) any foreign tax credit allowed under section 103; then

(b) any tax credit allowed under Part X of Chapter III; and then

(c) any tax credit allowed under sections 140, 147 and 168.

 (4) Certain classes of income (including the income of certain classes of persons) may be subject to –

 (a) separate taxation as provided in sections 5, 6 and 7; or

(b) collection of tax under Division II of Part V of Chapter X or deduction of tax under  Division III of Part V of Chapter X as  a final tax on the income or the person.

 (5) Income referred to in sub -section (4) shall be subject to tax as provided for in section 5, 6 or 7, or Part V of Chapter X, as the case may be, and shall not be included in the computation of taxable income in accordance with section 8 or 169, as the case may be.

 5. Tax on dividends.-

 (1)   Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division III of Part I of the First Schedule, on every person who receives a dividend from a resident company.

 (2) The tax imposed under sub-section (1) on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.

 (3) This section shall not apply to a dividend that is exempt from tax under this Ordinance.

 6. Tax on certain payments to non-residents.-

 (1)   Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IV of Part I of the First Schedule, on every nonresident person who receives any Pakistan-source royalty or fee for technical services.

 (2) The tax imposed under sub-section (1) on a non-resident person shall be computed by applying the relevant rate of tax to the gross amount of the royalty or fee for technical services.

 (3) This section shall not apply to –

 (a) any royalty where the property or right giving rise to the royalty is effectively connected with a permanent establishment in Pakistan of the non-resident person;

 (b) any fee for technical services where the services giving rise to the fee are rendered through a permanent establishment inPakistanof the non-resident person; or

 (c) any royalty or fee for technical services that is exempt from tax under this Ordinance.

 (4) Any Pakistani-source royalty or fee for technical services received by a non-resident person to which this section does not apply by virtue of clause (a) or (b) of sub -section (3) shall be treated as income from business attributable to the permanent establishment in Pakistan of the person.

 7. Tax on shipping and air transport income of a non-resident person.-

 (1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division V of Part I of the First Schedule, on every nonresident person carrying on the business of operating ships or aircraft as the owner or charterer thereof in respect of –

 (a) the gross amount received or receivable (whether in or out of  Pakistan) for the carriage of passengers, livestock, mail or goods embarked in Pakistan; and

 (b) the gross amount received or receivable in Pakistan for the carriage of passengers, livestock, mail or goods embarked outside Pakistan.

(2) The tax imposed under sub-section (1) on a non-resident person shall be computed by applying the relevant rate  of tax to the gross amount referred to in sub-section (1).

(3) This section shall not apply to any amounts exempt from tax under this Ordinance.

8. General provisions relating to taxes imposed under sections 5, 6 and 7.- Subject to this Ordinance, the tax imposed under Sections 5, 6 and 7 shall be a final tax on the amount in respect of which the tax is imposed and-

(a) such amount shall not be chargeable to tax under any head of income in computing the taxable income of the person who derives it for any tax year;

(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the amount;

(c) the amount shall not be reduced by –

(i) any deductible allowance; or

(ii) the set off of any loss;

(d) the tax payable by a person under sections 5, 6 or 7 shall not be reduced by any tax credits allowed under this Ordinance; and

(e) the liability of a person under sections 5, 6 or 7 shall be discharged to the extent that –

(i) in the case of shipping and air transport income, the tax has been paid in accordance with section 143 or 144, as the case may be; or

(ii) in any other case, the tax payable has been deducted at source under Division III of Part V of Chapter X.

CHAPTER III

TAX ON TAXABLE INCOME

PART I

COMPUTATION OF TAXABLE INCOME

 9. Taxable income.- The taxable income of a person for a tax year shall be the total income of the person for the year reduced (but not below zero) by the total of any deductible allowances under Part IX of this Chapter of the person for the year.

 10. Total Income.- The total income of a person for a tax year shall be the sum of the person’s income under each of the heads of income for the year.

 11. Heads of income.-

 (1) For the purposes of the imposition of tax and the computation of total income, all income shall be classified under the following heads, namely:–

 (a) Salary;

33[(b)  Income from Property;

(c)  Income from Business;

(d)  Capital Gains; and

(e)  Income from Other Sources.]

 (2) Subject to this Ordinance, the income of a person under a head of income for a tax year shall be the total of the amounts derived by the person in that year that are chargeable to tax under the head as reduced by the total deductions, if any, allowed under this Ordinance to the person for the year under that head.

 (3) Subject to this Ordinance, where the total deductions allowed under this Ordinance to a person for a tax year under a head of income exceed the total of the amounts derived by the person in that year that are chargeable to ta x under that head, the person shall be treated as sustaining a loss for that head for that year of an amount equal to the excess.

 (4) A loss for a head of income for a tax year shall be dealt with in accordance with Part VIII of this Chapter.

 (5) The income of a resident person under a head of income shall be computed by taking into account amounts that are Pakistan-source income and amounts that are foreign-source income.

 (6) The income of a non-resident person under a head of income shall be computed by taking into account only amounts that are Pakistan-source income.

 PART II

HEAD OF INCOME: SALARY

 12. Salary.-

 (1) Any salary received by an employee in a tax year, other than salary that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Salary”.

 (2) Salary means any amount received by an employee from any employment, whether of a revenue or capital nature, including -

 (a) any pay, wages or other remuneration provided to an employee, including leave pay, payment in lieu of leave, overtime payment, bonus, commission, fees, gratuity or work condition supplements (such as for unpleasant or dangerous  working conditions);

 (b) any perquisite, whether convertible to money or not;

 (c) the amount of any allowance provided by an employer to an employee including a cost of living, subsistence, rent, utilities, education, entertainment or travel allowance, but shall not include any allowance solely expended in the performance of the employee’s duties of employment;

 (d) the amount of any expenditure incurred by an employee that is paid or reimbursed by the employer, other than expenditure incurred on behalf of the employer in the performance of the employee’s duties of employment;

 (e) the amount of any profits in  lieu of, or in addition to, salary or wages, including any amount received –

 (i) as consideration for a person’s agreement to enter into an employment relationship;

 (ii) as consideration for an employee’s agreement to any conditions of employment or any changes to the employee’s conditions of employment;

 (iii) on termination of employment, whether paid voluntarily or under an agreement, including any compensation for redundancy or loss of employment and golden handshake payments;

 (iv) from a provident  or other fund, to the extent to which the amount is not a repayment of contributions made by the employee to the fund in respect of which the  employee was not entitled to a deduction; and

 (v) as consideration for an employee’s agreement to a restrictive covenant in respect of any past, present or prospective employment;

 (f) any pension or annuity, or any supplement to a pension or annuity; and

 (g) any amount chargeable to tax as “Salary” under section 14.

 (3) Where an employer agrees to pay the tax chargeable on an employee’s salary, the amount of the employee’s income chargeable under the head “Salary” shall be grossed up by the amount of tax payable by the employer.

 (4) No deduction shall be allowed for any expenditure incurred by an employee in deriving amounts chargeable to tax under the head “Salary”.

 (5) For the purposes of this Ordinance, an amount or perquisite shall be treated as received by an employee from any employment regardless of whether the amount or perquisite is paid or provided –

 (a) by the employee’s employer, an associate of the employer, or by a third party under an arrangement with the employer  or an associate of the employer;

 (b) by a past employer or a prospective employer; or

 (c) to the employee or to an associate of the employee 34[or to a third party under and agreement with the employee or an associate of the employee].

 (6) An employee who has received an amount referred to in sub-clause (iii) of clause (e) of sub-section (2) in a tax year may, by notice in writing to the Commissioner, elect for the amount to be taxed at the rate computed in accordance with the following formula, namely:– A/B% where – A is the total tax paid or payable by the employee on the employee’s total taxable income for the three preceding tax years; and B is the employee’s total taxable income for the three preceding tax years.

 (7) Where –

 (a) any amount chargeable under the head “Salary” is paid to an employee in arrears; and

 (b) as a result the employee is chargeable at higher rates of tax than would have been applicable if the amount had been paid to the employee in the tax year in which the services were rendered, the employee may, by notice in writing to the Commissioner, elect for the amount to be taxed at the rates of tax that would have been applicable if the salary had been paid to the employee in the tax year in which the services were rendered.

 (8) An election under sub-section (6) or (7) shall be made by the due date for furnishing the employee’s return of income or employer certificate, as the case may be, for the tax year in which the amount was received or by such later date as the Commissioner may allow.

 13. Value of perquisites.-

 (1) For the purposes of computing the income of an employee for a tax year chargeable to tax under the head “Salary”, the value of any perquisite provided by an employer to the employee in that year that is included in the employee’s salary under section 12 shall be determined in accordance with this section.

 (2) This section shall not apply to any amount referred to in clause (c) or (d) of sub -section (2) of section 12.

 35[(3)  Where, in a tax year, a motor vehicle is provided by an employer to an employee wholly or partly for the private use of the employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include an amount computed as may be prescribed.]

 36 [ ]

 (5) Where, in a tax year, the services of a housekeeper, driver, gardener or other domestic assistant is provided by an employer to an employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the total salary paid to 37[such housekeeper, driver, gardener or other domestic assistant] in that year for services rendered to the employee, as reduced by any payment made by the employee 38[to the employer] for such  services.

 (6) Where, in a tax year, utilities are provided by an employer to an employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the fair market value of the utilities provided, as reduced by any payment made by the employee for the utilities.

 39[(7) Where a loan is made, on or after the 1^st day of July, 2002 by an employer to an employee and either no profit on loan is payable by the employee or the rate of profit on loan is less than the benchmark rate, the amount chargeable to tax to the employee under the head “Salary” for a tax year shall include an amount equal to-

 (a)  the profit on loan computed at the benchmark rate, where no profit on loan is payable by the employee, or

 (b)  the difference between the amount of profit on loan paid by the employee in that tax year and the amount of profit on loan computed at the benchmark rate, as the case may be.]

 (8) For the purposes of this Ordinance not including sub-section (7), where the employee uses a loan referred to in sub-section (7) wholly or partly for the acquisition of 40[any asset or property] producing income chargeable to tax under any head of income, the employee shall be treated as having paid an amount as profit equal to the benchmark rate on the loan or that part of the loan used to acquire the 41[any asset or property].

 (9) Where, in a tax year, an obligation of an employee to pay or repay an amount owing by the employee to the employer is waived by the employer, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the amount so waived.

 (10) Where, in a tax year, an obligation of an employee to repay an amount 42[owing] by the employee to another person is paid by the employer, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the amount so paid.

 (11) Where, in a tax year, property is transferred or services are provided by an employer to an employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the fair market value of the property or services determined at the time the property is transferred or the services are provided, as reduced by any payment made by the employee for the property or services.

 43[(12) Where, in the tax year, accommodation or housing is provided by an employer to an employee, the amount chargeable to tax to the employee under the head “Salary" for that year shall include an amount computed as may be prescribed.]

 (13) Where, in a tax year, an employer has provided an employee with a perquisite which is not covered by sub-sections (3) through (12), the amount chargeable to tax to the employee under the head “Salary” for that year shall include the fair market value of the perquisite 44[, except where the rules, if any, provide otherwise] determined at the time it is provided, as reduced by any payment made by the employee for the perquisite.

45[(14)  In this section,-

 (a)  “benchmark rate” means --

 (i)  for the tax year commencing on the first day of July, 2002, a rate of five percent per annum; and

 (ii)  for the tax years next following the tax year referred to in sub-clause (i), the rate for each  successive year taken at one percent above the rate applicable for the immediately preceding tax year but not exceeding such rate, if any, as the Federal Government may, by notification, specify in respect of any tax year;

 (b)  “services” includes the provision of any facility; and

 (c)  “utilities” includes electricity, gas, water and telephone.]

 14. Employee share schemes.-

 (1) The value of a right or option to acquire shares under an employee share scheme granted to an employee shall not be chargeable to tax.

 (2) Subject to sub-section (3), where, in a tax year, an employee is issued with shares under an employee share scheme including as a result of the exercise of an option or right to acquire the shares, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the fair market value of the shares determined at the date of issue, as reduced by any consideration given by the employee for the shares including any amount given as consideration for the grant of a right or option to acquire the shares.

 (3) Where shares issued to an employee under an employee share scheme are subject to a restriction on the transfer of the shares -

 (a) no amount shall be chargeable to tax to the employee under the head “Salary” until the earlier of –

 (i) the time the employee has a free right to transfer the shares; or

 (ii) the time the employee disposes of the shares; and

 (b) the amount chargeable to tax to the employee shall be the fair market value of the shares at the time the employee has a free right to transfer the shares or disposes of the shares, as the case may be, as reduced by any consideration given by the employee for the shares including any amount given as consideration for the grant of a right or option to acquire the shares.

 (4) For purposes of this Ordinance, where sub-section (2) or (3) applies, the cost of the shares to the employee shall be the sum of -

 (a) the consideration, if any, given by the employee for the  shares;

 (b) the consideration, if any, given by the employee for the grant of any right or option to acquire the shares; and

 (c) the amount chargeable to tax under the head “Salary” under those sub-sections.

 (5) Where, in a tax year, an employee disposes of a right or option to acquire shares under an employee share scheme, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the amount of any gain made on the disposal computed in accordance with the following formula, namely:– A-B where – A is the  consideration received for the disposal of the right or  option; and B is the employee’s cost in respect of the right or option.

 (6) In this sub-section, “employee share scheme” means any agreement or arrangement under which a company may issue shares in the company to –

 (a) an employee of the company or an employee of an associated company; or

 (b) the trustee of a trust and under the trust deed the trustee may transfer the shares to an employee of the company or an employee of an associated company.

 PART III

HEAD OF INCOME: INCOME FROM  PROPERTY

 15. Income from property.-

 (1) The rent received or receivable by a person in a tax year, other than rent exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Income  from Property”.

 (2) Subject to sub-section (3), “rent” means any amount received or receivable by the owner of land or a building as consideration for the use or occupation of, or the right to use or occupy, the land or building, and includes any forfeited deposit paid under a contract for the sale of land or a building.

 (3) This section shall not apply to any rent received or receivable by any person in respect of the lease of a building together with plant and machinery and such rent shall be chargeable  to tax under the head “Income from Other Sources”.

 (4) Subject to sub-section (5), where the rent received or receivable by a person is less than the fair market rent for the property, the person shall be treated as having derived the fair market rent for the period the property is let on rent in the tax year.

 (5) Sub-section (4) shall not apply where the fair market rent is included in the income of the lessee chargeable to tax under the head “Salary”.

 16. Non-adjustable amounts received in relation to buildings.-

 (1) Where the owner of a building receives from a tenant an amount which is not adjustable against the rent payable by the tenant, the amount shall be treated as rent chargeable to tax under the head “Income from Property” in the tax year in which it was received and the following nine tax years in equal proportion.

 (2) Where an amount (hereinafter referred to as the “earlier amount”) referred to in sub-section (1) is refunded by the owner to the tenant on termination of the tenancy before the expiry of ten years, no portion of the amount shall be allocated to the tax year in which it is refunded or to any subsequent tax year except as provided for in sub-section (3).

 (3) Where the circumstances specified in sub -section (2) occur and the owner lets out the building or part thereof to another person (hereinafter referred to as the “succeeding tenant”) and receives from the succeeding tenant any amount (hereinafter referred to as the “succeeding amount”) which is not adjustable against the rent payable by the succeeding tenant, the succeeding amount as reduced by such portion of the earlier amount as was charged to tax shall be treated as rent chargeable to tax under the head “Income from Property” as specified in sub-section (1).

 17. Deductions in computing income chargeable under the head “Income from Property”.-

 (1) In computing the income of a person chargeable to tax under the head “Income from Property” for a tax year, a deduction shall be allowed for the following expenditures or allowances, namely:–

 (a) In respect of repairs to a building, an allowance equal to one-fifth of the rent chargeable to tax in respect of the building for the year, computed before any deduction allowed under this section;

 (b) any premium paid or payable by the person in the year to insure the building against the risk of damage or destruction;

 (c) any local rate, tax, charge, or cess in respect of the property or the rent from the property paid or payable by the person to any local authority or government in  the year, not being any tax payable under this Ordinance;

 (d) any ground rent paid or payable by the person in the year in respect of the property;

 (e) any profit paid or payable by the person in the year on any money borrowed including by way of mortgage, to acquire, construct, renovate, extend, or reconstruct the property;

 (f) where the property has been acquired, constructed, renovated, extended, or reconstructed by the person with capital contributed by the House Building Finance Corporation or a scheduled bank under a scheme of investment in property on the basis of sharing the rent made by the Corporation or bank, the share in rent 46[and share towards appreciation in the value of property] (excluding the return of capital, if any) from the property paid or payable by the person to the said Corporation or the bank in the year under that scheme;

 (g) any expenditure (not exceeding six per cent of the rent chargeable to tax in respect of the property for the year computed before any deduction allowed under this section) paid or payable by the person in the year for the purpose of collecting the rent due in respect of the property;

 (h) any expenditure paid or payable by the person in the tax year for legal services acquired to defend the person’s title to the property or any suit connected with the property in a Court; and

 (i) where there are reasonable grounds for believing that any unpaid rent in respect of the property is irrecoverable, an allowance equal to the unpaid rent where –

 (i) the tenancy was bona fide, the defaulting tenant has vacated the property or steps have been taken to compel the tenant to vacate the property, and the defaulting tenant is not in occupation of any other property of the person;

 (ii) the person has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or has reasonable grounds to believe that legal proceedings would be useless; and

 (iii) the unpaid rent has been included in the income of the person chargeable to tax under the head “Income from Property” for the tax year in which the rent was  due and tax has been duly paid on such income.

 (2) Where any unpaid rent allowed as a deduction under clause (i) of sub-section (1) is wholly or partly recovered, the amount recovered shall be chargeable to tax in the tax year in which it is recovered.

 (3) Where a person has been allowed a deduction for any expenditure incurred in deriving rent chargeable to tax under the head “Income from Property” and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head “Income from Property” in the first tax  year following the end of the three years.

 (4) Where an unpaid liability is chargeable to tax as a result of the application of sub-section (3) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.

 (5) Any expenditure allowed to a person under this section as a deduction shall not be allowed as a deduction in computing the income of the person chargeable to tax under any other head of income.

 (6) The provisions of section 21 shall apply in determining the deductions allowed to a person under this section in the same manner as they apply in determining the deductions allowed in computing the income of a person chargeable to tax under the head “Income from Business”.

 PART IV

HEAD OF INCOME: INCOME FROM BUSINESS

Division I

Income from Business

 18. Income from business.-

 (1) The following incomes of a person for a tax year, other than income exempt from tax under this Ordinance, shall be chargeable to tax under the head “Income from Business” –

 (a) the profits and gains of any business carried on by a person at any time in the year;

 (b) any income derived by any trade, professional or similar association from the sale of goods or provision of services to its members;

 (c) any income from the hire or lease of tangible movable property;

 (d) the fair market value of any benefit or perquisite, whether convertible into money or not, derived by a person in the course of, or by virtue of, a past, present, or prospective business relationship; and

 (e) any management fee derived by a management company (including a modaraba 47[management company]).

 (2) Any profit on debt derived by a person where the person’s business is to derive such income shall be chargeable to tax under the head “Income from Business” and not under the head “Income from Other Sources”.

 19. Speculation business.-

 (1) Where a person carries on a speculation business –

 (a) that business shall be treated as distinct and separate from any other business carried on 48[by] the person;

 (b) this Part shall apply separately to the speculation business and the other business of the person;

 (c) section 67 shall apply as if the profits and gains arising from a speculation business were a separate head of income;

 (d) any profits and gains arising from the speculation business for a tax year computed in accordance with this Part shall be included in the person’s income chargeable to tax under the head “Income from Business” for that year; and

 (e) any loss of the person arising from the speculation business sustained for a tax year computed in accordance with this Part shall be dealt with under section 58.

 (2) In this section, “speculation business” means any business in which a contract for the purchase and sale of any commodity (including stock and shares) is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity, but does not include a business in which –

 (a) a contract  in respect of raw materials or merchandise is entered into by a person in the course of a manufacturing or mercantile business to guard against loss through future price fluctuations for the purpose of fulfilling the person’s other contracts for the actual  delivery of the goods to be manufactured or merchandise to be sold;

 (b) a contract in respect of stocks and shares is entered into by a dealer or investor therein to guard against loss in the person’s holding of stocks and shares through price fluctuations; or

 (c) a contract is entered into by a member of a forward market or stock exchange in the course of any transaction in the nature of jobbing arbitrate to guard against any loss which may arise in the ordinary course of the person’s business as such member.

 Division II

Deductions: General Principles

 20. Deductions in computing income chargeable under the head “Income from Business”.-

 (1) Subject to this Ordinance, in computing the income of a person chargeable to tax under the head “Income from Business” for a tax year, a deduction shall be allowed for any expenditure incurred by the person in the year to the extent to which the expenditure is incurred in deriving income from business chargeable to tax.

 (2) Subject to this Ordinance, where the expenditure referred to in subsection (1) is incurred in acquiring a depreciable asset or an intangible with a useful life of more than one year or is precommencement expenditure, the person must depreciate or amortise the expenditure in accordance with sections 22, 23, 24 and 25.

 49[(3)  Subject to this Ordinance, where any expenditure is incurred by an amalgamated company on legal and financial advisory services and other administrative cost relating to planning and implementation of amalgamation, a deduction shall be allowed for such expenditure.]

 21. Deductions not allowed.- Except as otherwise provided in this Ordinance, no deduction shall be allowed in computing the income of a person under the head “Income from Business” for -

 (a) any cess, rate or tax paid or payable by the person in Pakistan or a foreign country that is levied on the profits or gains of the business or assessed as a percentage or otherwise on the basis of such profits or gains;

 (b) any amount of tax deducted under Division III of Part V of Chapter X from an amount derived by the person;

 (c) any salary, rent, brokerage or commission, profit on debt, payment to non-resident, payment for services or fee paid by the person from which the person is required to deduct tax under Division III of Part V of Chapter X or section 233 of chapter XII, until the person has deducted and paid the tax as required by Division IV of Part V of Chapter X;

 (d) any entertainment expenditure in excess of such limits as may be prescribed;

 (e) any contribution made by the person to a fund that is not a recognised provident fund, approved superannuation fund, or approved gratuity fund;

 (f) any contribution made by the person to any provident or other fund established for the benefit of employees of the person, unless the person has made effective arrangements to secure that tax is deducted under section 149 from any payments made by the fund in respect of which the recipient is chargeable to tax under the head “Salary”;

 (g) any fine or penalty paid or payable by the person for the violation of any law, rule or regulation;

 (h) any personal expenditures incurred by the person;

 (i) any amount carried to a reserve fund or capitalised in any way;

 (j) any profit on debt, brokerage, commission, salary or other remuneration paid by an association of persons to a member of the  association;

 (k) any expenditure paid or payable by an employer on the provision of  perquisites and allowances to an employee where the sum of the value of the perquisites computed under section 13 and the amount  of the allowances exceeds fifty per cent of the employee’s salary for a tax year (excluding the value of the perquisites or amount of the allowances);

 (l) any expenditure paid or payable under a single account head which, in aggregate, exceeds fifty thousand rupees made other than by a crossed bank cheque or crossed bank draft, except expenditures not exceeding  50[five thousand rupees or on account of freight charges, travel fare, postage, utilities or payment of taxes, duties, fees, fines or any other statutory obligation];

 (m) any salary paid or payable exceeding five thousand rupees per month other than by a crossed cheque or direct transfer of funds to the employee’s bank account; and

 (n) except as provided in Division III of this Part, any expenditure paid  or payable of a capital nature.45

 Division III

Deductions: Special Provisions

 22. Depreciation.-

 (1) Subject to this section, a person shall be allowed a deduction for the depreciation of the person’s depreciable assets used in the person’s business in the tax year.

 (2) Subject to sub-sections (3) and (4), the depreciation deduction for a tax year shall be computed by applying the rate specified in Part I of the Third Schedule against the written down value of the asset at the beginning of the year.

 (3) Where a depreciable asset is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted  to the fair proportional part of the amount that would be allowed if the asset were wholly used to derived income from business chargeable to tax.

 (4) Where a depreciable asset is not used for the whole of the tax year in deriving income from business chargeable to tax, the deduction allowed under this section shall be computed according to the following formula, namely:– A x B/C where – A is the amount of depreciation computed under sub-section (2) or (3), as the case may be; B is the number of months in the tax year the asset is used in deriving income from business chargeable to tax; and C is the number of months in the tax year.

 (5) The written down value of a depreciable asset of a person at the beginning of the tax year shall be –

 (a) where the asset was acquired in the tax year, the cost of the asset to the person as reduced by any initial allowance in respect of the asset under section 23; or

 (b) in any other case, the cost of the asset to the person as reduced by the total depreciation deductions (including any initial allowance under section 23) allowed to the person in respect of the asset in previous tax years.

 (6) Where sub-section (3) applies to a depreciable asset for a tax year, the written down value of the asset shall be computed on the basis that the asset has been solely used to derive income from business chargeable to tax.

 (7) The total deductions allowed to a person during the period of ownership of a depreciable asset under this section and section 23 shall not exceed the cost of the asset.

 (8) Where, in any tax year, a person disposes of a depreciable asset, no depreciation deduction shall be allowed under this section for that year and –

 (a) if the consideration received exceeds the written down value  of the asset at the  time of disposal, the excess shall be chargeable to tax in that year under the head “Income from Business”; or

 (b) if the consideration received is less than the written down value of the asset at the time of disposal, the difference shall be allowed as a deduction in computing the person’s income chargeable under the head “Income from Business” for that year.

 (9) Where sub-section (3) applies, the written down value of the asset for the purposes of sub-section (8) shall be increased by the amount that is not allowed as a deduction as a result of the application of sub-section (3).

 (10) Where clause (a) of sub-section (13) applies, the written down value of the passenger transport vehicle for the purposes of subsection (8) shall be computed according to the following formula – A x B/C where – A is the consideration received on disposal of the vehicle; B is the amount referred to in clause (a) of sub -section (13); and C is the actual cost of acquiring the vehicle.

 (11) Subject to sub-sections (13) and (14), the rules in Part III of Chapter IV shall apply in determining the cost and consideration received in respect of a depreciable asset for the purposes of this section.

 51[(12) The depreciation deductions allowed to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person shall  be deductible only against the lease rental income derived in respect of such assets.]

 (13) For the purposes of this section, -

 (a) the cost of a depreciable asset being a passenger transport vehicle not plying for hire shall not exceed 52[one million] rupees;

 (b) the cost of immovable property or a structural improvement to immovable property shall not include the cost of the land;

 53[(c)  any asset owned by a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person is treated as used in the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution’s business; and]

 (d) where the consideration received on the disposal of immovable property exceeds the cost of the property, the consideration received shall be treated as the cost of the property.

 (14) Where a depreciable asset that has been used by a person inPakistanis exported or transferred out ofPakistan, the person shall be treated as having disposed of the asset at the time of the export or transfer for a consideration received equal to the cost of the asset.

 (15) In this section, -

  “depreciable asset” means any tangible movable property, immovable property (other than unimproved land), or structural improvement to immovable property, owned by a person that –

 (a) has a normal useful life exceeding one year;

 (b) is likely to lose value as a result of normal wear and tear, or obsolescence; and

 (c) is used wholly or partly by the person in deriving income from business chargeable to tax, but shall not include any tangible movable property, immovable property, or structural improvement to immovable property in relation to which a deduction has been allowed  under another section of this Ordinance for the entire cost of the property or improvement in the tax year in which the property is acquired or improvement made by the person; and “structural improvement” in relation to immovable property, includes any building, road, driveway, car park, railway line, pipeline, bridge, tunnel, airport runway, canal, dock, wharf, retaining wall, fence, power lines, water or sewerage pipes, drainage, landscaping or dam.

 23. Initial allowance.-

 (1) A person who places an eligible depreciable asset into service inPakistanfor the first time in a tax year shall be allowed a deduction (hereinafter referred to as an “initial allowance”) computed in accordance with sub-section (2), provided the asset is wholly and exclusively used by the person in deriving income from business chargeable to tax.

 (2) The amount of the initial allowance of a person shall be computed by applying the rate specified in Part II of the Third Schedule against the cost of the asset.

 (3) The rules in section 76 shall apply in determining the cost of an eligible depreciable asset for the purposes of this section.

 54[(4)  A deduction allowed under this section to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution and leased to another person shall be deducted only against the leased rental income derived in respect of such assets.]

 (5) In this section, “eligible depreciable asset” means a depreciable asset that is plant or machinery, other than –

 (a) any road transport vehicle unless the vehicle is plying for hire;

 (b) any furniture, including fittings;

 (c) any plant or machinery that is acquired second hand; or

 (d) any plant or machinery in relation to which a deduction has been allowed under another section of this Ordinance for the entire cost of the asset in the tax year in which the asset is acquired.

 24. Intangibles.-

 (1) A person shall be allowed an amortisation deduction in accordance with this section in a tax year for the cost of the person’s intangibles –

 (a) that are wholly or partly used by the person in the tax year in deriving income from business chargeable to tax; and

 (b) that have a normal useful life exceeding one year.(2) No deduction shall be allowed under this section where a deduction has been allowed under another section of this Ordinance for the entire cost of the intangible in the tax year in which the intangible is acquired.

 (3) Subject to sub -section (7), the amortization deduction of a person for a tax year shall be computed according to the following formula, namely:–A B where –A is the cost of the intangible; and B is the normal useful life of the intangible in whole years.

 (4) An intangible –

 (a) with a normal useful life of more than ten years; or

 (b) that does not have an ascertainable useful life, shall be treated as if it had a normal useful life of ten years.

 (5) Where an intangible is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the intangible were wholly used to derive income from business chargeable to tax.

 (6) Where an intangible is not used for the whole of the tax year in deriving income from business chargeable to tax, the deduction allowed under this section shall be computed according to the following formula, namely:– A x B/C where – A is the amount of 55[amortization] computed under subsection (3) or (5), as the case may be; B is the number of days in the tax year the intangible is used in deriving income from business chargeable to tax; and C is the number of days in the tax year.

 (7) The total deductions allowed to a person under this section in the current tax year and all previous tax years in respect of an intangible shall not exceed the cost of the intangible.

 (8) Where, in any tax year, a person disposes of an intangible, no amortisation deduction shall be allowed under this section for that year and –

 (a) if the consideration received by the person exceeds the written down value of the intangible at the time of disposal, the excess shall be income of the person chargeable to tax in that year under the head “Income from Business”; or

 (b) if the consideration received is less than the written down value of the intangible at the time of disposal, the difference shall be allowed as a deduction in computing the person’s income chargeable under the head “Income from Business” in that year.

 (9) For the purposes of sub-section (8) –

 (a) the written down value of an intangible at the time of disposal shall be the cost of the intangible reduced by the total deductions allowed to the person under this section in respect of the intangible or, where the intangible is not wholly used to derive income chargeable to tax, the amount that would be allowed under this section if the intangible were wholly so used; and

 (b) the consideration received on disposal of an intangible shall be determined in accordance with section 77.

 (10) For the purposes of this section, an intangible that is available for use on a day (including a non-working day) is treated as used on that day.

 (11) In this section, -

 “cost” in relation to an intangible, means any expenditure incurred in acquiring or creating the intangible, including any expenditure incurred in improving or renewing the intangible; and “intangible” means any patent, invention, design or model, secret formula or process, copyright, or other like property or right, contractual rights and any expenditure that provides an advantage or benefit for a period of more than one year (other than expenditure incurred to acquire a depreciable asset or unimproved land).

 25. Pre-commencement expenditure.-

 (1) A person shall be allowed a deduction for any pre-commencement expenditure in accordance with this section.

 (2) Pre-commencement expenditure shall be amortized on a straightline basis at the rate specified in Part III of the Third Schedule.

 (3) The total deductions allowed under this section in the current tax year and all previous tax years in respect of an amount of precommencement expenditure shall not exceed the amount of the expenditure.

 (4) No deduction shall be allowed under this section where a deduction has been allowed under another section of this Ordinance for the entire amount  of the pre-commencement expenditure in the tax year in which it is incurred.

 (5) In this section, “pre-commencement expenditure” means any expenditure incurred before the commencement of a business wholly and exclusively to derive income chargeable to tax, including the cost of feasibility studies, construction of prototypes, and trial production activities, but shall not include any expenditure which is incurred in acquiring land, or which is depreciated or amortised under section 22 or 24.

 26. Scientific research expenditure.-

 (1) A person shall be allowed a deduction for scientific research expenditure incurred in Pakistan in a tax year wholly and exclusively for the purpose of deriving income from business chargeable to tax.

 (2) In this section –

 “scientific research” means any 56[activity] in the fields of natural or applied science for the development of human knowledge; “scientific research expenditure” means any expenditure incurred by a person on scientific research for the purposes of developing the person’s business, including any contribution to a scientific research institution to undertake scientific research for the purposes of the person’s business, other than expenditure incurred –

 (a) in the acquisition of any depreciable asset or intangible;

 (b) in the acquisition of immovable property; or

 (c) for the purpose of ascertaining the existence, location, extent or quality of a natural deposit; and “scientific research institution” means any institution certified by the Central Board of Revenue as conducting scientific research in Pakistan.

 27. Employee training and facilities.- A person shall be allowed a deduction for any expenditure (other than capital expenditure) incurred in a tax year in respect of

 (a) any educational institution or hospital in Pakistan established for the benefit of the person’s employees and their dependents;

 (b) any institute in Pakistan established for the training of industrial workers recognised, aided, or run by the Federal Government or a local authority; or

 (c) the training of any person, being a citizen of Pakistan, in connection with a scheme approved by the Central Board of Revenue for the purposes of this section.

 28. Profit on debt, financial costs and lease payments.-

 (1)  Subject to this Ordinance, a deduction shall be allowed for a tax year for –

 (a) any profit on debt incurred by a person in the tax year to the extent that the proceeds or benefit of the debt have been used by the person in deriving income chargeable to tax under the head “Income from Business”;

 (b) any lease rental incurred by a person in the tax year to a scheduled bank, financial institution, an approved modaraba, an approved leasing company or a Special Purpose Vehicle on behalf of the Originator for an asset used by the person in deriving income chargeable to tax under the head “Income from Business”;

 (c) any amount incurred by a person in the tax year to a modaraba or a participation term certificate holder for any funds borrowed and used by the person in deriving income chargeable to tax under the head “Income from Business”;

 (d) any amount incurred by a scheduled bank in the tax year to a person maintaining a profit or loss sharing account or a deposit with the bank as a distribution of profits by the bank in respect of the account or deposit;

 (e) any amount incurred by the House Building Finance Corporation (hereinafter referred to as “the Corporation”) constituted under the House Building Finance Corporation Act, 1952 (XVIII of 1952), in the tax year to the State Bank of Pakistan (hereinafter referred to as “the Bank”) as the share of the Bank in the profits derived by the Corporation on its investment in property made under a scheme of partnership in profit and loss, where the investment is provided by the Bank under the House Building Finance Corporation (Issue and Redemption of Certificates) Regulations, 1982;

 (f) any amount incurred by the National Development Leasing Corporation Limited (hereinafter referred to as “the Corporation”) in the tax year to the State Bank of Pakistan (hereinafter referred to as “the Bank”) as the share of the Bank in the profits derived by the Corporation on its leasing operations financed out of a credit line provided by the Bank on a profit and loss sharing basis;

 (g) any amount incurred by the Small Business Finance Corporation (hereinafter referred to as “the Corporation”) in the tax year to the State Bank of Pakistan (hereinafter referred to as the “Bank”) as the share of the Bank in the profits derived by the Corporation on investments made in small business out of a credit line provided by the Bank on a profit and loss sharing basis;

 (h) any amount incurred by a person in the tax year to a banking company under a scheme of musharika representing the bank’s share in the profits of the musharika;

 (i) any amount incurred by a person in the tax year to a certificate holder under a musharika scheme approved by the Securities and Exchange Commission and Religious Board formed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980) representing the certificate holder’s share in the profits  of the musharika; or

 (j) the financial cost of the securitization of receivables incurred by an Originator in the tax year from a Special Purpose Vehicle being the difference between the amount received by the Originator and the amount of receivables securitized from a Special Purpose Vehicle.

 (2) Notwithstanding any other provision in this Ordinance, where any assets are transferred by an Originator, as a  consequence of securitisation, to a Special Purpose Vehicle, it shall be treated as a financing transaction irrespective of the method of accounting adopted by the Originator.

 (3) In this section, -

 “approved leasing company” means a leasing company approved by the Central Board of Revenue for the purposes of clause (b) of sub-section (1); and “approved  modaraba” means a modaraba approved by the Central Board of Revenue for the purposes of clause (b) of sub-section (1).

 29. Bad debts.-

 (1) A person shall be allowed a deduction for a bad debt in a tax year if the following conditions are satisfied, namely: -

 (a) The amount of the debt was –

 (i) previously included in the person’s income from business chargeable to tax; or

 (ii) in respect of money lent by a financial institution in deriving income from business chargeable to tax;

 (b) the debt or part of the debt is written off in the accounts of the person in the tax year; and

 (c) there are reasonable grounds for believing that the debt is irrecoverable.

 (2) The amount of the deduction allowed to a person under this section for a tax year shall not exceed the amount of the debt written off in the accounts of the person in the tax year.

 (3) Where a person has been allowed a deduction in a tax year for a bad debt and in a subsequent tax year the person receives in cash or kind any amount in respect of that debt, the following rules shall apply, namely:–

 (a) Where the amount received exceeds the difference between the whole of such bad debt and the amount previously allowed as a deduction under this section, the excess shall be included in the person’s income under the head “Income from Business” for the tax year in which it was received; or

 (b) where the amount received is less than the difference between the whole of such bad debt and the amount allowed as a deduction under this section, the shortfall shall be allowed as a bad debt deduction in computing the person’s income under the head “Income from Business” for the tax year in which it was received.

 30. Profit on non-performing debts of a banking company or development finance institution.-

 (1) A banking company or development finance institution shall be allowed a deduction for any profit accruing on a non-performing debt of the banking company or institution where the profit is credited to a suspense account in accordance with the Prudential Regulations for Banks or Non-bank Financial Institutions, as the case may be, issued by the State Bank of Pakistan.

 (2) Any profit deducted under sub-section (1) that is subsequently recovered by the banking company or development finance institution shall be included in the income of the company or institution chargeable under the head “Income from Business” for the tax year in which it is recovered.

 31. Transfer to participatory reserve.-

 (1) Subject to this section, a company shall be allowed a deduction for a tax year for any amount transferred by the company in the year to a participatory reserve created under section 120 of the Companies Ordinance, 1984 (XLVII of 1984) in accordance with an agreement relating to participatory redeemable capital entered into between the company and a banking company as defined in the Banking Tribunals Ordinance, 1984.

 (2) The deduction allowed under subsection (1) for  a tax year shall be limited to five per cent of the value of the company’s participatory redeemable capital.

 (3) No deduction shall be allowed under subsection (1) if the amount of the tax exempted accumulation in the participatory reserve exceeds ten per cent of the amount of the participatory redeemable capital.

 (4) Where any amount accumulated in the participatory reserve of a company has been allowed as a deduction under this section is applied by the company towards any purpose other than payment of share of profit on the participatory redeemable capital or towards any purpose not allowable for deduction or exemption under this Ordinance the amount so applied shall be included in the income from business of the company in the tax year in which it is so applied.

 Division IV

Tax Accounting

 32. Method of accounting.-

 (1) A person’s income chargeable to tax under the head “Income from Business” shall be computed in accordance with the method of accounting regularly employed by the person.

 (2) Subject  to sub-section (3), a company shall account for income chargeable to tax under the head “Income from Business” on an accrual basis, while other persons may account for such income on a cash or accrual basis.

 (3) The Central Board of Revenue may prescribe  that any class of persons shall account for income chargeable to tax under the head “Income from Business” on a cash or accrual basis.

 (4) A person may apply, in writing, for a change in the person’s method of accounting and the Commissioner may, by notice in writing, approve such an application but only if satisfied that the change is necessary to clearly reflect the person’s income chargeable to tax under the head “Income from Business”.

 (5) If a person’s method of accounting has changed, the person shall make adjustments to items of income, deduction, or credit, or to any other items affected by the change so that no item is omitted and no item is taken into account more than once.

 33. Cash-basis accounting.- A person accounting for income chargeable  to tax under the head “Income from Business” on a cash basis shall derive income when it is received and shall incur expenditure when it is paid.

 34. Accrual-basis accounting.-

 (1) A person accounting for income chargeable to tax under the head “Income  from Business” on an accrual basis shall derive income when it is due to the person and shall incur expenditure when it is payable by the person.

 (2) Subject to this Ordinance, an amount shall be due to a person when the person becomes entitled to receive it even if the time for discharge of the entitlement is postponed or the amount is payable by instalments.

 (3) Subject to this Ordinance, an amount shall be payable by a person when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy, but not before economic performance occurs.

 (4) For the purposes of sub-section (3), economic performance shall occur -

 (a) in the case of the acquisition of services or assets, at the time the services or assets are provided;

 (b) in the case of the use of assets, at the time the assets are used; and

 (c) in any other case, at the time payment is made in full satisfaction of the liability.

 (5) Where a person has been allowed a deduction for any expenditure incurred in deriving income chargeable to tax under the head “Income from Business” and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head “Income from Business” in the first tax year following the end of the three years.

 (6) Where an unpaid liability is chargeable to tax as a result of the application of sub-section (5) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.

 35. Stock-in-trade.-

 (1) For the purposes  of determining a person’s income chargeable to tax under the head “Income from Business” for a tax year, the cost of stock-in-trade disposed of by the person in the year shall be computed in accordance with the following formula, namely:–

(A + B) – C where –A is the opening value of the person’s stock-in-trade for the  year; B is cost of stock-i n-trade acquired by the person in the year; and C is the closing value of stock-i n-trade for the year.

 (2) The opening value of stock-in-trade of a person for a tax year shall be -

 (a) the closing value of the person’s stock-in-trade at the end of the previous year; or

 (b) where the person commenced to carry on business in the year, the fair market value of any stock-i n-trade acquired by the person prior to the commencement of the business.

 (3) The fair market value of stock-in-trade referred to in clause (b) of sub-section (2) shall be determined at the time the stock-i n-trade is ventured in the business.

 (4) The closing value of a person’s stock-in-trade for a tax year shall be the lower of cost or 57[net realisable] value of the person’s stock-in trade on hand at the end of the year.

 (5) A person accounting for income chargeable to tax under the head “Income from Business” on a cash basis may compute the person’s cost of stock-in-trade on the prime-cost method or absorption-cost method, and a person accounting for such income on an accrual basis shall compute the person’s cost of stock-in-trade on the absorption-cost method.

 (6) Where particular items of  stock-in-trade are not readily identifiable, a person may account for that stock on the first-in-first-out method or the average-cost method but, once chosen, a stock valuation method may be changed only with the written permission of the Commissioner and in accordance with any conditions that the Commissioner may impose.

 (7) In this section, -

 “absorption-cost method” means the generally accepted accounting principle under which the cost of an item of stock-i n-trade is the sum of direct material costs,  direct labour costs, and factory overhead costs; “average-cost method” means the generally accepted accounting principle under which the valuation of stock-in-trade is based on a weighted average cost of units on hand; “direct labour costs” means labour  costs directly related to the manufacture or production of stock-in-trade; “direct material costs” means the cost of materials that become an integral part of the stock-i n-trade manufactured or produced, or which are consumed in the manufacturing or production process; “factory overhead costs” means the total costs of manufacturing or producing stock-i n-trade, other than direct labour and direct material costs; “first-i n-first-out method” means the generally accepted accounting principle under which the valuation of stock-in-trade is based on the assumption that stock is sold in the order of its acquisition; “prime-cost method” means the generally accepted accounting principle under which the cost of stock-in-trade is the sum of direct material costs, direct labour costs, and variable factory overhead costs; “stock-in-trade” means anything produced, manufactured, purchased, or otherwise acquired for manufacture, sale or exchange, and any materials or supplies to be consumed in the production or manufacturing process, but does not include stocks or shares; and “variable factory overhead costs” means those factory overhead costs which vary directly with changes in volume of stock-in-trade manufactured or produced.

 36. Long-term contracts.-

 (1)   A person accounting for income chargeable to tax under the head “Income from Business” on an accrual basis shall compute such income arising for a tax year under a long -term contract on the basis of the percentage of completion method.

 (2) The percentage of completion of a long-term contract in a tax year shall be determined by comparing the total costs allocated to the contract and incurred before the end of the year with the estimated total contract costs as determined at the commencement of the contract.

 (3) In this section, -

 “long-term contract” means a contract for manufacture, installation, or construction, or, in relation to each, the performance of related services, which is not completed within the tax year in which work under the contract commenced, other than a contract estimated to be completed within six months of the date on which work under the contract commenced; and “percentage of completion method” means the generally accepted accounting principle under which revenue and expenses arising under a long-term contract are recognised by reference to the stage of completion of the contract, as modified by sub-section (2).

 PART V

HEAD OF INCOME: CAPITAL GAINS

37. Capital gains.-

(1)   Subject to this Ordinance, a gain arising on the disposal of a capital  asset by a person in a tax year, other than a gain that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Capital Gains”.

(2) Subject to sub-sections (3) and (4), the gain arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely:–A – B where – A is the consideration received by the person on disposal of the asset; and  B is the cost of the asset.

(3) Where a capital asset has been held by a person for more than one year, the amount of any gain arising on disposal of the asset shall be computed in accordance with the following formula, namely:–A x ¾ where  A is the amount of the gain determined under sub -section (2)

(4) For the purposes of determining component  B of the formula in sub-section (2), no amount shall be included in the cost of a capital asset for any expenditure incurred by a person –

(a) that is or may be deducted under another provision of this Chapter; or

(b) that is referred to in section 21.

(5) In this section, “capital asset” means property of any kind held by a person, whether or not connected with a business, but does not include –

58[(a)  any stock-i n-trade (not being stocks and shares), consumable stores or raw materials held for the purpose of business;]

(b) any property with respect to which the person is entitled to a depreciation deduction under section 22 or amortization deduction under section 24;

(c) any immovable property; 59[or]

(d) any movable property (including wearing apparel, jewellery,  or furniture) held for personal use by the person or any member of the person’s family dependent on the person  60[.] 61[  ]

38. Deduction of losses in computing the amount chargeable under the head “Capital Gains”.-

(1) Subject to this Ordinance, in computing the amount of a person chargeable to tax under the head “Capital Gains” for a tax year, a deduction shall be allowed for any loss on the disposal of a capital asset by the person in the year.

(2) No loss shall be deducted under this section on the disposal of a capital asset where a gain on the disposal of such asset would not be chargeable to tax.

(3) The loss arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely:–A – B where –A is the cost of the asset; and B is the consideration received by the person on disposal of the asset.

(4) The provisions of sub-section (4) of section 37 shall apply in determining component A of the formula in sub-section (3).

(5) No loss shall be recognised under this Ordinance on the disposal of the following capital assets, namely:–

(a) A painting, sculpture, drawing or other work of art;

(b) jewellery;

(c) a rare manuscript, folio or book;

(d) a postage stamp or first day cover;

(e) a coin or medallion; or

(f) an antique.

PART VI

HEAD OF INCOME: INCOME FROM OTHER SOURCES

39. Income from other sources.-

(1) Income of every kind received by a person in a tax year, 62[if it is not included in any other head,] other than income exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Income from Other Sources”, including the following namely:–

(a)63[dividend];

(b)64[royalty];

(c) profit on debt;

(d) ground rent;

(e) rent from the sub-lease of land or a building;64

(f) income from the lease of any building together with plant or machinery;

(g) any annuity or pension;

(h) any prize bond, or winnings from a raffle, lottery or crossword puzzle;

(i) any other amount received as consideration for the provision, use or exploitation of property, including from the grant of a right to explore for, or exploit, natural resources;

(j) the fair market value of any benefit, whether convertible to money or not, received in connection with the provision, use or exploitation of property; and

(k) any amount received by a person as consideration for vacating the possession of a building or part thereof, reduced  by any amount paid by the person to acquire possession of such building or part thereof.

(2) Where a person receives an amount referred to in clause (k) of  sub-section (1), the amount shall be chargeable to tax under the head “Income from Other Sources” in the tax year in which it was received and the following nine tax years in equal proportion.

(3) Subject to sub-section (4), any amount received as a loan, advance, deposit or gift by a person in  65[a tax year] from another person (not being a banking company or financial institution) otherwise than by a crossed cheque drawn on a bank or through a banking channel from a person holding a National Tax Number Card shall be treated as income chargeable to tax under the head “Income from Other Sources” for the tax year in which it was received.

(4) Sub-section (3) shall not apply to an advance payment for the sale of goods or supply of services.

(5) This section shall not apply to any income received by a person in a tax year that is chargeable to tax under any other head of income or subject to tax under section 5, 6 or 7.

66[  ]

40. Deductions in computing income chargeable under the head “Income from Other Sources”.-

(1) Subject to this Ordinance, in computing the income of a person chargeable to tax under the head “Income from Other Sources” for a tax year, a deduction shall be allowed for any expenditure paid by the person in the year to the extent to which the expenditure is paid in deriving income chargeable to tax under that head, other than expenditure of a capital nature.

(2) A person receiving any profit on debt chargeable to tax under the head “Income from Other Sources” shall be allowed a deduction for any Zakat paid by the person on the profit under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), at the time the profit is paid to the person.

(3) A person receiving income referred to in clause (e) or (f) of subsection (1) of section 39 chargeable to tax under the head “Income from Other Sources” shall be allowed –

(a) a deduction for the depreciation of any plant, machinery or building used to derive that income in accordance with section 22; and

(b) an initial allowance for any plant or machinery used to derive that income in accordance with section 23.

(4) No deduction shall be allowed to a person under this section to the extent that the expenditure is deductible in computing the income of the person under another head of income.

(5) The provisions of section 21 shall apply in determining the deductions allowed to a person under this section in the same manner as they apply in determining the deductions allowed in computing the income of the person chargeable to tax under the head “Income from Business”.

67[(6)  Expenditure is of a capital nature if it has a normal useful life of more than one year.]

PART VII

EXEMPTIONS AND TAX CONCESSIONS

41. Agricultural income.-

(1) Agricultural income derived by a person shall be exempt from tax under this Ordinance.

(2) In this section, “agricultural income” means, -

(a) any rent or revenue derived by a person from land which is situated in Pakistan and is used for agricultural purposes;

(b) any income derived by a person from land situated in Pakistan from –

(i) agriculture;

(ii) the performance by a cultivator or receiver of rent-in kind of any process ordinarily employed  by such person to render the produce raised or received by the person fit to be taken to market; or

(iii) the sale by a cultivator or receiver of rent-i n-kind of the produce raised or received by such person, in respect of which no process has been performed other than a process of the nature described in sub clause (ii); or

(c) any income derived by a person from –

(i) any building owned and occupied by the receiver of the rent or revenue of any land described in clause (a) or (b);

(ii) any building occupied by the cultivator, or the receiver of rent-in-kind, of any land in respect of which, or the produce of which, any operation specified in sub clauses (ii) or (iii) of clause (b) is carried on, but only where the building is on, or in the immediate vicinity of the land and is a building which the receiver of the rent or revenue, or the cultivator, or the receiver of the rent-in-kind by reason of the person’s connection with the land, requires as a dwelling-house, a store-house, or other out-building.

42. Diplomatic and United Nations exemptions.-

(1) The income of an individual entitled to privileges under the Diplomatic and Consular Privileges Act, 1972 (IX of 1972) shall be exempt from tax under this Ordinance to the extent provided for in that Act.

(2) The income of an individual entitled to privileges under the United Nations (Privileges and Immunities) Act, 1948 (XX of 1948), shall be exempt from tax under this Ordinance to the extent provided for in that Act.

(3) Any pension received by a person, being a citizen of Pakistan, by virtue of the person’s former employment in the United Nations or its specialised agencies (including the International Court of Justice) provided the person’s  salary from such employment was exempt under this Ordinance.

43. Foreign government officials.- Any salary received by an employee of a foreign government as remuneration for services rendered to such government shall be exempt from tax under this Ordinance provided -

(a) the employee is a citizen of the foreign country and not a citizen of Pakistan;

(b) the services performed by the employee are of a character similar to those performed by employees of the Federal Government in foreign countries; 68[and]

(c) the foreign government grants a similar exemption to employees of the Federal Government performing similar services in such foreign country;

69[  ]

70 [  ]

44. Exemptions under international agreements.-

(1) Any Pakistan-source income which Pakistan is not permitted to tax under a tax treaty shall be e xempt from tax under this Ordinance.

(2) Any salary received by an individual (not being a citizen of Pakistan) shall be exempt from tax under this Ordinance to the extent provided for in an Aid Agreement between the Federal Government and a foreign government or public international organisation, where –

(a) the individual is either a non-resident individual or a resident individual solely by reason of the performance of services under the Aid Agreement;

(b) if the Aid Agreement is with a foreign country, the individual is a citizen of that country; and

(c) the salary is paid by the foreign government or public international organisation out of funds or grants released as aid to Pakistan in pursuance of such Agreement.

(3) Any income received by a person (not being a citizen of Pakistan) engaged as a contractor, consultant, or expert on a project in Pakistan shall be exempt from tax under this Ordinance to the extent provided for in a bilateral or multilateral technical assistance agreement between the Federal Government and a foreign government or public international organisation, where –

(a) the project is financed out of grant funds in accordance with the agreement;

(b) the person is either a non-resident person or a resident person solely by reason of the performance of services under the agreement; and

(c) the income is paid out of the funds of the grant in pursuance of the agreement.

45. President’s honours.-

(1)   Any allowance attached to any Honour, Award, or Medal awarded to a person by the President of Pakistan shall be exempt from tax under this Ordinance.

(2) Any monetary award granted to a person by the President of Pakistan shall be exempt from tax under this Ordinance.

46. Profit on debt.- Any profit received by a non-resident person on a security issued by a resident person shall be exempt from tax under this Ordinance where –

(a) the persons are not associates;

(b) the security was widely issued by the resident person outside Pakistan for the purposes of raising a loan outsidePakistanfor use in a business carried on by the person in Pakistan;

(c) the profit was paid outside Pakistan; and

(d) the security is approved by the Central Board of Revenue for the purposes of this section.

47. Scholarships.- Any scholarship granted to a person to meet the cost of the person’s education shall be exempt from tax under this Ordinance, other than where the scholarship is paid directly or indirectly by an associate.

48. Support payments under an agreement to live apart.-

71[Any income received by a spouse as support payment under an agreement to live apart] shall be exempt from tax under this Ordinance.

49. Federal and Provincial Government, and local authority  income.-

(1)  The income of the Federal Government shall be exempt from tax under this Ordinance.

(2) The income of a Provincial Government or a local authority in Pakistan shall be exempt from tax under this Ordinance, other than income chargeable under the head “Income from Business” derived by a Provincial Government or local authority from a business carried on outside its jurisdictional area.

50. Foreign-source income of short-term resident individuals.-

(1)   Subject to sub-section (2), the foreign-source income of an individual (other than a citizen of Pakistan) –

(a) who is a resident individual solely by reason of the individual’s employment; and

(b) who is present in Pakistan for a period or periods not exceeding three years, shall be exempt from tax under this Ordinance.

(2) This section shall not apply to –

(a) any income derived from a business of the person established in Pakistan; or

(b) any foreign-source income brought into or received in Pakistan by the person.

51. Foreign-source income of returning expatriates.- Any foreign-source income derived by a citizen of Pakistan in a tax year who was not a resident individual in any of the four tax years preceding the tax year in which the individual became a resident shall be exempt from tax under this Ordinance in the tax year in which the individual became a  resident individual and in the following tax year.

72 [  ]

53. Exemptions and tax concessions in the Second Schedule.-

(1)   The income or classes of income, or persons or classes of persons specified in the Second Schedule shall be –

(a) exempt from tax under this Ordinance, subject to any conditions and to the extent specified therein;

(b) subject to tax under this Ordinance at such rates, which are less than the rates specified in the First Schedule, as are specified therein;

(c) allowed a reduction in tax liability under this Ordinance, subject to any conditions and to the extent specified therein; or

(d) exempted from the operation of any provision of this Ordinance, subject to any conditions and to the extent specified therein.

(2) The Federal Government may, from time to time, by notification in the official Gazette, make such amendment in the Second Schedule by –

(a) adding any clause or condition therein;

(b) omitting any clause or condition therein; or

(c) making any change in any clause or condition therein, as the Government may think fit, and all such amendments shall have effect in respect of any tax year beginning on any date before or after the commencement of the financial year in which the notification is issued.

(3) The Federal Government shall place before the National Assembly all amendments made by it to the Second Schedule in a financial year.

54. Exemptions and tax provisions in other laws.- No provision in any other law providing for –

(a) an exemption from any tax imposed under this Ordinance;

(b) a reduction in the rate of tax imposed under this Ordinance;

(c) a reduction in tax liability of any person under this Ordinance; or

(d) an exemption from the operation of any provision of this Ordinance, shall have legal effect unless also provided for in this Ordinance.

55. Limitation of exemption.-

(1)   Where any income is exempt from tax under this Ordinance, the exemption shall be, in the absence of a specific provision to the contrary contained in this Ordinance, limited to the original recipient of that income and shall not extend to any person receiving any payment wholly or in part out of that income.

(2) Where a person’s income from business is exempt from tax under this Ordinance as a result of a tax concession, any loss sustained in the period of the exemption shall not be set off against the person’s income chargeable to tax after the exemption expires.

PART VIII

LOSSES

56. Set off of losses.-

(1) Subject to sections 58 and 59, where a person sustains a loss for any tax year under any head of income specified in section 11, the person shall be entitled to have the amount of the loss set off against the person’s income, if any, chargeable to tax under any other head of income for the year.

(2) Except as provided in this Part, where a person sustains a loss under a head of income for a tax year that cannot be set off under sub-section (1), the person shall not be permitted to carry the loss forward to the next tax year.

(3) Where 73[, in a tax year,] a person sustains a loss under the head “Income from Business” and a loss under another head of income, the loss under the head “Income from Business shall be set off last.

57. Carry forward of business losses.-

(1) Where a person sustains a loss for a tax  year under the head “Income from Business” (other than a loss to which section 58 applies) and the loss cannot be wholly set off under section 56, so much of the loss that has not been set off shall be carried forward to the following tax year and set off against the person’s income chargeable under the head “Income from Business” for that year.

(2) If a loss sustained by a person for a tax year under the head “Income from Business” is not wholly set off under sub-section (1), then the amount of the loss not set off shall be carried forward to the following tax year and applied as specified in sub-section (1) in that year, and so on, but no loss can be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.

74[(2A)  Where a loss, referred to in sub-section (2), relating to any assessment year commencing on or after 1^st day of July, 1995, and ending on the 30^th day of June 2001, is sustained by a banking company wholly owned by the Federal Government as on first day of June, 2002, which is approved by the State Bank of Pakistan for the purpose of this sub-section, the said loss shall be carried forward for a period of ten years.]

(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first.

(4) Where the loss referred to in sub-section (1) includes deductions allowed under sections 22, 23 and 24 that have not been set off against income, the amount not set off shall be added to the deductions allowed under those sections in the following tax year, and so on until completely set off.

(5) In determining whether a person’s deductions under sections 22, 23 and 24 have been set off against income, the deductions allowed under those sections shall be taken into account last.

75[57A. Set off of business loss consequent to amalgamation. ---

(1) The accumulated loss under the head “Income from Business” (not being a loss to which section 58 applies) of an amalgamating company or companies shall be set off or carried forward against the business profits and gains of the amalgamated company up to a period of six tax years immediately succeeding the tax year in which the loss was first computed in the case of amalgamating company or companies.

(2)  The provisions of sub-section (4) and (5) of section 57 shall, mutatis mutandis, apply for the purposes of allowing unabsorbed depreciation of amalgamating company or companies in the assessment of amalgamated company.

(3)  Where any of the conditions as laid down by the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan, as the case may be, in the scheme of amalgamation, are not fulfilled, the set off of loss or allowance for depreciation made in any tax year of the amalgamated company shall be deemed to be the income of that amalgamated company for the year in which such default is discovered by the Commissioner or taxation officer, and all the provisions of this Ordinance shall apply accordingly.]

58. Carry forward of speculation business losses.-

(1)   Where a person sustains a loss for a tax year in respect of a speculation business carried on by the person (hereinafter referred to as a “speculation loss”), the loss shall be set off only against the income of the person from any other speculation business of the person chargeable to tax for that year.

(2) If a speculation loss sustained by a person for a tax year is not wholly set off under sub -section (1), then the amount of the loss not set off shall be carried forward to the following tax year and applied against the income of any speculation business of the person in that year and applied as specified in sub-section (1) in that year, and so on, but no speculation loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.

(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first.

59. Carry forward of capital losses.-

(1)   Where a person sustains a loss for a tax year under the head “Capital Gains” (hereinafter referred to as a “capital loss”), the loss shall not be set off against the person’s income, if any, chargeable under any other head of income for the year, but shall be carried forward to the next tax year and set off against the capital gain, if any, chargeable under the head “Capital Gains” for that year.

(2) If a capital loss sustained by a person for a tax year under the head “Capital Gains” is not wholly set off under sub -section (1), then the amount of the loss not set off shall be carried forward to the following tax year, and so on, but no loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.

(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first.

PART IX

DEDUCTIBLE ALLOWANCES

60. Zakat.-

(1) A person shall be entitled to a deductible allowance for the amount of any Zakat paid by the person in a tax year under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

(2) Sub-section (1) does not apply to any Zakat taken into account under sub-section (2) of section 40.

(3) Any allowance or part of an allowance under this section for a tax year that is not able to be deducted under section 9 for the year shall not be refunded, carried forward to a subsequent tax year, or carried back to a preceding tax year.

PART X

TAX CREDITS

61. Charitable donations.-

(1)   A person shall be entitled to a tax credit for a tax year in respect of any amount paid, or property given by the person in the tax year as a donation to a non-profit organisation.

(2) The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely:– (A/B) x C where –A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part;B is the person’s taxable income for the tax year; and C is the lesser of –

(a) the total amount of the person’s donations referred to in sub-section (1) in the year, including the fair market value of any property given; or

(b) where the person is –

(i) an individual or association of persons, thirty per cent of the taxable income of the person for  the year; or

(ii) a company, fifteen per cent of the taxable income of the person for the year.

(3) For the purposes of clause (a) of component  C  of the formula in sub-section (2), the fair market value of any property given shall be determined at the time it is given.

(4) A cash amount paid by a person as a donation shall be taken into account under clause (a) of component C 76[of] sub-section (2) only if it was paid by a crossed cheque drawn on a bank.

62. Investment in shares.-

(1)   A person shall be entitled to a tax credit for a tax year in respect of the cost of acquiring in the year new shares offered to the public by a public company listed on a stock exchange in Pakistan where the person is the original allottee of the shares or the shares are acquired from the Privatization Commission of Pakistan.

(2) The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: – (A/B) x C where – A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and C is the lesser of –

(a) the total cost of acquiring the shares referred to in sub-section (1) in the year;

(b) ten per cent of the person’s total income for the year;  or

(c) one hundred thousand rupees.

(3) Where –

(a) a person has claimed a tax credit under sub-section (1) in a tax year in respect of the purchase of a share; and

(b) the person has made a disposal of the share within twelve months of the date of acquisition, the amount of tax payable by the person for the tax year in which the shares were disposed of shall be increased by the amount of the credit  allowed.

63. Retirement annuity scheme. –

(1)   Subject to subsection (3), a resident individual deriving income chargeable to tax under the head “Salary” or the head “Income from Business” shall be entitled to a tax credit for a tax year in respect of any contribution or premium paid in the year by the person under a contract of annuity scheme approved by 77[, Securities and Exchange Commission of Pakistan] of an insurance company duly registered under the Insurance Ordinance, 2000 (XXXIX of 2000), having its main object the provision to the person of an annuity in old age.

(2) The amount of a resident individual’s tax credit allowed under subsection (1) for a tax year shall be computed according to the following formula, namely: – (A/B) x C where –A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and C is the lesser of –

(a) the total contribution or premium referred to in subsection (1) paid by the individual in the year;

(b) five per cent of the person’s total income for the tax year; or

(c) 78[one hundred] thousand rupees.

(3) A person shall not be entitled to a tax credit under sub -section (1) in respect of a contract of annuity which provides –

(a) for the payment during the life of the person of any amount besides an annuity;

(b) for the annuity payable to the person to commence before  the person attains the age of sixty years;

(c) that the annuity is capable, in whole or part, of surrender, commutation, or assignment; or

(d) for payment of the annuity outside Pakistan.

64. Profit on debt.-

79[(1)  A person shall be entitled to a tax credit for a tax year in respect of any profit or share in rent and share in appreciation of value of house paid by the person in the year on a loan by a scheduled bank under a house finance scheme approved by the State Bank of Pakistan or advanced by Government, the local authority or House Building Finance Corporation where the person utilizes the loan for the construction of a new house or the acquisition of a house.]

(2) The amount of a person’s tax credit allowed under sub-section (1) for a tax  year shall be computed according to the following formula, namely: – (A/B) x C78 where – A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and  C is the lesser of –

(a) the total profit referred to in sub-section (1) paid by  the person in the year;

(b) twenty five per cent of the person’s total income for the year; or

(c) 80[one hundred] thousand rupees.

(3) A person is not entitled to 81[tax credit] under this section for any profit deductible under section 17.

65. Miscellaneous provisions relating to tax credits.-

(1)   Where the person entitled to a tax credit under 82[this] Part is a member of an association of persons to which sub-section (1) of section 92 applies, the following shall apply –

(a) component A of the formula in sub -section (2) of section 61, sub-section (2) of section 62, sub-section (2) of section 63 and sub-section (2) of section 64 shall be the amount of tax that  would be assessed to the individual if any amount derived in the year that is exempt from tax under sub-section (1) of section 92 were chargeable to tax; and

(b) component B of the formula in sub -section (2) of section 61, sub-section (2) of section 62, sub-section (2) of section 63 and sub-section (2) of section 64 shall be the taxable income of the individual for the year if any amount derived in the year that is exempt from tax under sub -section (1) of section 92 were chargeable to tax. (2) Any tax credit allowed under this Part shall be applied in accordance with sub-section (3) of section 4.

(3) Subject to sub-section (4), any tax credit or part of a tax credit allowed to a person under this Part for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall not be refunded, carried forward to a subsequent tax year, or carried back to a preceding tax year.

(4) Where the person to whom sub-section (3) applies is a member of an association of persons to which sub-section (1) of section 92 applies, the amount of any excess credit under sub-section (3) for a tax year may be claimed as a tax credit by the association for that year.

(5) Sub-section (4) applies only where the member and the association agree in writing for the sub-section to apply and such agreement in writing must be furnished with the association’s return of income for that year.

CHAPTER IV

COMMON RULES

PART I

GENERAL

66. Income of joint owners.-

(1) For the purposes of this Ordinance and subject to sub-section (2), where any property is owned by two or more persons and their respective shares are definite and ascertainable –

(a) the persons shall not be assessed as an association of persons in respect of the property; and

(b) the share of each person in the income from the property for a tax year shall be taken into account in the computation of the person’s taxable income for that year.

(2) This section shall not apply in computing income chargeable under the head “Income from Business”.

67. Apportionment of deductions.-

(1)   Subject to this Ordinance, where an expenditure relates to –

(a) the derivation of more than one head of income; or 83[(ab)  derivation of income comprising of taxable income and any class of income to which sub-sections (4) and (5) of section 4 apply, or]

(b) the derivation of income chargeable to tax under a head of income and to some other purpose, the expenditure shall be apportioned on any reasonable basis taking account of the relative nature and size of the activities to which the amount relates.

(2) The Central Board of Revenue may make rules under section   84[237] for the purposes of apportioning deductions.

68. Fair market value.-

(1)   For the purposes of this Ordinance, the fair market value of any property, asset, service, benefit or perquisite at a particular time shall be the price which the property, asset, service, benefit or perquisite would ordinarily fetch on sale or supply in the open market at that time.

(2) The fair market value of any property, asset, service, benefit or perquisite shall be determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.

69. Receipt of income.- For the purposes of this Ordinance, a person shall be treated as having received an amount, benefit, or perquisite if it is –

(a) actually received by the person;

(b) applied on behalf of the person, at the instruction of the person or under any law; or

(c) made available to the person.

70. Recouped expenditure.- Where a person has been allowed a deduction for any expenditure or loss incurred in a tax year in the computation of the person’s income chargeable to tax under a head of income and, subsequently, the person has received, in cash or in kind, any amount in respect of such expenditure or loss, the amount so received shall be included in the income chargeable under that head for the tax year in which it is received.

71. Currency conversion.-

(1)   Every amount taken into account under this Ordinance shall be in Rupees.

(2) Where an amount is in a currency other than rupees, the amount shall be converted to the Rupee at the State Bank of Pakistan midex change rate applying between the foreign currency and the Rupee on the date the amount is taken into account for the purposes of this Ordinance.

72. Cessation of source of income.- Where –

(a) any income is derived by a person in a tax year from any business, activity, investment or other source that has ceased either before  the commencement of the year or during the year; and

(b) if the income had been derived before the business, activity, investment or other source ceased it would have been chargeable to tax under this Ordinance, this Ordinance shall apply to the income on the basis that the business, activity, investment or other source had not ceased at the time the income  was derived.

73. Rules to prevent double derivation and double deductions.-

(1)   For the purposes of this Ordinance, where –

(a) any amount is chargeable to tax under this Ordinance on the basis that it is receivable, the amount shall not be chargeable again on the basis that it is received; or

(b) any amount is chargeable to tax under this Ordinance on the basis that it is received, the amount shall not be chargeable  again on the basis that it is receivable.

(2) For the purposes of this Ordinance, where –

(a) any expenditure is deductible under this Ordinance on the basis that it is payable, the expenditure shall not be deductible again on the basis that it is paid; or

(b) any expenditure is deductible under this Ordinance on the basis that it is paid, the expenditure shall not be deductible again on the basis that it is payable.

PART II

TAX YEAR

85[74.  Tax year.-

(1)  For the purpose of this Ordinance and subject to this section, the tax year shall be a period of twelve months ending on the 30^th day of June (hereinafter referred to as ‘normal tax year’) and shall, subject to sub-section (3), be denoted by the calendar year in which the said date falls.

(2)  Where a person’s income year, under the repealed Ordinance, is different from the normal tax year, or where a person is allowed, by an order under sub -section (3), to use a twelve months’ period different from normal tax year, such income year or such period shall be that person’s tax year (hereinafter referred to as ‘special tax year’) and shall, subject to sub-section (3), be denoted by the calendar year relevant to normal tax year in which the closing date of the special tax year falls.

(3)  A person may apply, in writing, to the Commission to allow him to use a twelve months’ period, other than normal tax year, as special tax year and the Commissioner may, subject to sub -section (5), by an order, allow him to use such special tax year.

(4)  A person using a special tax year, under sub-section (2), may apply in writing, to the Commissioner to allow him to use normal tax year and the Commissioner may, subject to sub-section (5), by an order, allow him to use normal tax year.

(5)  The Commissioner shall grant permission under sub-section (3) or (4) only if the person has shown a compelling need to use special tax year or normal tax year, as the case may be, and the permission shall be subject to such conditions, if any, as the Commissioner may impose.

(6)  An order under sub-section (3) or (4) shall be made after providing to the applicant an opportunity of being heard and where his application is rejected the Commissioner shall record in the order the reasons for rejection.

(7)  The Commissioner may, after providing to the person concerned an opportunity of being heard, by an order, withdraw the permission granted under sub-section (3) or (4).

(8)  An order under sub -section (3) or (4) shall take effect from such date, being the first day of the special tax year or the normal tax year, as the case may be, as may be specified in the order.

(9)  Where the tax year of a person changes as a result of an order under sub-section (3) or sub-section (4), the period between the end of the last tax year prior to change and the date on which the changed tax year commences shall be treated as a separate tax year, to be known as the “transitional tax year”.

(10)  In this Ordinance, a reference to a particular financial year shall, unless the context otherwise requires, include a special tax year or a transitional tax year commencing during the financial year.

(11)  A person dissatisfied with an order under sub-section (3), (4) or (7) may file a review application to the Central Board of Revenue, and the decision by the Central Board of Revenue on such application shall be final.]

PART III

ASSETS

75. Disposal and acquisition of assets.-

(1)  A person who holds an asset shall be treated as having made a disposal of the asset at the time the person parts with the ownership of the asset, including when the asset is -

(a) sold, exchanged, transferred or distributed; or

(b) cancelled, redeemed, relinquished, destroyed, lost, expired or surrendered.

(2) The transmission of an asset by succession or under a will shall be treated as a disposal of the asset by the deceased at the time asset is transmitted.

(3) The application of a business asset to personal use shall be treated as a disposal of the asset by the owner of the asset at the time the asset is so applied.

(4) A disposal shall include the disposal of a part of an asset. 84

(5) A person shall be treated as having acquired an asset at the time the person begins to own the asset, including at the time the person is granted any right.

(6) The application of a personal asset to business use shall be treated as an acquisition of the asset by the owner at the time the asset is so applied.

 (7) In this section, -

“business asset” means an asset held wholly or partly for use in a business, including stock-i n-trade and a depreciable asset; and “personal asset” means an asset held wholly for personal use.

76. Cost.-

(1)   Except as otherwise provided in this Ordinance, this section shall establish the cost of an asset for the purposes of this Ordinance.

(2) Subject to sub-section (3), the cost of an asset purchased by a person shall be the sum of the following amounts, namely:–

(a) The total consideration given by the person for the asset, including the fair market value of any consideration in kind determined at the time the asset is acquired;

(b) any incidental expenditure incurred by the person in acquiring and disposing of the asset; and

(c) any expenditure incurred by the person to alter or improve the asset, but shall not include any expenditure under clauses (b) and (c) that has been fully allowed as a deduction under this Ordinance.

(3) The cost of an asset treated as acquired under sub-section (6) of section 75 shall be the fair market value of the asset determined at the date it is applied to business use.

(4) The cost of an asset produced or constructed by a person shall be the total costs incurred by the person in producing or constructing the asset plus any expenditure referred to clauses (b) and (c) of sub-section (2) incurred by the person.

(5) Where an asset has been acquired by a person with a loan denominated in a foreign currency and, before full and final repayment of the loan, there is an increase or decrease in the liability of the person under the loan as expressed in Rupees, the amount by which the liability is increased or reduced shall be added to or deducted from the cost of the asset, as the case may be.

(6) In determining whether the liability of a person has increased or decreased for the purposes of sub-section (5), account shall be taken of the person’s position under any hedging agreement relating to the loan.

(7) Where a part of an asset is disposed of by a person, the cost of the asset shall be apportioned between the part of the asset retained and the part disposed of in accordance with their respective fair market values determined at the time the person acquired the asset.

(8) Where the acquisition of an asset by a person is the derivation of an amount chargeable to tax, the cost of the asset shall be the amount so charged  plus any amount paid by the person for the asset.

(9) Where the acquisition of an asset by a person is the derivation of an amount exempt from tax, the cost of the asset shall be the exempt amount plus any amount paid by the person for the asset.

(10) The cost of an asset does not include the amount of any grant, subsidy, rebate, commission or any other assistance (other than a loan repayable with or without profit) received or receivable by a person in respect of the acquisition of the asset, except to  the extent to which the amount is chargeable to tax under this Ordinance.

77. Consideration received.-

(1)   The consideration received by a person on disposal of an asset shall be the total amount received by the person for the asset, including the fair market value of any consideration received in kind determined at the time of disposal.

(2) Where an asset has been lost or destroyed by a person, the consideration received for the asset shall include any compensation, indemnity or damages received by the person under –

(a) an insurance policy, indemnity or other agreement;

(b) a settlement; or

(c) a judicial decision.

(3) The consideration received for an asset treated as disposed of under sub-section (3) of section 75 shall be the fair market value of the asset determined at the time it is applied to personal use.

(4) The consideration received by a scheduled bank, financial institution, modaraba, or leasing company approved by the Commissioner (hereinafter referred to as a “leasing company”) in respect of an asset leased by the company to another person shall be the residual value received by the leasing company on maturity of the lease agreement subject to the condition that the residual value plus the amount realised during the term of the lease towards the cost of the asset is not less than the original cost of the asset.

(5) Where two or more assets are disposed of by a person in a single transaction and the consideration received for each asset is not specified, the total consideration received by the person shall be apportioned among the assets disposed of in proportion to their respective fair market values determined at the time of the transaction.

78. Non-arm’s length transactions.- Where an asset is disposed of in a nonarm’s length transaction –

(a) the person disposing of the asset shall be treated as having received consideration equal to the fair market value of the asset determined at the time the asset is disposed; and

(b) the person acquiring the asset shall be treated as having  a cost equal to the amount determined under clause (a).

79. Non-recognition rules.-

(1)   For the purposes of this Ordinance and subject to sub -section (2), no gain or loss shall be taken to arise on the disposal of an asset -

(a) between spouses under an agreement to live apart;

(b) by reason of the transmission of the asset to an executor or beneficiary on the death of a person;

(c) by reason of a gift of the asset;

(d) by reason of the compulsory acquisition of the asset under any law where the  consideration received for the disposal is reinvested by the recipient in an asset of a like kind within one year of the disposal;

(e) by a company to its shareholders on liquidation of the company; or

(f) by an association of persons to its members on  dissolution of the association where the assets are distributed to members in accordance with their interests in the capital of the association.

(2) Sub-section (1) shall not apply where the person acquiring the asset is a non-resident person at the time of the acquisition.

(3) Where clause (a), (b), (c), (e) or (f) of sub-section (1) applies, the person acquiring the asset shall be treated as –

(a) acquiring an asset of the same character as the person disposing of the asset; and

(b) acquiring the asset for a cost equal to the cost of the asset for the person disposing of the asset at the time of the disposal.

(4) The person’s cost of a replacement asset referred to in clause (d) of sub-section (1) shall be the cost of the asset disposed of plus the amount by which any consideration given by the person for the replacement asset exceeds the consideration received by the person for the asset disposed of.

CHAPTER V

PROVISIONS GOVERNING PERSONS

PART I

CENTRAL CONCEPTS

Division I

Persons

80. Person.-

(1)   The following shall be treated as persons for the purposes of this Ordinance, namely:–

(a) An individual;

(b) a company or association of persons incorporated, formed, organised or established in Pakistan or elsewhere;

(c) the Federal Government, a foreign government, a political subdivision of a foreign government, or public international organisation.

(2) For the purposes of this Ordinance –

(a) “association of persons” includes a firm, a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a company;

(b) “company” means –

(i) a company as defined in the Companies Ordinance, 1984 (XLVII of 1984);

(ii) a body corporate formed by or under any law in force in Pakistan;

(iii) a modaraba;

(iv) a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;

(v) a trust,  a co-operative  society or a finance society 86[or any other society established or constituted by or under any law for the time being in force];

(vi) a foreign association, whether incorporated or not, which the Central Board of Revenue has, by general or special order, declared to be a company for the purposes of this Ordinance;

(vii) a Provincial Government; or

(viii) a local authority in Pakistan;

(c) “firm” means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all;

(d) “trust” means an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner, or declared and accepted by the owner for the benefit of another, or of another and the owner, and includes a unit trust; and

(e) “unit trust” means any trust under which beneficial interests are divided into units such that the entitlements of the beneficiaries to income or capital are determined by the number of units held.

Division II

Resident and Non-Resident Persons

81. Resident and non-resident persons.-

(1)   A person shall be a resident person for a tax year if the person is –

(a) a resident individual, resident company or resident association of persons for the year; or

(b) the Federal Government.

(2) A person shall be a non-resident person for a tax year if the person is not a resident person for that year.

82. Resident individual.- An individual shall be a resident individual for a tax year if the individual –

(a) is present in Pakistan for a period of, or periods amounting in aggregate to, one hundred and eighty-two days or more in the tax year;

(b) is present in Pakistan for a period of, or periods amounting in aggregate to, ninety days or more in the tax year and who, in the four years preceding the tax year, has been in Pakistan for a period of, or periods amounting in aggregate to, three hundred and sixty five days or more; or

(c) is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year.

83. Resident company.- A company shall be a resident company for a tax year if –

(a) it is incorporated or formed by or under any law in force in Pakistan;

(b) the control and management of the affairs of the company is situated wholly or almost wholly in Pakistan at any time in the year; or

(c) it is a Provincial Government or local authority in Pakistan.

84. Resident association of persons.- An association of persons shall be a resident association of persons for a tax year if the control and management of the affairs of the association is situated wholly or partly in Pakistan at any time in the year.

Division III

Associates

85. Associates.-

(1)   Subject to sub-section (2), two persons shall be associates where the relationship between the two is such that one may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person.

(2) Two persons shall not be associates solely by reason of the fact that one person is an employee of the other or both persons are employees of a third person.

(3) Without limiting the generality of sub-section (1) and subject to subsection (4), the following shall be treated as associates –

(a) an individual and a relative of the individual;91

(b) members of an association of persons;

(c) a member of an association of persons and the association, where the member, either alone or together with an associate or associates under another application of this section, controls fifty per cent or more of the rights to income or capital of the association;

(d) a trust and any person who benefits or may benefit under the trust;

(e) a shareholder in a company and the company, where the shareholder, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons –

(i) fifty per cent or more of the voting power in the company;

(ii) fifty per cent or more of the rights to dividends; or

(iii) fifty per cent or more of the rights to capital; and

(f) two companies, where a person, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons –

(i) fifty per cent or more of the voting power in both companies;

(ii) fifty per cent or more of the rights to dividends in both companies; or

(iii) fifty per cent or more of the rights to capital in both companies.

(4) Two persons shall not be associates under clause (a) or (b) of subsection (3) where the Commissioner is satisfied that neither person may reasonably be expected to act in accordance with the intentions of the other.

(5) In this section, “relative” in relation to an individual, means –

(a) an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or

(b) a spouse of the individual or of any person specified in clause (a).

PART II

INDIVIDUALS

Division I

Taxation of Individuals

86. Principle of taxation of individuals.- Subject to this Ordinance, the taxable income of each individual shall be determined separately.

87. Deceased individuals.-

(1)   The legal representative of a deceased individual shall be liable for –

(a) any tax that the individual would have become liable for if the individual had not died; and

(b) any tax payable in respect of the income of the deceased’s estate.

(2) The liability of a legal representative under this section shall be limited to the extent to which the deceased’s estate is capable of meeting the liability.

(3) For the purpose of this Ordinance, –

(a) any proceeding taken under this Ordinance against the deceased before his or her death shall be treated as taken against the legal representative and may be continued against the legal representative from the stage at which the proceeding stood on the date of the deceased’s death; and

(b) any proceeding which could have been taken under this Ordinance against the deceased if the deceased had survived may be taken against the legal representative of the deceased.

(4) In this section, “legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in representative character the person on whom the estate devolves on the death of the party so suing or sued.

Division II

Provisions Relating to Averaging

88. An individual as a member of an association of persons.- If, for a tax year, an individual has taxable income and derives an amount or amounts exempt from tax under sub-section (1) of section 92, the amount of tax payable on the taxable income of the individual shall be computed in accordance with the following formula, namely:– (A/B) x C where – A is the amount of tax that would be assessed to the individual for the year if the amount or amounts exempt from tax under sub -section (1) of section 92 were chargeable to tax; B is the taxable income of the individual for the year if the amount or  amounts exempt from tax under sub-section (1) of section 92 were chargeable to tax; and C is the individual’s actual taxable income for the year.

89. Authors.- Where the time taken by an author of a literary or artistic work to complete the work exceeds twenty-four months, the author may elect to treat any lump sum amount received by the author in a tax year on account of royalties in respect of the work as having been received in that tax year and the preceding two tax years in equal proportions.

Division III

Income Splitting

90. Transfers of assets.-

(1)   For the purposes of this Ordinance and subject to sub -section (2), where there has been a revocable transfer of an asset, any income arising from the asset shall be treated as the income of the transferor and not of the transferee.

(2) Sub-section (1) shall not apply to any income derived by a person by virtue of a transfer that is not revocable during the lifetime of the person and the transferor derives no  direct or indirect benefit from such income.

(3) For the purposes of this Ordinance, where there has been a transfer of an asset but the asset remains the property of the transferor, any income arising from the asset shall be treated as the income of the transferor.

(4) For the purposes of this Ordinance and subject to sub -section (5), any income arising from any asset transferred by a person directly or indirectly to –

(a) the person’s spouse or minor child; or

(b) any other person for the benefit of a person or persons referred to in clause (a), shall be treated as the income of the transferor.

(5) Sub-section (4) shall not apply to any transfer made –

(a) for adequate consideration; or

(b) in connection with an agreement to live apart.

(6) For the purposes of clause (a) of sub -section (5), a transfer shall not be treated as made for adequate consideration if the transferor has provided, by way of loan or otherwise, to the transferee, directly or indirectly, with the funds for the acquisition of the asset.

(7) Subsection (5) does not apply where the transferor fails to produce evidence of the transfer of the asset by way of its registration or mutation in the relevant record and the income arising from the asset shall be treated as the income of the transferor for the purposes of this Ordinance.

(8) For the purposes of this section, –

(a) a transfer of an asset shall be treated as revocable if –

(i) there is any provision for the re-transfer, directly or indirectly, of the whole or any part of the asset to the transferor; or

(ii) the transferor has, in any way, the right to resume power, directly or indirectly, over the whole or any part of the asset;

(b) “minor child” shall not include a married daughter; and

(c) “transfer” includes any disposition, settlement, trust, covenant, agreement or arrangement.

91. Income of a minor child.-

(1)   Any income of a minor child for a tax year chargeable under the head “Income from Business” shall be chargeable to tax as the income of the parent of the child with the highest taxable income for that year.

(2) Sub-section (1) shall not apply to the income of a minor child from a business acquired by the child through an inheritance.

PART III

ASSOCIATIONS OF PERSONS

92. Principles of taxation of associations of persons.-

(1)   Subject to sub-section (2), an association of persons shall be liable to tax separately from the members of the association and any amount received by a member of the association in the capacity as member out of the income of the association shall be exempt from tax.

(2) Sub-section (1) shall not apply to –

(a) an association of persons that is a professional firm prohibited from incorporating by any law or the rules of the body regulating the profession; or

(b) an association of persons in which a company is a member.

(3) An association of persons to which subsection (2) applies shall not be liable to tax and the income of the association shall be taxed to the members in accordance with section 93.

(4) An association of persons referred to in sub-section (3) shall furnish a return of total income for each tax year.

(5) Sections 114, 118 and 119 shall apply to a return of total income required to be furnished under sub-section (4).

93. Taxation of members of an association of persons.-

(1)   Where sub-section (3) of section 92 applies, the income of a member of an association of persons chargeable under the head  “Income from Business” for a tax year shall include –

(a) in the case of a resident member, the member’s share in the total income of the association; or

(b) in the case of a non-resident member, the member’s share in so much of the total income of the association as is attributable to Pakistani-source income.

(2) Where an association of persons to which sub-section (3) of section 92 applies sustains a loss that cannot be set off against any other income of the association in accordance with section 56, the amount of the loss shall be apportioned among the members of the association according to their interest in the association and the members shall be entitled to have their share of the loss set off and carried forward for set off under Part VIII of Chapter III in computing their taxable income under this Ordinance.

(3) The share of a loss referred to in sub-section (2) of a non-resident member shall be limited to the extent that the loss relates to the derivation of Pakistan-source income.

(4) The total income of an association of persons for the purposes of sub-section (1) and the loss of an association for the purposes of sub-section (2) shall be computed as if the association were a resident person.

(5) Income, expenditures and losses of an association of persons to which this section applies shall retain their character as to geographic source and type of income, expenditure or loss in the hands of the members of the association, and shall be treated as having passed through the association on a pro rata basis, unless the Commissioner permits otherwise by notice in writing to the association.

(6) The share of a member in the total income of an association of persons shall be determined according to the  member’s interest in the association and shall include any profit on debt, brokerage, commission, salary or other remuneration received or due from the association.

PART IV

COMPANIES

94. Principles of taxation of companies.-

(1)   A company shall be liable to tax separately from its shareholders.

(2) A dividend paid by a resident company shall be taxable in accordance with Section 5.

(3) A dividend paid by a non-resident company to a resident person shall be chargeable to tax under the head “Income from Business” or “Income from Other Sources”, as the case may be, unless the dividend is exempt from tax.

95. Disposal of business by individual to wholly-owned company.-

(1)   Where a resident individual (hereinafter referred to as the “transferor”) disposes of all the assets of a business of the transferor to a resident company, no gain or loss shall be taken to arise on the disposal if the following conditions are satisfied, namely:–

(a) The consideration received by the transferor for the disposal is a share or shares in the company (other than redeemable shares);

(b) the transferor must beneficially own all the issued shares in the company immediately after the disposal;

(c) the company must undertake to discharge any liability in respect of the assets disposed of to the company;

(d) any liability in respect of the assets disposed of to the company must not exceed the transferor’s cost of the assets at the time of the disposal;

(e) the fair market value of the share or shares received by the transferor for the disposal must be substantially the same as the fair market value of the assets disposed of to the company, less any liability that the company has undertaken to discharge in respect of the assets; and

(f) the company must not be exempt from tax for the tax year in which the disposal takes place.

(2) Where sub-section (1) applies –

(a) each of the assets acquired by the company shall be treated as having the same character as it had in the hands of the transferor;

(b) the company’s cost in respect of the acquisition of the assets shall be –

(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;

(ii) in the case of stock-in-trade valued for tax purposes under sub -section (4) of section 35 at fair market value, that value; or

(iii) in any other case, the transferor’s cost at the time of the disposal;

(c) if, immediately before the disposal, the transferor has deductions allowed under sections 22, 23 and 24 in respect of the assets transferred which have not been set off against the transferor’s income, the amount not set off shall be added to the deductions allowed under those sections to the company in the tax year in which the transfer is made; and

(d) the transferor’s cost in respect of the share or shares received as consideration for the disposal shall be –

(i) in the case of a consideration of one share, the transferor’s cost of the assets transferred as determined under clause (b), less the amount of any liability that the company has undertaken to discharge in respect of the assets; or

(ii) in the case of a consideration of more than one share, the amount determined under sub-clause (i) divided by the number of shares received.

(3) In determining whether the transferor’s deductions under sections 22, 23 or 24 have been set off against income for the purposes of clause (c) of sub -section (2), those deductions shall be taken into account last.

96. Disposal of business by association of persons to wholly-owned company.-

(1)   Where a resident association of persons disposes of all the assets of a business of the association to a resident company, no gain or loss shall be taken to arise on the disposal if the following conditions are satisfied, namely:–

(a) The consideration received by the association for the disposal is a share or shares in the company (other than redeemable shares);

(b) the association must own all the issued shares in the company immediately after the disposal;

(c) each member of the association must have an interest in the shares in the same proportion to the member’s interest in the business assets immediately before the disposal;

(d) the company must undertake to discharge any liability in respect of the assets disposed of to the company;

(e) any liability in respect of the assets disposed of to the company must not exceed the association’s cost of the asset at the time of the disposal;

(f) the fair market value of the share or shares received by the association for the disposal must be substantially the same as the fair market value of the assets disposed of to the company, as reduced by any liability that the company has undertaken to discharge in respect of the assets; and

(g) the company must not be exempt from tax for the tax year in which the disposal takes place.

(2) Where sub-section (1) applies –

(a) each of the assets acquired by the company shall be treated as having the same character as it had in the hands of the association;

(b) the company’s cost in respect of the acquisition of the assets shall be –100

(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;

(ii) in the case of stock-in-trade valued for tax purposes under sub -section (4) of section 35 at fair market value, that value; or

(iii) in any other case, the association’s cost at the time of the disposal;

(c) if, immediately before the disposal, the association is subject to tax in accordance with sub-section (1) of section 92 and the association has deductions allowed under sections 22, 23 and 24 in respect of the assets transferred which have not been set off against the association’s income, the amount not set off shall be added to the deductions allowed under those sections to the company in the tax year in which the transfer is made; and

(d) the association’s cost in respect of the share  or shares received as consideration for the disposal shall be –

(i) in the case of a consideration of one share, the association’s cost of the assets transferred as determined under clause (b), as reduced by the amount of any liability that the company has undertaken to discharge in respect of the assets; or

(ii) in the case of a consideration of more than one share, the amount determined under sub-clause (i) divided by the number of shares received.

(3) In determining whether the association’s deductions under Sections 22, 23 or 24 have been set off against income for the purposes of clause (c) of sub-section (2), those deductions are taken into account last.

97. Disposal of asset between wholly-owned companies.-

(1)   Where a resident company (hereinafter referred to as the “transferor”) disposes of an asset to another resident company (hereinafter referred to as the “transferee”), no gain or loss shall be taken to arise on the disposal if the following conditions are satisfied, namely:-

(a) Both companies belong to a wholly-owned group of companies at the time of the disposal;

(b) the transferee must undertake to discharge any liability in respect of the asset acquired;

(c) any liability in respect of the asset must not exceed the transferor’s cost of the asset at the time of the disposal; and

(d) the transferee must not be exempt from tax for the tax year in which the disposal takes place.

(2) Where sub-section (1) applies –

(a) the asset acquired by the transferee shall be treated as having  the same character as it had in the hands of the transferor;

(b) the transferee’s cost in respect of the acquisition of the asset shall be –

(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;

(ii) in the case of stock-in-trade valued for tax purposes under sub -section (4) of section 35 at fair market value, that value; or

(iii) in any other case, the transferor’s cost at the time of the disposal;

(c) if,  immediately before the disposal, the transferor has deductions allowed under sections 22, 23 and 24 in respect of the asset transferred which have not been set off against the transferor’s income, the amount not set off shall be added to the deductions allowed under those sections to the transferee in the tax year in which the transfer is made; and

(d) the transferor’s cost in respect of any consideration in kind received for the asset shall be the transferor’s cost of the asset transferred as determined under clause (b), as reduced by the amount of any liability that the transferee has undertaken to discharge in respect of the asset.102

(3) In determining whether the transferor’s deductions under sections 22, 23 or 24 in respect of the asset transferred have  been set off against income for the purposes of clause (c) of sub-section (2), those deductions shall be taken into account last.

(4) The transferor and transferee companies belong to a whollyowned group if –

(a) one company beneficially holds all the issued shares of the other company; or

(b) a third company beneficially holds all the issued shares in both companies.

PART V

COMMON PROVISIONS APPLICABLE TO ASSOCIATIONS OF PERSONS AND COMPANIES

98. Change in control of an entity.-

(1)   Where there is a change of fifty per cent or more in the underlying ownership of an entity, any loss incurred for a tax year before the change shall not be allowed as a deduction in a tax year after the change, unless the entity –

(a) continues to conduct the same business after the change as it conducted before the change until the loss has been fully set off; and

(b) does not, until the loss has been fully set off, engage in any new business or investment after the change where the principal purpose of the entity or the beneficial owners of the entity is to utilise the loss so as to reduce the income tax payable on the income arising from the new business or investment.

(2) In this section, –

“entity” means a company or association of persons to which subsection (1) of section 92 applies; “ownership interest” means a share in a company or the interest of a member in an association of persons; and “underlying ownership” in relation to an entity, means an ownership interest in the entity held, directly or indirectly through an interposed entity or entities, by an individual or by a person not ultimately owned by individuals.

CHAPTER VI

SPECIAL INDUSTRIES

PART I

INSURANCE BUSINESS

99. Special provisions relating to insurance business.- The profits and gains of any insurance business shall be computed in accordance with the rules in the Fourth Schedule.

PART II

OIL, NATURAL GAS AND OTHER MINERAL DEPOSITS

100. Special provisions relating to the production of oil and natural gas, and exploration and extraction of other mineral deposits.-

(1)   Subject to sub-section (2), the profits and gains from –

(a) the exploration and production of petroleum including natural gas and from refineries set up at the Dhodak and Bobi fields;

(b) the pipeline operations of  exploration and production companies; or

(c) the manufacture and sale of liquified petroleum gas or compressed natural gas, and the tax payable thereon shall be computed in accordance with the rules in Part I of the Fifth Schedule.

(2) Sub-section (1) shall not apply to the profits and gains attributable to the production of petroleum including natural gas discovered before the 24^th day of September, 1954.

(3) The profits and gains of any business which consists of, or includes, the exploration and extraction of such mineral deposits of a wasting nature (not being petroleum or natural gas) as may be specified in this behalf by the Federal Government carried on by a person in Pakistan shall be computed in accordance with the rules in Part II of the Fifth Schedule.

CHAPTER VII

INTERNATIONAL

PART I

GEOGRAPHICAL SOURCE OF INCOME

101. Geographical source of income.-

(1)   Salary shall be Pakistan-source income to the extent to which the salary –

(a) is received from any employment exercised in Pakistan, wherever paid; or

(b) is paid by, or on behalf of, the Federal Government, a Provincial Government, or a local authority in Pakistan, wherever the employment is exercised.

(2) Business income of a resident person shall be Pakistan-source income to the extent to which the income is derived from any business carried on in Pakistan.

(3) Business income of a non-resident person shall be Pakistan-source income to the extent to which it is directly or indirectly attributable to –

(a) a permanent establishment of the non-resident person in Pakistan;

(b) sales in Pakistan of goods or merchandise of the same or similar kind as those sold by the person through a permanent establishment in Pakistan; or

(c) other business activities carried on in Pakistan of the same or similar kind as those effected by the non-resident through a permanent establishment in Pakistan.

(4) Where the business of a non-resident person comprises the rendering of independent services (including professional services and the services of entertainers and sportspersons), the Pakistansource business income of the person shall include (in addition to any amounts treated as Pakistan-source income under sub -section

(3)) any remuneration derived by the person where –

(a) the remuneration is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident; person; and

(b) the aggregate gross amount (before deduction of expenses) of the remuneration is sixty thousand rupees or more.

(5) Any gain from the disposal of any asset or property used in deriving any business income referred to in sub-section (2), (3) or (4) shall be Pakistan-source income.

(6) A dividend shall be Pakistan-source income if it is paid by a resident company.

(7) Profit on debt shall be Pakistan-source income if it is –

(a) paid by a resident person, except where the profit is payable in respect of any debt used for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or

(b) borne by a permanent establishment in Pakistan of a nonresident person.

(8) A royalty shall be Pakistan-source income if it is –

(a) paid by a resident person, except where the royalty is payable in respect of any right, property, or information used, or services utilised for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or

(b) borne by a permanent establishment in Pakistan of a nonresident person.

(9) Rental income shall be Pakistan-source income if it is derived from the lease of immovable property in Pakistan whether improved or not, or from any other interest in or over immovable property, including a right to explore for, or exploit, natural resources in Pakistan.

(10) Any gain from the alienation of any property or right referred to in sub-section (9) or from the alienation of any share in a company the assets of which consist wholly or principally, directly or indirectly, of property or rights referred to in sub -section (9) shall be Pakistan source income.

(11) A pension or annuity shall be Pakistan-source income if it is paid by a resident or borne by a permanent establishment in Pakistan of a non-resident person.

(12) A technical fee shall be Pakistan-source income if it is –

(a) paid by a resident person, except where the fee is payable in respect of services utilised in a business carried on by the resident outside Pakistan through a permanent establishment; or

(b) borne by a permanent establishment in Pakistan of a nonresident person.

(13) Any gain arising on the disposal of shares in a resident company shall be Pakistan-source income.

(14) Any amount not mentioned in the preceding sub-sections shall be Pakistan-source income if it is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident person.

(15) Where an amount may be dealt with under sub-section (3) and under another sub -section (other than sub-section (14)), this section shall apply –

(a) by first determining whether the amount is Pakistan-source income under that other sub -section; and

(b) if the amount is not Pakistan-source income under that subsection, then determining whether it is Pakistan-source income under sub -section (3).

(16) An amount shall be foreign-source income to the extent to which it is not Pakistan-source income.

PART II

TAXATION OF FOREIGN-SOURCE INCOME OF RESIDENTS

102. Foreign source salary of resident individuals.-

(1)   Any foreign-source salary received by a resident individual shall be exempt from tax if the individual has paid foreign income tax in respect of the salary.

(2) A resident individual shall be treated as having paid foreign income tax in respect of foreign-source salary if tax has been withheld from the salary by the individual’s employer and paid to the revenue authority of the foreign country in which the employment was exercised.

103. Foreign tax credit.-

(1)   Where a resident taxpayer derives foreign source income chargeable to tax under this Ordinance in respect of which the taxpayer has paid foreign income tax, the taxpayer shall be allowed a tax credit of an amount equal to the lesser of –

(a) the foreign income tax paid; or

(b) the Pakistan tax payable in respect of the income.

(2) For the purposes of clause (b) of sub-section (1), the Pakistan tax payable in respect of foreign source income derived by a taxpayer in a tax year shall be computed by applying the average rate of Pakistan income tax applicable to the taxpayer for the year against the taxpayer’s net foreign-source income for the year.

(3) Where, in a tax year, a taxpayer has foreign income under more than one head of income, this section shall apply separately to each head of income.

(4) For the purposes of sub -section (3), income derived by a taxpayer from carrying  on a speculation business shall be treated as a separate head of income.

(5) The tax credit allowed under this section shall be applied in accordance with sub-section (3) of section 4.

(6) Any tax credit or part of a tax credit allowed under this section for a tax year that is not credited under sub-section (3) of section 4 shall not be refunded, carried back to the preceding tax year, or carried forward to the following tax year.

(7) A credit shall be allowed under this section only if the foreign income tax is paid within two years after the end of the tax year in which the foreign income to which the tax relates was derived by the resident taxpayer.

(8) In this section, –

“average rate of Pakistan income tax” in relation to a taxpayer for a tax year, means the percentage that the Pakistani income tax (before allowance of the tax credit under this section) is of the taxable income of the taxpayer for the year; “foreign income tax” includes a foreign withholding tax; and “net foreign-source income” in relation to a taxpayer for a tax year, means the total foreign-source income of the taxpayer charged to tax in the year, as reduced by any deductions allowed to the taxpayer under this Ordinance for the year that –

(a) relate exclusively to the derivation of the foreign-source income; and

(b) are reasonably related to the derivation of foreign-source income in accordance with sub-section (1) of section 67 and any rules made for the purposes of that section.

104. Foreign losses.-

(1)   Deductible expenditures incurred by a person in deriving foreign source income chargeable to tax under a head of income shall be deductible only against that income.

(2) If the total deductible expenditures referred to in sub-section (1) exceed the total foreign source income for a tax year chargeable to tax under a head of income (hereinafter referred to as a “foreign loss”), the foreign loss shall be carried forward to the following tax year and set off against the foreign source income chargeable to tax under that head in that year, and so on, but no foreign loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was computed.

(3) Where a taxpayer has a foreign loss carried forward for more than one tax year, the loss for the earliest year shall be set off first.(4) Section 67 shall apply for the purposes of this section on the basis that –

(a) income from carrying on a speculation business is a separate head of income; and

(b) foreign source income chargeable under a head of income (including the head specified in clause (a)) shall be a separate head of income.

PART III

TAXATION OF NON-RESIDENTS

105. Taxation of a permanent establishment in Pakistan of a non-resident person.-

(1)   The following principles shall apply in determining the income of a permanent establishment in Pakistan of a non-resident person chargeable to tax under the head “Income from Business”, namely: -

(a) The profit of the permanent establishment shall be computed on the basis that it is a distinct and separate person engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the nonresident person of which it is a permanent establishment;

(b) subject to this Ordina nce, there shall be allowed as deductions any expenses incurred for the purposes of the business activities of the permanent establishment including executive and administrative expenses so incurred, whether in Pakistan or elsewhere;

(c) no deduction shall be allowed for amounts paid or payable by the permanent establishment to its head office or to another permanent establishment of the non-resident person (other than towards reimbursement of actual expenses incurred by the non-resident person to third parties) by way of:

(i) royalties, fees or other similar payments for the use of any tangible or intangible asset by the permanent establishment;

(ii) compensation for any services including management services performed for the permanent establishment; or

(iii) profit on debt on moneys lent to the permanent establishment, except in connection with a banking business; and

(d) no account shall be taken in the determination of the income of a permanent establishment of amounts charged by the permanent establishment to the head office or to another permanent establishment of the non-resident person (other than towards reimbursement of actual expenses incurred by the permanent establishment to third parties) by way of:

(i) royalties, fees or other similar payments for the use of any tangible or intangible asset;

(ii) compensation for any services including management services performed by the permanent establishment; or

(iii) profit on debt on moneys lent by the permanent establishment, except in connection  with a banking business.

(2) No deduction shall be allowed in computing the income of a permanent establishment in Pakistan of a non-resident person chargeable to tax under the head “Income from Business” for a tax year for head office expenditure in excess of the amount as bears to the turnover of the permanent establishment in Pakistan the same proportion as the non-resident’s total head office expenditure bears to its worldwide turnover.

(3) In this section, “head office expenditure” means any executive or general administration expenditure incurred by the non-resident person outside Pakistan for the purposes of the business of thePakistanpermanent establishment of the person, including –

(a) any rent, local rates and taxes excluding any foreign income tax, current repairs, or insurance against risks of damage or destruction outside Pakistan;

(b) any salary paid to an employee employed by the head office outside Pakistan;

(c) any travelling expenditures of such employee; and

(d) any other expenditures which may be prescribed.

(4) No deduction shall be allowed in computing the income of a permanent establishment in Pakistan of a non-resident person chargeable under the head “Income from Business” for –

(a) any profit paid or payable by the non-resident person on debt to finance the operations of the permanent establishment; or

(b) any insurance premium paid or payable by the non-resident person in respect of such debt.

106. Thin capitalisation.-

(1) Where a foreign-controlled resident company (other than a financial institution 87 [or a banking company]) has a foreign debt-to-foreign equity ratio in excess of three to one at any time during a tax year, a deduction shall be disallowed for the profit on debt paid by the company in that year on that part of the debt which exceeds the three to one ratio.

(2) In this section, -

“foreign-controlled resident company” means a resident company in which fifty per cent or more of the underlying ownership of the company is held by a non-resident person (hereinafter referred to as the “foreign controller”) either alone or together with an associate or associates; “foreign debt” in relation to a foreign-controlled resident company, means the greatest amount, at any time in a tax year, of the sum of the following amounts, namely:-

(a) The balance outstanding at that time on any debt obligation owed by the foreign-controlled resident company to a foreign controller or non-resident associate of the foreign controller on which profit on debt is payable which profit on debt is deductible to the foreign-controlled resident company and is not taxed under this Ordinance or is taxable at a rate lower than the 88[corporate rate] of tax applicable on assessment to the foreign controller or associate; and

(b) the balance outstanding at that time on any debt obligation owed by the foreign-controlled resident company to a person other than the foreign controller or an associate of the foreign controller where that person has a balance outstanding of a similar amount on a debt obligation owed by the person to the foreign controller or a non-resident associate of the foreign controller; and “foreign equity” in relation to a foreign-controlled resident company and for a tax year, means the sum of the following amounts, namely:-

(a) The paid-up value of all shares in the company owned by the foreign controller or a non-resident associate of the foreign controller at the beginning of the tax year;

(b) so much of the amount standing to the credit of the share premium account of the company at the beginning of the tax year as the foreign controller or a non-resident associate would be entitled to if the company were wound up at that time; and

(c) so much of the accumulated profits and asset revaluation reserves of the company at the beginning of the tax year as the foreign controller or a non-resident associate of the foreign controller would be entitled to if the company were wound up at that time; reduced by the sum of the following amounts, namely:-

(i) The balance outstanding at the beginning of the tax year on any debt obligation owed to the foreign controlled resident company by the foreign controller or a non-resident associate of the foreign controller; and

(ii) where the foreign-controlled resident company has accumulated losses at the beginning of the tax year, the amount by which the return of capital to the foreign controller or non-resident associate of the foreign controller would be reduced by virtue of the losses if the company were wound up at that time.

PART IV

AGREEMENTS FOR THE AVOIDANCE OF DOUBLE TAXATION AND

PREVENTION OF FISCAL EVASION

107. Agreements for the avoidance of double taxation and prevention of fiscal evasion.-

(1)   The Federal Government may enter into an agreement with the government of  a foreign country for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income imposed under this Ordinance and under the corresponding laws in force in that country, and may, by notification in the official Gazette make such provisions as may be necessary for implementing the agreement.

(2) Where any agreement is made in accordance with sub-section (1), the agreement and the provisions made by notification for implementing the agreement shall, notwithstanding anything contained in any law for the time being in force, have effect in so far as they provide for –

(a) relief from the tax payable under this Ordinance;

(b) the determination of the Pakistan-source income of nonresident persons;

(c) where all the operations of a business are not carried on within Pakistan, the determination of the income attributable to operations carried on within and outside Pakistan, or the income chargeable to tax in Pakistan in the hands of nonresident persons, including their  agents, branches, and permanent establishments in Pakistan;

(d) the determination of the income to be attributed to any resident person having a special relationship with a nonresident person; and

(e) the exchange of information for the prevention of fiscal evasion or avoidance of taxes on income chargeable under this Ordinance and under the corresponding laws in force in that other country.

(3) Notwithstanding anything in sub-sections (1) or (2), any agreement referred to in sub-section (1) may include  provisions for the relief from tax for any period before the commencement of this Ordinance or before the making of the agreement.

CHAPTER VIII

ANTI-AVOIDANCE

107. Transactions between associates.-

(1)   The Commissioner may, in respect of any transaction  between persons who are associates, distribute, apportion or allocate income, deductions or tax credits between the persons as is necessary to reflect the income that the persons would have realised in an arm’s length transaction.

(2) In making any adjustment under sub-section (1), the Commissioner may determine the source of income and the nature of any payment or loss as revenue, capital or otherwise.

109. Recharacterisation of income and deductions.-

(1)   For the purposes of determining liability to tax under this Ordinance, the Commissioner may –

(a) recharacterise a transaction or an element of a transaction that was entered into as part of a tax avoidance scheme;

(b) disregard a transaction that does not have substantial economic effect; or

(c) recharacterise a transaction where the form of the transaction does not reflect the substance.

(2) In this section, “tax avoidance scheme” means any transaction where one of the main purposes of a person in entering into the transaction is the avoidance or reduction of any person’s liability to tax under this Ordinance.

110. Salary paid by private companies.- Where, in any tax year, salary is paid by a private company to an employee of the company for services rendered by the employee in an earlier tax year and the salary has not been included in the employee’s salary chargeable to tax in that earlier year, the Commissioner may, if there are reasonable grounds to believe that payment of the salary was deferred, include the amount in the employee’s income under the head “Salary” in that earlier year.

111. Unexplained income or assets.-

(1)   Where –

(a) any amount is credited in a person’s books of account;

(b) a person has made any investment or is the owner of any money or valuable article; or

(c) a person has incurred any expenditure, and the person offers no explanation about the nature and source of the amount credited or the investment, money, valuable article, or funds from which the expenditure was made or the explanation offered by the person is not, in the Commissioner’s opinion, satisfactory, the amount credited, value of the investment, money, value of the article, or amount of expenditure shall be included in the person’s income chargeable to tax under head “Income from 89[Other Sources] to the extent it is not adequately explained.

(2) The amount referred to in sub-section (1) shall be included in the person’s income chargeable to tax in the tax year in which it was discovered by the Commissioner.

(3) Where the declared value of any investment, valuable article or expenditure of a person is less than the cost of the investment or valuable article, or the amount of the expenditure, the Commissioner may, having regard to all the circumstances, include the difference in the person’s income chargeable to tax under the head “Income from 90[Other Sources] in the tax year in which the difference is discovered.

(4) Sub-section (1) does not apply to any amount of foreign exchange remitted by a person from outside Pakistan through normal banking channels that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.

(5) The Central Board of Revenue may make rules under section  91[237] for the purposes of this section.

112. Liability in respect of certain security transactions.-

(1)  Where the owner of any security disposes of the security and thereafter re-acquires the security and the result of the transaction is that any income payable in respect of the security is receivable by any person  other than the owner, the income shall be treated, for all purposes of the Ordinance, as the income of the owner and not of the other person.

(2) In this section, “security” includes stocks and shares.

CHAPTER IX

MINIMUM TAX

113. Minimum tax on the income of certain persons.-

(1)   This section shall apply to a resident company where, for any reason whatsoever, including the sustaining of a loss, the setting off of a loss of an earlier year, exemption from tax, the application of credits or rebates,  or the claiming of allowances or deductions (including depreciation and amortisation deductions) allowed under this Ordinance or any other law for the time being in force, no tax is payable or paid by the person for a tax year or the tax payable or paid by  the person for a tax year is less than one-half per cent of the amount representing the person’s turnover from all sources for that year.

(2) Where this section applies –

(a) the aggregate of the person’s turnover for the tax year shall be treated as the income of the person for the year chargeable to tax; and

(b) the person shall pay as income tax for the tax year (instead of the actual tax payable under this Ordinance), an amount equal to one-half per cent of the person’s turnover for the year.

(3) In this section, “turnover” means –

(a) the gross receipts, exclusive of 92[sales tax and central excise duty or] any trade discounts shown on invoices or bills, derived from the sale of goods;

(b) the gross fees for the rendering of services 93[or giving benefits], including commissions;

(c) the gross receipts from the execution of contracts; and

(d) the company’s share of the amounts stated above of any association of persons of which the company is a member.

CHAPTER X

PROCEDURE

PART I

RETURNS

114. Return of income.-

(1)   Subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely:–

(a) Every company and any other person whose taxable income for the year exceeds the maximum amount that  is not chargeable to tax under this Ordinance for the year; and

(b) any person not covered by clause (a) who –

(i) has been charged to tax in respect of any of the four preceding tax years;

(ii) claims a loss carried forward under this Ordinance for a tax year;

(iii) owns immovable property, with a land area of two hundred and fifty square yards or more, located in areas falling in the limits of a Metropolitan/Municipal Corporation, a Cantonment Board, or the Islamabad Capital Territory or owns any flat;

(iv) owns a motor vehicle (other than a motor cycle) in Pakistan;

(v) subscribes for a telephone including a mobile phone in Pakistan;

(vi) has undertaken foreign travel in the tax year other than travel by a non-resident person or any travel for the purposes of the Haj, Umrah, or Ziarat; or

(vii) is member of a club where the monthly subscription exceeds five hundred rupees or the admission fee exceeds twenty-five thousand rupees.

(2) A return of income –

(a) shall be in the prescribed form;

(b) shall state the information required by the form, including a declaration of the records kept by the taxpayer;

(c) in the case of a person carrying on a business, shall include an income statement, balance sheet, and any other document as may be prescribed for the tax year; and

(d) shall be signed by the person or the person’s representative.

(3) The Commissioner may, by notice in writing, require a person, or a person’s representative, as the case may be, to furnish a return of income by the date specified in the notice for a period of less than twelve months, where -

(a) the person has died;

(b) the person has become bankrupt or gone into liquidation;

(c) the person is about to leave Pakistan permanently;

(d) the person is otherwise about to cease carrying on business in Pakistan; or

(e) the Commissioner otherwise considers it appropriate to require such a return to be furnished.

(4) Subject to sub-section (5), the Commissioner may, by notice in writing, require any person who, in the Commissioner’s opinion, is required to file a return of income under this section for a tax year but who has failed to do so to furnish a return of income for that year within thirty days from the date of service of such notice or such longer period as may be specified in such notice or as the Commissioner may allow.

(5) A notice under sub -section (4) may be issued only in respect of the last five completed tax years.

(6) Any person who, having furnished a return, discovers any omission or wrong statement therein, may furnish a revised return within five years of the date that the original return was furnished.

(7) Every return purporting to be made or signed by, or on behalf of a person shall be treated as having been duly made by the person or with the person’s authority until the person proves the contrary.

115. Persons not required to furnish a return of income.-

(1)   Where the entire income of a taxpayer in a tax year consists of income chargeable under the head “Salary”, the taxpayer may, instead of furnishing a return as required under section 114 furnish –

(a) a certificate from the person’s employer in the prescribed form stating such particulars, and accompanied by such statements, and verified in such manner, as may be prescribed, and such certificate shall be, for the purposes of this Ordinance, treated as a return of income furnished under section 114; and119

(b) subject to sub-section (2), a wealth statement referred to 94[in] section 116.

(2) Clause (b) of sub-section (1) shall not apply to a person whose declared income for the tax year, or whose last declared or assessed income, is less than two hundred thousand rupees.

(3) The following persons shall not be required to furnish a return of income for a tax year solely by reason of sub-clauses (iii) through (vii) of clause (b) of sub -section (1) of section 114 –

(a) A widow;

(b) an orphan below the age of twenty-five years;

(c) a disabled person; or

(d) in the case of ownership of immovable property, a nonresident person.

(4) Any person who  is not obliged to furnish a return for a tax year because all the person’s income is subject to final taxation under sections 148, 95[5, 6, 7, 148, 153, 154, 156 or sub-section (5) of section 234] shall furnish to the Commissioner a statement showing such particulars relating to the person’s income for the tax year in such form and verified in such manner as may be prescribed.

116. Wealth statement.-

(1)   Subject to subsection (2), the Commissioner may, by notice in writing, require any person to furnish, on the date specified in the notice, a statement (hereinafter referred to as the “wealth statement”) in the prescribed form and verified in the prescribed manner giving particulars of –

(a) the person’s total assets and liabilities as on the date or dates specified in such notice;

(b) the total assets and liabilities of the person’s spouse, minor children, and other dependents as on the date or dates specified in such notice;

(c) any assets transferred by the person to any other person during the period or periods specified in such notice and the consideration for the transfer; and

(d) the total expenditures incurred by the person, and the person’s spouse, minor children, and other dependents during the period or periods specified in the notice and the details of such expenditures.

(2) Every resident taxpayer filing a return of income for any tax year shall  furnish a wealth statement for that year along with such return.

117. Notice of discontinued business.-

(1)   Any person discontinuing a business shall give the Commissioner a notice in writing to that effect within fifteen days of the discontinuance.

(2) The person discontinuing a business shall, under the provisions of this Ordinance or on being required by the Commissioner by notice, in writing, furnish a return of income for the period commencing on the first day of the tax year in which the discontinuance occurred and ending on the date of discontinuance and this period shall be treated as a separate tax year for the purposes of this Ordinance.

(3) Where no notice has been given under sub -section (1) but the Commissioner has reasonable grounds to believe that a business has discontinued or is likely to discontinue, the Commissioner may serve a notice on the person who has discontinued the business or is likely to discontinue the business to furnish to the Commissioner within the time specified in the notice a return of income for the period specified in the notice.

(4) A return furnished under this section shall be treated for all purposes  of this Ordinance as a return of income, including the application of Section 120.

118. Method of furnishing returns and other documents.-

(1)   A return of income under section 114, an employer’s certificate under section 115, a statement required under sub-section (4) of section 115 or a wealth statement under section 116 shall be furnished in the prescribed manner.

(2) A return of income of a company shall be furnished –

(a) in the case of a company with a tax year ending any time between the first  day of January and the thirtieth day of June, on or before the thirty-first day of December next following the end of the tax year to which the return relates; or

(b) in any other case, on or before the thirtieth day of September next following the end of  the tax year to which the return relates.

(3) A return of income for any person (other than a company), an employer certificate of an individual or a statement required under sub-section (4) of section 115 shall be furnished on or before the thirtieth day of September next following the end of the tax year to which the return, certificate or statement relates.

(4) A wealth statement shall be furnished by the due date specified in the notice requiring the person to furnish such statement or, where the person is required to furnish the wealth statement for a tax year under sub-section (2) of section 116, by the due date for furnishing the return of income for that year.

(5) A return required to be furnished by a notice issued under section 117 shall be furnished by the due date specified in the notice.

(6) Where a taxpayer is not borne on the National Tax Number Register and fails to file an application in the prescribed form and manner with the taxpayer’s return of income or employer’s certificate, such return or certificate shall not be treated as a return or certificate furnished under this section.

119. Extension of time for furnishing returns and other documents.-

(1)   A person required to furnish –

(a) a return of income under section 114 or 117;

(b) an employer’s certificate under section 115;

(c) a statement required under sub-section (4) of section 115; or

(d) a wealth statement under section 116, may apply, in writing, to the Commissioner for an extension of time to furnish the return, certificate, or statement, as the case may be.

(2) An application under sub-section (1) shall be made by the due date for furnishing the return of income, employer’s certificate, or 96 [  ] statement to which the application relates.

(3) Where an application has been made under sub-section (1) and the Commissioner is satisfied that the applicant is unable to furnish the return of income, employer’s certificate, or 97[  ] statement to which the application relates by the due date because of –

(a) absence from Pakistan;

(b) sickness or other misadventure; or

(c) any other reasonable cause, the Commissioner may, by 98[order], in writing, grant the applicant an extension of time for furnishing the return, certificate, or statement, as the case may be.

(4) An  extension of time under sub-section (3) should not exceed fifteen days from the due date for furnishing the return of income, employer’s certificate, or 99[  ] statement, as the case may be, unless there are exceptional circumstances justifying a longer extension of time.

100[  ]

(6) An extension of time granted under sub-section (3) shall not 101[, for the purpose of charge of additional tax under sub-section (1) of section 205,] change the due date for payment of income tax under section 137.

PART II

ASSESSMENTS

120. Assessments.- Where a taxpayer has furnished a return of income (other than a revised return under sub-section (6) of section 114) for a tax year 102[ending on or after 1^st  day of July, 2002,] –

(a) the Commissioner shall be taken to have made an assessment of the taxable income of the taxpayer for the year and the tax due thereon, equal to those respective amounts specified in the return; and

(b) the taxpayer’s return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the Commissioner on the day the return was furnished.

121. Assessment of persons who have not furnished a return.-

(1)   Where a person required under this Ordinance 103[, or the repealed Ordinance] to furnish a return of income for a tax year fails to do so by the due date, the Commissioner may, based on any available information and to the best of the Commissioner’s judgement, make an assessment of the taxable income of the person and the tax due thereon for the year.

(2) As soon as possible after making an assessment under this section, the Commissioner shall issue, in writing, an assessment order to the taxpayer stating –

(a) the taxable income of the taxpayer for the year;

(b) the amount of tax due;

(c) the amount of tax paid, if any; and

(d) the time, place, and manner of appealing the assessment order.

(3) An assessment order shall only be issued within five years after the end of the tax year 104[, or the income year,] to which it relates and shall be an alternative to the application of sub-section (4) of section 114.

122. Amendment of assessments.-

(1)   Subject to this section, the Commissioner may amend an assessment order treated as issued under section 120 or issued under section 121 105[, or issued under section 59, 59A, 62, 63 or 65 of the repealed Ordinance,] by making such alterations or additions as the Commissioner considers necessary to ensure that the taxpayer is liable for the correct amount of tax for the tax year to which the assessment order relates.

(2) An assessment order shall only be amended under subsection (1) within five years after the Commissioner has issued or is treated as having issued the assessment order on the taxpayer.

(3) Where a taxpayer furnishes a revised return under sub-section (6) of section 114 -124

(a) the Commissioner shall be treated as having made an amended assessment of the taxable income and tax payable thereon as set out in the revised return; and

(b) the taxpayer’s revised return shall be taken for all purposes of this Ordinance to be an amended assessment order issued to the taxpayer by the Commissioner on the day on which the revised return was furnished.

(4) Where an assessment order (hereinafter referred to as the “original assessment”) has been amended  under sub-section (1) or (3), the Commissioner may further amend 106[, as many times as may be necessary,] the original assessment within the later of –

(a) five years after the Commissioner has issued or is treated as having issued the original assessment order to the taxpayer; or

(b) one year after the Commissioner has issued or is treated as having issued the amended assessment order to the taxpayer.

(5) An assessment order shall only be amended under sub -section (1) and an amended assessment shall  only be amended under subsection (4) where the Commissioner –

(a) is of the view that this Ordinance has been incorrectly applied in making the assessment (including the misclassification of an amount under a head of income 107 ,] incorrect payment of tax  with the return of income, an incorrect claim for tax relief or rebate,] an incorrect claim for exemption of any amount or an incorrect claim for a refund); or

(b) has definite information acquired from an audit or otherwise that the assessment is incorrect.

(6) As soon as possible after making an amended assessment under sub-section (1) or (4), the Commissioner shall issue an amended  assessment order to the taxpayer stating –

(a) the amended taxable income of the taxpayer;

(b) the amended amount of tax due;

(c) the amount of tax paid, if any; and125

(d) the time, place, and manner of appealing the amended assessment.

(7) An amended assessment order shall be treated in all respects as an assessment order for the purposes of this Ordinance, other than for the purposes of sub-section (1).

(8) For the purposes of this section, “definite information” includes information on sales or purchases of any goods made by the taxpayer, 108[receipts of the taxpayer from services rendered or any other receipts that may  be chargeable to tax under this Ordinance,] and on the acquisition, possession or disposal of any money, asset, valuable article or investment made or expenditure incurred by the taxpayer.

109[(9)  No assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard.]

123. Provisional assessment in certain cases.-

(1)   Where a concealed asset of any person is impounded by any department or agency of the Federal Government or a Provincial Government, the Commissioner may, at any time before issuing any assessment order under section 121 or any amended assessment order under section 122, issue to the person a provisional assessment order or provisional amended assessment order, as the case may be, for the last completed tax year of the person taking into account the concealed asset.

(2) The Commissioner shall finalise a provisional assessment order or a provisional amended assessment order as soon as practicable after making it.

(3) In this section, “concealed asset” means any property or asset which, in the opinion of the Commissioner, was acquired from any income subject to tax under this Ordinance.

124. Assessment giving effect to an order.-

(1)   Except where sub-section (2) applies, where, in consequence of, or to give effect to, any finding or direction in any order made under Part III of this Chapter by the Commissioner (Appeals), Appellate Tribunal, High Court, or Supreme Court an assessment order or amended assessment order is to be issued to any person, the Commissioner shall issue the order within two years from the end of the financial year in which the order of the Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court, as the case may be, was served on the Commissioner.

(2) Where, by an order made under Part III of this Chapter by the Commissioner (Appeals), Appellate Tribunal, High Court, or Supreme Court, an assessment order is set aside and the Commissioner is directed to make a new assessment order, the Commissioner shall make the new order within 110[one year from the end of the financial year in which] the Commissioner is served with the order.

(3) Where an assessment order has been set aside or modified, the proceedings may commence from the stage next preceding the stage at which such setting aside or modification took place and nothing contained in this Ordinance shall render necessary the reissue of any notice which had already been issued or the refurnishing or re-filing of any return, statement, or other particulars which had already been furnished or filed.

(4) Where direct relief is provided in an order under section 129 or 132, the Commissioner shall issue appeal effect orders within two months of the date the Commissioner is served with the order.

(5) Where, by any order referred to in sub-section (1), any income is excluded –

(a) from the computation of the taxable income of a taxpayer for any year and held to be included in the computation of the taxable income of the taxpayer for another year; or

(b) from the computation of the taxable income of one taxpayer and held to be included in the computation of the taxable income of another taxpayer, the assessment or amended assessment relating to that other tax year or other taxpayer, as the case may be, shall be treated as an assessment or amended assessment to be made in consequence of, or to give effect to, a finding or direction contained in such order.

(6) Nothing in this Part shall prevent the issuing of an assessment order or an amended assessment order to give effect to an order made under Part III of this Chapter by the Commissioner (Appeals), Appellate Tribunal, High Court, or Supreme Court.

111[124A. Powers of tax authorities to modify orders, etc.

(1)  Where a question of law has been decided by a High Court or the Appellate Tribunal in the case of an assessee, on or after first day of July 2002, the Commissioner may, notwithstanding that he has preferred an appeal against the decision of the High Court or made an application for reference against the order of the Appellate Tribunal, as the case may be, follow the said decision in the case of the said assessee in so far as it applies to said question of law arising in any assessment pending before the Commissioner until the decision of the High Court or of the Appellate Tribunal is reversed or modified.

(2)  In case the decision of High Court or the Appellate Tribunal, referred to in sub-section (1), is reversed or modified, the Commissioner may, notwithstanding the expiry of period of limitation prescribed for making any assessment or order, within a period of one year from the date of receipt of decision, modify the assessment or order in which the said decision was applied so that it conforms to the final decision.]

125. Assessment in relation to disputed property.- Where the ownership of any property the income from which is chargeable to tax under this Ordinance is in dispute in any Civil CourtinPakistan, an assessment order or amended assessment order in respect  of such income may be issued at any time within one year after the end of the financial year in which the decision of the Court is made.

126. Evidence of assessment.-

(1)   The production of an assessment order or a certified copy of an assessment order shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part III of this Chapter relating to the assessment, that the amount and all particulars of the assessment are correct.

(2) Any notice of assessment or other document purporting to be made, issued, or executed under this Ordinance may not be –

(a) quashed or deemed to be void or voidable for want of form; or

(b) affected by reason of any mistake, defect, or omission therein, if it is, in substance and effect, in conformity with this Ordinance and the person assessed, or intended to be assessed or affected by the document, is designated in it according to common understanding.

PART III

APPEALS

127. Appeal to the Commissioner (Appeals).-

112[(1)  Any person dissatisfied with any order passed by a Commissioner or a taxation officer under section 121, 122, 143, 144, 170, 182, 183, 184, 185, 186, 187, 188, or 189, or an order under sub -section (1) of section 161 holding a person to be personally liable to pay an amount of tax, or an order under clause (f) of sub-section (3) of section 172 treating a person to be the representative of a nonresident person, or an order under section 221 refusing to rectify the mistake, either in full or in part, as claimed by the taxpayer or an order having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the person, may prefer an appeal to the Commissioner (Appeals) against the order.]

113[(2)  No appeal under sub-section (1) shall be made by a taxpayer against an order of assessment unless the taxpayer has paid,-

(a)  the amount of tax due under sub -section (1) of section 137, and

(b)  an amount equal to-

(i)  fifteen percent of the amount of tax assessed as is in excess of the tax due under sub-section (1) of section 137, or

(ii)  twenty percent of the amount of tax assessed for the immediately preceding tax year, and where a person has not been assessed to tax for that tax year, thirty percent of the amount of tax  mentioned in clause (a), whichever is less.]

(3) An appeal under sub-section (1) shall–

(a) be in the prescribed form;

(b) be verified in the prescribed manner; 129

(c) state precisely the grounds upon which the appeal is made;

(d) be accompanied by the prescribed fee specified in subsection (4); and

(e) be lodged with the Commissioner (Appeals) within the time set out in sub -section (5).

(4) The prescribed fee 114[shall be] –

(a) in the case of an appeal against an assessment, the lesser of one thousand rupees or ten per cent of the tax assessed; or

(b) in any other case –

(i) where the appellant is a company, one thousand rupees; or

(ii) where the appellant is not a company, two hundred

rupees.

115[(5)  An appeal shall be preferred to the Commissioner (Appeals) within thirty days of the following --

(a)  where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the said assessment or penalty, as the case may be; and

(b)  in any other case, the date on which the order to be appealed against is served.]

(6) The Commissioner (Appeals) may, upon application in writing by the appellant, admit an appeal after the expiration of the period specified in sub-section (5) if the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from lodging the appeal within that period.

128. Procedure in appeal.-

(1)   The Commissioner (Appeals) shall give notice of the day fixed for the hearing of the appeal to the appellant and to the Commissioner against whose order the appeal has been made.

(2) The Commissioner (Appeals) may adjourn the hearing of the appeal from time to time.

(3) The Commissioner (Appeals) may, before the hearing of an appeal, allow an appellant to file any new ground of appeal not specified in the grounds of appeal already filed by the appellant where the Commissioner (Appeals) is satisfied that the omission of the ground from the form of the appeal was not wilful or unreasonable.

(4) The Commissioner (Appeals) may, before disposing of an appeal, call for such particulars as the Commissioner (Appeals) may require respecting the matters arising in the appeal or cause further enquiry to be made by the Commissioner.

(5) The Commissioner (Appeals) shall not admit any documentary material or evidence which was not produced before the Commissioner unless the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner.

129. Decision in appeal.-

(1)   In disposing of an appeal lodged under section 127, the Commissioner (Appeals) may –

(a) in the case of an appeal against an assessment order –

(i) make an order to set aside the assessment order and direct the Commissioner to make a new assessment order in accordance with any directions or recommendations of the Commissioner (Appeals); or

(ii) make an order to confirm, modify or annul the assessment order; or

(b) in any other case, make such order as the Commissioner (Appeals) thinks fit.

(2) The Commissioner (Appeals) shall not increase the amount of any assessment order or decrease the amount of any refund unless the appellant has been given a reasonable opportunity of showing cause against such increase or decrease, as the case may be.

(3) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Commissioner (Appeals) may authorise the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in sub -section (2) of section 122 shall not apply to the making such amended assessment.

(4) As soon as practicable after deciding an appeal, the Commissioner (Appeals) shall serve 116[  ] his order on the appellant and the Commissioner.

(5) Where the Commissioner (Appeals) has not made an order on an appeal before the expiration of three months from the end of the month in which the appeal was lodged, the relief sought by the appellant in the appeal shall be treated as having been given and all the provisions of this Ordinance shall have effect accordingly.

(6) For the purposes of sub-section (5), any period during which the hearing of an appeal is adjourned on the request of the appellant shall be excluded in the computation of the period of three months referred to in that sub-section.

(7) The provisions of sub-section (5) shall not apply unless a notice by the appellant stating that no order under sub-section (1) has been made is personally served by the appellant on the Commissioner (Appeals) not less than thirty days before the expiration of the period of three months.

130. Appointment of the Appellate Tribunal. –

(1) There shall be established an Appellate Tribunal to exercise the functions conferred on the Tribunal by this Ordinance.

(2) The Appellate Tribunal shall consist of a chairperson and such other judicial and accountant members as are appointed by the Federal Government having regard to the needs of the Tribunal.

(3) A person may be appointed as a judicial member of the Appellate Tribunal if the person –

(a) has exercised the powers of a District Judge and is qualified to be a Judge of a High Court; or

(b) is or has been an advocate  of a High Court and is qualified to be a Judge of the High Court.

(4) A person may be appointed as an accountant member of the Appellate Tribunal if the person is an officer of the Income Tax Group equivalent in rank to that of a Regional Commissioner 117.[  ]132

(5) The Federal Government shall appoint a member of the Appellate Tribunal as Chairperson of the Tribunal and, except in special circumstances, the person appointed should be a judicial member.

(6) The powers and functions of the Appellate Tribunal shall be exercised and discharged by Benches constituted from members of the Tribunal by the Chairperson of the Tribunal.

(7) Subject to sub-section (8), a Bench shall consist of not less than two members of the Appellate Tribunal and shall be constituted so as to contain an equal number of judicial and accountant members, or so that the number of members of one class does not exceed the number of members of the other class by more than one.

(8) The Federal Government may direct that all or any of the powers of the Appellate Tribunal shall be exercised by –

(a) any one member; or

(b) more members than one, jointly or severally.

(9) Subject to sub-section (10), if the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority.

(10) If the members of a 118[Bench] are equally divided on a point, they shall state the point on which they differ and the case shall be referred by the Chairperson for hearing on that point by one or more other members of the Appellate Tribunal, and the point shall be decided according to the opinion of the majority of the members of the Tribunal who have heard the case including those who first heard it.

(11) If there are an equal number of members of the Appellate Tribunal, the Federal Government may appoint an additional member for the purpose of deciding the case on which there is a difference of opinion.

(12) Subject to this Ordinance, the Appellate Tribunal shall have the power to regulate its own procedure, and the procedure of Benches of the Tribunal in all matters arising out of the discharge of its functions including the places at which the Benches shall hold their sittings.

131. Appeal to the Appellate Tribunal.-

(1)   Where the 119[taxpayer] or Commissioner objects to an order passed by the Commissioner (Appeals), the 120[taxpayer] or Commissioner may appeal to the Appellate Tribunal against such order.

(2) An appeal under sub-section (1) shall be–

(a) in the prescribed form;

(b) verified in the prescribed manner;

(c) accompanied 121[, except in case of an appeal preferred by the Commissioner,] by the prescribed fee specified in subsection (3); and

[(d)  preferred to the Appellate Tribunal within sixty days of the date of service of order of  the Commissioner (Appeals) on the taxpayer or the Commissioner, as the case may be.]

(3) The prescribed fee shall be–

(a) in the case of an appeal in relation to an assessment order, the lesser of two thousand five hundred rupees or ten percent of the tax assessed; or

(b) in any other case –

(i) where the appellant is a company, two thousand rupees; or

(ii) where the appellant is not a company, five hundred rupees.

(4) The Appellate Tribunal may, upon application in writing, admit an appeal after the expiration of the period specified in clause (d) of sub-section (2) if it is satisfied that the person appealing was prevented by sufficient cause from filing the appeal within that period.

132. Disposal of appeals by the Appellate Tribunal.-

(1)   The Appellate Tribunal may, before disposing of an appeal, call for such particulars as it may require in respect of the matters arising on the appeal or cause further enquiry to be made by the Commissioner.

123[(2)  The Appellate Tribunal shall afford an opportunity of being heard to the parties to the appeal and, in case of default by any of the party on the date of hearing, the Tribunal may if it deems fit, dismiss the appeal in default, or may proceed ex parte to decide the appeal on the basis of the available record.]

(3) Where the appeal relates to an assessment order, the Appellate Tribunal may 124[, without prejudice to the powers specified in subsection (2),] make an order to –

(a) affirm, modify or annul the assessment order; or

(b) set aside the assessment order and direct the Commissioner to make a new assessment order in accordance with the directions or recommendations of the Tribunal 125[; and]

126[(c)  remand the case to the Commissioner or the Commissioner (Appeals) for making such enquiry or taking such action as the Tribunal may direct.]

(4) The Appellate Tribunal shall not increase the amount of any assessment or decrease the amount of any refund unless the taxpayer has been given a reasonable opportunity of showing cause against such i ncrease or decrease, as the case may be.

(5) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Appellate Tribunal may authorise the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in sub -section (2) of section 122 shall not apply to the making of such amended assessment.

(6) Where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the decision, and issue such consequential directions as the case may require.

127[(7)  The Appellate Tribunal shall communicate its order to the taxpayer and the Commissioner.]

128[  ]

129[  ]

(10) Save as provided in section 133, the decision of the Appellate Tribunal on an appeal shall be final.

133. Reference to High Court.-

(1)   Where the Appellate Tribunal has made an order on an appeal under  section132, the

130[taxpayer] or Commissioner may, by application in such form and accompanied by such documents as may be prescribed, require the Appellate Tribunal to refer any question of law arising out of such order to the High Court.

(2) An application under sub -section (1) shall be made within ninety days of the date on which the 131[taxpayer] or Commissioner, as the case may be, was served with notice of the Appellate Tribunal’s order.

(3) Where, on an application under sub-section (1), the Appellate Tribunal is satisfied that a question of law arises out of its order, it shall, within ninety days of receipt of the application, draw up a statement of the case and refer it to the High Court.

(4) Where, on an application under sub-section (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the 132[taxpayer] or the Commissioner, as the case may be, may 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 for its consideration.

(5) An application under sub-section (4) shall be made within onehundred and twenty days from the date on which the 133[taxpayer] or Commissioner, as the case may be, was served with notice of the refusal.

(6) Sub-sections (10) through (14) shall apply to a question of law framed by the High Court in the same manner as they apply to a reference made under sub-section (1).

(7) If, on an application under sub -section (1), the Appellate Tribunal rejects the application on the ground that it is time-barred, the 134[taxpayer] or Commissioner may apply to the High Court and, if the High Court is not satisfied with the correctness of the Appellate Tribunal’s decision, the Court may require the Appellate Tribunal to treat the application as made within the time allowed under subsection (1).

(8) An application under sub-section (7) shall be made within 135[ninety days] from the date on which the 136[taxpayer] or Commissioner, as the case may be, was served with notice of the rejection.

(9) If the High Court is not satisfied that the statement in a case referred under sub-section (3) 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.

(10) A reference to the High Court under this section shall be heard by a Bench of not less than two Judges of the High Court and, in respect of the reference, the provisions of section 98 of the Code of Civil Procedure, 1908 (V of 1908) shall apply, so far as may be, notwithstanding anything contained in any other law for the time being in force.

(11) The High Court upon hearing a reference under this section shall decide the questions of law raised by the reference and deliver judgment thereon containing the grounds on which such decision is founded.

(12) A copy of the judgment of the High Court shall be sent 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 judgment.

(13) The costs of a reference to the High Court under this section shall be at the discretion of the Court.

(14) Where a reference relates to an assessment, the tax due under the assessment shall be payable in accordance with the assessment, unless recovery of the tax has been stayed by the High Court.

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

(16) An application under sub-section (1) by a person other than the Commissioner shall be accompanied by a fee of one hundred rupees.

134. Appeal to Supreme Court.-

(1)   An appeal shall lie to the Supreme Court from any judgment of the High Court delivered on a reference made or question of law framed under section 133 in any case which the High Court certifies to be a fit one for appeal to the Supreme Court.

(2) The provisions of the Code of Civil Procedure, 1908 (V of 1908), relating to appeals to the Supreme Court shall apply, so far as may be, in the case of an appeal under this section in like manner as they apply in the case of an appeal from decrees of a High Court.

(3) Where the judgment of the High Court is varied or reserved in appeal under this section, effect shall be given to the order of the Supreme Court in the manner provided in sub-section (10) of section 133 in the case of a judgment of the High Court.

(4) The provisions of sub-sections (11), (12)  and (13) of section 133 shall apply in the case of an appeal to the Supreme Court made under this section as they apply to an appeal to the High Court under section 133.

137[  ]

136. Burden of proof.- In any appeal under this Part, the burden shall be on the taxpayer to prove, on the balance of probabilities –

(a) in the case of an assessment order, the extent to which the order does not correctly reflect the taxpayer’s tax liability for the tax year; or

(b) in the case of any other decision, that the decision is erroneous.

PART IV

COLLECTION AND RECOVERY OF TAX

137. Due date for payment of tax.-

(1)   The tax payable by a taxpayer on the taxable income of the taxpayer for a tax year shall be due on the due date for furnishing the taxpayer’s return o f income for that year.

(2) Where an assessment order or amended assessment order is issued by the Commissioner, the tax payable under the order shall be payable within fifteen days from the date of the assessment order is issued.

(3) Nothing in sub-section (2) shall affect the operation of sub -section (1).

(4) Upon written application by a taxpayer, the Commissioner may, where good cause is shown, grant the taxpayer an extension of time for payment of tax due or allow the taxpayer to pay any tax due in instalments of equal or varying amounts as the Commissioner may determine having regard to the circumstances of the case.

(5) Where a taxpayer is permitted to pay tax by instalments and the taxpayer defaults in payment of any instalment, the whole balance of the tax outstanding shall become immediately payable.

(6) The grant of an extension of time to pay tax due or the grant of permission to pay tax due by instalments shall not preclude the liability for additional tax arising under section 205 from the due date of the tax under sub-section (1).

138[  ]

139[138. Recovery of tax out of property and through arrest of taxpayer.-

(1)  For the purpose of recovering any tax due by a taxpayer, the Commissioner may serve upon the taxpayer a notice in the prescribed form requiring him to pay the said amount within such time as may be specified in the notice.

(2)  If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover from the taxpayer the said amount by one or more of the following modes, namely:-

(a)  attachment and sale of any movable or immovable property of the taxpayer;

(b)  appointment of a receiver for the management of the movable or immovable property of the taxpayer; and

(c)  arrest of the taxpayer and his detention in prison for a period not exceeding six months.

(3)  For the purposes of recovery of tax under sub-section (2), the Commissioner shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purposes of the recovery of any amount due under a decree.139

(4)  The Central Board of Revenue may make rules regulating the procedure for the recovery of tax under this section and any other matter connected with, or incidental to, the operation of this section.]

140[138A.  Recovery of tax by District Officer (Revenue).-

(1)  The Commissioner may forward to the District Officer (Revenue) of the district in which the taxpayer resides or carries on business or in which any property belonging to the taxpayer is situated, a certificate specifying the amount of any tax due from the taxpayer, and, on receipt of such certificate, the District Officer (Revenue) shall proceed to recover from the taxpayer the amount so specified as if it were an arrear of land revenue.

(2)  Without prejudice to any other power of the District Officer (Revenue) in this behalf, shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purpose of the recovery of the amount due under a decree.]

139. Collection of tax in the case of private companies and associations of persons.-

(1)   Notwithstanding anything in the Companies Ordinance, 1984 (XLVII of 1984), where any tax payable by a private company (including a private company that has been wound up or gone into liquidation) in respect of any tax year cannot be recovered from the company, every person who was, at any time in that tax year –

(a) a director of the company, other than an employed director; or

(b) a shareholder in the company owning not less than ten per cent of the paid-up capital of the company, shall be jointly and severally liable for payment of the tax due by the company.

(2) Any director who pays tax under sub-section (1) shall be entitled to recover the tax paid from the company or a share of the tax from any other director.

(3) A shareholder who pays tax under sub-section (1) shall be entitled to recover the tax paid from the company or from any other shareholder to whom clause (b) of sub-section (1) applies in proportion to the shares owned by that other shareholder.140

(4) Notwithstanding anything in any law, where any tax payable by a member of an association of persons in respect of the member’s share of the income of the association in respect of any tax year cannot be recovered from the member, the association shall be liable for the tax due by the member.

(5) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.

140. Recovery of tax from persons holding money on behalf of a taxpayer.-

(1)   For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –

(a) owing or who may owe money to the taxpayer; or

(b) holding or who may hold money for, or on account of the taxpayer;

(c) holding or who may hold money on account of some other person for payment to the taxpayer; or

(d) having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice.

(2) Subject to sub-section (3), the amount  set out in a notice under sub-section (1) –

(a) where the amount of the money is equal to or less than the amount of tax due by the taxpayer, shall not exceed the amount of the money; or

(b) in any other case, shall be so much of the money as is sufficient to pay the amount of tax due by the taxpayer.

(3) Where a person is liable to make a series of payments (such as salary) to a taxpayer, a notice under sub-section (1) may specify an amount to be paid out of each payment until the amount of tax due by the taxpayer has been paid.

(4) The date for payment specified in a notice under sub-section (1) shall not be a date before the money becomes payable to the taxpayer or held on the taxpayer’s behalf.

(5) The provisions of sections 160, 161, 162 and 163, so far as may be, shall apply to an amount due under this section as if the amount were required to be deducted from a payment under Division III of Part V of this Chapter.

(6) Any person who has paid any amount in compliance with a notice under sub-section (1) shall be treated as having paid such amount under the authority of the taxpayer and the receipt of the Commissioner constitutes a good and sufficient discharge of the liability of such person to the taxpayer to the extent of the amount referred to in such receipt.

(7) Where an amount has been paid under sub-section (1), the taxpayer shall be allowed a tax credit for the amount (unless the amount paid represents a final tax on the taxpayer’s income) in computing the tax due by the taxpayer on the taxpayer’s taxable income for the tax year in which the amount was paid.

(8) The tax credit allowed under this section shall be applied in accordance with sub-section (3) of section 4.

(9) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year must be refunded to the taxpayer in accordance with section 170.

(10) In this section, “person” includes any Court, Tribunal or any other authority.

141. Liquidators.-

(1)   Every person (hereinafter referred to as a “liquidator”) who is –

(a) a liquidator of a company;

(b) a receiver appointed by a Court or appointed out of Court;

(c) a trustee for a bankrupt; or

(d) a mortgagee in possession, shall, within fourteen days of being appointed or taking possession of an asset inPakistan, whichever occurs first, give written notice thereof to the Commissioner.

(2) The Commissioner shall, within three months of being notified under sub-section (1), notify the liquidator in writing of the amount which appears to the Commissioner to be sufficient to provide for any tax which is or will become payable by the person whose assets are in the possession of the liquidator.

(3) A liquidator shall not, without leave of the Commissioner, part with any asset held as liquidator until the liquidator has been notified under sub -section (2).

(4) A liquidator -

(a) shall set aside, out of the proceeds of sale of any asset by the liquidator, the amount notified by the Commissioner under sub-section (2), or such lesser amount as is subsequently agreed to by the Commissioner;

(b) shall be liable to the extent of the amount set aside for the tax of the person who owned the asset; and

(c) may pay any debt that has priority over the tax referred to in this section notwithstanding any provision of this section.

(5) A liquidator shall be personally liable to the extent of any amount required to be set aside under sub-section (4) for the tax referred to in sub-section (2) if, and to the extent that, the liquidator fails to comply with the requirements of this section.

(6) Where the proceeds of sale of any asset are less than the amount notified by the Commissioner under sub-section (2), the application of sub-sections (4) and (5) shall be limited to the proceeds of sale.

(7) This section shall have effect notwithstanding anything contained in any other law for the time being in force.

(8) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.

142. Recovery of tax due by non-resident member of an association of persons.-

(1)   The tax due by a non-resident member of an association of persons in respect of the member’s share of the profits of the association shall be assessable in the name of the association or of any resident member of the association and may be recovered out of the assets of the association or from the resident member personally.

(2) A person making a payment under this section shall be treated as acting under the authority of the non-resident member and is hereby indemnified in respect of the payment against all proceedings, civil or criminal, and all processes, judicial or extrajudicial, notwithstanding any provisions to the contrary in any written law, contract or agreement.

(3) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.

143. Non-resident ship owner or charterer.-

(1)   Before the departure of a ship owned or chartered by a nonresident person from any port inPakistan, the master of the ship shall furnish to the Commissioner a return showing the gross amount specified in sub-section (1) of section 7 in respect of the ship.

(2) Where the  master of a ship has furnished a return under subsection (1), the Commissioner shall 141[, after calling for such particulars, accounts or documents as he may require,]  determine the amount of tax due under section 7 in respect of the ship and, as soon as possible, notify the master, in writing, of the amount payable.

(3) The master of a ship shall be liable for the tax notified under subsection (2) and the provisions of this Ordinance shall apply to such tax as if it were tax due under an assessment order.

(4) Where the Commissioner is satisfied that the master of a ship or non-resident owner or charterer of the ship is unable to furnish the return required under sub-section (1) before the departure of the ship from a port inPakistan, the Commissioner may allow the

return to be furnished within thirty days of departure of the ship provided the non-resident owner or charterer has made satisfactory arrangements for the payment of the tax due under section 7 in respect of the ship.

(5) The Collector of Customs or other authorised officer shall not grant a port clearance for a ship owned or chartered by a non-resident person until the Collector or officer is satisfied that any tax due under section 7 in respect of the ship has been paid or that arrangements for its payment have been made to the satisfaction of the Commissioner.

(6) This section shall not relieve the non-resident owner or charterer of the ship from liability to pay any tax due under this section that is not paid by the master of the ship.

144. Non-resident aircraft owner or charterer.-

(1)   A non-resident owner or charterer of an aircraft shall be liable for tax under section 7, or an agent authorised by the non-resident person for this purpose, shall furnish to the Commissioner, within forty-five days from the last day of each quarter of the financial year, a return, in respect of the quarter, showing the gross amount specified in sub-section (1) of section 7 of the non-resident person for the quarter.

(2) Where a return has been furnished under sub-section (1), the Commissioner shall 142[, after calling for such particulars, accounts or documents as he may require,] determine the amount of tax due under section 7 by the non-resident person for the quarter and notify the non-resident person, in writing, of the amount payable.

(3) The non-resident person shall be liable to pay the tax notified under sub-section (2) within the time specified in the notice and the provisions of this Ordinance shall apply to such tax as if it were tax due under an assessment order.

(4) Where the tax referred to in sub-section (3) is not paid within three months of service of the notice, the Commissioner may issue to the authority by whom clearance may be granted to the aircraft operated by the non-resident  person a certificate specifying the name of the non-resident person and the amount of tax due.

(5) The authority to whom a certificate is issued under sub-section (4) shall refuse clearance from any airport inPakistanto any aircraft owned or chartered by the non-resident until the tax due has been paid.

145. Collection of tax from persons leaving Pakistan permanently.-

(1)   Where the Commissioner has reasonable grounds to believe that a person may leavePakistanpermanently without paying tax due under this Ordinance, the Commissioner may issue a certificate containing particulars of the tax due to the Commissioner of Immigration and request the Commissioner of Immigration to prevent that person from leavingPakistanuntil that person -

(a) makes payment of tax in full; or

(b) makes an arrangement satisfactory to the Commissioner for payment of the tax due.

(2) A copy of a certificate issued under sub-section (1) shall be served on the person named in the certificate if it is practicable to do so.

(3) Payment of the tax specified in the certificate to a customs or immigration officer or the production of a certificate signed by the Commissioner stating that the tax has been paid or satisfactory arrangements for payment have been made shall be sufficient authority for allowing the person to leavePakistan.

146. Recovery of tax from persons assessed in Azad Jammu and Kashmir.-

(1)   Where any person assessed to tax for any tax year under the law relating to income tax in the Azad Jammu and Kashmir has failed to pay the tax and the income tax authorities of the Azad Jammu and Kashmir cannot recover the tax because –

(a) the person’s residence is inPakistan; or

(b) the person has no movable or immovable property in the Azad Jammu andKashmir, the Deputy Commissioner in the Azad Jammu andKashmirmay forward a certificate of recovery to the Commissioner and, on receipt of such certificate, the Commissioner shall recover the tax referred to in the certificate in accordance with this Part.

(2) A certificate of recovery under sub-section (1) shall be in the prescribed form specifying –

(a) the place of residence of the person inPakistan;146

(b) the description and location of movable or immovable property of the person inPakistan; and

(c) the amount of tax payable by the person.

143[146A.  Initiation, validity, etc., of recovery proceedings.-

(1)  Any proceedings for the recovery of tax under this Part may be initiated at any time;

(2)  The Commissioner may, at any time, amend the certificate issued under section 138A, or recall such certificate and issue fresh certificate, as he thinks fit;

(3)  It shall not be open to a taxpayer to question before the District Officer (Revenue) the validity or correctness of any certificate issued under section 138A, or any such certificate as amended, or any fresh certificate issued, under sub-section (2);

(4)  The several modes of recovery provided in this Part shall be deemed to be neither mutually exclusive nor affect in any way any other law for the time being in force relating to the recovery of debts due to the Government and the Commissioner may have recourse to any such mode of recovery notwithstanding that the tax due is being recovered from a taxpayer by any other mode.]

PART V

ADVANCE TAX AND DEDUCTION OF TAX AT SOURCE

Division I

Advance Tax Paid by the Taxpayer

147. Advance tax paid by the taxpayer.

(1)   Subject to sub-section (2), every taxpayer who derives or expects to derive income chargeable to tax under this Ordinance in a tax year other tha n –

(a) income chargeable to tax under the head “Capital Gains”;

(b) income chargeable to tax under sections 5, 6 and 7; 144[(ba)  income chargeable to tax under section 15;]

(c) income subject to deduction of tax at source under section 149; or147

(d) income from which tax has been collected under Division II or deducted under Division III and for which no tax credit is allowed as a result of sub-section (3) of section 168, shall be liable to pay advance tax for the year in accordance with this section.

(2) This section does not apply to an individual where the individual’s latest assessed taxable income excluding income referred to in clauses (a), (b), 145[(ba),] (c) and (d) of sub-section (1) is less than one hundred and fifty thousand rupees.

(3) Advance tax shall be payable by a taxpayer in respect of the following periods, namely:–

(a) 1^st of July to 30^th September (referred to as the “September quarter”);

(b) 1^st October to 31^st December (referred to as the “December quarter”);

(c) 1^st January to 31^st March (referred to as the “March quarter”); and

(d) 1^st April to 30^th June (referred to as the “June quarter”).

(4) The amount of advance tax due for a quarter shall be computed according to the following formula, namely:– (A x B/C) – D where – A is the taxpayer’s turnover for the quarter; B is the tax assessed to the taxpayer for the latest tax year;  C is the taxpayer’s turnover for the latest tax year; and D is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax deducted under section 149.

(5) Advance tax is payable by a taxpayer to the Commissioner –

(a) in respect of the September quarter, on or by the 7^th day of  October;

(b) in respect of the December quarter, on or before the 7^th day  of January;

(c) in respect of the March quarter, on or before the 7^th day of April; and

(d) in respect of the June quarter, on or before the 21^st day of June.

(6) The turnover of a taxpayer for the period  from 16^th to 30^th June of the June quarter shall  be taken to be equal to the turnover for the period from 1^st to 15^th June of that quarter.

(7) The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order.

(8) A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year.

(9) A tax credit allowed for advance tax paid under this section shall be applied in accordance with sub-section (3) of section 4.

(10) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer inaccordance with section 170.

(11) In this section, “turnover” shall not include amounts referred to in clauses (a), (b), (c) and (d) of sub-section (1).

Division II

Advance Tax Paid to a Collection Agent

148. Imports.-

(1)   The Collector of Customs shall collect advance tax from every importer of goods on the value of the goods at the rate specified in Part II of the First Schedule.

(2) This section shall not apply to –

(a) the re-importation of re-usable containers for re-export qualifying for customs-duty and sales tax exemption on temporary import under the Customs Notification No. S.R.O. 344(1)/95, dated the 25^th day of April, 1995; or

(b) the importation of the following petroleum products – “Motor Spirit (MS), Furnace Oil (FO), JP-1 and MTBE”.

(3) Where a manufacturer imports raw materials (other than edible oils) exclusively for the manufacturer’s own use, the Commissioner may certify a reduction (of up to one hundred per cent) of the rate of advance tax applicable  under this section if the aggregate of tax paid or collected in a tax year equals the amount of tax paid by the manufacturer in the immediately preceding year.

(4) A certification of a reduction of tax under sub-section (3) shall not be made in the first year of a manufacturer’s business.

(5) Advance tax shall be collected in the same manner and at the same time as the customs-duty payable in respect of the import or, if the goods are exempt from customs-duty, at the time customs duty would be payable if the goods were dutiable.

(6) The provisions of the Customs Act, 1969 (IV of 1969), in so far as relevant, shall apply to the collection of tax under this section.

(7) Except in the case of an industrial undertaking importing goods as raw materials for its own use, the tax collected under this section shall be a final tax on the income of the importer arising from the imports subject to sub-section (1).

(8) The tax collected from a person under this section on the import of edible oils for a tax year shall be treated as the minimum amount of tax payable by the person under this Ordinance and where the person’s final tax liability exceeds the amount collected under this section the tax collected shall be credited against that final liability.

(9) In this section –

“Collector of Customs” means the person appointed as Collector of Customs under section 3 of the Customs Act, 1969 (IV of 1969), and includes a Deputy Collector of Customs, an Additional Collector of Customs, or an officer of customs appointed as such under the aforesaid section; and “value of goods” means the value of the goods as determined under section 25 of the Customs Act, 1969 (IV of 1969), as if the goods were subject to  ad valorem  duty increased by the customsduty and sales tax, if any, payable in respect of the import of the goods.

Division III

Deduction of Tax at Source

149. Salary.-

(1)   Every employer paying salary to an employee shall, at the time of payment, deduct tax from the amount paid at the employee’s average rate of  tax computed at the rates specified in Division I of Part I of the First Schedule on the estimated income of the employee chargeable under the head “Salary” for the tax year in which the payment is made after making such adjustment, as may be necessary, fo r any excess deduction or deficiency arising out of any previous deduction or failure to make a deduction during the year.

(2) The average rate of tax of an employee for a tax year for the purposes of sub -section (1) shall be computed in accordance with the following formula, namely:– A/B where – A is the tax that would be payable if the amount referred to in component  B  of the formula were the employee’s taxable income for that year; and B is the employee’s estimated income under the head “Salary” for that year.

150. Dividends.- Every resident company paying a dividend shall deduct tax from the gross amount of the dividend paid 146[  ] at the rate specified in Division III of Part I of the First Schedule.

151. Profit on debt.-

(1)   Where –151

(a) a  person pays yield on a National Savings Deposit Certificate, including a Defence Savings Certificate, under the National Savings Scheme;

(b) a banking company and financial institution pays any profit on a debt, being an account or deposit maintained with  the company or institution; 147[  ]

148[(c)  the Federal Government, a Provincial Government or a local authority pays to any person, other than a financial institution, profit on any security issued by such Government  or authority; or ]

149[(d)  a banking company, a financial institution, a company referred to in clauses (a) and (b) of sub-section (2) of section 80, or finance societies pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution,] the payer of the profit shall deduct tax at the rate specified in Division I of Part III of the First Schedule from the gross amount of the yield or profit paid as reduced by the amount of Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), at the time the profit is paid to the recipient.

(2) This section shall not apply to any profit on debt that is subject to sub-section (2) of section 152.

152. Payments to non-residents.-

(1)   Every person paying an amount of 150[royalty] or fees for technical services to a non-resident person that is chargeable to tax under section 6 shall deduct ta x from the gross amount paid at the rate specified in Division IV of Part I of the First Schedule.

(2) Subject to sub-section (3), every person paying an amount to a non-resident person (other than an amount to which sub-section (1) applies) shall deduct  tax from the gross amount paid at the rate specified in Division II of Part III of the First Schedule.

(3) Sub-section (2) does not apply to an amount  –

(a) that is subject to deduction of tax under section 149, 150, 153, 155 or 156;152

(b) with the written approval of the Commissioner, that is taxable to a permanent establishment inPakistanof the non-resident person;

(c) that is payable by a person who is liable to pay tax on the amount as representative of the non-resident person under sub-section (3) of section 172; or

(d) where the non-resident person is not chargeable to tax in respect of the amount.

(4) Where a person claims to be a representative of a non-resident person for the purposes of clause (c) of sub-section (3), the person shall file a declaration to that effect with the Commissioner prior to making any payment to the non-resident person.

(5) Where a person intends to make a payment to a non-resident person without deduction of tax under this section, the person shall, before making the payment, furnish to the Commissioner a notice in writing setting out –

(a) the name and address of the non-resident person; and

(b) the nature and amount of the payment.

(6) Where a person has notified the Commissioner of a payment under sub-section (5) and the Commissioner has reasonable grounds to believe that the non-resident person is chargeable to tax under this Ordinance in respect of the payment, the Commissioner may, by notice in writing, direct the person making the payment to deduct tax from the payment in accordance with sub-section (2).

(7) Sub-section (5) shall not apply to a payment on account of –

(a) 151[on] import of goods where title to the goods passes outside Pakistan, except an the import that is part of an overall arrangement for the supply of goods, their installation, and any commission and guarantees in respect of the supply where –

(i) the supply is made by the head office outsidePakistanof a person to a permanent establishment of  the person in Pakistan;

(ii) the supply is made by a permanent establishment of the person outsidePakistanto a permanent establishment of the person inPakistan;

(iii) the supply is made between associates; or

(iv) the supply is made by a resident person or aPakistanpermanent establishment of a non-resident person; or (b) educational and medical expenses remitted in accordance with the regulations of the State Bank ofPakistan.

153. Payments for goods and services.-

(1)   Every prescribed person making a payment in full or part including a payment by way of advance to a resident person or permanent establishment inPakistanof a non-resident person –

(a) for the sale of goods;

(b) for the rendering of 152[  ] services;

(c) on the execution of a contract, other than a contract for the supply of goods or the rendering of professional services, shall, at the time of making the payment, deduct tax from the gross amount payable at the rate specified in Division III of Part III of the First Schedule.

(2) The gross amount payable for a sale of goods shall include the sales tax, if any, payable in respect of the sale.

(3) Every prescribed person making a payment in full or part (including a payment by way of advance) to a non-resident person on the execution of –

(a) a turnkey contract;

(b) a contract or sub-contract for the design, construction or supply of plant and equipment under a power project;

(c) a contract or sub-contract under a construction, assembly or installation project inPakistan, including a contract for the supply of supervisory activities in relation to such project; or

(d) any other contract for construction or services rendered, other than a contract to which section 152 applies, shall deduct tax from the gross amount payable under the contract at the rate specified in Division III of Part III of the First Schedule.

(4) The Commissioner may, on application made by the recipient of a payment referred to in sub-section (1) or (3) and after making such enquiry as the Commissioner thinks fit, allow, by order in writing, any person to make the payment without deduction of tax.

(5) Sub-section (1) shall not apply to –

(a) a sale of goods where –

(i) the sale is made by the importer of the goods;

(ii) the importer has paid tax under section 148 in respect of the goods; and

(iii) the goods are sold in the same condition they were in when imported;

(b) a refund of any security deposit;

(c) the purchase of an asset under a lease and buy back agreement by a modaraba, leasing company, banking company or financial i nstitution; or

(d) any payment for securitization of receivables by a Special Purpose Vehicle to the Originator.

(6) The tax deducted under this section shall be a final tax on the income of a resident person arising from transactions referred to in clauses (a) or (c) of sub-section (1).

(7) The tax deducted under this section shall be a final tax on the income of a non-resident person arising from a contract 153[specified in sub-section (3)].

(8) Where any tax is deducted by a person making a payment  to a Special Purpose Vehicle, on behalf of the Originator, the tax is credited to the Originator.

(9) In this section, –

 “prescribed person” means –

(a) the Federal Government;

(b) a company;

(c) an association of persons 154[constituted by, or under,] law;

(d) a foreign contractor or consultant; or

(e) a consortium or joint venture 155[.] “professional services” includes the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than as an employee; and “sale of goods” includes a sale of goods for cash or on credit, whether under written contract or not  156[.]

154. Exports.-

(1)   Every authorised dealer in foreign exchange shall, at the time of realisation of foreign exchange proceeds on account of the export of goods by an exporter, deduct tax from the proceeds at the rate specified in Division IV of Part III of the First Schedule.

(2) Every authorised dealer in foreign exchange shall, at the time of realisation of foreign exchange proceeds on account of the commission due to an indenting commission agent, deduct tax from the proceeds at the rate specified in Division IV of Part III of the First Schedule.

(3) Every banking company shall, at the time of realisation of the proceeds on account of a sale of goods to an exporter under an inland back-to-back letter of credit or any other arrangement as prescribed by the Central Board of Revenue, deduct tax from the amount of the proceeds at the rate specified in Division IV of Part III of the First schedule.

(4) The tax deducted under sub -section (1) or (3) shall be a final tax on the income arising from the export 157 [or sale to an exporter].

155. Income from property.-

(1)   Subject to sub-section (2), every prescribed person making  a payment in full or part (including a payment by way of advance) to any person on account of rent of immovable property (including rent of furniture and fixtures, and amounts for services relating to such  property) shall deduct tax from the gross amount of rent paid at the rate specified in Division V of Part III of the First Schedule.

(2) Sub-section (1) shall apply only where the annual rent exceeds one hundred thousand rupees.

(3) In this section, “prescribed person” means the Federal Government, a Provincial Government, local authority, a company, a non-profit organisation or a diplomatic mission of a foreign state.

156. Prizes and winnings.-

(1)   Every person paying 158[prize on] a prize bond, or winnings from a raffle, lottery, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.

(2) Where a payment under sub-section (1) is not in cash, the person making the payment shall collect the tax due under that sub -section from the recipient of the payment.

159[(3)  The tax deducted under sub -section (1) or collected under subsection (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.

160[  ]

161[158. Time of deduction of tax.- A person required to deduct tax from an amount paid by the person shall deduct tax –

(a)  in the case of deduction under section 151, at the time the amount is credited to the account of recipient; and

(b)  in other cases, at the time the amount is actually paid.] Division IV General Provisions Relating to the Advance Payment of Tax or the Deduction of Tax at Source

159. Exemption or lower rate certificate.-

(1)   Where the Commissioner is satisfied that an amount paid to a person to which Division II or III of this Part 162[or Chapter XII] applies is –

(a) exempt from tax under this Ordinance; or

(b) subject to tax at a rate lower than that specified in the First Schedule, the Commissioner shall, upon application in writing by the person, issue the person with an exemption or lower rate certificate.

(2) A person required to collect advance tax under Division II of this Part or deduct tax from a payment under Division III of this Part shall collect or deduct the full amount of tax specified in Division II or III, as the case may be, unless there is in force a certificate issued under sub-section (1) relating to the collection or deduction of such tax, in which case the person shall comply with the certificate.

160. Payment of tax collected or deducted.- Any tax that has been collected or purported to be collected under Division II of this Part or deducted or purported to be deducted under Division III of this Part 163[or deducted or collected, or purported to be deducted or collected  under Chapter XII] shall be paid to the Commissioner by the person making the collection or deduction within the time and in the manner as may be prescribed.

161. Failure to pay tax collected or deducted.-

(1)   Where a person –

(a) fails to collect tax as required under Division II of this Part or deduct tax from a payment as required under Division III of this Part 164[or Chapter XII]; or

(b) having collected tax under Division II of this Part or deducted tax under Division III of this Part 165[or Chapter XII] fails to pay the tax to the Commissioner as required under section 160,158 the person shall be personally liable to pay the amount of tax to the Commissioner 166[who may proceed to recover the same].

167[(1A)  No recovery under sub-section (1) shall be made unless the person referred to in sub -section (1) has been provided with an opportunity of being heard.]168[ (1B)  Where at the time of recovery of tax under sub-section (1) it is established that the tax that was to be deducted from the payment made to a person or collected from a person has meanwhile been paid by that person, no recovery shall be made from the person who had failed to collect or deduct the tax but the said person shall be liable to pay additional tax at the rate of eighteen  percent per annum from the date he failed to collect or deduct the tax to the date the tax was paid.]

(2) A person personally liable for an amount of tax under sub -section (1) as a result of failing to collect or deduct the tax shall be entitled to recover the tax from the person from whom the tax should have been collected or deducted.

162. Recovery of tax from the person from whom tax was not collected or deducted.-

(1)   Where a person fails to collect tax as required under Division II of this Part or deduct tax from a payment as required under Division III of this Part 169[or Chapter XII], the Commissioner may recover the amount not collected or deducted from the person from whom the tax should have been collected or to whom the payment was made.

(2) The recovery of tax under sub -section (1) does not absolve the person who failed to deduct tax as required under Division III of this Part 170[or Chapter XII] from any other legal action in relation to the failure, or from a charge of additional tax or the disallowance of a deduction for the expense to which the failure relates, as provided for under this Ordinance.

163. Recovery of amounts payable under this Division.- The provisions of this Ordinance shall apply to any amount required to be paid to the Commissioner under this Division as if it were tax due under an assessment order.

164. Certificate of collection or deduction of tax.-

(1)   Every person collecting tax under Division II of this Part or deducting tax from a payment under Division III of this Part 171[or Chapter XII] shall, at the time of collection or deduction of the tax, furnish to the person from whom the tax has been collected or to whom the payment from which tax has been deducted has been made, a certificate setting out the amount of tax collected or deducted and such other particulars as may be prescribed.

(2) A person required to furnish a return of taxable income for a tax year shall attach to the return any certificate provided to the person under this section in respect of tax collected or deducted in that year 172[and such certificate shall be treated as sufficient evidence of the collection or deduction for the purposes of section 168].

165. Statements.-

(1)   Every person collecting tax under Division II of this Part or deducting tax from a payment under Division III of this Part 173 [or Chapter XII] shall, within two months after the end of the financial year or within such further time as the Commissioner may allow by notice in writing, furnish to the Commissioner a statement in the prescribed form setting out–

(a) the name and address of each person from whom tax has been collected under Division II of this Part or to whom payments have been made from which tax has been deducted under Division III of this Part 174[or Chapter XII] in the year;

(b) the total amount of payments made to a person from which tax has been deducted under Division III of this Part 175[or Chapter XII] in the year;

(c) the total amount of tax collected from a person under Division II of this Part or deducted from payments made to a person under Division III of this Part 176[or Chapter XII] in the year; and

(d) such other particulars as may be prescribed.

(2) In addition to the annual statement required to be furnished under sub-section (1), a person collecting tax under Division II of this Part or deducting tax under Division III of this Part 177[or Chapter XII] may be required to furnish statements on a quarterly or six monthly basis as may be prescribed.

166. Priority of tax collected or deducted.-

(1)   Tax collected by a person under Division II or deducted from a payment under Division III of this Part 178[or Chapter XII] shall be –

(a) held by the person in trust for the Government; and

(b) not subject to attachment in respect of any debt or liability of the person.

(2) In the event of the liquidation or bankruptcy of a person who has collected tax under Division II of this Part or deducted tax from a payment under Division III of this Part 179[or Chapter XII], the amount collected or deducted shall not form part of the estate of the person in liquidation or bankruptcy and the Commissioner shall have a first claim for that amount before any distribution of property is made.

(3) Every amount that a person is required to deduct from a payment under Division III of this Part shall be –

(a) a first charge on the payment; and

(b) deducted prior to any other amount that the person may be required to deduct from the payment by virtue of an order of any Court or under any other law.

167. Indemnity.- A person who has deducted tax from a payment under 180[Division II] Division III 181[or Chapter XII] and remitted the deducted amount to the Commissioner shall be treated as having paid the deducted amount to the recipient of the payment for the purposes of any claim by the recipient for payment of the deducted tax.

168. Credit for tax collected or deducted.-

(1)   For the purposes of this Ordinance –

(a) the amount of any tax deducted from a payment under Division III of this Part

182[or Chapter XII] shall be treated as income derived by the person to whom the payment was made; and

(b) the amount of any tax collected under Division II of this Part or deducted under Division III of this Part 183[or Chapter XII] shall be treated as tax paid by the person from whom the tax was collected or deducted.

(2) Subject to sub-sections (3) and (4), where an amount of tax has been collected from a person under Division II of this Part or deducted from a payment made to a person under Division  III of this Part 184[or Chapter XII], the person shall be allowed a tax credit for that tax in computing the tax due by the person on the taxable income of the person for the tax year in which the tax was collected or deducted.

(3) No tax credit shall be allowed for any tax collected or deducted that is a final tax under sub-section (7) of section 148, sub-sections (6) or (7) of section 153, sub-section (4) of section 154, sub-section (3) of section 156, or  185[sub-section (5) of section 234].

(4) A tax  credit allowed under this section shall be applied in accordance with sub-section (3) of section 4.

(5) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.

169. Tax collected or deducted as a final tax.-

(1)   This section shall apply where –

(a) the collection of advance tax is a final tax under sub-section (7) of section 148 on the income to which it relates; or

(b) the deduction of tax is a final tax under sub-sections (6) or (7) of section 153, sub-section (4) of section 154, subsection (3) of section 156 186[  ] on the income from which it has been deducted.

(2) Where this section applies -

(a) the income shall not be chargeable to tax under any head of income in computing the taxable income of the person;

(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the income;

(c) the amount of the income shall not be reduced by –

(i) any deductible allowance under Part IX of Chapter III; or

(ii) the set off of any loss;

(d) the tax deducted shall not be reduced by any tax credit allowed under this Ordinance; and

(e) there shall be  no refund of the tax collected or deducted 187[unless the tax so collected or deducted is in excess of the amount for which the taxpayer is chargeable under this Ordinance].

(3) Where all the income derived by a person in a tax year is subject to final taxation under the provisions referred to in sub-section (1) or under sections 5, 6 and 7, 188[an assessment shall be treated to have been made under section 120 and] the person shall not be required to furnish a return of income under section 114 for the year.

189[(4)  Where a taxpayer, while explaining the nature and source of any amount, investment, money, valuable article, expenditure, referred to in section 111, takes into account any source of income which is subject to tax in accordance with the provisions of sections 148, 153, 154, 156 or sub-section (5) of section 234, he shall not be entitled to take credit of any sum as is in excess of an amount which if taxed at a rate or rates, other than the rate applicable to the income chargeable to tax under  aforesaid sections 148, 153, 154, 156 or sub -section (5) of section 234 would have resulted in tax liability equal to the tax payable in respect of income under any of the aforesaid sections.]

PART VI

REFUNDS

170. Refunds.-

(1)   A taxpayer who has paid tax in excess of the amount which the taxpayer is properly chargeable under this Ordinance may apply to the Commissioner for a refund of the excess.

(2) An application for a refund under sub-section (1) shall be –

(a) made in the prescribed form;

(b) verified in the prescribed manner; and163

(c) made within two years of the later of -

(i) the date on which the Commissioner has issued the assessment order to the taxpayer for the tax year to which the refund application relates; or

(ii) the date on which the tax was paid.

(3) Where the Commissioner is satisfied that tax has been overpaid, the Commissioner shall –

(a) apply the excess in reduction of any other tax due from the taxpayer under this Ordinance;

(b) apply the balance of the excess, if any, in reduction of any outstanding liability of the taxpayer to pay other taxes; and

(c) refund the remainder, if any, to the taxpayer.

(4) The Commissioner shall, within forty five days of receipt of a refund application under sub-section (1), serve on  the person applying for the refund an order in writing of the decision.

(5) A person dissatisfied with a decision referred to in sub-section (4) may challenge the decision only under Part III of this Chapter.

171. Additional payment for delayed refunds. –

(1)   Where a refund due to a taxpayer is not paid within three months of the date on which it becomes due, the Commissioner shall pay to the taxpayer a further amount by way of compensation at the rate of fifteen per cent per annum of the amount of the refund computed for the period commencing at the end of the three month period and ending on the date on which it was paid.

(2) For the purposes of this section, a refund shall be treated as having become due –

(a) in the case of a refund required to be made in consequence of an order on an appeal to the Commissioner (Appeals), an appeal to the Appellate Tribunal, a reference to the High Court or an appeal to the Supreme Court, on the date of receipt of such order by the Commissioner;

(b) in the case of a refund required to be made as a consequence of a revision order under section 135, on the date the order is made by the Commissioner; or

(c) in any other case, on the date the refund order is made.

PART VII

REPRESENTATIVES

172. Representatives.-

(1)   For the purposes of this Ordinance and subject to sub-sections (2) and (3), “representative” in respect of a person for a tax year, means –

(a) where the person is an individual under a legal disability, the guardian or manager who receives or is entitled to receive income on behalf, or for the benefit of the individual;

(b) where the person is a company (other than a trust, a Provincial Government, or local authority inPakistan), the principal officer of the company;

(c) where the person is a trust declared by a duly executed instrument in writing whether testamentary or otherwise (including any Wakf deed which is valid under the Mussalman Wakf Validation Act, 1913 (VI of 1913)), any trustee of the trust;

(d) where the person is a Provincial Government, or local authority inPakistan, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Provincial Government or local authority;

(e) where the person is an association of persons, the principal officer of the association or, in the case of a firm, any partner in the firm;

(f) where the person is the Federal Government, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Federal Government; or

(g) where the person is a public international organisation, or a foreign government or political subdivision of a foreign government, any individual responsible for accounting for the receipt and payment of moneys or funds inPakistanon behalf of the  organisation, government, or political subdivision of the government.

(2) Where the Court of Wards, the Administrator General, the Official Trustee, or any receiver or manager appointed by, or under, any order of a Court receives or is entitled to receive income on behalf, or for the benefit of any person, such Court of Wards, Administrator General, Official Trustee, receiver, or manager shall be the representative of the person for a tax year for the purposes of this Ordinance.

(3) Subject to sub-sections (4) and (5), where a person is a nonresident person, the representative of the person for the purposes of this Ordinance for a tax year shall be any person inPakistan–

(a) who is employed by, or on behalf of, the non-resident person;

(b) who has any business connection with the non-resident person;

(c) from or through whom the non-resident person is in receipt of any income, whether directly or indirectly;

(d) who holds, or controls the receipt or disposal of any money belonging to the non-resident person;

(e) who is the trustee of the non-resident person; or

(f) who is declared by the Commissioner by notice in writing to be the representative of the non-resident person.

(4) A bona fide independent broker in Pakistan who, in respect of any transactions, does not deal directly with, or on behalf of, a nonresident principal but deals with, or through a non-resident broker, shall not be treated as a representative of the non-resident principal in respect of such transactions, if –

(a) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and (b) the non-resident broker is carrying on such transactions in the ordinary course of its business and not as a principal.

(5) No person shall be declared or  treated as the representative of a non-resident person unless the person has been given an opportunity by the Commissioner of being heard.

173. Liability and obligations of representatives.-

(1)   Every representative of a person shall be responsible for performing any duties or obligations imposed by or under this Ordinance on the person, including the payment of tax.

(2) Subject to sub-section (4), any tax that, by virtue of sub -section (1), is payable by a representative of a taxpayer shall be recoverable from the representative only to the extent of any assets of the taxpayer that are in the possession or under the control of the representative.

(3) Every representative of a taxpayer who pays any tax owing by the taxpayer shall be entitled to recove r the amount so paid from the taxpayer or to retain the amount so paid out of any moneys of the taxpayer that are in the representative’s possession or under the representative’s control.

(4) Every representative shall be personally liable for the payment of any tax due by the representative in a representative capacity if, while the amount remains unpaid, the representative -

(a) alienates, charges or disposes of any moneys received or accrued in respect of which the tax is payable; or

(b) disposes of or parts with any moneys or funds belonging to the taxpayer that is in the possession of the representative or which comes to the representative after the tax is payable, if such tax could legally have been paid from or out of such moneys or funds.

(5) Nothing in this section shall relieve any person from performing any duties imposed by or under this Ordinance on the person which the representative of the person has failed to perform.

PART VIII

RECORDS, INFORMATION COLLECTION AND AUDIT

174. Records.-

(1)   Unless otherwise authorised by the Commissioner, every taxpayer shall maintain inPakistansuch accounts, documents and records as may be prescribed.

(2) The Commissioner may disallow a taxpayer’s claim for a deduction if the taxpayer is unable, without reasonable excuse, to provide a receipt, or other record or evidence of the transaction or circumstances giving rise to the claim for the deduction.

(3) The accounts and documents required to be maintained under this section shall be maintained for five years after the end of the tax year to which they relate.

175. Power to enter and search premises.

(1)   In order to enforce any provision of this Ordinance (including for the purpose of making an audit of a taxpayer or a survey of persons liable to tax), the Commissioner or any officer authorised in writing by the Commissioner for the purposes of this section –

(a) shall, at all times and without prior notice, have full and free access to any premises, place, accounts, documents or computer;

(b) may stamp, or make an extract or copy of any accounts, documents or computer-stored information to which access is obtained under clause (a);

(c) may impound any accounts or documents and retain them for so long as may be necessary for examination or  for the purposes of prosecution;

(d) may, where a hard copy or computer disk of information stored on a computer is not made available, impound and retain the computer for as long as is necessary to copy the information required; and

(e) may make an inventory of any articles found in any premises or place to which access is obtained under clause (a).

(2) The Commissioner may authorise any valuer to enter any premises or place to inspect such accounts and documents as may be necessary to enable the valuer to make a valuation of an asset for the purposes of this Ordinance.

(3) The occupier of any premises or place to which access is sought under sub-section (1) shall provide all reasonable facilities and assistance for the effective exercise of the right of access.

(4) Any accounts, documents or computer impounded and retained under sub-section (1) shall be signed for by the Commissioner or an authorised officer.

(5) A person whose accounts, documents or computer have been impounded and retained under sub-section (1) may examine them and make extracts or copies from them during regular office hours under such supervision as the Commissioner may determine.

(6) Where any accounts, documents or computer impounded and retained under sub-section (1) are lost  or destroyed while in the possession of the Commissioner, the Commissioner shall make reasonable compensation to the owner of the accounts, documents or computer for the loss or destruction.

(7) This section shall have effect notwithstanding any rule of  law relating to privilege or the public interest in relation to access to premises or places, or the production of accounts, documents or computer-stored information.

(8) In this section, “occupier” in relation to any premises or place,means the owner, manager or any other responsible person on the premises or place.

176. Notice to obtain information or evidence.-

(1)   The Commissioner may, by notice in writing, require any person, whether or not liable for tax under this Ordinance –

(a) to furnish to the Commissioner or an authorised officer, any information relevant to any tax imposed under this Ordinance as specified in the notice; or

(b) to attend at the time and place designated in the notice for the purpose of being examined on oath by the Commissioner or an authorised officer concerning the tax affairs of that person or any other person and, for that purpose, the Commissioner or authorised officer may require the person examined to produce any accounts, documents, or computer-stored information in the control of the person.

(2) The Commissioner may impound any accounts or documents produced under sub-section (1) and retain them for so long as may be necessary for examination or for the purposes of prosecution.

(3) Where a hard copy or computer disk of information stored on a computer is not made available as required under sub -section (1), the Commissioner may require production of the computer on which the information is stored, and impound and retain the computer for as long as is necessary  to copy the information required.

(4) For the purposes of this section, the Commissioner shall have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (Act V of 1908), in respect of the following matters, namely:–

(a) enforcing the attendance of any person and examining the person on oath or affirmation;

(b) compelling the production of any accounts, records, computer-stored information, or computer;

(c) receiving evidence on affidavit; or

(d) issuing commissions for the examination of witnesses.

(5) This section shall have effect notwithstanding any rule of law relating to privilege or the public interest in relation to the production of accounts, documents, or computer-stored information or the giving of information.

177. Audit.-

(1)   The Commissioner may select any person for an audit of the person’s income tax affairs having regard to –

(a) the person’s history of compliance or non-compliance with this Ordinance;

(b) the amount of tax payable by the person;

(c) the class of business conducted by the person; and

(d) any other matter that the Commissioner considers relevant.190[(1A)  After selection of a person for audit under sub-section (1), the Commissioner shall conduct an audit of the income tax affairs (including examination of accounts and records, enquiry into expenditure, assets and liabilities) of that person.]

(2) The fact that a person has been audited in a year shall not preclude the person from being audited again in the next and following years where there are reasonable grounds for such audits, particularly having regard to the factors in sub-section (1).

(3) The Central Board of Revenue may appoint a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961), to conduct an audit of the income tax affairs of any person and the scope of such audit shall be as determined by the Central Board of Revenue on a case by case basis.

(4) Any person employed by a firm referred to in sub-section (3) may be authorised by the Commissioner, in writing, to exercise the powers in sections 175 and 176 for the purposes of 191[conducting] an audit under that subsection.

178. Assistance to Commissioner.- Every Officer of Customs, Central Excise 192[, Sales Tax], Provincial  Excise and Taxation, District Coordination Officer, District Officers including District Officer  – Revenue, the Police and the Civil Armed Forces is empowered and required to assist the Commissioner in the discharge of the Commissioner’s functions under this Ordinance.

179. Accounts, documents, records and computer-stored information not in Urdu or English language.- Where any account, document, record or computer-stored information referred to in section 174, 175 or 176 is not in the Urdu or English language, the Commissioner may, by notice in writing, require the person keeping the account, document, record or computerstored information to provide, at the person’s expense, a translation into the Urdu or English language by a translator approved by the Commissioner for this purpose.

180. Power to collect information regarding exempt income.- The Central Board of Revenue may, by notification in the official Gazette, authorise any department or agency of the Government to collect and compile any data in respect of incomes from industrial and commercial undertakings exempt from tax under this Ordinance.

PART IX

NATIONAL TAX NUMBER CARD

181. National Tax Number Card.-

(1)   Every taxpayer shall apply in the prescribed form and in the prescribed manner for a National Tax Number Card.

(2) An application under sub -section (1) shall be accompanied by the prescribed fee.

(3) The Commissioner having jurisdiction over an applicant under subsection (1) may after examination of all relevant documents and evidence, and after satisfying himself of the genuiness of the application, may direct issuance of the National Tax Number Card for a period prescribed by Commissioner.

PART X

PENALTY

182. Penalty for failure to furnish a return or statement.-

(1)   Any person who, without reasonable excuse, fails to furnish, within the time allowed under this Ordinance, 193[return of income for any tax year] as required under this Ordinance shall be liable for a penalty equal to one-tenth of one per cent of the tax payable for each day of default subject to a minimum penalty of five hundred rupees and a maximum penalty of twenty-five per cent of the tax payable in respect of 194[that tax year].

(2) Any person who, without reasonable excuse, fails to furnish, within the time allowed under this Ordinance, any statement required under section 165 shall be liable for a penalty of two thousand rupees.

(3) Where a person liable to a penalty under sub-section (2) continues to fail to furnish the statement, the person shall be liable for an additional penalty of two hundred rupees for each day of default after the imposition of the penalty under sub-section (2).

183. Penalty for non-payment of tax.-

(1)   A taxpayer who fails to pay any tax (other than penalty) due under this Ordinance by the due date shall be liable for a penalty equal to –

(a) in the case of the first default, five per cent of the amount of tax in default;

(b) in the case of a second default, an additional penalty of twenty per cent of the amount of tax in default;

(c) in the case of a third default, an additional penalty of twenty five per cent of the amount of tax in default; and

(d) in the case of a fourth and subsequent default, an additional penalty of up to fifty per cent of the amount of tax in default as determined by the Commissioner, but the total penalty in respect of the amount of tax in default shall not exceed one hundred per cent of such amount of tax.

(2) Where, in consequence of any order under this Ordinance, the amount of tax in respect of which any penalty imposed under subsection (1) is reduced, the amount of the penalty shall be reduced accordingly.

184. Penalty for concealment of income.-

(1)   Where, in the course of any proceedings under this Ordinance, the Commissioner, Commissioner (Appeals), or the Appellate Tribunal is satisfied that any person has concealed income or furnished inaccurate particulars of such income, the Commissioner, Commissioner (Appeals), or the Appellate Tribunal, as the case may be, may, by an order in writing, impose upon the person a penalty equal to the amount of tax which the person sought to evade by concealment of income or the furnishing of inaccurate particulars of such income.

(2) For the purposes of sub-section (1), concealment of income or the furnishing of inaccurate particulars of income shall include –

(a) the suppression of any income or amount chargeable to tax;

(b) the claiming of any deduction for any expenditure not actually incurred; or

(c) any act referred to in sub-section (1) of section 111.

(3) Where any income or amount declared by a taxpayer is claimed by the taxpayer to be exempt from tax or any expenditure declared by a taxpayer is claimed by the taxpayer to be deductible, the mere disallowance of such claim shall not constitute concealment of income or the furnishing of inaccurate particulars of income, unless it is proved that the taxpayer made the claim knowing it to be wrong.

(4) Where a Commissioner (Appeals) or the Appellate Tribunal makes an order under sub -section (1), the 195[Commissioner (Appeals) or the Appellate Tribunal], as the case may be, shall immediately serve a copy of the order on the Commissioner and thereupon all the provisions of this Ordinance relating to the recovery of penalty shall apply as if the order were made by the Commissioner.

185. Penalty for failure to maintain records.- A person who, without reasonable excuse, fails to maintain records as required under this Ordinance shall be liable for a penalty equal to –

(a) in the case of the first failure, two thousand rupees;

(b) in the case of a second failure, five thousand rupees; and

(c) in the case of a third and subsequent failure, ten thousand rupees.

186. Penalty for non-compliance with notice.-

(1)   A person who, without reasonable exc use, fails to comply with any notice served on the person under section 116 or 176 shall be liable for a penalty equal to –

(a) in the case of the first failure, two thousand rupees;

(b) in the case of a second failure, five thousand rupees; or

(c) in the case of a third and subsequent failure, ten thousand rupees.

(2) Where a person liable for a penalty under sub -section (1) has an assessed tax liability for the tax year in which the failure occurred of less than twenty thousand rupees, the amount of  the penalty imposed under sub-section (1) shall be reduced by seventy-five percent.

187. Penalty for making false or misleading statements.-

(1)   Where a person –

(a) makes a statement to 196[an income tax authority] that is false or misleading in  a material particular or omits from a statement made to 197[an income tax authority] any matter or thing without which the statement is false or misleading in a material particular; and

(b) the tax liability (including the liability for advance tax under section 147) of the person computed on the basis of the statement is less than it would have been if the statement had not been false or misleading (the difference hereinafter referred to as the “tax shortfall”), the person shall be liable for a penalty equal to –

(i) where the statement or omission was made knowingly or recklessly, two hundred per cent of the tax shortfall; or

(ii) in any other case (other than where sub-section (2) applies), twenty-five per cent of the tax shortfall.

(2) In the case  of an assessment order under section 120, no penalty shall be imposed under sub-section (1) to the extent to which the tax shortfall arose as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayer’s position.

(3) A reference in this section to a statement made to 198[an income tax authority] is a reference to a statement made in writing or orally to that 199[authority] acting in the performance of the 200[authority’s] duties under this Ordinance, and shall include a statement made -

(a) in an application, certificate, declaration, notification, return, objection or other document made, prepared, given, filed or furnished under this Ordinance;

(b) in information required to be furnished under this Ordinance;

(c) in a document furnished to 201[an income tax authority] otherwise than pursuant to this Ordinance;

(d) in answer to a question asked of a person by 202[an income tax authority]; or

(e) to another person with the knowledge or reasonable expectation that the statement would be conveyed to 203[an income tax authority].

188. Penalty for failure to give notice.-

(1)   Where a person fails to give notice of the discontinuance of the person’s business as required under section 124, the Commissioner may impose a penalty on the person not exceeding the amount of tax payable by the person for the tax year in which the business was discontinued.

(2) Where a person fails to give notice of the person’s appointment as liquidator as required under section 141, the Commissioner may impose a penalty on the person not exceeding ten thousand rupees.

189. Penalty for obstruction.- Where any person obstructs the Commissioner or a taxation officer in discharge of the Commissioner or officer’s functions under this Ordinance, the Commissioner may impose a penalty on the person not exceeding ten thousand rupees.

190. Imposition of penalty.-

(1)   No penalty may be imposed under this Part on any person unless the person is given a reasonable opportunity of being heard.

(2) Subject to sub -section (3), the imposition of a penalty under this Part shall be without prejudice to any other liability incurred by the person under this Ordinance.

(3) The imposition of a penalty in relation to an act or omission shall be an alternative to prosecution under Part XI of this Chapter.

(4) If a penalty has been paid under this Part and the Commissioner institutes a prosecution proceeding under Part XI of this Chapter in respect of the same act or omission, the Commissioner shall refund the amount of penalty paid, and the penalty shall not be payable unless the prosecution is withdrawn.

(5) The Commissioner shall make an assessment of any penalty imposed under this Part in accordance with the provisions of Part II of this Chapter as if the penalty were tax.176

(6) The provisions of Parts III and IV of this Chapter shall apply to an assessment of penalty as if it were an assessment of tax.

PART XI

OFFENCES AND PROSECUTIONS

191. Prosecution for non-compliance with certain statutory obligations.-

(1)   Any person who, without reasonable excuse, fails to –

(a) furnish a return of income as required under section 114 or a wealth statement as required under section 116;

(b) pay advance tax as required under section 147;

(c) comply with the obligation under Part V of this Chapter to collect or deduct tax and pay the tax to the Commissioner;

(d) comply with a notice served under section 140 or 176;

(e) comply with the requirements of section 141; or

(f) provide reasonable facilities and assistance as required under sub -section (3) of section 175, shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both.

(2) If a person convicted of an offence under clause (a) of sub-section (1) fails, without reasonable excuse, to furnish the return of income or wealth statement to which the offence relates within the period specified by the Court, the person shall commit a further offence punishable on conviction with a fine or imprisonment for a term not exceeding two years, or both.

192. Prosecution for false statement in verification.- Any person who makes a statement in any verification in any return or other document furnished under this Ordinance which is false and which the person knows or believes to be false, or does not believe to be true, the person shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding three years, or both.

193. Prosecution for failure to maintain records.  A person who fails to maintain records as required under this Ordinance shall commit anoffence punishable on conviction with –

(a) where the failure was deliberate, a fine or imprisonment for a term not exceeding two years, or both; or

(b) in any other case, a fine.

194. Prosecution for improper use of National Tax Number Card.- A person who knowingly or recklessly uses a false National Tax Number Card including the National Tax Number Card of another person on a return or other document prescribed or used for the purposes of this Ordinance shall commit an offence punishable with a fine or imprisonment for a term not exceeding two years, or both.

195. Prosecution for making false or misleading statements.-

(1)   A person who –

(a) makes a statement to 204[an income tax authority] that is false or misleading in a material particular; or

(b) omits from a statement made to 205[an income tax authority] any matter or thing without which the statement is misleading in a material particular, shall commit an offence punishable on conviction –

(i) where the statement or omission was made knowingly or recklessly, with a fine or imprisonment for a term not exceeding two years, or both; or

(ii) in any other case, with a fine.

(2) A person shall not commit an offence under sub-section (1) if the person did not know and could not reasonably be expected to have known that the statement to which the prosecution relates was false or misleading.

(3) Sub-section (3) of section 187 shall apply in determining whether a person has made a statement to a taxation officer.

196. Prosecution for obstructing 206[an income tax authority].- A person who obstructs 207[an income tax authority] in discharge of functions under this Ordinance shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both.

197. Prosecution for disposal of property to prevent attachment.- Where the owner of any property, or a person acting on the owner’s behalf or claiming under the owner, sells, mortgages, charges, leases or otherwise deals with the property after the receipt of a notice from the Commissioner with a view to preventing the Commissioner from attaching it, shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding three years, or both.

198. Prosecution for unauthorised disclosure of information by a public servant.- A person who discloses any particulars in contravention of section 216 shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding six months, or both.

199. Prosecution for abetment.- Where a person aids, abets, assists, incites or induces another person to commit an offence under this Ordinance, the first-mentioned person shall  commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding three years, or both.

200. Offences by companies and associations of persons.-

(1)   Where an offence under this Part is committed by a company, every person who, at the time the offence was committed, was –

(a) the principal officer, a director, general manager, company secretary or other similar officer of the company; or

(b) acting or purporting to act in that capacity, shall be, notwithstanding anything contained in any other law, guilty of the offence and all the provisions of this Ordinance shall apply accordingly.

(2) Where an offence under this Part is committed by an association of persons, every person who, at the time the offence was committed, was a member of the association shall be, notwithstanding anything contained in any other law, guilty of the offence and all the provisions of this Ordinance shall apply accordingly.

(3) Sub-sections (1) and (2) shall not apply to a person where –

(a) the offence was committed without the person’s consent or knowledge; and

(b) the person has exercised all diligence to prevent the commission of the offence as ought to have been exercised having regard to the nature of the person’s functions and all the circumstances.

201. Institution of prosecution proceedings without prejudice to other action.- Notwithstanding anything contained in any law for the time being in force, a prosecution for an offence against this Ordinance may be instituted without prejudice to any other liability incurred by any person under this Ordinance.

202. Power to compound offences.- Where any person has committed any offence under this Part, the Commissioner may either before or after the institution of proceedings, compound such offence and order that such person pay the amount for which the offence may be compounded.

203. Trial by Special Judge.-

(1)   Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898) or in any other law, an offence punishable under this Part (other than an offence referred to in section 198) shall be tried exclusively by a Special Judge appointed by the Federal Government under the Pakistan Criminal Law (Amendment) Act, 1958 (XL of 1958), as if such offence were an offence specified in the Schedule to that Act.

(2) A Special Judge shall take cognisance of, and have jurisdiction to try, an offence triable under sub-section (1) only upon a complaint in writing made by the Commissioner.

204. Power to tender immunity from prosecution.-

(1)   The Federal Government may, for the purpose of obtaining the evidence of any person appearing to have been directly or indirectly concerned in, or privy to the concealment of income or to the evasion of tax, tender to such person immunity from prosecution for any offence under this Ordinance or under the Pakistan Penal Code (Act XLV of 1860), or under any other Federal Law on condition of the person making full and true disclosure of the whole circumstances relating to the concealment of income or evasion of tax.

(2) A tender of immunity made to, and accepted by, the person concerned shall render the person immune from prosecution for any offence in respect of which the tender was made and to the extent specified in the immunity.

(3) If it appears to the Federal Government that any person to whom immunity has been tendered under this section has not complied with the conditions on which the tender was made or is concealing anything or giving false evidence, the Federal Government may withdraw the immunity, and any such person may be tried for the offence in respect of which the tender of immunity was made or for any other offence of which the person appears to have been guilty in connection with the same matter.

PART XII

ADDITIONAL TAX

205. Additional tax.-

(1)   A person who fails to pay –

(a) any tax, including any advance payment of tax under section 147;

(b) any penalty; or

(c) any amount referred to in section 140 or 141, on or before the due date for payment shall be liable  for additional tax at a rate equal to eighteen per cent per annum on the tax, penalty or other amount unpaid computed for the period commencing on the date on which the tax, penalty or other amount was due and ending on the date on which it was paid.

(2) Any additional tax paid by a person under sub -section (1) shall be refunded to the extent that the tax, penalty or other amount to which it relates is held not to be payable.

(3) A person who fails to pay an amount of tax collected or deducted as required under section 160 on or before the due date for payment shall be liable for additional tax at a rate equal to eighteen per cent per annum on the amount unpaid computed for the period commencing on the date the amount was required to be collected or deducted and ending on the date on which it was paid to the Commissioner.

(4) Additional tax imposed under sub-section (3) shall be borne personally by the person obliged to collect or deduct the tax, and no part shall be recoverable from the taxpayer.

(5) The Commissioner shall make an assessment of any additional tax imposed under this Part in accordance with the provisions of Part II of this Chapter as if the additional tax were tax.

(6) The provisions of Parts III and IV apply to an assessment of additional tax as if it were an assessment of tax.

PART XIII

CIRCULARS

206. Circulars.-

(1)   To achieve consistency in the administration of this Ordinance and to provide guidance to taxpayers and officers of the Central Board of Revenue, the Central Board of Revenue may issue Circulars setting out the Board’s interpretation of this Ordinance.

(2) A Circular shall be binding on the Central Board of Revenue, other than the Commissioner (Appeals).

(3) A Circular shall not 208[be] binding on a taxpayer.

CHAPTER XI

ADMINISTRATION

PART I

GENERAL

209[207. Income tax authorities.-

(1)  There shall be the following income tax authorities for the purposes of this Ordinance, namely:-

(a)  Central Board of Revenue;

(b)  Regional Commissioners of Income Tax;

(c)  Commissioners of Income Tax;

(d)  Commissioners of Income Tax (Appeals); and

(e)  taxation officers.

(2)  The Central Board of Revenue shall exercise the general administration of this Ordinance.

(3)  The Regional Commissioners of Income Tax and the Commissioners of Income Tax (Appeals) shall be subordinate to the Central Board of Revenue and the Commissioners of Income Tax shall be subordinate to the Regional Commissioners.

(4)  Subject to sub-section (5), the taxation officers shall be subordinate to the Commissioners of Income Tax.

(5)  A taxation officer invested with the powers and functions of the Commissioner, under sub-section (2) of section 209, shall be subordinate to the Regional Commissioner of Income Tax.]

210[208. Appointment of income tax authorities.-

(1) The Central Board of Revenue may appoint as many Regional Commissioners of Income Tax, Commissioners of Income Tax, Commissioners of Income Tax (Appeals), taxation officers and such other executive or ministerial  officers and staff as may be necessary.

(2)  Subject to such orders or directions as may be issued by the Central Board of Revenue, any income tax authority may appoint any income tax authority subordinate to it and such other executive or ministerial officers and staff as may be necessary.

(3)  All appointments, other than of valuers, chartered accountants or experts, made under this Ordinance, shall be subject to rules and orders of the Federal Government regulating the terms and conditions of persons in public services and posts.]

211[209. Jurisdiction of income tax authorities.-

(1)  Subject to this Ordinance, the Regional Commissioners, the Commissioners and the Commissioners (appeals) shall perform all or such functions and exercise all or such powers, under this Ordinance, in respect of such persons or classes of persons or such areas, as may be assigned to them by orders or directions issued by the Central Board of Revenue.

(2)  The Central Board of Revenue or the Regional Commissioner may, by an order, confer upon or assign to any taxation officer all or any of the powers and functions conferred upon or assigned to the Commissioner, under this Ordinance, in respect of any person or persons or classes of persons or areas.

(3)  An order under sub-section (2) by the Regional Commissioner shall be made only with the approval of the Central Board of Revenue.

(4)  The taxation officer referred to in sub-section (2) shall, for the purposes of this Ordinance, be treated to be the Commissioner.

(5)  Within the area assigned to him, the Commissioner shall have jurisdiction,-

(a)  in respect of any person carrying on business, if the person’s place of business is within such area, or where the business is carried on in more than one place, the person’s principal place of business is within such area; or

(b)  in respect of any other person, if the person resides in such area.

(6)  Where a question arises as to whether a Commissioner has jurisdiction over a person, the question shall be decided by the Regional Commissioner or Regional Commissioners concerned and, if they are not in agreement, by the Central Board of Revenue.

(7)  No person shall call into question the jurisdiction of a Commissioner after that person has furnished a return of income to the Commissioner or, where the person has not furnished a return of income, after the time allowed by any notice served on the person for furnishing such return has expired.

(8)  Notwithstanding anything contained in this section, every commissioner shall ha ve all the powers conferred by, or under, this Ordinance on him in respect of any income arising within the area assigned to him.

(9)  Where, in respect of any proceedings under this Ordinance, an income tax authority is succeeded by another, the succeeding authority may continue the proceedings from the stage it was left by that authority’s predecessor.]

212[210. Delegation.-

(1)  The Commissioner may, by an order in writing, delegate to any taxation officer all or any of the powers or functions conferred upon or assigned to the Commissioner under this Ordinance, other than  the power of delegation.

(2)  An order under sub -section (1) may be in respect of all or any of the persons, classes of persons or areas falling in the jurisdiction of the Commissioner.

(3)  The Commissioner shall have the power to cancel, modify, alter or amend an order under sub-section (1).]

213[211. Power or function exercised.-

(1)  Where, by virtue of an order under section 210, a taxation officer exercises a power or performs a function of the Commissioner, such power or function shall be treated as having been exercised or performed by the Commissioner.

(2)  The exercise of a power, or the performance of a function, of the Commissioner by a taxation officer shall not prevent the exercise of the power, or the performance of the function, by the Commissioner.]

214[212. Authority of approval.- The Central Board of Revenue may, by a general or special order, authorise the Regional Commissioner or the Commissioner to grant  approval in any case where such approval is required from the Central Board of Revenue under any provision of this Ordinance.]

215[213. Guidance to income tax authorities.-  In the course of any proceedings under this Ordinance, the Commissioner or any taxation officer may be assisted, guided or instructed by any income tax authority to whom he is subordinate or any other person authorised in this behalf by the Central Board of Revenue.]

216[214. Income tax authorities to follow orders of the Central Board of Revenue.-

(1)  Subject to sub-section (2), all income tax authorities and other persons employed in the execution of this Ordinance shall observe and follow the orders, instructions and directions issued by the Central Board of Revenue.

(2)  No orders, instructions or directions shall be given by the Central Board of Revenue that will interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate function.]

217[215.  Furnishing of returns, documents etc.-

(1) Where, by virtue of an order section 210, the Commissioner has delegated to any taxation officer the function and power to receive, or to call for and receive, any returns of income, certificates, documents, accounts and statements from any person or persons or class of persons (hereinafter called ‘filer’), the filer shall furnish such returns, certificates, documents, accounts and statements to that taxation officer and, when furnished, shall be treated as having been furnished to the Commissioner.

(2)  where a person is allowed, under any provision of this Ordinance, to make an application to the Commissioner and the Commissioner has delegated to any taxation officer the function or power to receive the application, such application, when made, shall be treated as having been made to the Commissioner.]

216. Disclosure of information by a public servant.-

(1)   All particulars contained in –

(a) any statement made, return furnished, or accounts or documents produced under the provisions of this Ordinance;

(b) any evidence given, or affidavit or deposition made, in the course of any proceedings under this Ordinance, other than proceedings under Part XI of Chapter X; or

(c) any record of any assessment proceedings or any proceeding relating to the recovery of a demand, shall be  confidential and no public servant save as provided in this  Ordinance may disclose any such particulars.

(2) Notwithstanding anything contained in the Qanun-e-Shadat, 1984 (P.O. Order No. 10 of 1984), or any other law for the time being in force, no court or other authority shall be, save as provided in this Ordinance, entitled to require any public servant to produce before it any return, accounts, or documents contained in, or forming a part of the records relating to any proceedings under this Ordinance, or any records of the Income Tax Department generally, or any part thereof, or to give evidence before it in respect thereof.

(3) Nothing contained in sub-section (1) shall preclude the disclosure of any such particulars  –

(a) to any person acting in the execution of this Ordinance, where it is necessary to disclose the same to him for the purposes of this Ordinance;

(b) to any person authorised by the Commissioner in this behalf, where it is necessary to disclose the same to such person for the purposes of processing of data and preparation of computer printouts relating to returns of income or calculation of tax;

(c) where the disclosure is occasioned by the lawful employment under this Ordinance of any process for the service of any notice or the recovery of any demand;

(d) to the Auditor-General ofPakistanfor the purpose of enabling the Auditor-General to discharge his functions under the Constitution;

(e) to any officer appointed by the Auditor-General ofPakistanor the Commissioner to audit income tax receipts or refunds;

(f) to any officer of the Federal Government or a Provincial Government authorised by such Government in this behalf as may be necessary for the purpose of enabling that Government to levy or realise any tax imposed by it;

(g) to any authority exercising powers under 218[the Central Excises Act, 1944 (I of 1944)], the Sales Tax Act, 1990, the Wealth Tax Act, 1963 (XV of 1963), or the Customs Act, 1969 (IV of 1969), as may be necessary for the purpose of enabling its duty to exercise such powers;

(h) occasioned by the lawful exercise by a public servant of powers under the Stamp Act, 1899 (II of 1899) to impound an insufficiently stamped document;

(i) to the State Bank ofPakistanto enable it to compile financial statistics of international investment and balance of payment;

(j) as may be required by any order made under sub-section (2) of section 19 of the Foreign Exchange Regulation Act, 1947 (VII of 1947), or for the purposes of any prosecution for an offence under section 23 of that Act;

(k) to the Securities and Exchange Commission or the Monopolies Control Authority for the purposes of the Securities and Exchange Ordinance, 1969 (XVII of 1969),  the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (VI of 1970), the Companies Ordinance, 1984 (XLVII of 1984) or the Securities and Exchange Commission of Pakistan Act, 1997, as the case may be;

(l) relevant to any inquiry into a charge of misconduct in connection with income tax proceedings against a legal practitioner or an accountant;

(m) to a Civil Court in any suit or proceeding to which the Federal Government or any income tax authority is a party which relates to any matter arising out of any proceedings under this Ordinance;

(n) for the purposes of a prosecution for any offence under the Pakistan Penal Code, 1860 (XLVI of 1860), in respect of any such statement, returns, accounts, documents, evidence, affidavit or deposition, or for the purposes of a prosecution for any offence under this Ordinance;

(o) relevant to any inquiry into the conduct of an official of the Income Tax Department to any person or officer appointed to hold such inquiry, or to a Public Service Commission, established under the Federal Public Service Commission Ordinance, 1977 (XLV of 1977), when exercising its functions in relation to any matter arising out of such inquiry;

(p) as may be required by any officer or department of the Federal Government or of a Provincial Government for the purpose of investigation into the conduct and affairs of any public servant, or to a Court in connection with any prosecution of the public servant arising out of any such investigation;

(q) to an authorised officer of the government of any country outside Pakistan with which the Government has entered into an agreement under section 107 for the avoidance of double taxation and the prevention of fiscal evasion as may be required to be disclosed in pursuance of that agreement; or

(r) to the  Federal Tax Ombudsman appointed under the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 (XXXV of 2000).

(4) Nothing in this section shall apply to the production by a public servant before a Court of any document, declaration, or affidavit filed or the giving of evidence by a public servant in respect thereof.

(5) Nothing contained in sub-section (1) shall prevent the Commissioner from publishing, with the prior approval of the Federal Government, any such particulars as are referred to in that sub-section.

(6) Nothing contained in sub-section (1) shall prevent the Federal Government from publishing particulars and the amount of tax paid  by a holder of a public office as defined in the 219[National Accountability Bureau Ordinance, 1999 (XVIII of 1999)].

(7) Any person to whom any information is communicated under this section, and any person or employee under the first-mentioned person’s control, shall be, in respect of that information, subject to the same rights, privileges, obligations, and liabilities as if the person were a public servant and all the provisions of this Ordinance, so far as may be, shall apply accordingly.

(8) No prosecution may be instituted under this section except with the previous sanction of the Central Board of Revenue.

217. Forms and notices; authentication of documents.-

(1)   Forms, notices, returns, statements, tables and other documents required under this Ordinance may be in such form as determined by the Central Board of Revenue for the efficient administration of this Ordinance and publication of such documents in the official Gazette shall not be required.

(2) The Commissioner shall make the documents referred to in subsection (1) available to the public in the manner prescribed.

(3) A  notice or other document issued, served or given by the Commissioner under this Ordinance shall be sufficiently authenticated if the name or title of the Commissioner, or authorised taxation officer, is printed, stamped or written on the notice or document.

218. Service of notices and other documents.-

(1)   Subject to this Ordinance, any notice, order or requisition required to be served on a resident individual (other than in a representative capacity) for the purposes of this Ordinance shall be treated  as properly served on the individual if –

(a) personally served on the individual or, in the case of an individual under a legal disability or a non-resident individual, the representative of the individual;

(b) sent by registered post or courier service to the place specified in clause (b) or to the individual’s usual or last  known address in Pakistan; or

(c) served on the individual in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908).

(2) Subject to this Ordinance, any notice, order or requisition required to be served on any person (other than a resident individual to whom sub-section (1) applies) for the purposes of this Ordinance shall be treated as properly served on the person if –

(a) personally served on the representative of the person;

(b) sent by registered post or courier service to the person’s registered office or address for service of notices under this Ordinance in Pakistan, or where the person does not have such office or address, the  notice is sent by registered post to any office or place of business of the person in Pakistan; or

(c) served on the person in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908).

(3) Where an association of persons is dissolved, any notice, order or requisition required to be served under this Ordinance on the association may be served on any person who was 220[the principal officer or] a member of the association immediately before such dissolution.

(4) Where section 117 applies, any notice, order or requisition required to be served under this Ordinance on the person discontinuing the business may be served on the person personally or on any individual who was the person’s representative at the time of discontinuance.

(5) The validity of any notice issued under this Ordinance or the validity of any service of a notice under this Ordinance shall not be called into question after the return to which the notice relates has been furnished or the notice has been otherwise complied with.190

219. Tax or refund to be computed to the nearest Rupee.- In the determination of any amount of tax or refund payable under this Ordinance, fractions of a rupee less than fifty paisa shall be disregarded and fractions of a rupee  equal to or exceeding fifty paisa shall be treated as one rupee.

220. Receipts for amounts paid.- The Commissioner shall give a receipt for any tax or other amount paid or recovered under this Ordinance.

221. Rectification of mistakes.-

(1)   The Commissioner, the Commissioner (Appeals) or the Appellate Tribunal may, by an order in writing, amend any order passed by them to rectify any mistake apparent from the record on their own motion or any mistake brought to their notice by a taxpayer or, in the case of the Commissioner (Appeals) or the Appellate Tribunal, the Commissioner.

(2) No order under sub-section (1) which has the effect of increasing an assessment, reducing a refund or otherwise applying adversely to the taxpayer shall be made unless the taxpayer has been given a reasonable opportunity of being heard.

(3) Where a mistake apparent on the record is brought to the notice of the Commissioner, Commissioner (Appeals) or the Appellate Tribunal, as the case may be, and no order has been made under  sub-section (1) before the expiration of the financial year next following the date on which the mistake was brought to their notice, the mistake shall be treated as rectified and all the provisions of this Ordinance shall have effect accordingly.

(4) No order under sub-section (1) may be made after five years from the date of the order sought to be rectified.

222. Appointment of expert.- The Commissioner may appoint any expert as the Commissioner considers necessary for the purposes of this Ordinance, including for the purposes of audit or valuation.

223. Appearance by authorised representative.-

(1)   Any taxpayer who is entitled or required to attend before the Commissioner, the Commissioner (Appeals) or the Appellate Tribunal in connection with any proceeding under this Ordinance may, except when required under section 176 to attend personally, attend by an authorised representative.

(2) For the purposes of this section and subject to sub-section (3), an authorised representative of a taxpayer shall be a person who is a representative of the person under section 172 and any of the following persons, namely:–

(a) A relative of the taxpayer;

(b) a current full-time employee of the taxpayer;

(c) any officer of a scheduled bank with which the taxpayer maintains a current account or has other regular dealings;

(d) any legal practitioner entitled to practice in anyCivil CourtinPakistan;

(e) any accountant; or

(f) any income tax practitioner.

(3) For the purposes of this section -–

(a) no person who has been dismissed or removed from service in the Income Tax Department shall be entitled to represent a taxpayer under sub -section (1);

(b) no  person having resigned from service after having been employed in the Income Tax Department for not less than two years shall be entitled to represent a taxpayer under sub-section (1) for a period of two years from the date of resignation;

(c) no person having retired from service in the Income Tax Department shall be entitled to represent a taxpayer under  sub-section (1) for a period of one year from the date of retirement in any case in which the person had made or approved, as the case may be, any order of assessment, refund or appeal within one year before the date of retirement; or

(d) no person who  has become insolvent shall be entitled to represent a taxpayer under sub-section (1) for so long as the insolvency continues;

(e) no person who has been convicted of an offence in relation to any income tax proceedings under this Ordinance shall be entitled to represent a taxpayer under sub-section (1) for such period as the Commissioner may, by order in writing, determine.

(4) Where any legal practitioner or accountant is found guilty of misconduct in a professional capacity by any authority entitled to take disciplinary action against the legal practitioner or accountant, an order passed by that authority shall have effect in relation to any right to represent a taxpayer under sub-section (1) as it has in relation to the person’s right to practice as a legal practitioner or accountant.

(5) Where any person (other than a person to whom sub-section (4) applies) is found guilty of misconduct in relation to any income tax proceeding, the Commissioner may, by an order in writing, direct that the person cease to represent a taxpayer under sub-section (1) before the Commissioner, Commissioner (Appeals) or Appellate Tribunal.

(6) The Commissioner shall not make an order under clause (e) of subsection (3) or sub-section (5) in respect of any person, unless the Commissioner has given the person a reasonable opportunity to be heard.

(7) Any person against whom an order under clause (e) of sub -section (3) or sub-section (5) has been made may, within thirty days of service of notice of the order, appeal to the Central Board of Revenue to have the order cancelled.

(8) The Central Board of Revenue may admit an appeal after the expiration of the period specified in sub-section (7) if satisfied that the appellant was prevented by sufficient cause from lodging the appeal within the period.

(9) No order made under clause (e) of sub-section (3) or sub -section (5) shall take effect until thirty days after notice of the order is served on the person or, where an appeal has been lodged under sub-section (7), until the disposal of the appeal.

(10) The Central Board of Revenue may make rules under section  221[237] for the registration of income tax practitioners and related matters, including establishing a code of conduct for such practitioners.

(11) In this section –

“accountant” means –

(a) a chartered accountant within the meaning of the Chartered Accountants Ordinance, 1961 (X of 1961);

(b) a cost and management accountant within the meaning of the Cost and Management Accountants Act, 1966 (XIV of 1966); or

(c) a member of any association of accountants recognised for the purposes of this section by the Central Board of Revenue; and “income tax practitioner” means a person who is registered as such by the Central Board of Revenue, being a person who possesses such qualifications as may be prescribed for the purposes of this section or who has retired after putting in satisfactory service in the Income Tax Department for a period of not less than ten years in a post or posts not below that of Income Tax Officer.

224. Proceedings under the Ordinance to be judicial proceedings.- Any proceedings under this Ordinance before the Commissioner, Commissioner (Appeals) or Appellate Tribunal shall be treated as judicial proceedings within the meaning of sections 193 and 228 of the Pakistan Penal Code, 1860 (Act XLV of 1860), and for the purposes of section 196 of thePakistanPenal Code, 1860 (Act XLV of 1860).

225. Proceedings against companies under liquidation.- Notwithstanding anything contained in section 316 of the Companies Ordinance, 1984 (XLVII of 1984), leave of the Court shall not be required for continuing with or commencing any proceeding under this Ordinance against a company in respect of which a winding up order has been made or Provisional Liquidator appointe d .

226. Computation of limitation period.- In computing the period of limitation, there shall be excluded –

(a) in the case of an appeal or an application under this Ordinance, the day on which the order complained of was served and, if the taxpayer was not furnished with a copy of the order when the notice of the order was served on the taxpayer, the time requisite for obtaining a copy of such order; and

(b) in the case of an assessment or other proceeding under this Ordinance, the period, if any, for which such proceedings were stayed by 222[any Court, Tribunal or any other authority].

227. Bar of suits in Civil Courts.- No suit or other legal proceeding shall be brought in anyCivil Courtagainst any order made under this Ordinance, and no prosecution, suit or other proceedings shall be made against any person for anything which is in good faith done or intended to be done under this Ordinance or any rules or orders made thereunder.

PART II

DIRECTORATE-GENERAL OF INSPECTION

228. Appointment of Directorate-General of Inspection.-

(1)   The Federal Government shall appoint a Directorate-General of Inspection to exercise the powers and discharge the functions conferred on it under this Part.

(2) The Directorate-General shall consist of a Director-General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors, Extra-Assistant Directors and Inspectors, as the Director General may consider necessary to be appointed from among the officers of the Income Tax Group.

229. Inspection authorities.-

(1)   There shall be the following classes of inspection authorities for the purposes of this Ordinance, namely: -

(a) The Director-General of Inspection; and

(b) Directors of Inspection.

(2) The Directors of Inspection shall be subordinate to the Director General of Inspection.

230. Jurisdiction of Inspection Authorities.-

(1)    Subject to the provisions of this Chapter,  the Directors of Inspection shall perform their functions in respect of such persons or classes of persons or such areas as may be assigned to them by the Director-General.

(2) The Director-General or a Director of Inspection may assign any function in respect of any area, or office or offices located within an area, case, class of cases, person or classes of persons to any inspection officer working under his control.

(3) In this section, “inspection officer” means an Additional Director of Inspection, a Deputy Director of Inspection, an Assistant Director and an Extra-Assistant Director.

231. Functions and Powers of Directorate.-

(1)   The functions of the Directorate-General of Inspection shall be, namely:-

(a) To carry out inspections of income tax cases and offices;

(b) to investigate or cause investigation to be carried out in respect of –

(i) cases  involving leakage of revenue or evasion of taxes; and

(ii) Regional Commissioners of Income Tax, Commissioners of Income Tax, taxation officers and any other staff of income tax offices allegedly involved in corruption and malpractice, and recommend to the competent authority appropriate disciplinary action;

(c) to carry out audit of cases or offices involving income tax revenues;

(d) to recommend to the Central Board of Revenue in matters of tax policy, tax administration and tax operations;

(e) to furnish an annual report about the workings of Income Tax Offices to the Central Board of Revenue by the thirty-first day of December, following the end of the financial year to which it relates; and

(f) to carry out any other work or function that may be assigned to it by the Federal Government.

(2) In discharge of its functions under sub -section (1), the Directorate General shall have the powers specified in section 176.

CHAPTER XII

TRANSITIONAL ADVANCE TAX PROVISIONS

223[  ]

233. Brokerage and Commission.-

(1)  Where any payment on account of brokerage or commission is made by the Federal Government, a Provincial Government, a local authority, a company or an association of persons (hereinafter called the “principal”) to any person (hereinafter called the “agent”), the principal shall deduct advance tax at the rate specified in Part IV of the First Schedule from such payment.

(2) If the agent retains commission or brokerage from any amount remitted by him to the principal, he shall be deemed to have been paid the commission or brokerage by the principal and the principal shall collect advance tax from the agent.

234. Transport business.-

(1)  Any person 224[at the time of] collecting motor vehicle tax shall also collect advance tax at the rates specified in Part IV of the First Schedule.

(2)  If the motor vehicle tax is collected in instalments, the advance tax may also be collected in instalments in like manner.

225[(2A)  In respect of motor cars used for more than ten years inPakistan, no advance tax shall be collected after a period of ten years.]

(3) In respect of a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax shall not be collected after a period  of ten years from the first day of July of the year of make of the vehicle.

(4) In respect of a goods transport vehicle with registered laden weight of 2030 kilograms or more but less than 8120 kilograms, advance tax shall not be collected after a period of ten years from the date of first registration of vehicle inPakistan.

(5) Where tax is collected from any person being the owner of goods transport vehicle, the tax so collected shall be the final tax on the income of such person 226[from plying, or hiring out, of such vehicle].

235. Electricity consumption.-

(1)  There shall be collected advance tax at the rates specified in Part IV of the First Schedule on the amount of electricity bill of a commercial or industrial consumer.

(2) The person preparing electricity consumption bill shall  charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

(3) Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax.

 236. Telephone users.-

(1)  Advance tax at the rates specified in Part IV of the First Schedule shall be collected on the amount of –

(a) telephone bill of a subscriber; and

(b) prepaid cards for 227[  ] telephones.

(2) The person preparing the telephone bill shall charge advance tax under sub-section (1) in the manner telephone charges are charged.

(3) The person issuing or selling prepaid cards for 228[  ] telephones shall called advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.

(4) Advance tax under this section shall not be collected from Government, a foreign diplomat, a diplomatic mission inPakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.

CHAPTER XIII

MISCELLANEOUS

237. Power to make rules.-

(1)   The Central Board of Revenue may, by notification in the official Gazette, make rules for carrying out of the purposes of this Ordinance.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:–

(a) the manner in, and procedure by, which the income, profits and gains chargeable to tax and the tax payable thereon under this Ordinance shall be determined in the case of –

(i) income derived partly from agriculture and partly from other business; or

(ii) non-resident persons;

(b) fees and other charges to be paid in respect of any matter referred to in this Ordinance;

(c) anything which is to be or may be prescribed under this Ordinance;

(d) the procedure for furnishing returns and other documents as required under this Ordinance, including on computer media or through electronic medium or for issuance of orders or notices, or levy of additional tax or penalty through electronic medium;

(e) contain provisions of a saving or transitional nature consequent upon the making of this Ordinance; and

(f) penalties for the contravention of the rules made under this Ordinance.

(3) The power to make rules conferred by this section shall be, except on the first occasion of the exercise thereof, subject to the condition of previous publication.

(4) Where rules made under this section –

(a) adversely affect a person;

(b) are of a transitional nature; and

(c) are made within twelve months after commencement of this Ordinance, these may provide that they shall take effect from the date on which this Ordinance comes into force or a later date.

238. Repeal.- The Income Tax Ordinance, 1979 (XXXI of 1979), shall stand repealed on the date  this Ordinance comes into force in pursuance of sub-section (3) of section 1.

239. Savings.-

229[(1)  Subject to sub -section (2), in making any assessment in respect of any income  year ending on or before the 30^th day of June, 2002,  the provisions of the repealed Ordinance in so far as these relate to computation of total income and tax payable thereon shall apply as if this Ordinance had not come into force.]

230[(2)  The assessment referred to in sub -section (1), shall be made by an income tax authority which is competent under this Ordinance to make an assessment in respect of a tax year ending on any date after the 30^th day of June, 2002, and in accordance with the procedure specified in section 59 or 59A or 62 or 63, as the case maybe, of the repealed Ordinance.]

231[(3)  The provisions of sub-section (1) and (2) shall apply, in like manner, to the imposition or charge of any penalty, additional tax or any other amount, under the repealed Ordinance, as these apply to the assessment, so however that procedure for such imposition or charge shall be in accordance with the corresponding provision of this Ordinance.]

(4) Any proceeding under the repealed Ordinance pending on the commencement of this Ordinance before any income tax authority, the Appellate Tribunal or any Court by way of appeal, reference, revision or prosecution shall be continued and disposed of as if this Ordinance has not come into force.

(5) Where the period prescribed for any application, appeal, reference or revision under the repealed Ordinance had expired on or before the commencement of this Ordinance, nothing in this Ordinance shall be construed as enabling such application, appeal, reference or revision  to be made under this Ordinance by reason only of the fact that a longer period is specified or provision for an extension of time in suitable cases by the appropriate authority.

(6) Any proceeding for 232[  ] prosecution in respect of an assessment for an income year ending on or before the 30^th day of June 2002 shall be taken and continued as if this Ordinance has not come into force.

(7) Any income tax, super tax, surcharge, penalty, additional tax, or other amount payable under the repealed Ordinance may be recovered under this Ordinance, but without prejudice to any action already taken for the recovery of the amount under the repealed Ordinance.

(8) Any election or declaration made or option exercised by any person under any provision of the repealed Ordinance and in force immediately before the commencement of this Ordinance shall be treated as an election or declaration made, or option exercised under the corresponding provisions, if any, of this Ordinance.

(9) Anything done or action taken under  the repealed Ordinance in so far as it is not inconsistent with the provision of this Ordinance shall, without prejudice to anything already done or any action already taken, be treated as having been done or taken under this Ordinance.

(10) Any agreement entered into, appointment made, approval given, recognition granted, direction, instruction, notification, notice, order or rule issued or made under any provision of the repealed Ordinance and in force or valid at the commencement of this Ordinance shall, so far as it is not inconsistent with the corresponding provision of this Ordinance or any agreement, appointment entered into, approval given, recognition granted, direction, instruction, notification, notice, order or rule issued or made under this Ordinance, be treated as entered into, made, given, granted or issued, as the case may be, under that corresponding provision and shall unless revoked, cancelled or repealed by, or under, this Ordinance, continue in force accordingly.

(11) Any appointment, act of authority or other thing made or done by  any authority or person and subsisting or in force at the commencement of this Ordinance which would have been made or  done under any substantially corresponding provision of this Ordinance by any authority or person other than the one specified  in the repealed Ordinance, or in any manner other than as specified in the repealed Ordinance shall continue in force and have effect as if it has been made or done under the corresponding provision of this Ordinance by the authority or person, or in the manner specified in the corresponding provision as if such provision had been in force when it was made or done.

233[(12)  Any notification issued under section 50 of the repealed Ordinance and in force on the commencement of this Ordinance shall continue to remain in force, unless revoked, cancelled or repealed by, or under, this Ordinance.]

234[(13)  The authority which issued any notification, notice, direction or instruction, or made any rule, agreement or appointment, or granted any approval or recognition, referred to in sub-sections (10) and (12), shall have the power to revoke, cancel or repeal any such notification, notice, direction, instruction, rule, agreement, appointment, approval or recognition.]

235 [(14) Clause (77C) of Part I of the First Schedule of the repealed Ordinance shall continue to apply to the yield on National Savings Deposit Certificates issued before 1^st  July, 2001, and a person paying yield on such a Certificate shall not deduct tax under  section 151 from the payment, and the holder of such Certificate shall not be required to acquire an exemption certificate under section 159 to give effect to the said exemption.]

(15) Section 107AA of the repealed Ordinance shall continue to apply until the 30^th  day of June, 2002.

(16) The Income Tax Rules made under the repealed Ordinance, on the valuation of perquisites shall continue to apply 236[in respect of any income year ending on or before] the 30th day of June 2002.

(17) Item 8(5)(h) of the Third Schedule to the repealed Ordinance shall continue to apply to assets covered by the item.

237[(18)  In this section, “income tax authority“ means an income tax authority as specified in section 3 of the repealed Ordinance.]

240. Removal of difficulties.-

(1) Subject to sub-section (2), if any difficulty arises in giving effect to any of the provisions of this Ordinance, the Federal Government may, by notification in the official Gazette, make such order, 238[not] inconsistent with the provisions of this Ordinance, as may appear to it to be necessary for the purpose of removing the difficulty.202

(2) No such power shall be exercised under sub -section (1) after the 30^th  day of June 2004.

Detailed Order on Maintainability in Memo Gate Case Dated 12th of January, 2012
[Constitution Petition under Article 184(3) of the Constitution regarding alleged Memorandum to Admiral Mike Mullen by Mr. Husain Haqqani, former Ambassador of Pakistan to the United States of America] …

Order in implementation of NRO Case Dated 10th of January, 2012

[Criminal Miscellaneous Application No. 486 of 2010 in Criminal Appeal No. 22 of 2002]

Order on Maintainability in Memo Gate Case Dated 30th of December, 2011
[Constitution Petition under Article 184(3) of the Constitution regarding alleged Memorandum to Admiral Mike Mullen by Mr. Hussain Haqqani, former Ambassador of Pakistan to the United States of America]

Judgment in Review Petition in NRO Case Dated 25th of November, 2011
[Against the judgment dated 16.12.2009 passed in Constitution Petitions No. 76 to 80 of 2007]

Suo Motu Case No. 16 of 2011 Dated 7th of July, 2011
(Suo Motu Action Regarding Law & Order Situation in Karachi)

National Insurance Company Ltd. Case Dated 7th of July, 2011
(Suo moto action regarding violation of Public Procurement Rules, 2004 in procurement loss of billions of rupees to public exchequer caused by National Insurance Company Ltd.)

Hajj Corruption Case Dated 29th of July, 2011
Regarding Corruption in Hajj Arrangements in 2010] 

Review in Judges Extention of Tenure Case  Dated 20th of April, 2011
(Against the judgment dated 4.3.2011 passed by this Court In Const. Ps. Nos. 10 & 18 of 2011). 

Dual Office Case  Dated 12th of May, 2011
Pakistan Lawyer’s Forum vs. Federation of Pakistan 

Order to de-notify PCO Judges  Dated: 18th of May, 2011
On appeal against the order dated 02.02.2011 passed by a  4-Member Bench of the Supreme Court in Criminal Original Petition No.93 etc.

Mukhtara Mai Case Dated 21st of April, 2011
Criminal Appeals No. 163 to 171 and S.M. Case No. 5 of 2005 Dated 21st April, 2011

Chairman NAB Case Dated 10th of March, 2011
Constitution Petitions Nos. 60 & 61 of 2010 Dated 10th of March, 2011

Judges Extention of Tenure Case Dated 4th of March, 2011
Constitution Petitions Nos. 10 & 18 of 2011 Dated 4th of March, 2011

Interim Order in Eighteenth Amendment Case 21^st of October, 2010
Order in CP challenging provisions on appointment of Judges of Superior Courts under the 18^th Amendment Act, 2010

De-notification of Judges Case 15^th of October, 2010
Order in Petition No. 9 of 2009 “Sindh High Court Bar Association v/s Federation” on Report/Allegation in press that the Government is considering Withdrawal of the Notification for Restoration of Judges Dated 15^th of October, 2010.

Suo Moto Case on clash between Police and Lawyers 4^th of October, 2010
Regarding untoward incident that took place between Police and Lawyers on 1.10.2010 in the Court Premises at Lahore

Appointment of CJ Lahore Case 13^th of February, 2010
Stay Order in appointment of Justice Khawaja Sharif as Judge of Supreme Court and Justice Saqib Nasir as Chief Justice of Lahore High Court granted by Supreme Court “Nadeem Ahmed Advocate v/s Federation”

NRO Case 19^th of January, 2010
Detailed Judgment of the Supreme Court in Writ Petitions filed against the National Reconciliation Ordinance dated 19th of January, 2010.

Makro-Habib Case 21^st of December, 2009
Judgment of the Supreme Court in Suo Moto Proceedings regarding establishment of Makro-Habib Store on playground dated 21st  of December, 2009

Short Order in NRO Case 16^th of December, 2009
Short Order of the Supreme Court in Writ Petitions filed against the National Reconciliation Ordinance dated 16th of December, 2009.

Second Review Petition in PCO Judges Case 11^th of November, 2009
Civil Review Petition No. Nil of 2009 in PCO Judges Case “Abdul Hameed Dogar v/s Federation” dated 11th of November, 2009

Restoration of CJ Case 3^rd of November, 2009
Detailed Judgment of the Supreme Court in CP filed in connection with Reference against the Chief Justice of Pakistan under Article 209 of the Constitution dated 23rd of December, 2009.

First Review Petition in PCO Judges Case 13^th of October, 2009
Civil Review Petition No. Nil of 2009 in PCO Judges Case “Justice Khurshid Anwar Bhindar v/s Federation of Pakistan” against Judgment 31^st July, 2007

PCO Judges Case (Part 1) 30^th of September, 2009
Detailed Judgment of the Supreme Court in Writ Nos. 9 and 8 of 2008 against Proclamation of Emergency and Provisional Constitution Order, dated 30th of September, 2009

PCO Judges Case (Part 2) 30^th of September, 2009
Detailed Judgment of the Supreme Court in Writ Nos. 9 and 8 of 2008 against Proclamation of Emergency and Provisional Constitution Order, dated 30th of September, 2009

Short Order in PCO Judges Case 31^st of July, 2009
Short Order of the Supreme Court in Writ Nos. 9 and 8 of 2008 against Proclamation of Emergency and Provisional Constitution Order dated 31^st of July, 2009

Disqualification of the Sharif Brothers Case 25^th of February, 2009
Short Order of the Supreme Court in Writs against the disqualification of the Sharif Brothers dated 25th of February, 2009.

Tikka Iqbal Khan Case 23^rd of November, 2007
Judgment of Mr. Justice Retd. Abdul Hameed Dogar in Constitution Petition Nos. 87 and 88 of 2007 against the Proclamation of Emergency and Provisional Constitution Order No. 1 of 2007 dated 23^rd of November, 2007

Short Order in Restoration of CJ Case 20^th of July, 2007
Short Order of the Supreme Court in CP filed in connection with reference against the Chief Justice of Pakistan Mr. Iftikhar Muhammad Chaudhry’s Petition under Article 209 of the Constitution dated 20th of July, 2007.

Affiliation of Law Collages Case 16^th of November, 2006
Judgment in CP on implementation on Affiliation of Law Collage Rules

Pakistan Medical & Dental Council v/s Ziauddin Medical University and others  Dated 15th of December, 2006
Dated 15th of December, 2006

Done at Vienna on 18 April 1961. Entered into force on 24 April 1964.

United Nations, Treaty Series, vol. 500, p. 95.

Vienna Convention on Diplomatic Relations

Done at Vienna on 18 April 1961

The States Parties to the present Convention,

Recalling that peoples of all nations from ancient times have recognized the status of diplomatic agents,

Having in mind the purposes and principles of the Charter of the United Nations concerning the sovereign equality of States, the maintenance of international peace and security, and the promotion of friendly relations among nations,

Believing that an international convention on diplomatic intercourse, privileges and immunities would contribute to the development of friendly relations among nations, irrespective of their differing constitutional and social systems,

Realizing that the purpose of such privileges and immunities is not to benefit individuals but to ensure the efficient performance of the functions of diplomatic missions as representing States, Af irming that the rules of customary international law should continue to govern questions not expressly regulated by the provisions of the present Convention,

Have agreed as follows:

Article 1

For the purpose of the present Convention, the following expressions shall have the meanings hereunder assigned to them:

(a) The “head of the mission” is the person charged by the sending State with the duty of acting in that capacity;

(b) The “members of the mission” are the head of the mission and the members of the staff of the mission;

(c) The “members of the staff of the mission” are the members of the diplomatic staff, of the administrative and technical staff and of the service staff of the mission;

(d) The “members of the diplomatic staff” are the members of the staff of the mission having diplomatic rank;

(e) A “diplomatic agent” is the head of the mission or a member of the diplomatic staff of the mission;

(f) The “members of the administrative and technical staff” are the members of the staff of the mission employed in the administrative and technical service of the mission;3

(g) The “members of the service staff” are the members of the staff of the mission in the domestic service of the mission;

(h) A “private servant” is a person who is in the domestic service of a member of the mission and who is not an employee of the sending State;

(i) The “premises of the mission” are the buildings or parts of buildings and the land ancillary thereto, irrespective of ownership, used for the purposes of the mission including the residence of the head of the mission.

Article 2

The establishment of diplomatic relations between States, and of permanent diplomatic missions, takes place by mutual consent.

Article 3

1. The functions of a diplomatic mission consist, inter alia, in:

(a) Representing the sending State in the receiving State;

(b) Protecting in the receiving State the interests of the sending State and of its nationals, within the limits permitted by international law;

(c) Negotiating with the Government of the receiving State;

(d) Ascertaining by all lawful means conditions and developments in the receiving State, and reporting thereon to the Government of the sending State;

(e) Promoting friendly relations between the sending State and the receiving State, and developing their economic, cultural and scientific relations.

2. Nothing in the present Convention shall be construed as preventing the performance of consular functions by a diplomatic mission.

Article 4

1. The sending State must make certain that the agrément of the receiving State has been given for the person it proposes to accredit as head of the mission to that State.

2. The receiving State is not obliged to give reasons to the sending State for a refusal of agreement.

Article 5

1. The sending State may, after it has given due notification to the receiving States concerned, accredit a head of mission or assign any member of the diplomatic staff, as the case may be, to more than one State, unless there is express objection by any of the receiving States.

2. If the sending State accredits a head of mission to one or more other States it may establish a diplomatic mission headed by a chargé d’affaires ad interim in each State where the head of mission has not his permanent seat.

3. A head of mission or any member of the diplomatic staff of the mission may act as representative of the sending State to any international organization.

Article 6

Two or more States may accredit the same person as head of mission to another State, unless objection is offered by the receiving State.

Article 7

Subject to the provisions of articles 5, 8, 9 and 11, the sending State may freely appoint the members of the staff of the mission. In the case of military, naval or air attachés, the receiving State may require their names to be submitted beforehand, for its approval.

Article 8

1.Members of the diplomatic staff of the mission should in principle be of the nationality of the sending State.

2.Members of the diplomatic staff of the mission may not be appointed from among persons having the nationality of the receiving State, except with the consent of that State which may be withdrawn at any time.

3. The receiving State may reserve the same right with regard to nationals of a third State who are not also nationals of the sending State.

Article 9

1. The receiving State may at any time and without having to explain its decision, notify the sending State that the head of the mission or any member of the diplomatic staff of the mission is persona non grata or that any other member of the staff of the mission is not acceptable. In any such case, the sending State shall, as appropriate, either recall the person concerned or terminate his functions with the mission. A person may be declared non grata or not acceptable before arriving in the territory of the receiving State.

2. If the sending State refuses or fails within a reasonable period to carry out its obligations under paragraph 1 of this article, the receiving State may refuse to recognize the person concerned as a member of the mission.

Article 10

1. The Ministry for Foreign Affairs of the receiving State, or such other ministry as may be agreed, shall be notified of:

(a) The appointment of members of the mission, their arrival and their final departure or the termination of their functions with the mission;

(b) The arrival and final departure of a person belonging to the family of a member of the mission and, where appropriate, the fact that a person becomes or ceases to be a member of the family of a member of the mission;

(c) The arrival and final departure of private servants in the employ of persons referred to in subparagraph (a) of this paragraph and, where appropriate, the fact that they are leaving the employ of such persons;

(d) The engagement and discharge of persons resident in the receiving State as members of the mission or private servants entitled to privileges and immunities.

2.Where possible, prior notification of arrival and final departure shall also be given.

Article 11

1. In the absence of specific agreement as to the size of the mission, the receiving State may require that the size of a mission be kept within limits considered by it to be reasonable and normal, having regard to circumstances and conditions in the receiving State and to the needs of the particular mission.

2. The receiving State may equally, within similar bounds and on a non-discriminatory basis, refuse to accept officials of a particular category.

Article 12

The sending State may not, without the prior express consent of the receiving State, establish offices forming part of the mission in localities other than those in which the mission itself is established.

Article 13

1. The head of the mission is considered as having taken up his functions in the receiving State either when he has presented his credentials or when he has notified his arrival and a true copy of his credentials has been presented to the Ministry for Foreign Affairs of the receiving State, or such other ministry as may be agreed, in accordance with the practice prevailing in the receiving State which shall be applied in a uniform manner.

2. The order of presentation of credentials or of a true copy thereof will be determined by the date and time of the arrival of the head of the mission.

Article 14

1. Heads of mission are divided into three classes, namely:

(a) That of ambassadors or nuncios accredited to Heads of State, and other heads of mission of equivalent rank;

(b) That of envoys, ministers and internuncios accredited to Heads of State;

(c) That of chargés d’affaires accredited to Ministers for Foreign Affairs.

2. Except as concerns precedence and etiquette, there shall be no differentiation between heads of mission by reason of their class.

Article 15

The class to which the heads of their missions are to be assigned shall be agreed between States.

Article 16

1. Heads of mission shall take precedence in their respective classes in the order of the date and time of taking up their functions in accordance with article 13.

2. Alterations in the credentials of a head of mission not involving any change of class shall not affect his precedence.

3. This article is without prejudice to any practice accepted by the receiving State regarding the precedence of the representative of the Holy See.

Article 17

The precedence of the members of the diplomatic staff of the mission shall be notified by the head of the mission to the Ministry for Foreign Affairs or such other ministry as may be agreed.

Article 18

The procedure to be observed in each State for the reception of heads of mission shall be uniform in respect of each class.7

Article 19

1. If the post of head of the mission is vacant, or if the head of the mission is unable to perform his functions a chargé d’affaires ad interim shall act provisionally as head of the mission. The name of the chargé d’affaires ad interim shall be notified, either by the head of the mission or, in case he is unable to do so, by the Ministry for Foreign Affairs of the sending State to the Ministry for Foreign Affairs of the receiving State or such other ministry as may be agreed.

2. In cases where no member of the diplomatic staff of the mission is present in the receiving State, a member of the administrative and technical staff may, with the consent of the receiving State, be designated by the sending State to be in charge of the current administrative affairs of the mission.

Article 20

The mission and its head shall have the right to use the flag and emblem of the sending State on the premises of the mission, including the residence of the head of the mission, and on his means of transport.

Article 21

1. The receiving State shall either facilitate the acquisition on its territory, in accordance with its laws, by the sending State of premises necessary for its mission or assist the latter in obtaining accommodation in some other way.

2. It shall also, where necessary, assist missions in obtaining suitable accommodation for their members.

Article 22

1. The premises of the mission shall be inviolable. The agents of the receiving State may not enter them, except with the consent of the head of the mission.

2. The receiving State is under a special duty to take all appropriate steps to protect the premises of the mission against any intrusion or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity.

3. The premises of the mission, their furnishings and other property thereon and the means of transport of the mission shall be immune from search, requisition, attachment or execution.

Article 23

1. The sending State and the head of the mission shall be exempt from all national, regional or municipal dues and taxes in respect of the premises of the mission, whether owned or leased, other than such as represent payment for specific services rendered.8

2. The exemption from taxation referred to in this article shall not apply to such dues and taxes payable under the law of the receiving State by persons contracting with the sending State or the head of the mission.

Article 24

The archives and documents of the mission shall be inviolable at any time and wherever they may be.

Article 25

The receiving State shall accord full facilities for the performance of the functions of the mission.

Article 26

Subject to its laws and regulations concerning zones entry into which is prohibited or regulated for reasons of national security, the receiving State shall ensure to all members of the mission freedom of movement and travel in its territory.

Article 27

1. The receiving State shall permit and protect free communication on the part of the mission for all official purposes. In communicating with the Government and the other missions and consulates of the sending State, wherever situated, the mission may employ all appropriate means, including diplomatic couriers and messages in code or cipher. However, the mission may install and use a wireless transmitter only with the consent of the receiving State.

2. The official correspondence of the mission shall be inviolable. Official correspondence means all correspondence relating to the mission and its functions.

3. The diplomatic bag shall not be opened or detained.

4. The packages constituting the diplomatic bag must bear visible external marks of their character and may contain only diplomatic documents or articles intended for official use.

5. The diplomatic courier, who shall be provided with an official document indicating his status and the number of packages constituting the diplomatic bag, shall be protected by the receiving State in the performance of his functions. He shall enjoy person inviolability and shall not be liable to any form of arrest or detention.

6. The sending State or the mission may designate diplomatic couriers ad hoc. In such cases the provisions of paragraph 5 of this article shall also apply, except that the immunities therein mentioned shall cease to apply when such a courier has delivered to the consignee the diplomatic bag in his charge.

7. A diplomatic bag may be entrusted to the captain of a commercial aircraft scheduled to land at an authorized port of entry. He shall be provided with an official document indicating the number of packages constituting the bag but he shall not be considered to be a diplomatic courier. The mission may send one of its members to take possession of the diplomatic bag directly and freely from the captain of the aircraft.

Article 28

The fees and charges levied by the mission in the course of its official duties shall be exempt from all dues and taxes.

Article 29

The person of a diplomatic agent shall be inviolable. He shall not be liable to any form of arrest or detention. The receiving State shall treat him with due respect and shall take all appropriate steps to prevent any attack on his person, freedom or dignity.

Article 30

1. The private residence of a diplomatic agent shall enjoy the same inviolability and protection as the premises of the mission.

2. His papers, correspondence and, except as provided in paragraph 3 of article 31, his property, shall likewise enjoy inviolability.

Article 31

1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall also enjoy immunity from its civil and administrative jurisdiction, except in the case of:

(a) A real action relating to private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purposes of the mission;

(b) An action relating to succession in which the diplomatic agent is involved as executor, administrator, heir or legatee as a private person and not on behalf of the sending State;

(c) An action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State outside his official functions.

2. A diplomatic agent is not obliged to give evidence as a witness.

3. No measures of execution may be taken in respect of a diplomatic agent except in the cases coming under subparagraphs (a), (b) and (c) of paragraph 1 of this article, and provided that the measures concerned can be taken without infringing the inviolability of his person or of his residence.

4. The immunity of a diplomatic agent from the jurisdiction of the receiving State does not exempt him from the jurisdiction of the sending State.10

Article 32

1. The immunity from jurisdiction of diplomatic agents and of persons enjoying immunity under article 37 may be waived by the sending State.

2.Waiver must always be express.

3. The initiation of proceedings by a diplomatic agent or by a person enjoying immunity from jurisdiction under article 37 shall preclude him from invoking immunity from jurisdiction in respect of any counterclaim directly connected with the principal claim.

4.Waiver of immunity from jurisdiction in respect of civil or administrative proceedings shall not be held to imply waiver of immunity in respect of the execution of the judgement, for which a separate waiver shall be necessary.

Article 33

1. Subject to the provisions of paragraph 3 of this article, a diplomatic agent shall with respect to services rendered for the sending State be exempt from social security provisions which may be in force in the receiving State.

2. The exemption provided for in paragraph 1 of this article shall also apply to private servants who are in the sole employ of a diplomatic agent, on condition:

(a) That they are not nationals of or permanently resident in the receiving State; and

(b) That they are covered by the social security provisions which may be in force in the sending State or a third State.

3. A diplomatic agent who employs persons to whom the exemption provided for in paragraph 2 of this article does not apply shall observe the obligations which the social security provisions of the receiving State impose upon employers.

4. The exemption provided for in paragraphs 1 and 2 of this article shall not preclude voluntary participation in the social security system of the receiving State provided that such participation is permitted by that State.

5. The provisions of this article shall not affect bilateral or multilateral agreements concerning social security concluded previously and shall not prevent the conclusion of such agreements in the future.

Article 34

A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except:

(a) Indirect taxes of a kind which are normally incorporated in the price of goods or services;

(b) Dues and taxes on private immovable property situated in the territory of the receiving State, unless he holds it on behalf of the sending State for the purposes of the mission;

(c) Estate, succession or inheritance duties levied by the receiving State, subject to the provisions of paragraph 4 of article 39;

(d) Dues and taxes on private income having its source in the receiving State and capital taxes on investments made in commercial undertakings in the receiving State;

(e) Charges levied for specific services rendered;

(f) Registration, court or record fees, mortgage dues and stamp duty, with respect to immovable property, subject to the provisions of article 23.

Article 35

The receiving State shall exempt diplomatic agents from all personal services, from all public service of any kind whatsoever, and from military obligations such as those connected with requisitioning, military contributions and billeting.

Article 36

1. The receiving State shall, in accordance with such laws and regulations as it may adopt, permit entry of and grant exemption from all customs duties, taxes, and related charges other than charges for storage, cartage and similar services, on:

(a) Articles for the official use of the mission;

(b) Articles for the personal use of a diplomatic agent or members of his family forming part of his household, including articles intended for his establishment.

2. The personal baggage of a diplomatic agent shall be exempt from inspection, unless there are serious grounds for presuming that it contains articles not covered by the exemptions mentioned in paragraph 1 of this article, or articles the import or export of which is prohibited by the law or controlled by the quarantine regulations of the receiving State. Such inspection shall be conducted only in the presence of the diplomatic agent or of his authorized representative.

Article 37

1. The members of the family of a diplomatic agent forming part of his household shall, if they are not nationals of the receiving State, enjoy the privileges and immunities specified in articles 29 to 36.

2. Members of the administrative and technical staff of the mission, together with members of their families forming part of their respective households, shall, if they are not nationals of or permanently resident in the receiving State, enjoy the privileges and immunities specified in articles 29 to 35, except that the immunity from civil and administrative jurisdiction of the receiving State specified in paragraph 1 of article 31 shall not extend to acts performed outside the course of their duties. They shall also enjoy the privileges specified in article 36, paragraph 1, in respect of articles imported at the time of first installation.

3.Members of the service staff of the mission who are not nationals of or permanently resident in the receiving State shall enjoy immunity in respect of acts performed in the course of their duties, exemption from dues and taxes on the emoluments they receive by reason of their employment and the exemption contained in article 33.

4. Private servants of members of the mission shall, if they are not nationals of or permanently resident in the receiving State, be exempt from dues and taxes on the emoluments they receive by reason of their employment. In other respects, they may enjoy privileges and immunities only to the extent admitted by the receiving State. However, the receiving State must exercise its jurisdiction over those persons in such a manner as not to interfere unduly with the performance of the functions of the mission.

Article 38

1. Except insofar as additional privileges and immunities may be granted by the receiving State, a diplomatic agent who is a national of or permanently resident in that State shall enjoy only immunity from jurisdiction, and inviolability, in respect of official acts performed in the exercise of his functions.

2. Other members of the staff of the mission and private servants who are nationals of or permanently resident in the receiving State shall enjoy privileges and immunities only to the extent admitted by the receiving State. However, the receiving State must exercise its jurisdiction over those persons in such a manner as not to interfere unduly with the performance of the functions of the mission.

Article 39

1. Every person entitled to privileges and immunities shall enjoy them from the moment he enters the territory of the receiving State on proceeding to take up his post or, if already in its territory, from the moment when his appointment is notified to the Ministry for Foreign Affairs or such other ministry as may be agreed.

2.When the functions of a person enjoying privileges and immunities have come to an end, such privileges and immunities shall normally cease at the moment when he leaves the country, or on expiry of a reasonable period in which to do so, but shall subsist until that time, even in case of armed conflict. However, with respect to acts performed by such a person in the exercise of his functions as a member of the mission, immunity shall continue to subsist.

3. In case of the death of a member of the mission, the members of his family shall continue to enjoy the privileges and immunities to which they are entitled until the expiry of a reasonable period in which to leave the country.

4. In the event of the death of a member of the mission not a national of or permanently resident in the receiving State or a member of his family forming part of his household, the receiving State shall permit the withdrawal of the movable property of the deceased, with the exception of any property acquired in the country the export of which was prohibited at the time of his death. Estate, succession and inheritance duties shall not be levied on movable property the presence of which in the receiving State was due solely to the presence there of the deceased as a member of the mission or as a member of the family of a member of the mission.

Article 40

1. If a diplomatic agent passes through or is in the territory of a third State, which has granted him a passport visa if such visa was necessary, while proceeding to take up or to return to his post, or when returning to his own country, the third State shall accord him inviolability and such other immunities as may be required to ensure his transit or return. The same shall apply in the case of any members of his family enjoying privileges or immunities who are accompanying the diplomatic agent, or traveling separately to join him or to return to their country.

2. In circumstances similar to those specified in paragraph 1 of this article, third States shall not hinder the passage of members of the administrative and technical or service staff of a mission, and of members of their families, through their territories.

3. Third States shall accord to official correspondence and other official communications in transit, including messages in code or cipher, the same freedom and protection as is accorded by the receiving State. They shall accord to diplomatic couriers, who have been granted a passport visa if such visa was necessary, and diplomatic bags in transit, the same inviolability and protection as the receiving State is bound to accord.

4. The obligations of third States under paragraphs 1, 2 and 3 of this article shall also apply to the persons mentioned respectively in those paragraphs, and to official communications and diplomatic bags, whose presence in the territory of the third State is due to force majeure.

Article 41

1.Without prejudice to their privileges and immunities, it is the duty of all persons enjoying such privileges and immunities to respect the laws and regulations of the receiving State. They also have a duty not to interfere in the internal affairs of that State.

2. All official business with the receiving State entrusted to the mission by the sending State shall be conducted with or through the Ministry for Foreign Affairs of the receiving State or such other ministry as may be agreed.

3. The premises of the mission must not be used in any manner incompatible with the functions of the mission as laid down in the present Convention or by other rules of general international law or by any special agreements in force between the sending and the receiving State.

Article 42

A diplomatic agent shall not in the receiving State practise for personal profit any professional or commercial activity.

Article 43

The function of a diplomatic agent comes to an end, inter alia:

(a) On notification by the sending State to the receiving State that the function of the diplomatic agent has come to an end;

(b) On notification by the receiving State to the sending State that, in accordance with paragraph 2 of article 9, it refuses to recognize the diplomatic agent as a member of the mission.

Article 44

The receiving State must, even in case of armed conflict, grant facilities in order to enable persons enjoying privileges and immunities, other than nationals of the receiving State, and members of the families of such persons irrespective of their nationality, to leave at the earliest possible moment. It must, in particular, in case of need, place at their disposal the necessary means of transport for themselves and their property.

Article 45

If diplomatic relations are broken off between two States, or if a mission is permanently or temporarily recalled:

(a) The receiving State must, even in case of armed conflict, respect and protect the premises of the mission, together with its property and archives;

(b) The sending State may entrust the custody of the premises of the mission, together with its property and archives, to a third State acceptable to the receiving State;

(c) The sending State may entrust the protection of its interests and those of its nationals to a third State acceptable to the receiving State.

Article 46

A sending State may with the prior consent of a receiving State, and at the request of a third State not represented in the receiving State, undertake the temporary protection of the interests of the third State and of its nationals.

Article 47

1. In the application of the provisions of the present Convention, the receiving State shall not discriminate as between States.

2. However, discrimination shall not be regarded as taking place:

(a) Where the receiving State applies any of the provisions of the present Convention restrictively because of a restrictive application of that provision to its mission in the sending State;

(b) Where by custom or agreement States extend to each other more favourable treatment than is required by the provisions of the present Convention.

Article 48

The present Convention shall be open for signature by all States Members of the United Nations or of any of the specialized agencies Parties to the Statute of the International Court of Justice, and by any other State invited by the General Assembly of the United Nations to become a Party to the Convention, as follows: until 31 October 1961 at the Federal Ministry for Foreign Affairs of Austria and subsequently, until 31 March 1962, at the United Nations Headquarters in New York.

Article 49

The present Convention is subject to ratification. The instruments of ratification shall be deposited with the Secretary-General of the United Nations.

Article 50

The present Convention shall remain open for accession by any State belonging to any of the four categories mentioned in article 48. The instruments of accession shall be deposited with the Secretary General of the United Nations.

Article 51

1. The present Convention shall enter into force on the thirtieth day following the date of deposit of the twenty-second instrument of ratification or accession with the Secretary-General of the United Nations.

2. For each State ratifying or acceding to the Convention after the deposit of the twenty-second instrument of ratification or accession, the Convention shall enter into force on the thirtieth day after deposit by such State of its instrument of ratification or accession.

Article 52

The Secretary-General of the United Nations shall inform all States belonging to any of the four categories mentioned in article 48:16

(a) Of signatures to the present Convention and of the deposit of instruments of ratification or accession, in accordance with articles 48, 49 and 50;

(b) Of the date on which the present Convention will enter into force, in accordance with article 51.

Article 53

The original of the present Convention, of which the Chinese, English, French, Russian and Spanish texts are equally authentic, shall be deposited with the Secretary-General of the United Nations, who shall send certified copies thereof to all States belonging to any of the four categories mentioned in article 48.

IN WITNESS WHEREOF the undersigned Plenipotentiaries, being duly authorized thereto by their respective Governments, have signed the present Convention.

DONE at Vienna this eighteenth day of April one thousand nine hundred and sixty-one.

Done at Vienna on 24 April 1963. Entered into force on 19 March 1967.

United Nations, Treaty Series, vo1. 596, p. 261

Vienna Convention on Consular Relations

Done at Vienna on 24 April 1963

The States Parties to the present Convention,

Recalling that consular relations have been established between peoples since ancient times,

Having in mind the Purposes and Principles of the Charter of the United Nations concerning the sovereign equality of States, the maintenance of international peace and security, and the promotion of friendly relations among nations,

Considering that the United Nations Conference on Diplomatic Intercourse and Immunities adopted the Vienna Convention on Diplomatic Relations which was opened for signature on 18 April 1961,

Believing that an international convention on consular relations, privileges and immunities would also contribute to the development of friendly relations among nations, irrespective of their differing constitutional and social systems,

Realizing that the purpose of such privileges and immunities is not to benefit individuals but to ensure the efficient performance of functions by consular posts on behalf of their respective States, Af irming that the rules of customary international law continue to govern matters not expressly regulated by the provisions of the present Convention,

Have agreed as follows:

Article 1

Definitions

1. For the purposes of the present Convention, the following expressions shall have the meanings hereunder assigned to them:

(a) “consular post” means any consulate-general, consulate, vice-consulate or consular agency;

(b) “consular district” means the area assigned to a consular post for the exercise of consular functions;

(c) “head of consular post” means the person charged with the duty of acting in that capacity;

(d) “consular officer” means any person, including the head of a consular post, entrusted in that capacity with the exercise of consular functions;

(e) “consular employee” means any person employed in the administrative or technical service of a consular post;3

(f) “member of the service staff” means any person employed in the domestic service of a consular post;

(g) “members of the consular post” means consular officers, consular employees and members of the service staff;

(h) “members of the consular staff” means consular officers, other than the head of a consular post, consular employees and members of the service staff;

(i) “member of the private staff” means a person who is employed exclusively in the private service of a member of the consular post;

(j) “consular premises” means the buildings or parts of buildings and the land ancillary thereto, irrespective of ownership, used exclusively for the purposes of the consular post;

(k) “consular archives” includes all the papers, documents, correspondence, books, films, tapes and registers of the consular post, together with the ciphers and codes, the card-indexes and any article of furniture intended for their protection or safe keeping.

2. Consular officers are of two categories, namely career consular officers and honorary consular officers. The provisions of Chapter II of the present Convention apply to consular posts headed by career consular officers, the provisions of Chapter III govern consular posts headed by honorary consular officers.

3. The particular status of members of the consular posts who are nationals or permanent residents of the receiving State is governed by article 71 of the present Convention.

CHAPTER I.

CONSULAR RELATIONS IN GENERAL

SECTION I. ESTABLISHMENT AND CONDUCT OF CONSULAR RELATIONS

Article 2

Establishment of consular relations

1. The establishment of consular relations between States takes place by mutual consent.

2. The consent given to the establishment of diplomatic relations between two States implies, unless otherwise stated, consent to the establishment of consular relations.

3. The severance of diplomatic relations shall not ipso facto involve the severance of consular relations.4

Article 3

Exercise of consular functions

Consular functions are exercised by consular posts. They are also exercised by diplomatic missions in accordance with the provisions of the present Convention.

Article 4

Establishment of a consular post

1. A consular post may be established in the territory of the receiving State only with that State’s consent.

2. The seat of the consular post, its classification and the consular district shall be established by the sending State and shall be subject to the approval of the receiving State.

3. Subsequent changes in the seat of the consular post, its classification or the consular district may be made by the sending State only with the consent of the receiving State.

4. The consent of the receiving State shall also be required if a consulate-general or a consulate desires to open a vice-consulate or a consular agency in a locality other than that in which it is itself established.

5. The prior express consent of the receiving State shall also be required for the opening of an office forming part of an existing consular post elsewhere than at the seat thereof.

Article 5

Consular functions

Consular functions consist in:

(a) protecting in the receiving State the interests of the sending State and of its nationals, both individuals and bodies corporate, within the limits permitted by international law;

(b) furthering the development of commercial, economic, cultural and scientific relations between the sending State and the receiving State and otherwise promoting friendly relations between them in accordance with the provisions of the present Convention;

(c) ascertaining by all lawful means conditions and developments in the commercial, economic, cultural and scientific life of the receiving State, reporting thereon to the Government of the sending State and giving information to persons interested;

(d) issuing passports and travel documents to nationals of the sending State, and visas or appropriate documents to persons wishing to travel to the sending State;

(e) helping and assisting nationals, both individuals and bodies corporate, of the sending State;5

(f) acting as notary and civil registrar and in capacities of a similar kind, and performing certain functions of an administrative nature, provided that there is nothing contrary thereto in the laws and regulations of the receiving State;

(g) safeguarding the interests of nationals, both individuals and bodies corporate, of the sending States in cases of succession mortis causa in the territory of the receiving State, in accordance with the laws and regulations of the receiving State;

(h) safeguarding, within the limits imposed by the laws and regulations of the receiving State, the interests of minors and other persons lacking full capacity who are nationals of the sending State, particularly where any guardianship or trusteeship is required with respect to such persons;

(i) subject to the practices and procedures obtaining in the receiving State, representing or arranging appropriate representation for nationals of the sending State before the tribunals and other authorities of the receiving State, for the purpose of obtaining, in accordance with the laws and regulations of the receiving State, provisional measures for the preservation of the rights and interests of these nationals, where, because of absence or any other reason, such nationals are unable at the proper time to assume the defence of their rights and interests;

(j) transmitting judicial and extrajudicial documents or executing letters rogatory or commissions to take evidence for the courts of the sending State in accordance with international agreements in force or, in the absence of such international agreements, in any other manner compatible with the laws and regulations of the receiving State;

(k) exercising rights of supervision and inspection provided for in the laws and regulations of the sending State in respect of vessels having the nationality of the sending State, and of aircraft registered in that State, and in respect of their crews;

(l) extending assistance to vessels and aircraft mentioned in subparagraph (k) of this article, and to their crews, taking statements regarding the voyage of a vessel, examining and stamping the ship’s papers, and, without prejudice to the powers of the authorities of the receiving State, conducting investigations into any incidents which occurred during the voyage, and settling disputes of any kind between the master, the officers and the seamen insofar as this may be authorized by the laws and regulations of the sending State;

(m) performing any other functions entrusted to a consular post by the sending State which are not prohibited by the laws and regulations of the receiving State or to which no objection is taken by the receiving State or which are referred to in the international agreements in force between the sending State and the receiving State.

Article 6

Exercise of consular functions outside the consular district

A consular officer may, in special circumstances, with the consent of the receiving State, exercise his functions outside his consular district.6

Article 7

Exercise of consular functions in a third State

The sending State may, after notifying the States concerned, entrust a consular post established in a particular State with the exercise of consular functions in another State, unless there is express objection by one of the States concerned.

Article 8

Exercise of consular functions on behalf of a third State

Upon appropriate notification to the receiving State, a consular post of the sending State may, unless the receiving State objects, exercise consular functions in the receiving State on behalf of a third State.

Article 9

Classes of heads of consular posts

1. Heads of consular posts are divided into four classes, namely

(a) consuls-general;

(b) consuls;

(c) vice-consuls;

(d) consular agents.

2. Paragraph 1 of this article in no way restricts the right of any of the Contracting Parties to fix the designation of consular officers other than the heads of consular posts.

Article 10

Appointment and admission of heads of consular posts

1. Heads of consular posts are appointed by the sending State and are admitted to the exercise of their functions by the receiving State.

2. Subject to the provisions of the present Convention, the formalities for the appointment and for the admission of the head of a consular post are determined by the laws, regulations and usages of the sending State and of the receiving State respectively.

Article 11

The consular commission or notification of appointment

1. The head of a consular post shall be provided by the sending State with a document, in the form of a commission or similar instrument, made out for each appointment, certifying his capacity and showing, as a general rule, his full name, his category and class, the consular district and the seat of the consular post.

2. The sending State shall transmit the commission or similar instrument through the diplomatic or other appropriate channel to the Government of the State in whose territory the head of a consular post is to exercise his functions.

3. If the receiving State agrees, the sending State may, instead of a commission or similar

instrument, send to the receiving State a notification containing the particulars required by paragraph 1 of this article.

Article 12

The exequatur

1. The head of a consular post is admitted to the exercise of his functions by an authorization from the receiving State termed an exequatur, whatever the form of this authorization.

2. A State which refused to grant an exequatur is not obliged to give to the sending State reasons for such refusal.

3. Subject to the provisions of articles 13 and 15, the head of a consular post shall not enter upon his duties until he has received an exequatur.

Article 13

Provisional admission of heads of consular posts

Pending delivery of the exequatur, the head of a consular post may be admitted on a provisional basis to the exercise of his functions. In that case, the provisions of the present Convention shall apply.

Article 14

Notification to the authorities of the consular district

As soon as the head of a consular post is admitted even provisionally to the exercise of his functions, the receiving State shall immediately notify the competent authorities of the consular district. It shall also ensure that the necessary measures are taken to enable the head of a consular post to carry out the duties of his office and to have the benefit of the provisions of the present Convention.

Article 15

Temporary exercise of the functions of the head of a consular post

1. If the head of a consular post is unable to carry out his functions or the position of head of consular post is vacant, an acting head of post may act provisionally as head of the consular post.

2. The full name of the acting head of post shall be notified either by the diplomatic mission of the sending State or, if that State has no such mission in the receiving State, by the head of the consular post, or, if he is unable to do so, by any competent authority of the sending State, to the Ministry for Foreign Affairs of the receiving State or to the authority designated by that Ministry. As a general rule, this notification shall be given in advance. The receiving State may make the admission as acting head of post of a person who is neither a diplomatic agent nor a consular officer of the sending State in the receiving State conditional on its consent.

3. The competent authorities of the receiving State shall afford assistance and protection to the acting head of post. While he is in charge of the post, the provisions of the present Convention shall apply to him on the same basis as to the head of the consular post concerned. The receiving State shall not, however, be obliged to grant to an acting head of post any facility, privilege or immunity which the head of the consular post enjoys only subject to conditions not fulfilled by the acting head of post.

4.When, in the circumstances referred to in paragraph 1 of this article, a member of the diplomatic staff of the diplomatic mission of the sending State in the receiving State is designated by the sending State as an acting head of post, he shall, if the receiving State does not object thereto, continue to enjoy diplomatic privileges and immunities.

Article 16

Precedence as between heads of consular posts

1. Heads of consular posts shall rank in each class according to the date of the grant of the exequatur.

2. If, however, the head of a consular post before obtaining the exequatur is admitted to the exercise of his functions provisionally, his precedence shall be determined according to the date of the provisional admission; this precedence shall be maintained after the granting of the exequatur.

3. The order of precedence as between two or more heads of consular posts who obtained the exequatur or provisional admission on the same date shall be determined according to the dates on which their commissions or similar instruments or the notifications referred to in paragraph 3 of article 11 were presented to the receiving State.

4. Acting heads of posts shall rank after all heads of consular posts and, as between themselves, they shall rank according to the dates on which they assumed their functions as acting heads of posts as indicated in the notifications given under paragraph 2 of article 15.

5. Honorary consular officers who are heads of consular posts shall rank in each class after career heads of consular posts, in the order and according to the rules laid down in the foregoing paragraphs.

6. Heads of consular posts shall have precedence over consular officers not having that status.

Article 17

Performance of diplomatic acts by consular of icers

1. In a State where the sending State has no diplomatic mission and is not represented by a diplomatic mission of a third State, a consular officer may, with the consent of the receiving State, and without affecting his consular status, be authorized to perform diplomatic acts. The performance of such acts by a consular officer shall not confer upon him any right to claim diplomatic privileges and immunities.

2. A consular officer may, after notification addressed to the receiving State, act as representative of the sending State to any intergovernmental organization. When so acting, he shall be entitled to enjoy any privileges and immunities accorded to such a representative by customary international law or by international agreements; however, in respect of the performance by him of any consular function, he shall not be entitled to any greater immunity from jurisdiction than that to which a consular officer is entitled under the present Convention.

Article 18

Appointment of the same person by two or more States as a consular of icer

Two or more States may, with the consent of the receiving State, appoint the same person as a consular officer in that State.

Article 19

Appointment of members of consular staf

1. Subject to the provisions of articles 20, 22 and 23, the sending State may freely appoint the members of the consular staff.

2. The full name, category and class of all consular officers, other than the head of a consular post, shall be notified by the sending State to the receiving State in sufficient time for the receiving State, if it so wishes, to exercise its rights under paragraph 3 of article 23.

3. The sending State may, if required by its laws and regulations, request the receiving State to grant an exequatur to a consular officer other than the head of a consular post.

4. The receiving State may, if required by its laws and regulations, grant an exequatur to a consular officer other than the head of a consular post.

Article 20

Size of the consular staf

In the absence of an express agreement as to the size of the consular staff, the receiving State may require that the size of the staff be kept within limits considered by it to be reasonable and normal, having regard to circumstances and conditions in the consular district and to the needs of the particular consular post.

Article 21

Precedence as between consular of icers of a consular post

The order of precedence as between the consular officers of a consular post and any change thereof shall be notified by the diplomatic mission of the sending State or, if that State has no such mission in the receiving State, by the head of the consular post, to the Ministry for Foreign Affairs of the receiving State or to the authority designated by that Ministry.

Article 22

Nationality of consular of icers

1. Consular officers should, in principle, have the nationality of the sending State.

2. Consular officers may not be appointed from among persons having the nationality of the receiving State except with the express consent of that State which may be withdrawn at any time.

3. The receiving State may reserve the same right with regard to nationals of a third State who are not also nationals of the sending State.

Article 23

Persons declared “non grata”

1. The receiving State may at any time notify the sending State that a consular officer is persona non grata or that any other member of the consular staff is not acceptable. In that event, the sending State shall, as the case may be, either recall the person concerned or terminate his functions with the consular post.

2. If the sending State refuses or fails within a reasonable time to carry out its obligations under paragraph 1 of this article, the receiving State may, as the case may be, either withdraw the exequatur from the person concerned or cease to consider him as a member of the consular staff.

3. A person appointed as a member of a consular post may be declared unacceptable before arriving in the territory of the receiving State or, if already in the receiving State, before entering on his duties with the consular post. In any such case, the sending State shall withdraw his appointment.

4. In the cases mentioned in paragraphs 1 and 3 of this article, the receiving State is not obliged to give to the sending State reasons for its decision.

Article 24

Notification to the receiving State of appointments arrivals and departures

1. The Ministry for Foreign Affairs of the receiving State or the authority designated by that Ministry shall be notified of:11

(a) the appointment of members of a consular post, their arrival after appointment to the consular post, their final departure or the termination of their functions and any other changes affecting their status that may occur in the course of their service with the consular post;

(b) the arrival and final departure of a person belonging to the family of a member of a consular post forming part of his household and, where appropriate, the fact that a person becomes or ceases to be such a member of the family;

(c) the arrival and final departure of members of the private staff and, where appropriate, the termination of their service as such;

(d) the engagement and discharge of persons resident in the receiving State as members of a consular post or as members of the private staff entitled to privileges and immunities.

2.When possible, prior notification of arrival and final departure shall also be given.

SECTION II.

END OF CONSULAR FUNCTIONS

Article 25

Termination of the functions of a member of a consular post

The functions of a member of a consular post shall come to an end, inter alia:

(a) on notification by the sending State to the receiving State that his functions have come to an end;

(b) on withdrawal of the exequatur;

(c) on notification by the receiving State to the sending State that the receiving State has ceased to consider him as a member of the consular staff.

Article 26

Departure from the territory of the receiving State

The receiving State shall, even in case of armed conflict, grant to members of the consular post and members of the private staff, other than nationals of the receiving State, and to members of their families forming part of their households irrespective of nationality, the necessary time and facilities to enable them to prepare their departure and to leave at the earliest possible moment after the termination of the functions of the members concerned. In particular, it shall, in case of need, place at their disposal the necessary means of transport for themselves and their property other than property acquired in the receiving State the export of which is prohibited at the time of departure.

Article 27

Protection of consular premises and archives and of the interests of the sending State in exceptional circumstances

1. In the event of the severance of consular relations between two States:

(a) the receiving State shall, even in case of armed conflict, respect and protect the consular premises, together with the property of the consular post and the consular archives;

(b) the sending State may entrust the custody of the consular premises, together with the property contained therein and the consular archives, to a third State acceptable to the receiving State;

(c) the sending State may entrust the protection of its interests and those of its nationals to a third State acceptable to the receiving State.

2. In the event of the temporary or permanent closure of a consular post, the provisions of subparagraph (a) of paragraph 1 of this article shall apply. In addition,

(a) if the sending State, although not represented in the receiving State by a diplomatic mission, has another consular post in the territory of that State, that consular post may be entrusted with the custody of the premises of the consular post which has been closed, together with the property contained therein and the consular archives, and, with the consent of the receiving State, with the exercise of consular functions in the district of that consular post; or

(b) if the sending State has no diplomatic mission and no other consular post in the receiving State, the provisions of subparagraphs (b) and (c) of paragraph 1 of this article shall apply.

CHAPTER II.

FACILITIES, PRIVILEGES AND IMMUNITIES RELATING TO CONSULAR POSTS, CAREER CONSULAR OFFICERS AND OTHER MEMBERS OF A CONSULAR POST SECTION I. FACILITIES, PRIVILEGES AND IMMUNITIES RELATING TO A CONSULAR POST

Article 28

Facilities for the work of the consular post

The receiving State shall accord full facilities for the performance of the functions of the consular post.

Article 29

Use of national flag and coat-of-arms

1. The sending State shall have the right to the use of its national flag and coat-of-arms in the receiving State in accordance with the provisions of this article.13

2. The national flag of the sending State may be flown and its coat-of-arms displayed on the building occupied by the consular post and at the entrance door thereof, on the residence of the head of the consular post and on his means of transport when used on official business.

3. In the exercise of the right accorded by this article regard shall be had to the laws, regulations and usages of the receiving State.

Article 30

Accommodation

1. The receiving State shall either facilitate the acquisition on its territory, in accordance with its laws and regulations, by the sending State of premises necessary for its consular post or assist the latter in obtaining accommodation in some other way.

2. It shall also, where necessary, assist the consular post in obtaining suitable accommodation for its members.

Article 31

Inviolability of the consular premises

1. Consular premises shall be inviolable to the extent provided in this article.

2. The authorities of the receiving State shall not enter that part of the consular premises which is used exclusively for the purpose of the work of the consular post except with the consent of the head of the consular post or of his designee or of the head of the diplomatic mission of the sending State. The consent of the head of the consular post may, however, be assumed in case of fire or other disaster requiring prompt protective action.

3. Subject to the provisions of paragraph 2 of this article, the receiving State is under a special duty to take all appropriate steps to protect the consular premises against any intrusion or damage and to prevent any disturbance of the peace of the consular post or impairment of its dignity.

4. The consular premises, their furnishings, the property of the consular post and its means of transport shall be immune from any form of requisition for purposes of national defence or public utility. If expropriation is necessary for such purposes, all possible steps shall be taken to avoid impeding the performance of consular functions, and prompt, adequate and effective compensation shall be paid to the sending State.

Article 32

Exemption from taxation of consular premises

1. Consular premises and the residence of the career head of consular post of which the sending State or any person acting on its behalf is the owner or lessee shall be exempt from all national, regional or municipal dues and taxes whatsoever, other than such as represent payment for specific services rendered.

2. The exemption from taxation referred to paragraph 1 of this article shall not apply to such dues and taxes if, under the law of the receiving State, they are payable by the person who contracted with the sending State or with the person acting on its behalf.

Article 33

Inviolability of the consular archives and documents

The consular archives and documents shall be inviolable at all times and wherever they may be.

Article 34

Freedom of movement

Subject to its laws and regulations concerning zones entry into which is prohibited or regulated for reasons of national security, the receiving State shall ensure freedom of movement and travel in its territory to all members of the consular post.

Article 35

Freedom of communication

1. The receiving State shall permit and protect freedom of communication on the part of the consular post for all official purposes. In communicating with the Government, the diplomatic missions and other consular posts, wherever situated, of the sending State, the consular post may employ all appropriate means, including diplomatic or consular couriers, diplomatic or consular bags and messages in code or cipher. However, the consular post may install and use a wireless transmitter only with the consent of the receiving State.

2. The official correspondence of the consular post shall be inviolable. Official correspondence means all correspondence relating to the consular post and its functions.

3. The consular bag shall be neither opened nor detained. Nevertheless, if the competent authorities of the receiving State have serious reason to believe that the bag contains something other than the correspondence, documents or articles referred to in paragraph 4 of this article, they may request that the bag be opened in their presence by an authorized representative of the sending State. If this request is refused by the authorities of the sending State, the bag shall be returned to its place of origin.

4. The packages constituting the consular bag shall bear visible external marks of their character and may contain only official correspondence and documents or articles intended exclusively for official use.

5. The consular courier shall be provided with an official document indicating his status and the number of packages constituting the consular bag. Except with the consent of the receiving State he shall be neither a national of the receiving State, nor, unless he is a national of the sending State, a permanent resident of the receiving State. In the performance of his functions he shall be protected by the receiving State. He shall enjoy personal inviolability and shall not be liable to any form of arrest or detention.

6. The sending State, its diplomatic missions and its consular posts may designate consular couriers ad hoc. In such cases the provisions of paragraph 5 of this article shall also apply except that the immunities therein mentioned shall cease to apply when such a courier has delivered to the consignee the consular bag in his charge.

7. A consular bag may be entrusted to the captain of a ship or of a commercial aircraft scheduled to land at an authorized port of entry. He shall be provided with an official document indicating the number of packages constituting the bag, but he shall not be considered to be a consular courier. By arrangement with the appropriate local authorities, the consular post may send one of its members to take possession of the bag directly and freely from the captain of the ship or of the aircraft.

Article 36

Communication and contact with nationals of the sending State

1.With a view to facilitating the exercise of consular functions relating to nationals of the sending State:

(a) consular officers shall be free to communicate with nationals of the sending State and to have access to them. Nationals of the sending State shall have the same freedom with respect to communication with and access to consular officers of the sending State;

(b) if he so requests, the competent authorities of the receiving State shall, without delay, inform the consular post of the sending State if, within its consular district, a national of that State is arrested or committed to prison or to custody pending trial or is detained in any other manner. Any communication addressed to the consular post by the person arrested, in prison, custody or detention shall be forwarded by the said authorities without delay. The said authorities shall inform the person concerned without delay of his rights under this subparagraph;

(c) consular officers shall have the right to visit a national of the sending State who is in prison, custody or detention, to converse and correspond with him and to arrange for his legal representation. They shall also have the right to visit any national of the sending State who is in prison, custody or detention in their district in pursuance of a judgement. Nevertheless, consular officers shall refrain from taking action on behalf of a national who is in prison, custody or detention if he expressly opposes such action.

2. The rights referred to in paragraph 1 of this article shall be exercised in conformity with the laws and regulations of the receiving State, subject to the proviso, however, that the said laws and regulations must enable full effect to be given to the purposes for which the rights accorded under this article are intended.

Article 37

Information in cases of deaths, guardianship or trusteeship, wrecks and air accidents

If the relevant information is available to the competent authorities of the receiving State, such authorities shall have the duty:

(a) in the case of the death of a national of the sending State, to inform without delay the consular post in whose district the death occurred;

(b) to inform the competent consular post without delay of any case where the appointment of a guardian or trustee appears to be in the interests of a minor or other person lacking full capacity who is a national of the sending State. The giving of this information shall, however, be without prejudice to the operation of the laws and regulations of the receiving State concerning such appointments;

(c) if a vessel, having the nationality of the sending State, is wrecked or runs aground in the territorial sea or internal waters of the receiving State, or if an aircraft registered in the sending State suffers an accident on the territory of the receiving State, to inform without delay the consular post nearest to the scene of the occurrence.

Article 38

Communication with the authorities of the receiving State

In the exercise of their functions, consular officers may address:

(a) the competent local authorities of their consular district;

(b) the competent central authorities of the receiving State if and to the extent that this is allowed by the laws, regulations and usages of the receiving State or by the relevant international agreements.

Article 39

Consular fees and charges

1. The consular post may levy in the territory of the receiving State the fees and charges provided by the laws and regulations of the sending State for consular acts.

2. The sums collected in the form of the fees and charges referred to in paragraph 1 of this article, and the receipts for such fees and charges, shall be exempt from all dues and taxes in the receiving State.

SECTION II.

FACILITIES, PRIVILEGES AND IMMUNITIES

RELATING TO CAREER CONSULAR OFFICERS AND

OTHER MEMBERS OF A CONSULAR POST

Article 40

Protection of consular of icers

The receiving State shall treat consular officers with due respect and shall take all appropriate steps to prevent any attack on their person, freedom or dignity.

Article 41

Personal inviolability of consular of icers

1. Consular officers shall not be liable to arrest or detention pending trial, except in the case of a grave crime and pursuant to a decision by the competent judicial authority.

2. Except in the case specified in paragraph 1 of this article, consular officers shall not be

committed to prison or be liable to any other form of restriction on their personal freedom save in execution of a judicial decision of final effect.

3. If criminal proceedings are instituted against a consular officer, he must appear before the competent authorities. Nevertheless, the proceedings shall be conducted with the respect due to him by reason of his official position and, except in the case specified in paragraph 1 of this article, in a manner which will hamper the exercise of consular functions as little as possible. When, in the circumstances mentioned in paragraph 1 of this article, it has become necessary to detain a consular officer, the proceedings against him shall be instituted with the minimum of delay.

Article 42

Notification of arrest, detention or prosecution

In the event of the arrest or detention, pending trial, of a member of the consular staff, or of criminal proceedings being instituted against him, the receiving State shall promptly notify the head of the consular post. Should the latter be himself the object of any such measure, the receiving State shall notify the sending State through the diplomatic channel.

Article 43

Immunity from jurisdiction

1. Consular officers and consular employees shall not be amenable to the jurisdiction of the judicial or administrative authorities of the receiving State in respect of acts performed in the exercise of consular functions.

2. The provisions of paragraph 1 of this article shall not, however, apply in respect of a civil action either:

(a) arising out of a contract concluded by a consular officer or a consular employee in which he did not contract expressly or impliedly as an agent of the sending State; or

(b) by a third party for damage arising from an accident in the receiving State caused by a vehicle, vessel or aircraft.

Article 44

Liability to give evidence

1.Members of a consular post may be called upon to attend as witnesses in the course of judicial or administrative proceedings. A consular employee or a member of the service staff shall not, except in the cases mentioned in paragraph 3 of this article, decline to give evidence. If a consular officer should decline to do so, no coercive measure or penalty may be applied to him.

2. The authority requiring the evidence of a consular officer shall avoid interference with the performance of his functions. It may, when possible, take such evidence at his residence or at the consular post or accept a statement from him in writing.

3.Members of a consular post are under no obligation to give evidence concerning matters connected with the exercise of their functions or to produce official correspondence and documents relating thereto. They are also entitled to decline to give evidence as expert witnesses with regard to the law of the sending State.

Article 45

Waiver of privileges and immunities

1. The sending State may waive, with regard to a member of the consular post, any of the privileges and immunities provided for in articles 41, 43 and 44.

2. The waiver shall in all cases be express, except as provided in paragraph 3 of this article, and shall be communicated to the receiving State in writing.

3. The initiation of proceedings by a consular officer or a consular employee in a matter where he might enjoy immunity from jurisdiction under article 43 shall preclude him from invoking immunity from jurisdiction in respect of any counterclaim directly connected with the principal claim.

4. The waiver of immunity from jurisdiction for the purposes of civil or administrative proceedings shall not be deemed to imply the waiver of immunity from the measures of execution resulting from the judicial decision; in respect of such measures, a separate waiver shall be necessary.19

Article 46

Exemption from registration of aliens and residence permits

1. Consular officers and consular employees and members of their families forming part of their households shall be exempt from all obligations under the laws and regulations of the receiving State in regard to the registration of aliens and residence permits.

2. The provisions of paragraph 1 of this article shall not, however, apply to any consular employee who is not a permanent employee of the sending State or who carries on any private gainful occupation in the receiving State or to any member of the family of any such employee.

Article 47

Exemption from work permits

1.Members of the consular post shall, with respect to services rendered for the sending State, be  exempt from any obligations in regard to work permits imposed by the laws and regulations of the receiving State concerning the employment of foreign labour.

2.Members of the private staff of consular officers and of consular employees shall, if they do not carry on any other gainful occupation in the receiving State, be exempt from the obligations referred to in paragraph 1 of this article.

Article 48

Social security exemption

1. Subject to the provisions of paragraph 3 of this article, members of the consular post with respect to services rendered by them for the sending State, and members of their families forming part of their households, shall be exempt from social security provisions which may be in force in the receiving State.

2. The exemption provided for in paragraph 1 of this article shall apply also to members of the private staff who are in the sole employ of members of the consular post, on condition:

(a) that they are not nationals of or permanently resident in the receiving State; and

(b) that they are covered by the social security provisions which are in force in the sending State or a third State.

3.Members of the consular post who employ persons to whom the exemption provided for in paragraph 2 of this article does not apply shall observe the obligations which the social security provisions of the receiving State impose upon employers.

4. The exemption provided for in paragraphs 1 and 2 of this article shall not preclude voluntary participation in the social security system of the receiving State, provided that such participation is permitted by that State.20

Article 49

Exemption from taxation

1. Consular officers and consular employees and members of their families forming part of their households shall be exempt from all dues and taxes, personal or real, national, regional or municipal, except:

(a) indirect taxes of a kind which are normally incorporated in the price of goods or services;

(b) dues or taxes on private immovable property situated in the territory of the receiving State, subject to the provisions of article 32;

(c) estate, succession or inheritance duties, and duties on transfers, levied by the receiving State, subject to the provisions of paragraph (b) of article 51;

(d) dues and taxes on private income, including capital gains, having its source in the receiving State and capital taxes relating to investments made in commercial or financial undertakings in the receiving State;

(e) charges levied for specific services rendered;

(f) registration, court or record fees, mortgage dues and stamp duties, subject to the provisions of article 32.

2.Members of the service staff shall be exempt from dues and taxes on the wages which they receive for their services.

3.Members of the consular post who employ persons whose wages or salaries are not exempt from income tax in the receiving State shall observe the obligations which the laws and regulations of that State impose upon employers concerning the levying of income tax.

Article 50

Exemption from customs duties and inspection

1. The receiving State shall, in accordance with such laws and regulations as it may adopt, permit entry of and grant exemption from all customs duties, taxes, and related charges other than charges for storage, cartage and similar services, on:

(a) articles for the official use of the consular post;

(b) articles for the personal use of a consular officer or members of his family forming part of his household, including articles intended for his establishment. The articles intended for consumption shall not exceed the quantities necessary for direct utilization by the persons concerned.

2. Consular employees shall enjoy the privileges and exemptions specified in paragraph 1 of this article in respect of articles imported at the time of first installation.21

3. Personal baggage accompanying consular officers and members of their families forming part of their households shall be exempt from inspection. It may be inspected only if there is serious reason to believe that it contains articles other than those referred to in subparagraph (b) of paragraph 1 of this article, or articles the import or export of which is prohibited by the laws and regulations of the receiving State or which are subject to its quarantine laws and regulations. Such inspection shall be carried out in the presence of the consular officer or member of his family concerned.

Article 51

Estate of a member of the consular post or of a member of his family

In the event of the death of a member of the consular post or of a member of his family forming part of his household, the receiving State:

(a) shall permit the export of the movable property of the deceased, with the exception of any such property acquired in the receiving State the export of which was prohibited at the time of his death;

(b) shall not levy national, regional or municipal estate, succession or inheritance duties, and duties on transfers, on movable property the presence of which in the receiving State was due solely to the presence in that State of the deceased as a member of the consular post or as a member of the family of a member of the consular post.

Article 52

Exemption from personal services and contributions

The receiving State shall exempt members of the consular post and members of their families forming part of their households from all personal services, from all public service of any kind whatsoever, and from military obligations such as those connected with requisitioning, military contributions and billeting.

Article 53

Beginning and end of consular privileges and immunities

1. Every member of the consular post shall enjoy the privileges and immunities provided in the present Convention from the moment he enters the territory of the receiving State on proceeding to take up his post or, if already in its territory, from the moment when he enters on his duties with the consular post.

2.Members of the family of a member of the consular post forming part of his household and members of his private staff shall receive the privileges and immunities provided in the present Convention from the date from which he enjoys privileges and immunities in accordance with paragraph 1 of this article or from the date of their entry into the territory of the receiving State or from the date of their becoming a member of such family or private staff, whichever is the latest.

3.When the functions of a member of the consular post have come to an end, his privileges and immunities and those of a member of his family forming part of his household or a member of his private staff shall normally cease at the moment when the person concerned leaves the receiving State or on the expiry of a reasonable period in which to do so, whichever is the sooner, but shall subsist until that time, even in case of armed conflict. In the case of the persons referred to in paragraph 2 of this article, their privileges and immunities shall come to an end when they cease to belong to the household or to be in the service of a member of the consular post provided, however, that if such persons intend leaving the receiving State within a reasonable period thereafter, their privileges and immunities shall subsist until the time of their departure.

4. However, with respect to acts performed by a consular officer or a consular employee in the exercise of his functions, immunity from jurisdiction shall continue to subsist without limitation of time.

5. In the event of the death of a member of the consular post, the members of his family forming part of his household shall continue to enjoy the privileges and immunities accorded to them until they leave the receiving State or until the expiry of a reasonable period enabling them to do so, whichever is the sooner.

Article 54

Obligations of third States

1. If a consular officer passes through or is in the territory of a third State, which has granted him a visa if a visa was necessary, while proceeding to take up or return to his post or when returning to the sending State, the third State shall accord to him all immunities provided for by the other articles of the present Convention as may be required to ensure his transit or return. The same shall apply in the case of any member of his family forming part of his household enjoying such privileges and immunities who are accompanying the consular officer or travelling separately to join him or to return to the sending State.

2. In circumstances similar to those specified in paragraph 1 of this article, third States shall not hinder the transit through their territory of other members of the consular post or of members of their families forming part of their households.

3. Third States shall accord to official correspondence and to other official communications in transit, including messages in code or cipher, the same freedom and protection as the receiving State is bound to accord under the present Convention. They shall accord to consular couriers who have been granted a visa, if a visa was necessary, and to consular bags in transit, the same inviolability and protection as the receiving State is bound to accord under the present Convention.

4. The obligations of third States under paragraphs 1, 2 and 3 of this article shall also apply to the persons mentioned respectively in those paragraphs, and to official communications and to consular bags, whose presence in the territory of the third State is due to force majeure.

Article 55

Respect for the laws and regulations of the receiving State

1.Without prejudice to their privileges and immunities, it is the duty of all persons enjoying such privileges and immunities to respect the laws and regulations of the receiving State. They also have a duty not to interfere in the internal affairs of the State.

2. The consular premises shall not be used in any manner incompatible with the exercise of consular functions.

3. The provisions of paragraph 2 of this article shall not exclude the possibility of offices of other institutions or agencies being installed in part of the building in which the consular premises are situated, provided that the premises assigned to them are separate from those used by the consular post. In that event, the said offices shall not, for the purposes of the present Convention, be considered to form part of the consular premises.

Article 56

Insurance against third party risks

Members of the consular post shall comply with any requirements imposed by the laws and regulations of the receiving State, in respect of insurance against third party risks arising from the use of any vehicle, vessel or aircraft.

Article 57

Special provisions concerning private gainful occupation

1. Career consular officers shall not carry on for personal profit any professional or commercial activity in the receiving State.

2. Privileges and immunities provided in this chapter shall not be accorded:

(a) to consular employees or to members of the service staff who carry on any private gainful occupation in the receiving State;

(b) to members of the family of a person referred to in subparagraph (a) of this paragraph or to members of his private staff;

(c) to members of the family of a member of a consular post who themselves carry on any private gainful occupation in the receiving State.24

CHAPTER III.

REGIME RELATING TO HONORARY CONSULAR

OFFICERS AND CONSULAR POSTS HEADED BY SUCH OFFICERS

Article 58

General provisions relating to facilities, privileges and immunities

1. Articles 28, 29, 30, 34, 35, 36, 37, 38 and 39, paragraph 3 of article 54 and paragraphs 2 and 3 of article 55 shall apply to consular posts headed by an honorary consular officer. In addition, the facilities, privileges and immunities of such consular posts shall be governed by articles 59, 60, 61 and 62.

2. Articles 42 and 43, paragraph 3 of article 44, articles 45 and 53 and paragraph 1 of article 55 shall apply to honorary consular officers. In addition, the facilities, privileges and immunities of such consular officers shall be governed by articles 63, 64, 65, 66 and 67.

3. Privileges and immunities provided in the present Convention shall not be accorded to members of the family of an honorary consular officer or of a consular employee employed at a consular post headed by an honorary consular officer.

4. The exchange of consular bags between two consular posts headed by honorary consular officers in different States shall not be allowed without the consent of the two receiving States concerned.

Article 59

Protection of the consular premises

The receiving State shall take such steps as may be necessary to protect the consular premises of a consular post headed by an honorary consular officer against any intrusion or damage and to prevent any disturbance of the peace of the consular post or impairment of its dignity.

Article 60

Exemption from taxation of consular premises

1. Consular premises of a consular post headed by an honorary consular officer of which the sending State is the owner or lessee shall be exempt from all national, regional or municipal dues and taxes whatsoever, other than such as represent payment for specific services rendered.

2. The exemption from taxation referred to in paragraph l of this article shall not apply to such dues and taxes if, under the laws and regulations of the receiving State, they are payable by the person who contracted with the sending State.

Article 61

Inviolability of consular archives and documents

The consular archives and documents of a consular post headed by an honorary consular officer shall be inviolable at all times and wherever they may be, provided that they are kept separate from other papers and documents and, in particular, from the private correspondence of the head of a consular post and of any person working with him, and from the materials, books or documents relating to their profession or trade.

Article 62

Exemption from customs duties

The receiving State shall, in accordance with such laws and regulations as it may adopt, permit entry of, and grant exemption from all customs duties, taxes, and related charges other than charges for storage, cartage and similar services on the following articles, provided that they are for the official use of a consular post headed by an honorary consular officer: coats-of-arms, flags, signboards, seals and stamps, books, official printed matter, office furniture, office equipment and similar articles supplied by or at the instance of the sending State to the consular post.

Article 63

Criminal proceedings

If criminal proceedings are instituted against an honorary consular officer, he must appear before the competent authorities. Nevertheless, the proceedings shall be conducted with the respect due to him by reason of his official position and, except when he is under arrest or detention, in a manner which will hamper the exercise of consular functions as little as possible. When it has become necessary to detain an honorary consular officer, the proceedings against him shall be instituted with the minimum of delay.

Article 64

Protection of honorary consular of icers

The receiving State is under a duty to accord to an honorary consular officer such protection as may be required by reason of his official position.

Article 65

Exemption from registration of aliens and residence permits

Honorary consular officers, with the exception of those who carry on for personal profit any professional or commercial activity in the receiving State, shall be exempt from all obligations under the laws and regulations of the receiving State in regard to the registration of aliens and residence permits.

Article 66

Exemption from taxation

An honorary consular officer shall be exempt from all dues and taxes on the remuneration and emoluments which he receives from the sending State in respect of the exercise of consular functions.

Article 67

Exemption from personal services and contributions

The receiving State shall exempt honorary consular officers from all personal services and from all public services of any kind whatsoever and from military obligations such as those connected with requisitioning, military contributions and billeting.

Article 68

Optional character of the institution of honorary consular of icers

Each State is free to decide whether it will appoint or receive honorary consular officers.

CHAPTER IV.

GENERAL PROVISIONS

Article 69

Consular agents who are not heads of consular posts

1. Each State is free to decide whether it will establish or admit consular agencies conducted by consular agents not designated as heads of consular post by the sending State.

2. The conditions under which the consular agencies referred to in paragraph 1 of this article may carry on their activities and the privileges and immunities which may be enjoyed by the consular agents in charge of them shall be determined by agreement between the sending State and the receiving State.

Article 70

Exercise of consular functions by diplomatic missions

1. The provisions of the present Convention apply also, so far as the context permits, to the exercise of consular functions by a diplomatic mission.

2. The names of members of a diplomatic mission assigned to the consular section or otherwise charged with the exercise of the consular functions of the mission shall be notified to the Ministry for Foreign Affairs of the receiving State or to the authority designated by that Ministry.

3. In the exercise of consular functions a diplomatic mission may address:

(a) the local authorities of the consular district;27

(b) the central authorities of the receiving State if this is allowed by the laws, regulations and usages of the receiving State or by relevant international agreements.

4. The privileges and immunities of the members of a diplomatic mission referred to in paragraph 2 of this article shall continue to be governed by the rules of international law concerning diplomatic relations.

Article 71

Nationals or permanent residents of the receiving State

1. Except insofar as additional facilities, privileges and immunities may be granted by the receiving State, consular officers who are nationals of or permanently resident in the receiving State shall enjoy only immunity from jurisdiction and personal inviolability in respect of official acts performed in the exercise of their functions, and the privileges provided in paragraph 3 of article 44. So far as these consular officers are concerned, the receiving State shall likewise be bound by the obligation laid down in article 42. If criminal proceedings are instituted against such a consular officer, the proceedings shall, except when he is under arrest or detention, be conducted in a manner which will hamper the exercise of consular functions as little as possible.

2. Other members of the consular post who are nationals of or permanently resident in the receiving State and members of their families, as well as members of the families of consular officers referred to in paragraph 1 of this article, shall enjoy facilities, privileges and immunities only insofar as these are granted to them by the receiving State. Those members of the families of members of the consular post and those members of the private staff who are themselves nationals of or permanently resident in the receiving State shall likewise enjoy facilities, privileges and immunities only insofar as these are granted to them by the receiving State. The receiving State shall, however, exercise its jurisdiction over those persons in such a way as not to hinder unduly the performance of the functions of the consular post.

Article 72

Non-discrimination

1. In the application of the provisions of the present Convention the receiving State shall not discriminate as between States.

2. However, discrimination shall not be regarded as taking place:

(a) where the receiving State applies any of the provisions of the present Convention restrictively because of a restrictive application of that provision to its consular posts in the sending State;

(b) where by custom or agreement States extend to each other more favourable treatment than is required by the provisions of the present Convention.28

Article 73

Relationship between the present Convention and other international agreements

1. The provisions of the present Convention shall not affect other international agreements in force as between States Parties to them.

2. Nothing in the present Convention shall preclude States from concluding international agreements confirming or supplementing or extending or amplifying the provisions thereof.

CHAPTER V.

FINAL PROVISIONS

Article 74

Signature

The present Convention shall be open for signature by all States Members of the United Nations or of any of the specialized agencies or Parties to the Statute of the International Court of Justice, and by any other State invited by the General Assembly of the United Nations to become a Party to the Convention, as follows: until 31 October 1963 at the Federal Ministry for Foreign Affairs of the Republic of Austria and subsequently, until 31 March 1964, at the United Nations Headquarters in New York.

Article 75

Ratification

The present Convention is subject to ratification. The instruments of ratification shall be deposited with the Secretary-General of the United Nations.

Article 76

Accession

The present Convention shall remain open for accession by any State belonging to any of the four categories mentioned in article 74. The instruments of accession shall be deposited with the Secretary General of the United Nations.

Article 77

Entry into force

1. The present Convention shall enter into force on the thirtieth day following the date of deposit of the twenty-second instrument of ratification or accession with the Secretary-General of the United Nations.

2. For each State ratifying or acceding to the Convention after the deposit of the twenty-second instrument of ratification or accession, the Convention shall enter into force on the thirtieth day after deposit by such State of its instrument of ratification or accession.

Article 78

Notifications by the Secretary-General

The Secretary-General of the United Nations shall inform all States belonging to any of the four categories mentioned in article 74:

(a) of signatures to the present Convention and of the deposit of instruments of ratification or accession, in accordance with articles 74, 75 and 76;

(b) of the date on which the present Convention will enter into force, in accordance with article 77.

Article 79

Authentic texts

The original of the present Convention, of which the Chinese, English, French, Russian and Spanish texts are equally authentic, shall be deposited with the Secretary-General of the United Nations, who shall send certified copies thereof to all States belonging to any of the four categories mentioned in article 74.

IN WITNESS WHEREOF the undersigned Plenipotentiaries, being duly authorized thereto by their respective Governments, have signed the present Convention.

DONE at Vienna this twenty-fourth day of April, one thousand nine hundred and sixty-three.

NATIONAL ASSEMBLY OF PAKISTAN

Islamabad, the 12th September, 1972

ACT NO IX OF 1972

An  Act  to give  effect in Pakistan to  the Vienna Convention   on Diplomatic    Relations,   1961,   and   the Vienna Convention on Consular Relations,  1963.

WHEREAS  Pakistan  has  acceded  to  the  Vienna  Convention   on Diplomatic Relations, 1961, and the Vienna Convention on Consular Relations, 1963;

AND  WHEREAS  it is necessary to give effect in Pakistan  to  the said Vienna Conentions;

It is hereby enacted as follows:-

1. Short title, extent and commencement.- (1) This may be  called the Diplomatic and Consular Privileges Act, 1972.

(2) It extends to the whole of Pakistan.

(3) It shall come into force at once.

2.  Provisions  of  Conventions  to  have  force  of  law.-

(1) Notwithstanding  anything to the contrary contained in any  other law  for  the time being in force, the provisions of  the  Vienna Convention  on Diplomatic Relations, 1961, set out in  the  First Schedule  and the Vienna Convention on Consular Relations,  1963, set  out  in  the Second Schedule shall,  subject  to  the  other provisions of this Act, have the force of law in Pakistan.

(2)  For the purposes of Article 32 of the Convention set out  in the  First Schedule, a waiver by the head of the mission of  any State  or any person for the time being performing his  functions shall be deemed to be a waiver by that State.

(3)  For the purposes of Article 45 of the Convention set out  in the Second Schedule and of that Article as applied by Article  58 of  that  Convention,  a  waiver shall be  deemed  to  have  been expressed  by a state if it has been expressed by the head of the diplomatic mission of that  State or by any person for the time being performing his functions  or, if  there  is no such mission, by the head of the  consular  post concerned.

(4)   Articles 35, 36 and 40 of the convention set out in the  First Schedule, and Articles 50,51,52,54, 62 and 67  of  the Convention set out in the Second Schedule, shall be construed  as granting any privilege or immunity which they require to be granted.

3.  Restriction of Privileges and immunities.- If it appears to the Federal  Government that the privileges and immunities,  accorded to the mission or a consular post of Pakistan in the territory of any  State, or to persons connected with that mission or  consular post, are less than those conferred by this Act on the mission or a  Consular post of that State or on persons connected with  that mission  or  consular  post,  the  Federal  Government  may,   by notification  in  the  official Gazette,  withdraw  such  of  the privileges  and immunities so conferred from the mission of  that State  or,  as the case may be from all or any  of  the  consular posts of that State, or, as from such persons connected  there with as it may deem fit.

4.             Certificate  of Federal Govermment.- If any  question  arises whether  or  not  any  person is entitled  to  any  privilege  or immunity  under  this Act, a certificate issued by or  under  the authority of the Federal Government stating any fact relating  to that question shall be conclusive evidence of that fact.

5.             Power  to amend schedules.- The Federal  Government  may,  by notification  in  the  official  Gazette,  amend  either  of  the Schedules  in  conformity  with any amendment duly  made  in  the provisions of the Convention set out therein.

6.             Repeal.- The Diplomatic and Consular  Privileges  Ordinance, 1972 (XV of 1972), is hereby repealed.

THE FIRST SCHEDULE

[See section 2 (1)]

ARTICLE 1

For  the  purposes  of  the  present  Convention,  the  following expressions shall have the meanings hereunder assigned to them:

(a)        the  “head  of the Mission” is the  person  charged  by  the sending State with the duty of acting in that capacity;

(b)        the “members of the mission” are the head of the mission  and the members of the staff of the mission;

(c)        the “members of the staff of the mission” and the  members  of the  diplomatic  staff of the administrative and technical  staff and  of the  service  staff of the mission;

(d)        the “member of the diplomatic staff” are the members of  the mission having diplomatic rank;

(e)        a “diplomatic agent” is the head of the mission or a  member of the diplomatic staff of the mission;

(f)        the “members of the administrative and technical staff”  are the  members  of  the  staff  of  the  mission  employed  in  the administrative and technical service of the mission;

(g)        the  “members of the service staff” are the members  of  the staff of the mission in the domestic service of the mission;

(h)       a  “private  servant” is a person who  is  in  the  domestic service of a member of the mission and who is not an employee  of the sending State;

(i)        the “premises of the mission” are the buildings or parts  of buildinggs  and  the  land  ancillary  thereto,  irrespective  of ownership,  used  for the purposes of the mission  including  the residence of the head of the mission.

ARTICLE 22

1.             The premises of the mission shall be inviolable. The agents of the  receiving State may not enter them, except with the  consent of the head of the mission.

2.             The  receiving  State is under a special  duty  to  take  all appropriate steps to protect the premises of the mission  against any  intrusion  or damage and to prevent any disturbance  of  the peace of the mission or impairment of its dignity.

3.             The   premises of the mission, their  furnishings  and  other property thereon and the means of transport of the mission shall be immune from search, requisition, attachment or execution.

ARTICLE 23

1.             The sending State and the head of the mission shall be  exempt from  all  national, regional, or municipal dues  and  taexes  in respect of the permises of the mission, whether owned or  leased, other  than  such  as represent  payment  for  specific  services rendered.

2.             The exemption from taxation referred to in this Article  shall not   apply to such dues and taxes payable under the law  of  the receiving State by persons contracting with the sending State  or the head of the mission.

ARTICLE 24

The archives and documents of the mission shall be inviolable  at any time and wherever they may be.

ARTICLE 27

1.             The   receiving  State  shall  permit   and   protect   free communication  on  the  part  of the  mission  for  all  official purposes.  In  communicating with the government  and  the  other missions  and consulates of the sending state wherever  situated, the   mission  and  employ all  appropriate   means,   including diplomatic couriers and messages in code or cypher. However,  the mission may install and use a wireless transmitter only with  the consent of the receiving State.

2.             The  official  correspondence  of  the  mission   shall   be inviolable.  Official  correspondence  means  all  correspondence relating to the mission and its functions.

3.             The diplomatic bag shall not be opened or detained.

4.             The packages constituting the diplomatic bag must bear visible external marks of their character and may contain only diplomatic documents or articles intended for official use.

5.             The  sending State or the mission  may  designate  diplomatic couriers  ad hoc. In such cases the provisions of paragraph 5  of constituting  the  diplomatic  bag, shall  be  protected  by  the receiving  State  in the performance of his  function.  He  shall enjoy personal inviolability and shall not be liable to any  form of arrest or detention.

6.             the  sending State or the mission amy  designate  diplomatic couriers  ad hoc. In such cases the provision of paragraph  5  of this Article shall also apply, except that the immunities therein mentioned shall cease to apply when such a courier has  delivered to the consignee the diplomatic bag in his charge.

7.             A  diplomatic  bag  may be ntrusted  to  the  captain  of  a commercial  aircraft scheduled to land at an authorized  port  of entry. He shall be provided with an official document  indicating the  number of packages constituting the bag but he shall not  be considered  to be a diplomatic courier. The mission may send  one of its members to take possession of the diplomatic bag  directly and freely from the captain of the aircraft.

ARTICLE 28

The  fees and charges levied by the mission in the course of  its official duties shall be exempt from all dues and taxes.

ARTICLES 29

The  person of a diplomatic agent shall be inviolable.  He  shall not  be liable to any form of arrest or detention. The  receiving State  shall  treat  him  with due respect  and  shall  take  all appropriate steps to prevent any attack on his person, freedom or dignity.

ARTICLE 30

1.             The private residence of a diplomatic agent shall  enjoy  the same inviolability and protection as the permises of the mission.

2.             His  papers,  correspondence  and,  except  as  provided   in paragraph  3  of Article 31, his property  shall  likewise  engoy inviolability.

ARTICLE 31

1.             A  diplomatic agent shall enjoy immunity  from  the  criminal jurisdiction of the receiving State. He shall also enjoy immunity from  its  civil and administrative jurisdiction, except  in  the case of:

(a)    a real action relating to private immovable property situated in  the territory of the receiving State, unless he holds  it  on behalf of the sending State for the purposes of the mission;

(b)    an action relating to succession in which the diplomatic agent is  involved  as executor, administrator, heir or  legatee  as  a private person and not on behalf of the sending State;

(c)    an action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State  outside his official     functions.

2.             A  diplomatic  agent is not obliged to  give  evidence  as  a witness.

3.           No  measures  of  execution may be  taken  in  respect  of  a diplomatic agent except in the cases coming under  sub-paragraphs (a),(b) and (c) of paragraph 1 of this Article, and provided that the  measures  concerned  can be  taken  without  infringing  the inviolability of his person or of his rresidence.

4.            The immunity of a diplomatic agent from the  jurisdiction  of the receiving State does not exempt him from the jurisdiction  of the sending State.

ARTICLE 32

1.            The  immunity from jurisdiction of diplomatic agents  and  of persons  enjoying immunity under Article 37 may be waived by  the sending State.

2.             The waiver must always be express.

3.          The initiation of proceedings by a diplomatic agent or  by  a person enjoying immunity from jurisdiction under Article 37  shall preclude him from invoking immunity from jurisdiction in  respect of any counter-claim, directly connected with the principal claim.

4.             Waiver of immunity from jurisidction in respect of  civil  or administrative  proceedings shall not be held to imply waiver  of immunity in respect of the execution of the judgment, for which a separate waiver shall be necessary.

ARTICLE 33

1.             Subject to the provisions of paragraph 3 of this  Article,  a diplomatic agent shall with respect to services rendered for  the sending State be exempt from social security provisions which may be in force in the receiving State.

2.             The  exemption provided for in paragraph 1  of  this  Article shall  also apply to private servants who are in the sole  employ of a diplomatic agent, on condition:

(a)    that they are not nationals of or permanently resident in the receiving State; and

(b)    that they are covered by the social securtiy provisions which may be inforce in the sending State or a third    State.

3.             A diplomatic agent who employs persons to whom the  exemption provided for in paragraph 2 of this Article does not apply  shall observe  the obligations which the social security provisions  of the receiving State impose upon employers.

4.             The  exemption provided for in paragraphs 1 and  2  of  this Article shall not preclude voluntary participation in the  social security  system  of  the  receiving  State  provided  that  such participation is permitted by that State.

5.             The provisions of this Article shall not affect bilateral  or multilateral agreements concerning social security concluded  pre viously  and shall not prevent the conclusion of such  agreements in the future.

ARTICLE 34

A  diplomatic  agent  shall be exempt from all  dues  and  taxes, personal or real, national, regional or municipal except:

(a)    indirect taxes of a kind which are normally incorporated  in the price of goods or services;

(b)    dues and taxes on private immovable proproperty situated  in the  territory  of  the receiving State, unless he  holds  it  on behalf of the sending State for the purposes of the mission;

(c)    estate,  succession  or inheritance  duties  levied  by  the receiving  State,  subject to the provisions of  paragraph  4  of Article 39;

(d)    dues  and  taxes  on private income  having  source  in  the receiving  State  and  Capital  taxes  on  investments  made   in commercial undertakings in the receiving State;

(e)    charges levied for specific service rendered;

(f)   registration, court or record fees, mortgage dues and  stamp duty,  with  respect  to  immovable  property,      subject  to   the provisions of Articlr 23.

ARTICLE 35

The  receiving  State  shall exempt diplomatic  agents  from  all personal   services,  from  all  public  service  of   any   kind whatsoever, and from military obligations such as those connected with requisitioning, military contributions and billeting.

ARTICLES 36

1.            The receiving State shall, in accordance with such  laws  and regulations as it may adopt, permit entry of and grant  exemption from  all  Customs-duties, taxes and related charges  other  than charges for storage, cartage and similar services, on:

(a)            articles for the official use of the mission;

(b)        articles  for  the personal use of  a  diplomatic  agent  or members  of his family forming part of his  household,  including articles intended for his establishment.

2.        The  personal baggage of a diplomatic agent shall  be  exempt from inspection, unless there are serious grounds for   pressuming that it contains articles not covered by the exemptions mentioned in paragraph 1 of this Article, or articles the import or  export of which is prohibited by the law or controlled by the quarantine regulations  of  the receiving State. Such  inspection  shall  be conducted  only in the presence of the diplomatic agent or of his authorized representative.

ARTICLE 37

1.            The members of the family of a diplomatic agent forming  part of  his  household  shall,  if they  are  not  nationals  of  the receiving State enjoy the privileges and immunities specified  in Articles 29 to 36.

2.             Members  of  the administative and  technical  staff  of  the mission, together with members of their families formings part of their respective households, shall, if they are not nationals  of or  permanently  resident  in  the  receiving  State,  enjoy  the privileges and immunities specified in Articles 29 to 35,  except that  the immunity from civil and administrative jurisdiction  of the  receiving State specified in paragraph 1 of the  Article  31 shall  not extend to acts performed outside the course  of  their duties. They shall also enjoy the privileges specified in Article 36  paragraph 1, in respect of articles imported at the  time  of first installation.

3.              Members  of  the service staff of the  mission  who  are  not nationals of or permanently resident in the receiving State shall enjoy  immunity  in respect of acts performed in  the  course  of their  duties,  exemption from dues and taxes on  the  emoluments they  receive  by reason of their employment  and  the  exemption contained in Article 33.

4.             Private servants of members of the mission shall, if they  are not nationals of or permanently resident in the receiving  State, be exempt from dues and taxes  on the emoluments they receive  by reason  of  their employment. In other respects, they  may  enjoy privileges  and immunities only to the extent  admitted  by  the receiving  State. however, the receiving State must exercise  its jurisdiction  over  those  persons in such a  manner  as  not  to interfere  unduly with the performance of the functions  of  the mission.

ARTICLE 38

1.             Except in so far as additional privileges and immunities may be granted  by  the  receiving State, a diplomatic agent  who  is  a national  of  or permanently resident in that State  shall  enjoy only immunity for jurisdiction, and inviolability, in respect of official acts performed in the exercise of his functions.

2.             Other members of the staff of the mission and private servants who  are  nationals of or permanently resident  in  the  receiving State, shall enjoy privileges and immunities only to the extent  admitted by the receiving State. However,  the  reveiving State must exercise its jurisdiction over those persons in such a manner  as  not to interfers unduly with the performance  of  the  functions of the mission.

ARTICLE 39

1.        Every person entitled to privileges and immunities shall enjoy them  from  the moment he enters the territory of  the  receiving State  on  proceeding to take up his post or, if already  in  its territory,  from the moment when his appointment is  notified  to the  Ministry for Foreign Affairrs or such other Ministry as  may be agreed.

2.            When  the  functions  of a  person  enjoying  privileges  and immunities  have come to an end, such privileges  and  immunities shall normally cease at the moment when he leaves the country, or on  expirty of a reasonable in which to do so, but shall  subsist until  that time, even in case of armed conflict.  However, with respect  to acts performed by such person in the exercise of  his functions  as  a member of the mission, immunity  shall  continue to subsist.

3.             In case of the death of a member of the mission, the  members of  his  family  shall  continue  to  enjoy  the  privileges  and immunities  to  which  they are entitled until the  expiry  of  a reasonable period in which to leave the country.

4.             In the event of the death of a member of the mission,  not  a national of or permanently resident in the receiving State or  of a  member  of  his  family forming part  of  his  household,  the receiving  State  sahll  permit the  withdrawal  of  the  movable property  of  the deceased, with the exception  of  any  property acquired in the country the export of which was prohibited at the time  of  his death. Estate, succession  and  inheritance  duties shall not be levied on movable property the presence of which  in the  receiving State was due solely to the presence there of  the deceased as a member of the mission or as a member of the  family of a member of the mission.

ARTICLE 40

1.             If  a diplomatic agent passes through or is in the territory  of a third State, which has granted him a passport visa if such visa was  necessay,  while proceeding to take up or to  return  to  his post, or when returning to his own country, the third State shall accord  him inviolability and such other immunities  as  may  be required to ensure his transit or return.

2.             The same shall apply in the case of any members of his  family enjoying  privileges  or  immunities who are  accompany  ing  the diplomatic  agent,  or travelling separately to join  him  or  to return to their conutry.

3.             In circumstances similar to those specified in paragraph 1  of this Article, third State shall not hinder the passage of members of  the  administrative  and technical or  services  staff  of  a mission,  and  of  members  of  their  families,  through   their territories.

4.             Third States shall accord to official correspondence and other official communications in transit, including messages in code  or cypher,  the  same freedom and protection as is accorded  by  the receiving  State.  They shall accord to diplomatic  couriers  who have been granted a passport visa if such visa was necessary  and diplomatic bags in transit the same inviolability and  protection as the  receiving State is bound to accord.

5.             The obligations of third States under paragraphs 1,2, and 3 of this   Article  shall  also  apply  to  the   persons   mentioned respectively in those paragraphs, and to official  communications and diplomatic bags, whose presence in the territory of the third States is due to force majeure.

THE SECOND SCHEDULE

[See section 2 (1)]

ARTICLE 1

DEFINITIONS

1.  For  the purposes of the present  Convention,  the  following expressions shall have the meanings hereunder assigned to them:

(a)    “consular post” means any consulate-general, consulate, vice-consulate or consular agency;

(b)    ‘consular  district’ means the area assigned to  a  consular post for the exercise of consular functions;

(c)    “head  of consular post” means the person charged  with  the duty of acting in that capactiy;

(d)    “consular officer” means any person, including the head of  a consular  post, entrusted in that capacity with the       exercise  of consular functions;

(e)    “consular  employee”  means  any  person  employed  in   the administrative or technical service of a consular post;

(f)        “member of the service staff” means any person  employed  in the domestic service of a consular post;

(g)        “member  of  the consular  post”  means  consular  officers, consular employees and members of the service staff;

(h)      members of the consular staff” means consular officers, other than  the  head  of the consular  post,  consular  employees  and members of the service staff;

(i)        “member of the private staff” means a person who is employed exclusively  in the private service of a member of  the  consular post;

(j)        “consular premises” means the buildings or parts of buildings and  the land ancillary thereto, irrespective of ownership,  used exclusively  for the purposes of the consular post;

(k)       “consular  archives”  includes all  the  papers,  documents, correspondence, books, films, tapes and registers of the consular post,  togehter with the cyphers and codes, the card-indexes  and any  article of furniture intended for their protection  or  safe keeping.

2.             Consular  officers  are  of  two  categories,  namely  career consular officers and honorary consular officers. The  provisions of  Chapter II of the present Convention apply to consular  posts headed by career consular officers, the provisions of Chapter III govern  consular posts headed by honorary consular officers.

3.             The particular status of members of the consular  posts  who are  nationals or permanent residents of the receiving States  is governed by Article 71 of the present Convention.

ARTICLE 5

CONSULAR FUNCTIONS

Consular functions consist in:-

(a)    protecting  in  the receiving State  the  interests  of  the sending  State and of its nationals, both individuals and  bodies corporate, within the limits permitted by international law;

(b)    furthering the development of commercial, economic,  cultural and  scientific  relations  between the  sending  State  and  the receiving  State  and  otherwise  promoting  friendly   relations between  them  in accordance with the provisions of  the  present Convention;

(c)    as certaining  by  all  lawful  means conditions and  developments in the commercial, economic, cultural and scientific life of  the receiving  State,  reporting  State,  reporting  thereon  to   the Government of the sending Stae and giving information to  persons interested;

(d)    issuing passports and travel documents to nationals  of  the sending  State,  and visas or appropriate  documents  to  persons wishing to travel to the sending State;

(e)    helping and assisting nationals, both individuals and  bodies corporate, of the sending State;

(f)    acting as notary and civil registrar and in capacities of  a similar   kind,   and   performing  certain   functions   of   an administrative      nature, provided that there is  nothing  contrary thereto in the laws and regulations of the receiving State;

(g)    safeguarding the interests of nationals, both individuals and bodies  corporate, of the sendings State in cases  of  succession mortis causa  in  the  territory  of  the  receiving  State,  in accordance with the laws and regulations of the receiving state;

(h)  safeguarding,  within the limits imposed by  the  laws,  and regulations  of the receiving State, the interests of minors  and other  persons  lacking full capacity who are  nationals  of  the sending State, particularly where any guardianship or trusteeship is required with respect ot such persons;

(i)    subject  to the practices and procedures  obtaining  in  the receiving   State,   representing   or   arranging    appropriate representation for  nationals  of the sending  State  before  the tribunals  and other authorities of the reveiving State, for  the purpose of obtaining, in accordance with the laws and  regulations of the receiving State, provisional measures for the preservation of the rights and interests of these nationals, where because  of absence  or  any other reason, such nationals are unable  at  the proper time to assume the defence   of their rights and interests;

(j)   transmitting  judicial  and  extra-judicial  documents   or executing  letters rogatory or commissions to take  evidence  for the courts of the sending State in accordance with  international agreements  in  force or, in the absence  of  such  international agreements  in  any  other manner compatible with  the  laws  and regulations of the receiving State;

(k)   exercising rights of supervision and inspection provided  for in the laws and regulations of the sending States, in respect  of vessels    having  the  nationality of the sending  State,  and  of aircraft  registrered  in  that State, and in  respect  of  their crews;

(l)    extending  assistance to vessels and airceaft  mentioned  in subparagraph  (k)  of this Article, and to  their  crews,  taking statements  regarding  the  voyage of  a  vessel,  examining  and stamping the ships papers, and, without prejudice to the  powers of   the   authorities   of the   reveiving   State,   conducting investigations  into  any  incident which  occurred  during  the voyage, and settling disputes of any kind between the master, the officers  and the sea-men in so far as this may be authorised  by the laws and regulations of the sending State;

(m)      performing any other functions entrusted to a consular  post by  the  sending State which are not prohibited by the  laws  and regulations  of the receiving State or to which no  objection  is taken  by  the receiving State or which are referred  to  in  the international agreements in force between the sending State  and the reveiving State.

ARTICLE 15

TEMPORARY  EXERCISE  OF THE FUNCTIONS OF THE HEAD OF  A  CONSULAR POST

1.             If  the head of a consular post is unable to  carry  out  his functions or the position of head of consular post is vacant, and acting head of post may act provisionally as head of the consular post.

2.             The  full name of the acting head of post shall  be  notified either by the diplomatic mission of the sending State or, if that State has no such mission in the receiving State, by the head  of the  consular post, or if he is unable to do so, by  a  competent authority  of  the  sending State, to the  Ministry  for  Foreign Affairs of the receiving State or to the authority designated  by that  Ministry.  As a general rule, this  notification  shall  be given  in advance. The receiving State may make the admission  as acting head of post of a person who is neither a diplomatic agent not  a  consular officer of the sending State  in  the  receiving State conditional on its consent.

3.             The competent authorities of the receiving State shall  afford assistance and protection to the acting head of post. While he  is in  charge of the post, the provisions of the present  Convention shall  apply  to  him  on the same basis as to  the  head  of  the consular post concerned. The receiving State shall not,  however, be  obliged  togrant  to an acting head  of  post  any  facility, privilege or immunity which the head of the consular post  enjoys only  subject to conditions not fulfilled by the acting  head  of post.

4.             When, in the circumstances referred to in paragraph 1 of  the Article,  a  member  of the diplomatic  staff  of  the  diplomatic mission of the sending State in the receiving State is designated by the sendings State as an acting head of post, he shall, if the receiving   State  does not object thereto,  continue  to  enjoy diplomatic privileges and immunities.

ARTICLE 17

PERFORMANCE OF DIPLOMATIC ACTS BY CONSULAR OFFICERS

1.             In a State where the sending State has no diplomatic  mission and is not represented by a diplomatic mission of a third  State, a consular officer may, with the consent of the receiving  State, and  without  affecting  his consular status,  be  authorised  to perform  diplomatic  acts, the performannce of such  acts  by  a consular  officer  shall not confer upon him any right  to  claim diplomatic privilges and immunities.

2.             A consular officer may, after notification addressed  to  the receiving  State, act as representative of the sending  State  to any inter-Governmental organisation, When so acting, he shall  be entitled to enjoy any privileges and immunities accorded to  such a   representative   by customary  international   law   or   by international agreements, however, in respect of the performancee by  him of any consular fuction, he shall not be entitled to  any greater immunity from jurisdiction than that to which a  consular officer is entitled under the present Convention.

CHAPTER  II.- Facilities, privileges and Immunities  Relating  to Consular  Posts,  Career Consular Officer and other  Officer  and other Members of a Consular Post.

SECTION  1.  -  FACILITIES, PRIVILEGES AND IMMUNITIES RELATING  TO  A CONSULAR POST.

ARTICLE 31

INVIOLABILITY OF THE CONSULAR PREMISES

1.             Consular premises shall be inviolable to the extent  provided in this Article.

2.             The authorities of the receiving State shall not  enter  that part  of the consular premises which is used exclusively for  the purpose of the work of the consular post except with the  consent of  the  head of the consular post or of his designee of  of  the head of the diplomatic mission of the sending State. The  consent of the head of the consular post may, however, be assumed in case of fire or other disaster requiring prompt protective action.

3.              The consular premises, their furnishings, the property of  the consular post and its means of transport shall be immune from any form  of requisition for purposes, of national defence or  public utility.  If  expropriation is necessary for such  purposes,  all possible steps shall be taken to avoid impending the  performance of   consular  functions  and  prompt  adequate   and   effective compensation shall be paid to the sending State.

ARTICLE 32

EXEMPTION FROM TAXATION OF CONSULAR PREMISES

1.             Consular  premises and the residence of the  career  head  of consular post of which the sending State or any person acting  on its  behalf  is  the owner of lessee shall  be  exempt  from  all national,  regional,   or municipal dues  and  taxes  whatsoever, other  than  such  as represent  payment  for  specific  services rendered.

2.             The exemption from taxation referred to in paragraph i of this Article shall not apply to such dues and taxes if, under the  law of  the  receiving  State, they are payable  by  the  person  who contracted  with the sending State or with the person  acting  on its behalf.

ARTICLE 33

INVIOLABILITY OF THE CONSULAR ARCHIVES AND DOCUMENTS

The  consular archives and documents shall be inviolable  at  all times and wherever they may be.

ARTICLS 35

FREEDOM OF COMMUNICATION

1.             The  receiving  State shall permit  and  protect  freedom  of communication on the part of the consular post for all  official purposes.  In  communication with the Government,  the  diplomaic missions  and  other consular posts, wherever  situated,  of  the sending  State,  the consular post may  employ  all  appropriate means, including diplomatic or consular, couriers, diplomatic  or consular  bag  and  messages in code  or  cypher.  However.,  the consular  post  may install and use a wireless  transmitter  only with the consent of the receiving State.

2.             The  official correspondence of the consular  post  shall  be inviolable.  Official  correspondence means  all  correspondentde relating to the consular post and its functions.

3.             The  consular  bag  shall be  neither  opened  nor  detained. Nevertheless, if the competent authorites of the receiving  State have  serious reason to believe that the bag contains   something other  than the correspondence, documents or articles  referred to in paragraph 4 of this Artilce, they may request that the bag  be opened  in their presence by an authorised representative of  the sending State.  If  this  request is refused by the authorities  of  the  sending State, the bag shall be returned to its place of origin.

4.             The packages constituting the consular bag shall bear  visible external marks of their character and may contain only  official correspondence and documents of articles intended exclusively for official use.

5.             The  consular  courier  shall be  provided  with  an  offical document  indicating  his  status  and  the  number  of  packages constituting  the  consular bag. Except with the consent  of  the receiving  State he shall be neither a national of the  receiving State,  nor  unless  he is a national of  the  sending  State,  a permanent resident of the receiving State. In the performance  of his  functions he shall be protected by the receiving  State.  He shall enjoy personal inviolability and shall not be liable to any form of arrest or detention.

6.             The  sending  State, its diplomatic missions and  its  consular posts  may designate consular couriers ad hoc. In such cases  the provisions of paragraph 5 of this Article shall also apply except that  the immunities therein mentioned shall cease to apply  when such a courier has delivered to the consignee the consular bag in his charge.

7.             A consular bag may be entrusted to the captain of a ship or of a commercial aircraft scheduled to land at an authorised post  of entry.  He shall be provided with an official document  indicating the  number of packages constituting the bag,but he shall  not  be considered  to  be a consular courier. By  arrangement  with  the appropriate local authorities, the consular post may send one  of its  members  to take possession of the bag directly  and  freely from the captain of the ship or of the aircraft.

ARTICLE 39

CONSULAR FEES AND CHARGES

1.             The consular post may levy in the terriory of  the  receiving State  the fees and charges provided by the laws and  regulations of the sending State for consular acts.

2.             The  sums  collected  in the form of  the  fees  and  charges referred to in paragraph 1 of this Article, and the receipts  for such fees and charges, shall be exempt from all dues and taxes in the  receiving  State.

SECTION  II.-       FACILITIES,  PRIVILEGES  AND IMMUNITIES RELATING TO CAREER CONSULAR OFFICERS AND OTHER MEMBERS OF A CONSULAR POST.

ARTICLE 41

PERSONAL INVIOLABILITY OF CONSULAR OFFICER

1.             Consular officers shall not be liable to arrest or  detention pending  trial, except in the case of a grave crime and  pursuant to a decision by the competent judicial authority.

2.             Except in the case specified in paragraph 1 of this  Article, consular  officers shall not be committed to prison or liable  to any  other for of restriction on their personal freedom  save  in execution of a judicial decision of final effect.

ARTICLE 43

IMMUNITY FROM JURISDICTION

1.           Consular officers and consular employees shall not be amenable to the jurisdiction of the judicial or administrative authorities of  the  receiving  State  in respect of  acts  perfomed  in  the exercise of consular functions.

2.             The  provision  of paragraph 1 of  this  Article  shall  not, however, apply in respect of a Civil action either:-

(a)    arising out of a contract concluded by a consular officer  or a consular employee in which he did not contract expressly or impliedly as an agent of the sending State; or

(b)    by a third party for damage arising from an accident in  the receiving State caused by a vehicle, vessel or aircraft.

ARTICLE 44

LIABILITY TO GIVE EVIDENCE

1.             Members  of a consular post may be called upon to  attend  as witnesses   in   the  course  of   judicial   or   administrative proceedings. A consular employee or a member of the service staff shall  not, except in the cases mentioned in paragraph 3 of  this Article,  decline to give evidence. If a consular officer  should decline  to do so, no coercive measure or penalty may be  applied to him.

2.             The  authority requiring the evidence of a  consular  officer shall avoid interference with the performance of his functions  . It may, when possible, take such evidence at his residence or  at the consular post or accept a statement from him in writing.

3.             Member  of a consular post are under no  obligation  to  give evidence concerning matters connected with the exercise of  their functions  or  to produce official correspondence  and  documents relating  thereto.  They  are also entitled to  decline  to  give evidence as expert witnesses with regard to the law of the sending state.

ARTICLE 45

WAIVER OF PRIVILEEGES AND IMMUNITIES

1.          The sending State may waive, with regard to a member  of  the consular  post any of the privileges and immunities provided  for in Articles 41,43 and 44.

2.             The waiver shall in all cases be express, except as  provided in paragraph 3 of this Article, and shall be communicated to  the receiving state in writing.

3.            The  initiation of proceedings by a consular  employee  in  a matter  where  he might enjoy immunity  from  jurisdiction  under Article  43  shall  preclude  him  from  invoking  immunity  from jurisdiction  in respect of any couter-claim  directly  connected with the principal claim.

4.             The waiver of immunity from jurisdiction for the purposes  of civil or administrative proceeedings shall not be deemed to imply the  waiver of immunity from the measures of execution  resulting from  the  judicial  decision; in respect  of  such  measures,  a separate waiver shall be necessary.

ARTICLE 48

SOCIAL SECURITY EXEMPTION

1.         Subject  to the provisions of paragraph 3  of  this  Article, members of the consular post with respect to services rendered by then for the sending State and members of their families  forming part  of their households, shall be exempt from  social  security provisions which may be in force  in the receiving State.

2.         The  exemption provided for in paragraph I  of  this  Article shall  apply also to members of the private staff who are in  the sole employ of members of the consular post, on condition:-

(a)    that they are not nationals of or permanently resident in the receiving State;and

(b)    that  they  are covered by the  social  security  provisions which are in force in the sending State or a third State.

3.             Members of the consular post who employ persons to  whom  the exemption  provided for in paragraph 2 of this Article does  not apply  shall observe the obligations which the  social  security provisions of the receiving State impose upon employers.

4.             The  exemption  provided for in paragraphs 1 and  2  of  this Article shall not preclude voluntary participation in the  social security  system  of  the receiving  State,  provided  that  such participation is permitted by that State.

ARTICLE 49

EXEMPTION FROM TAXATION

1.       Consular officers and consular employees and members of  their families  forming part of their households shall be  exempt  from all  dues  and  taxes, personal or real,  national,  regional  or municipal, except.

(a)  indirect taxes of a kind which are normally incorporated  in the price of goods or services;

(b)  dues or taxes on private immovable property situated in  the territory  of the receiving State, subject to the  provisions  of Articles 32;

(c)  estate,  succession  or inheritance duties,  and  duties  on transfers,  levied  by  the  receiving  State,  subject  to   the provisions of paragraph (b) of Article 51;

(d)    dues and taxes on private income, including  capital  gains, having its source in the receiving State;

(e)    charges levied for specific services rendered;

(f)  registration, court or record fees, mortgage dues and  stamp duties, subject to the provisions of Article 32.

2.             Members  of the service staff shall be exempt from  dues  and taxes on the wages which they receive for their services.

3.     Members of the consular post who employ persons whose wages or salaries  are not exempt from income tax in the  receiving  State shall  observe the obligations which the laws and regulations  of that   State  impose  upon employers concerning  the  levying  of income tax.

ARTICLE  50

EXEMPTION FROM CUSTOMS DUTIES AND INSPECTION

1.           The receiving state shall, in accordance with such  laws  and regulations as it may adopt, permit entry of and grant  exemption from  all Customs-duties, taxes, and related charges  other  than charges for storage, cartage and similar services, on:-

(a)    articles for the official use of consular post;

(b)    articles  for  the personal use of  a  consular  officer  or members  of his family forming part of his  household,  including articles  intended for his establishment. The  articles  intended for  consumption  shall not exceed the quantities  necessary  for direct utillization by the   persons concerned.

2.             Consular employees shall enjoy the privileges and  exemptions specified  in paragraph 1 of this Article in respect of  articles imported at the time of first installation.

3.          Personal baggage accompanying consular officeres and  members of  their  families  forming part of their  households  shall  be exempt  from  inspection. It may be inspected only  if  there  is serious  reason to believe that it contains articles  other  than those  referred  to in sub-paragrph (b) of paragraph  1  of  this Article, or articles the import or export of which is  prohibited by  the laws and regulations of the receiving State or which  are subject  to its quarantine laws and regulations.  such  inspection shall  be carriedout in the presence of the consular  officer or member of his family concerned.

ARTICLE  51

ESTATE  OF  A MEMBER OF THE CONSULAR POST OR OF A MEMBER  OF  HIS FAMILY

In the event of the death of a member of the consular post or  of a  member  of  his  family forming part  of  his  household,  the receiving State:-

(a)    shall  permit  the export of the  movable  property  of  the deceased, with the exception of any such property acquired in  the receiving State the export of which was prohibited at the time of his death;

(b)    shall  not  levy national,  regional  or  municipal  estate, succession  or  inheritance duties, and duites on  transfers,  on movable  property  the presence of which in the  receiving  State was due solely to the presence in that State of the deceased as a member  of  the consular post or as a member of the family  of  a member of the consular post.

ARTICLE  52

EXEMPTION FROM PERSONAL SERVICES AND CONTRIBUTIONS

The receiving Stat Shall exempt members of the consular post  and members  of their families forming part of their households  from all  personal  services,  from all public  service  of  any  kind whatsoever, and from military obligations such as those connected with requisitioning, military contributions and billeting.

ARTICLE  53

BEGINNING AND END OF CONSULAR PRIVILEGES AND IMMUNITIES

1.             Every member of the consular post shall enjoy the  privileges and immunities provided in the present Convention from the moment he enters the territory of the receiving State on proceeding  to take  up his post or if already in its territory from the  moment when he enters on his duties with the consular post.

2.          Members of the family of a member of the consular post  forming part  of  his household and members of his  private  staff  shall receive  the  privileges and immunities provided in  the  present Convention  from  the date from which he  enjoys  privileges  and immunities in accordance with paragraph 1 of this Article or from the date of their entry into the territory of the receiving State or  from  the date of their becoming a member of such  family  or private staff, whichever is the latest.

3.        When the functions of a member of the consular post have  come to an end, his privileges and immunities and those of a member of his  family  forming  part of his household or a  member  of  his private staff shall normally cease at the moment when the  person concerned leaves  the  receiving State or on  the  expiry  of  a reasonable period in which to do so whichever is the sooner,  but shall subsist until that time, even in case of armed  conflict.In the  case  of  the persons referred to in  paragraph  2  of  this Article,  their  privileges and immunities shall come to  an  end when  they  cease  to belong to the household or  to  be  in  the service of a member of the consular post provided, however,  that if  such  persons  intend leaving the  receiving  State  within  a reasonale  period  thereafter, their  privileges  and  immunities shall subsist until the time of their departure.

4.       However, with respect to acts performed by a consular  officer or a consular employee in the exercise of his functions, immunity from jurisdiction shall continue to subsist without limitation of time.

5.             In the event of the death of a member of the  consular  post, the  members  of his family forming part of his  household  shall continue to enjoy the privileges and immunities accorded to  them until  they  leave the receiving State or until the expiry  of  a reasonable  period enabling  them to do  so,  whichever  is  the sooner.

ARTICLE  54

OBLIGATIONS OF THIRD STATES

1.             If a consular officer passes through or is in the  territorry of  a  third  State, which has granted him a visa,  if  visa  was necessary,while  proceeding  to take up or return to his  post  or when returning to the sending State, the third state shall accord to  him all immunities provided for by the other Articles of  the present  Convention as may be required to ensure his  transit  or return.  The  same shall apply in the case of any member  of  his family forming part of his household enjoying such privileges and immunities   who  are  accompanying  the  consular  officer   of travelling  separately  to join him or to return to  the  sending State.

2.             In circumstances similar to those specified in paragraph 1  of this  Article, third State shall not hinder the  transit  through their  territory  of  other members of the consular  post  or  of members of their families forming part of their households.

3.             Third  State shall accord to official correspondence  and  to other  official communications in transit, including messages  in code or cypher, the same freedom and protection as the  receiving State is bound to accord under the present Convention. They shall accord  to consular couriers who have been granted a visa,  if  a visa  was  necessary, and to consular bags in transit,  the  same inviolability  and protection as the receiving State is bound  to accord under the present Convention.

4.             The obligations of third States under paragraphs 1,2 and 3  of the  this  Article  shall also apply  to  the  persons  mentioned respectively in those paragraphs, and to official  communications and  to  consular bags, whose presence in the  territory  of  the third State is due to force majeure.

ARTICLE  55

RESPECT FOR THE LAWS AND REGULATIONS OF THE RECEIVING STATE

1.             The  consular  premises  shall not  be  used  in  any  manner incompatible with the exercise of consular functions.

2.             The  provisions  of paragraph 2 of  this  Article  shall  not exclude  the  possibility  of offices of  other  institutions  or agencies  being  installed in part of the building in  whcih  the consular  premises  are  situated,  provided  that  the  premises assigned  to  them are separate from those used by  the  consular post. In that event, the said offices shall not, for the purposes of  the  present Convention, be considered to form  part  of  the consular premises.

ARTICLE 57

SPECIAL PROVISONS CONCERNING PRIVATE GAINFUL OCCUPATION

1.             Privileges and immunities provided in this Chapter shall  not be accorded:

(a)    to consular employees or to members of the services staff who carry on any private gainful occupation in the receiving State:

(b)    to  members of the family of a person referred  to  in  sub-paragraph  (a)  of this paragraph or to members  of  his  private staff:

(c)    to members of the family of a memeber of a consular post  sho themselves  carry  on  any  private  gainful  occupation  in  the receiving State.

CHAPTER-III.-    Regime relating to Honorary Consular Officers  and Consular Posts headed by such officers.

ARTICLE  58

GENERAL   PROVISIONS  RELATING  TO  FACILITIES,  PRIVILEGES   AND IMMUNITIES

1.             Articles 35 and, patagraph 3 of Article 54 and paragraphs 2 and 3  of  Article  55 shall apply to consular  posts  headed  by  an honorary   consular  officer.  In  additions,   the   facilities, privileges  and  immunities  of  such  consular  posts  shall  be governed by Articles60. 61 and 62.

2.             Article  43, paragraph 3 of Article 44, Articles  45  and  53 shall  apply  to  honorary consular officers.  In  addition,  the facilities,  privileges and immunities of such consular  officers shall be governed by Articles 66 and 67.

3.             Privileges amd immunities provided in the present  Convention shall  not  be accorded to members of the family of  an  honorary consular officer or of a consular employee employed at a consular post headed by an honorary consular officer.

ARTICLE  60

EXEMPTION FROM TAXATION OF CONSULAR PREMISES

1.             Consular  premises of a consular post headed by  an  honorary consular  officer  of  which the sending State is  the  owner  or lessee shall be exmpt from all national, regional  or  municipal  dues  and taxes whatsoever, other than such as represent  payment for specifie services rendered.

2.             The exemption from taxation referred to in paragraph 1 of this Article shall not apply to such dues and taxes if, under the laws and regulations of the receiving State, they are payable by  the person who contracted with the sending State.

ARTICLE 61

INVIOLABILITY OF CONSULAR ARCHIVES AND DOCUMENTS

The consular arcieves and documents of a consular post headed  by an honorary consular officer shall be inviolable at all times and wherever  they may be, provided that they are kept separate  from other  papers and documents and, in particular, from the  private correspondence of the head of a consular post and of any  person working with him, and  from the materials, books or  documents relating to their profession or trade.

ARTICLE  62

EXEMPTION FROM CUSTOMS DUTIES

The  receiving  State  shall, in accordance with  such  laws  and regulations as it may adopt, permit entry of and grant  exemption from  all Customs-duties, taxes, and related charges  other  than charges  for  storage,  cartage  and  similar  services  on   the following  articles, provided that they are for the  official use of a consular post headed by an honorary consular officers  coat-of-arms,  flages, signboards, seals and stamps,  books,  official printed  matter, office furniture, office equipment  and  similar articles  supplied by or at the instance of the sending State  to the consular post.

ARTICLE 66

EXEMPTION FROM TAXATION

An  honorary consular officer shall be exempt from all  dues  and taxes  on the remuneration and emoluments which he receives  from the  sending  State  in  respect  of  the  exercise  fo  consular functions.

ARTICLE  67

EXEMPTION FROM PERSONAL SERVICES AND CONTRIBUTIONS

The receiving State shall exempt honorary consular officers  from all  personal services and from all public services of  any  kind whatsoever and from military obligations such as those  connected with requistioning military contributions and billeting.

CHAPTER IV.-   General Provisons

ARTICLE 70

EXERCISE OF CONSULAR FUNCTIONS BY DIPLOMATIC MISSIONS

1.             The provisions of the present Convention apply also, so far as the  context permits, to the exercise of consular functions by  a diplomatic mission.

2.         The names of members of a diplomatic mission assigned to  the consular  section or otherwise charged with the exercise  of  the consular  functions  of  the mission shall  be  notified  to  the Ministry  of  Foreign Affaris of the receiving State  or  to  the authority designated by that Ministry.

3.          The privileges and immunities of the members of a  diplomatic mission referred to in paragraph 2 of this Article shall continue to be governed  by the rules of  international  law  concerning diplomatic relations.

ARTICLE 71

NATIONALS OR PERMANENT RESIDENTS OF THE REVEIVING STATE

1.             Except  in so far as additional  facilities,  privileges  and immunities  may  be  granted by  the  receiving  State,  consular officers  who  are nationals of or permanently  resident  in  the receiving  State shall enjoy only immunity from jurisdiction  and personal  inviolability in respect of official acts performed  in the  exercise of their functions, and the privilege  provided  in paragraph 3 of Article 44.

2.             other  members of the consulr post who are  nationals  of  or permanently resident in the receiving state and members of  their families, as well as members of the families of consular officers referred  to  in  paragraph  1  of  this  Article,  shall   enjoy facilities, privileges and immunities only in so far as these are granted  to  them by the receiving State. Those  members  of  the families  members of the consular post and those members  of  the private  staff  who are themselves nationals  of  or  permanently resident in the receiving State shall likewise enjoy facilities, privileges and immunities only in so far as these are granted  to them by the receiving State.

252. Possession of coin by person who knew it to be altered when he became possessed thereof: Whoever fraudulently or with intent that fraud may be committed, is in possession of coin with respect to which the offence defined in either of the Section 246 or 248 has been committed, having known at the time of becoming possessed thereof that such offence had been committed with respect to such coin, shall be punished with imprisonment of either description for a term which may extend to three years, and shall also be liable to fine.

253. Possession of Pakistan coin by person who knew it to by altered when he became possessed thereof: Whoever fraudulently or with intent that fraud may be committed, is in possession of coin with respect of which the offence, defined in either of Section 247 or 249 has been committed having known at the time of becoming possessed thereof that such offence had been committed with respect to such coin, shall be punished with imprisonment of either description for a term which may extend to five years, and shall also be liable to fine.

254. Delivery of coin as genuine which, when first possessed, the deliverer did not know to be altered: Whoever delivers to any other person as genuine or as a coin of a different description from what it is, or attempts to induce any person to receive as genuine, or as a different coin from what it is, any coin in respect of which’ he knows that any such operation as that mentioned in Sections 246, 247, 248 or 249 has been performed, but in respect of which he did not, at the time when he took it into his possession, know that such operation had been performed, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine to an amount which may extend to ten times the value of the coin for which the altered coin is passed, or attempted to be passed.

255. Counterfeiting Government stamp : Whoever counterfeits, or knowingly performs any part of the process of counterfeiting, any stamp issued by Government for the purpose of revenue, shall be punished with imprisonment for life or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.

Explanation: A person commits this offence who counterfeits by causing a genuine stamp of one denomination to appear like a genuine stamp of a different denomination.

256. Having possession of instrument or material for counterfeiting Government stamp: Whoever has in his possession any instrument or material for the purpose of being used, or knowing or having reason to believe that it is intended to be used, for the purpose of counterfeiting any stamp issued by Government for the purpose of revenue, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

257. Making or selling instrument for counterfeiting Government stamp: Whoever makes or performs any part of the process of making, or buys, or sells, or disposes of, any instrument for the purpose of being used, or knowing or having reason to believe that it is intended to be used, for the purpose of counterfeiting any stamp issued by Government for the purpose of revenue, shall be punished with imprisonment of either description for a term which may extend to seven years and shall also be liable to fine.

258. Sale of counterfeit Government stamp: Whoever sells, or offers for sale, any stamp which he knows or has reason to believe to be a counterfeit of any stamp issued by Government for the purpose of revenue shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

259. Having possession of counterfeit Government stamp : Whoever has in his possession any stamp which he knows to be a counterfeit of any stamp issued by Government for the purpose of revenue, intending to use, or dispose of the same as a genuine stamp, or in order that it may be used as a genuine stamp, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

260. Using as genuine a Government stamp known to be counterfeit: Whoever uses as genuine any stamp knowing it to be a counterfeit of any stamp issued by Government for purpose of revenue, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.

261. Effacing writing from substance, Government stamp, or removing from document a stamp used for it, with intent to cause loss to Government: Whoever fraudulently or with intent to cause loss to the Government, removes or effaces from any substance bearing any stamp issued by Government for the purpose of revenue, any writing or document for which such stamp has been used, or removes from any writing or document a stamp which has been used for such writing or document, in order that such stamp may be used for a different writing or document, shall be punished with imprisonment of either description for a term which may extend to there years, or with fine, or with both.

262. Using Government stamp known to have been before used: Whoever fraudulently or with intent to cause loss to the Government, uses for any purpose a stamp issued by Government for the purpose of revenue, which he knows to have been before used, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

263. Erasure of mark denoting that has been used: Whoever, fraudulently or with intent to cause loss to Government, erases or removes from a stamp issued by Government for the purpose of revenue, any mark, put or impressed upon such stamp for the purpose of denoting that the same has been used, or knowingly has in his possession or sells or disposes of any such stamp from which such mark has been erased or removed, or sells or disposes of any such stamp which he knows to have been used, shall be punished with imprisonment of either description for a term which may extend to three years or with fine, or with both.

263-A. Prohibition of fictitious stamp: (l) Whoever–

(a) makes, knowingly alters, deals in or sells any fictitious stamp, or knowingly uses for any postal purpose any fictitious stamp, or

(b) has in his possession, without lawful excuse, any fictitious stamp, or

(c) makes or, without .lawful excuse, has in his possession any die, plate, instrument or materials for making any. fictitious stamp, shall be punished with fine which may extend to two hundred rupees.

(2) An such stamp, die, plate, instrument or materials in the possession of any person for making any fictitious stamp may be seized and shall be forfeited.

(3) In this section “fictitious stamp” means any stamp falsely purporting to be issued by Government for the purpose of denoting a rate of postage or any facsimile or imitation or representation, whether on paper or otherwise, of any stamp issued by Government for that purpose.

(4) In this section and also in Sections 255 to 263, both inclusive, the word “Government” when used in connection with, or in reference to, any stamp issued, for the purpose of denoting a rate of postage, shall, notwithstanding anything in Section 17, be deemed to include the person or persons authorised by law to administer executive Government in any part of Pakistan, and also in any foreign country.

CHAPTER XIII

OF OFFENCES RELATING TO WEIGHTS AND MEASURES

264. Fraudulent use of false instrument for weighing: Whoever fraudulently uses any instrument for weighing which he knows to be false, shall be punished with imprisonment of either description for a term, which may extend to one year, or with fine, or with both.

265. Fraudulent use of false weight or measure: Whoever fraudulently uses any false weight or false measure of length or Capacity, or fraudulently uses any weight or any measure of length or capacity as a different weight or measure from what it is, shall be punished with imprisonment of either description for a term which may extend to one year, or with fine or with both.

266. Being in possession of false weight or measure: Whoever is in possession of any instrument for weighing, or of any weight, or of any measure of length or capacity, which he knows to be false and intending that the same may be fraudulently used, shall be punished with imprisonment of either description for a term which may extend to one year, Or with fine, or with both.

267. Making or selling false weight or measure: Whoever makes, sells or disposes of any instrument for weighing, or any weight, or any measure of length or capacity which he knows to be false, in order that the same may be used as true, or knowing that the same is likely to be used as true shall be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both.

CHAPTER XIV

OF OFFENCES AFFECTING THE PUBLIC HEALTH, SAFETY,

CONVENIENCE, DECENCY AND MORALS

268. Public nuisance: A person is guilty of a public nuisance who does any act or is guilty of an illegal omission which causes any common injury, danger or annoyance to the public or to the people in general who dwell or occupy property in the vicinity, or which must necessarily cause injury, obstruction, danger or annoyance to persons who may have occasion to use any public right. A common nuisance is not excused on the ground that it causes some convenience or advantage.

269. Negligent act likely to spread infection of disease dangerous to life: Whoever unlawfully or negligently does any act which is, and which he knows or has reason to believe to be, likely to spread the infection of any disease dangerous to life, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, or with both.

270. Malignant act likely to spread infection of disease dangerous to life: Whoever malignantly does any act which is, and which he knows or has reason to believe to be, likely to spread the infection of any disease dangerous to life, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

271. Disobedience to quarantine rule: Whoever knowingly disobeys any rule made and promulgated by the Federal or any Provincial Government for putting any vessel into a state of quarantine, or for regulating the intercourse of vessels in a state of quarantine with the shore or with other vessels, or for regulating the intercourse between places where an infectious disease prevails and other places, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, or with both.

272. Adulteration of food or drink intended for sale: Whoever adulterates any article of food or drink, so as to make such article noxious as food or drink, intending to sell such article as food or drink, or knowing it to be likely that the same will be sold as food or drink, snail be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

273. Sale of noxious food or drink: Whoever sells, or offers or exposes for sale, as food or drink, any article which has been rendered or has become noxious, or is in a state unfit for food or drink, knowing or haying reason to believe that the same is noxious as food or drink, shall be punished with imprisonment of either description for a term which may extend to six months, of with fine which may extend to one thousand rupees, or with both.

274. Adulteration of drugs: Whoever adulterates any drug or medical preparation-in such a manner as to lessen the efficacy or change the operation of such drug) or medical preparation, or to make it noxious intending that it shall be sold or used for, or knowing it to be likely that it will be sold or used for, any medicinal purposes, as if it had not undergone such adulteration, shall be punished with imprisonment of either description for a term which may extend to six months or with fine which may extend to one thousand rupees, or with both.

275. Sale of adulterated drugs: Whoever, knowing any drug or medical preparation to have been adulterated in such a manner as to lessen its efficacy, to change its operation, or to render it noxious, sells the same, or offers or exposes it for sale, or issues it from any dispensary for medicinal purposes as unadulterated, or causes it to be used for medicinal purposes by any person not knowing of the adulteration, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

276. Sale of drug as a different drug or preparation: Whoever knowingly sells, or offers or exposes for sale, or issues from a dispensary for medicinal purposes, any drug or medical preparation, as a different drug or medical preparation, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both,

277. Fouling water of public spring or reservoir: Whoever voluntarily corrupts or fouls the water of any public spring or reservoir, so as to render it less fit for the purpose for which it is ordinarily used, shall be punished with imprisonment of either description for a term which may extend to three months, or with fine which may extend to five hundred rupees, or with both.

278. Making atmosphere noxious to health: Whoever voluntarily vitiates the atmosphere in any place so as to make it noxious to the health of persons in general dwelling or carrying on business in the neighbourhood or passing along a public way, shall be punished with fine, which may extend to five hundred rupees.

279. Rash driving or riding on a public way: Whoever drives any vehicle, or rides,, on any public way in a manner so rash or negligent as .to endanger human life, or to be likely to cause hurt or injury to any other person, shall be punished with imprisonment of either description for a term which may extend to two years or with fine which may extend to one thousand rupees, or with both.

280. Rash navigation of vessel: Whoever navigates any vessel in a manner so rash or negligent as to endanger human life, or to be likely to cause hurt or injury to any other person, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees or with both.

281. Exhibition of false light, mark or buoy: Whoever exhibits any false light, mark or buoy intending or knowing it to be likely that such exhibition will mislead any navigator, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.

282. Conveying person by water for hire in unsafe or overloaded vessel: Whoever knowingly or negligently conveys; or causes to be conveyed for hire, any person by water in any vessel, when that vessel is in such a state or so loaded as to endanger the fife of that person, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

283. Danger or obstruction in public way or line of navigation: Whoever, by doing any act, or by omitting to take order with any property in his possession or under his charge, causes danger, obstruction or injury to any person in any public way or public line of navigation, shall be punished with fine which may extend to two hundred rupees.

284. Negligent conduct with respect to poisonous substance: Whoever does, with any poisonous substance, any act in a manner so rash or negligent as to endanger human life, or to be likely to cause hurt or injury to any person, or knowingly or negligently omits to take such order with any poisonous substance in his possession as is sufficient to guard against any probable danger to human life from such poisonous substance, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, which may extend to one thousand rupees, or with both.

285. Negligent conduct with respect to fire or combustible matter : Whoever does, with tire or any combustible matter, any act so rashly or negligently as to endanger human life, or to be likely to cause hurt or injury to any other person, or knowingly or negligently omits to take such order with any fire or any combustible

matter in his possession as is sufficient to guard against any probable danger to human life from such fire or combustible matter. shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

286. Negligent conduct with respect to explosive substance: Whoever does, with any explosive substance any act so rashly or negligently as to endanger human life, or to be likely to cause hurt or injury to any other person, or knowingly or negligently omits to take such order with any explosive substance in his possession as is sufficient to guard against any probable danger to human life from that substance, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

287. Negligent conduct with respect to machinery: Whoever does, with any machinery, any act so rashly or negligently as to endanger human life or to be likely to cause hurt or injury to any other person, or knowingly or negligently omits to take such order with any machinery in his possession or under his care as is sufficient to guard against any probable danger to human life from such machinery, shall be punished with imprisonment of either description for a term which may extend to Six months, or with fine which may extend to one thousand rupees, or with both.

288. Negligent conduct with respect to pulling down or repairing buildings: Whoever, in pulling down or repairing any building, knowingly or negligently omits to take such order with that building as is sufficient to guard against any probable danger to human life from the fall of that building, or of any part thereof, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

289. Negligent conduct with respect to animal: Whoever, knowingly or negligently omits to take such order with any animal in his possession as is sufficient to guard against any probable danger to human life, or any probable danger of grievous hurt from such animal, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand Rupees, or with both.

290. Punishment for public nuisance in cases not otherwise provided for: Whoever commits a public nuisance in any case not otherwise punishable by this Code, shall be punished with fine which may extend to two hundred rupees.

291. Continuance of nuisance after injunction to discontinue: Whoever repeats or continues a public nuisance having been enjoined by any public servant who has lawful authority to issue such injunction not to repeat or continue such nuisance, shall be punished with simple imprisonment for a term which may extend to six months, or with fine, or with both.

292. Sale, etc., of obscene books, etc.: Whoever:-

(a) sells, lets to hire, distributes, publicly exhibits or in any manner puts into circulation, or for purposes of sale. hire, distribution, public exhibition or circulation,, makes, produces or has in his possession any obscene book, pamphlet, paper, drawing, painting, representation or figure or any other obscene object whatsoever, or

(b) imports, exports or conveys any obscene object for any of the purposes aforesaid, or knowing or having reason to believe that such object will be sold, let to hire, distributed or publicly exhibited or in any manner put into circulation, or shall be punished with imprisonment of either description for a term which may extend to Six months, or with fine which may extend to one thousand rupees, or with both.

(c) takes part in or receives profits from, any business in the course of which he knows or has reason to believe that any such obscene objects are, for any of -the purposes aforesaid, made, produced, purchased, kept, imported, exported, conveyed, publicly exhibited or in any manner put into circulation, or .

(d) advertises or makes known by any means whatsoever that any person he engaged or is ready to engage in any act which is an offence under this section,  or that any such obscene object can be procured from or through any person, or

(e) offers or attempts to do any act which is an offence under this section, shall be punished with imprisonment of either description for a term which may extend to three months, or which tine or with both. .

Exception: This section does not extend to any book, pamphlet, writing, drawing or painting kept or used bona fide for religious purposes or any representation sculptured, engraved, painted or otherwise represented on or in any temple, or on any car used for the conveyance of idols, or kept or used for any religious purpose.

293. Sale, etc., of obscene objects to young person : Whoever sells, .lets to hire, distributes,, exhibits or circulates to any person under the age of twenty years any such obscene object as is referred to in the last preceding section, or offers or attempts so to do, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, or with both.

294. Obscene acts and songs; Whoever, to the annoyance of others, –

(a) does any obscene act in any public place, or (h) sings, recites or utters any obscene songs, ballad or words, in or near any public place, shall be punished with imprisonment of either description for a term which may extend to three months, or with fine, or with both.

294-A. Keeping lottery office: Whoever keeps any office or place for the purpose of drawing any lottery not being a State lottery or a lottery authorized by the Provincial Government shall be punished with imprisonment of either description for a term which may extend to six months, or with fine, or with both. And whoever publishes any proposal to pay any sum, or to deliver any goods, or to -do or forbear doing anything for the benefit of any person, on any event or contingency relative or applicable to the drawing of any ticket, lot, number or figure in any such lottery shall be punished with fine which may extend to one thousand rupees.

294-B. Offering of prize in connection with trade, etc.: Whoever offers, or undertakes to offer, in connection with any trade or business or sale of any commodity, any prize, reward or other similar consideration, by whatever name called, whether in money or kind, against any coupon, ticket, number or figure, or by any other device, as an inducement or encouragement to trade or business or to the buying of any commodity, or for the purpose of advertisement or popularising any commodity, and whoever publishes any such offer, shall be punishable, with imprisonment of either description for a term which may extend to six months, or with fine, or with both.

CHAPTER XV

OF OFFENCES RELATING TO RELIGION

295. Injuring or defiling place of worship, with Intent to insult the religion of any class: Whoever destroys, damages or defiles any place of worship, or any object held sacred by any class of persons with the intention of thereby insulting the religion of any class of persons or with the knowledge that any class of persons is likely to consider such destruction damage or defilement as an insult to their religion. shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

295-A. Deliberate and malicious acts Intended to outrage religious feelings of any class by insulting Its religion or religious beliefs: Whoever, with deliberate and malicious intention of outraging the ‘religious feelings of any class of the citizens of Pakistan, by words, either spoken or written, or by visible representations insults the religion or the religious beliefs of that class, shall be punished with imprisonment of either description for a term which may extend to ten years, or with fine, or with both.

295-B. Defiling, etc., of Holy Qur’an : Whoever wilfully defiles, damages or desecrates a copy of the Holy Qur’an or of an extract therefrom or uses it in any derogatory manner or for any unlawful purpose shall be punishable with imprisonment for life.

295-C. Use of derogatory remarks, etc., in respect of the Holy Prophet: Whoever by words, either spoken or written, or by visible representation or by any imputation, innuendo, or insinuation, directly or indirectly, defiles the sacred name of the Holy Prophet Muhammad (peace be upon him) shall be punished with death, or imprisonment for life, and shall also be liable to fine.

296. Disturbing religious assembly : Whoever voluntarily causes disturbance to any assembly lawfully engaged in the performance of religious worship, or religious ceremonies, shall be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both.

297. Trespassing on burial places, etc.: Whoever, with the intention of wounding the feelings of any person, or of insulting the religion of any person, or with the knowledge that the feelings of any person are likely to be wounded, or that the religion of any person is likely to be insulted thereby, commits any trespass in any place of worship or on any place of sculpture, or any place set apart for the performance of funeral rites or as a, depository for the remains of the dead, or offers any indignity to any human corpse or causes disturbance to any persons assembled for the performance of funeral ceremonies, shall be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both.

298. Uttering words, etc., with deliberate intent to wound religious feelings:

Whoever, with the deliberate intention of wounding the religious feelings of any person, utters any word or makes any sound in the hearing of that person or makes any gesture in the sight of that person or places any object in the sight of that person, shall be punished with imprisonment of either description for a term which may extend to one year or with fine, or with both.

298-A. Use of derogatory remarks, etc., in respect of holy personages: Whoever by words, either spoken or written, or by visible representation, or by any imputation, innuendo or insinuation, directly or indirectly, defiles the sacred name of any wife (Ummul Mumineen), or members of the family (Ahle-bait), of the Holy Prophet (peace be upon him), or any of the righteous Caliphs (Khulafa-e-Rashideen) or companions (Sahaaba) of the Holy Prophet (peace be upon him) shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

298-B. Misuse of epithets, descriptions and titles, etc., reserved for certain holy personages or places: (1) Any person of the Quadiani group or the Lahori group (who call themselves ‘Ahmadis’ or by any other name who by words, either spoken or written, or by visible representation-

(a) refers to or addresses, any person, other than a Caliph or companion of the Holy Prophet Muhammad (peace be upon him), as “Ameer-ul-Mumineen”, “Khalifatul- Mumineen”, Khalifa-tul-Muslimeen”, “Sahaabi” or “Razi Allah Anho”;

(b) refers to, or addresses, any person, other than a wife of the Holy Prophet Muhammad (peace bi upon him), as “Ummul-Mumineen”;

(c) refers to, or addresses, any person, other than a member of the family “Ahle-bait” of the Holy Prophet Muhammad (peace be upon him), as “Ahle-baft”; or

(d) refers to, or names, or calls, his place of worship a “Masjid”; shall be punished with imprisonment of either description for a term which may extend to

three years, and shall also be liable to fine.

(2) Any person of the Qaudiani group or Lahori group (who call themselves “Ahmadis” or by any other name) who by words, either spoken or written, or by visible representation refers to the mode or form of call to prayers followed by his faith as “Azan”, or recites Azan as used by the Muslims, shall be punished with imprisonment of either description for a term which may extend to three years, and shall also be liable to fine.

298-C. Person of Quadiani group, etc., calling himself a Muslim or preaching or propagating his faith : Any person of the Quadiani group or the Lahori group (who call themselves ‘Ahmadis’ or by any other name), who directly or indirectly, poses himself as a Muslim, or calls, or refers to, his faith as Islam, or preaches or propagates his faith, or invites others to accept his faith, by words, either spoken or written, or by visible representations, or in any manner whatsoever outrages the religious feelings of Muslims shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine.

CHAPTER XVI

OF OFFENCES AFFECTING THE HUMAN BODY

Of offences Affecting Life

299. Definitions : In this Chapter, unless there is anything repugnant in the subject or context:

(a) “adult” means a person who has attained the age of eighteen years ;

(b) “arsh” means the compensation specified in this Chapter to be paid to the victim or his heirs under this Chapter; .

(c) “authorised medical officer” means a medical officer or a Medical board, howsoever designated, authorised by the Provincial Government;

(d) “daman” means the compensation determined by the Court to be paid by the offender to the victim for causing hurt not liable to arsh;

(e) “diyat” means the compensation specified in Section 323 payable to the heirs of the victim ;

(f) “Government” means the Provincial Government,

(g) “ikrah-e-tam” means putting any person, his .spouse or any of his blood relations within the prohibited degree of marriage in fear of instant death or instant, permanent impairing of any organ of the body or instant fear of being subjected to sodomy or ziha-bil-jabr;

(h) “ikrah-e-naqis” means any form of duress which does not amount to ikrah-i-tam;

(i) “minor” means a person who is not an adult;

(j) “qatl” means causing death of a person ;

(k) “qisas” means punishment by causing similar hurt at the same part of the body of the convict as he has caused to the victim or by causing his death if he has committed qatl-iamd in exercise Of the right of the victim or a wali‘,

(l) “ta’zir” means purushment other than qisas, diyat, arsh , or daman; and

(m) “wali” means a person entitled to claim qisas.

300. Qatl-e-Amd : Whoever, with the intention of causing death or with the intention of causing bodily injury to a person, by doing an act which in the ordinary course of nature is likely to cause death, or with-the knowledge that his act is so imminently dangerous that it must in all probability cause death, causes the death of such person, is said to commit qatl-e-amd.

301. Causing death of person other than the person whose death was intended : Where a person, by doing anything which he intends or knows to be likely to cause death, causes death of any person whose death he neither intends nor knows himself to be likely to cause, such an act committed by the offender shall be liable for qatl-i-amd.

302. Punishment of qatl-i-amd : Whoever commits qatl-e-amd shall, subject to the provisions of this Chapter be:

(a) punished with death as qisas;

(b) punished with death for imprisonment for life as ta’zir having regard to the facts and circumstances of the case, if the proof in either of the forms specified in Section 304 is not available; or

(c) punished with imprisonment of either description for a term which may extend to twenty-five years, where according to the Injunctions of Islam the punishment of qisas is tot applicable.

303. Qatl committed under ikrah-i-tam or ikrah-i-naqis : Whoever commits qatl:

(a) under Ikrah-i-tam shall be punished with imprisonment for a term which may extend to twenty-five years but shall not be less than ten years and the person causing ‘ikrah-i-tam’ shall be punished for the ‘.kind of Qatl committed as a consequence of ikrah-i-tam; or

(b) under ‘ikrah-i-naqis’ shall be punished for the kind of Qatl committed by him and the person, causing ‘ikrah-i-naqis, shall be punished with imprisonment for a term which may extend to ten years.

304. Proof of qatl-i-amd liable to qisas, etc.: (1) Proof of qatl-i-amd shall be in any of the following forms, namely: -

(a) the accused makes before a Court competent to try the offence a voluntary and true confession of the commission of the offence; or

(b) by the evidence as provided in Article 17 of the Qanun-e-Shalladat, 1984 (P.O. No. 10 of 1984).

(2) The provisions of sub-section (1) shall, mutatis, mutandis, apply to a hurt liable to qisas.

305. Wali: In case of qatl, the wali shall be–

(a) the heirs of the victim, according to his personal law; and

(b) the Government, if there is no heir.

306. Qatl-e-amd not liable to qisas : Oatil-i-Amd shall not be liable to qisas in the following cases, namely:–

(a) when an offender is a minor or insane:

Provided that, where a person liable to qisas associates himself in the commission of the offence with a person not liable to qisas, with the intention of saving himself from qisas, .he shall not be exempted from qisas;

(b) when an offender causes death of his child or grand-child, howlowsoever’; and

(c) when any wali of the victim is a direct descendant, howlowsoever, of the offender.

307. Cases in which Qisas for qatl-i-amd shall not be enforced: (1) Qisas for qatl-iamd, shall not be enforced in the following cases, namely:–

(a) when the offender dies before the enforcement of qisas;

(b) when any wali voluntarily and without duress, to the satisfaction of the Court, waives the right of qisas under Section 309 or compounds under Section 310 and

(c) when the right of qisas devolves on the offender as a result of the death of the wali of the victim, or on , the person who has no right of qisas against the offender., .

(2) To satisfy itself that the wali has waived the right of qi’sas under Section 309 or compounded the right of qisas under Section 310 voluntarily and without duress the Court shall take down the statement of the wali and such other persons as it may deem necessary on oath and .record an opinion that it is satisfied that the Waiver or, as the case may be, the composition, was voluntary and not the result of any duress.

Illustrations

(i) A kills Z, the maternal uncle of his son B. Z has no other wali except D the wife of A. D has the right of qisas from A but if D dies, the right of qisas shall devolve on her son B who is also the son of the offender A. B cannot claim qisas against his father. Therefore, the qisas cannot be enforced.

(ii) B kills Z, the brother of their husband A. Z has no heir except A. Here A can claim qisas from his wife B. But if A dies, the right of qisas shall devolve on his son D who is also son of B, the qisas cannot be enforced against B.

308. Punishment in qatl-i-amd not liable to qisas, etc.: (1) Where an offender guilty of qatl-i-amd is not liable to qisas under Section 306 or the gisas is not enforceable under clause (c) of Section 307, he shall be liable to diyat:

Provided that, where the offender is minor or insane, diyat shall be payable either from his property or, by such person as may be determined by the Court:

Provided further that where at the time of committing qatl-i-amd the offender being a minor, had attained sufficient maturity of being insane, had a lucid interval, so as to be able to realize the consequences of his act, he may also be punished with imprisonment of either description for a term which may extend to fourteen years as ta’zir.

Provided further that, where the qisas is not enforceable under clause (c) of Section 307, the offender shall be liable to diyat only if there is any wali other than offender and if there is no wali other than the offender, he shall be punished with imprisonment of either description for a term which may extend to fourteen years as ta’zir.

(2) Notwithstanding anything contained in sub-section (i), the Court, having regard to the facts and circumstances of the case in addition to the punishment of diyat, may punish the offender with imprisonment of either description for a term which may extend to fourteen years, as ta’zir.

309. Waiver (Afw) of qisas in qatl-i-amd : In the case of qatl-i-amd, an adult sane wali may, at any time and without any compensation, waive his right of qisas:

Provided that the right of qisas shall not be waived;

(a) where the Government is the wali, or

(b) where the right of qisas vests in a minor or insane,

(2) Where a victim has more than one Wali any one of them may waive his right of qisas:

Provided that the wali who does not waive the right of qisas shall be entitled to his share of diyat.

(3) Where there are more than one victim, the waiver of the right of qisas by the wali of one victim shall not affect the right of qisas of the wali of the other victim.

(4) Where there are more than one offenders, the waiver of the right of qisas against one offender shall not affect the right of qisas against the other offender.

310. Compounding of qisas (Sulh) in qatl-i-amd: (1) In the case of qatl-i-amd, an adult sane wali may, at any time on accepting badl-i-sulh, compound his right of qisas:

Provided that giving a female in marriage shall not be a valid badl-i-sulh.

(2) Where a wali is a minor or an insane, the wali of such minor or insane wali may compound the right of qisas on behalf of such minor or insane wali:

Provided that the value of badf-i-sufh shall not be less than the value of diyat.

(3) Where the Government is the wali, it may compound the right of qisas:

Provided that fee value of badi-i-sulh shall not be less than the value of diyat.

(4) Where the badl-i-sufh is not determined or is a property or a right the value of which cannot be determined in terms of money under Shari’ah, the right of qisas shall be deemed to have been compounded and the offender shall be liable to diyat.

(5) Badl-i-sulh may be paid or given on demand or on a deferred date as may be agreed upon between the offender and the wali

Explanation: In this section, Badl-i-sulh means the mutually agreed compensation according to Shari’ah to be paid or given by the offender to a wali in cash or in kind or in the form of movable or immovable property.

311-Ta’zir after waiver or compounding of right of qisas in qatl-i-amd: Notwithstanding anything contained in Section 309 or Section 310, where all the wali do not waive or compound the right of qisas, or keeping in view the principle of fasad-fil-arz the Court may, in its discretion having regard to the facts and circumstances of the case, punish an offender against whom the right of qisas has been waived or compounded with imprisonment of either description for a term of which may extend to fourteen years as ta’zir.

Explanation: For the purpose of this section, the expression fasad-fil-arz shall include the past conduct of the offender, or whether he has any previous convictions, or the brutal or shocking manner in which the offence has been committed which is outrageous to the public conscience, or if the offender is considered a potential danger to the community.

312. Qatl-i-amd after waiver or compounding of qisas : Where a wali commits qatl-iamd of a convict against whom the right of qisas has been waived under Section 309 or compounded under Section 310, such wali shall be punished with– . \.

(a) qisas, if he had himself, waived or compounded the right of qisas against the convict or had knowledge of such waiver of-composition by another wali, or

(b) diyat, if he had no knowledge of such waiver or composition.

313. Right of qisas in qatl-i-amd : (1) Where there is only one wali, he alone has the right of qisas in qatl-i-amd but, if there are more than one, the right of qisas vests in each of them.

(2) If the victim-

(a) has no wali, the Government shall have the right of qisas; or

(b) has no wali other than a minor or insane or one of the wali is a minor or insane, the father or if he is not alive the paternal grandfather of such wali shall have the right of qisas on his behalf:

Provided that, if the minor or insane wali has no father or paternal grandfather, howhighsoever, alive and no guardian has been appointed by the Court, the Government shall have the right of qisas on his behalf.

314. Execution of qisas in qatl-i-amd: (1) Qisas in Qatll-i-amd shall be executed by a functionary of the Government by causing death of the convict as the Court may direct.

(2) Qisas shall not be executed until all the wali are present at the time of execution, either personally or through their representatives authorised by them in writing in this behalf:

Provided that where a wali or his representative fails to present himself on the date, time and place of execution of qisas after having been informed of the date, time and place as certified by the Court, an officer authorised by the Court shall give permission for the execution of qisas and the Government shall cause execution of qisas in the absence of such wali.

(3) If the convict is a woman who is pregnant, the Court may, in consultation with an authorised medical officer, postpone the execution of qisas up to a period of two years after the birth of the child and during this period she may be released on bail on furnishing of security to the satisfaction of the Court, or, if she is not so released she shall, be dealt with as if sentenced to simple imprisonment.

315-Qatl shibh-i-amd: Whoever, with intent to cause harm to the body or mind of any person, causes the death of that or of any other person by means of a weapon or an act which in the ordinary course of nature is not likely to cause death is said to commit qatlshibh- i-amd.

Illustration

A in order to cause hurt strikes Z with a stick or stone which in the ordinary course of nature is not likely to cause death. Z dies as a result of such hurt. A shall be guilty of Qatl shibh-i-amd.

316. Punishment for Qatl shibh-l-amd: Whoever commits qatl shibh-i-amd shall be liable to diyat and may also be punished with imprisonment of either description for a term which may extend to fourteen years as ta’zir.

317. Person committing qatl debarred from succession: Where a person committing qatl-i-amd or Qatl shibh-i-amd is an heir or a beneficiary under a will, he shall be debarred from succeeding to the estate of the victim as an heir or a beneficiary.

318. Qatl-i-khata: Whoever, without any intention to cause death of, or cause harm to, a person causes death of such person, either by mistake of act or by mistake of fact, is said to commit qatl-i-khata.

Illustrations

(a) A aims at a deer but misses the target and kills Z who is standing by, A is guilty of qatl-i-khata.

(b) A shoots at an object to be a boar but it turns out to be a human being. A is guilty of qatl-i-khata.

319. Punishment for qatl-i-khata: Whoever commits qatl-i-khata shall be liable to diyat:.