GST rates increased even prior to budget approval

* Tax increased from 5% to 17% on sale of finished products of textile, garments, leather, surgical equipments, sports goods and steel iron * FBR says no new tax imposed

ISLAMABAD: The PML-N government has jacked up general sales tax (GST) from 5 to 17 percent on the sale of finished products of textile, garments, leather, surgical equipments, sports goods, steel iron, etc, in the local market without seeking approval from parliament.
Official sources told Daily Times that the Federal Board Of Revenue (FBR) has issued separate notifications of increase in the general sales tax already imposed on the sale of readymade products of various industries in the local markets. They said the GST has been increased from 5% to 17% on the sale of textiles, garments, surgical equipments, sports goods, etc, while the GST already imposed on the steel iron industry has also been increased with by the FBR.
“Immediate imposition of increase in the ratio of GST will trigger a tsunami of inflation in the local market, especially on the sale of clothes, and this decision of increase will add to the common man’s miseries, who is already facing skyrocketing prices of basic commodities, fuel oil, and power tariff for a long time,” a senior official at the Finance Ministry said on the condition of anonymity. He added that it is a pity that the government has increased the GST prior to the approval of parliament of the recently announced federal budget for the upcoming financial year.
Quoting a notification, the sources said immediate increase in the GST has been made on the sale of textile, surgical equipments, sports goods, leather and leather products. Similarly, in another notification, GST on steel iron, its ready products and the steel iron industry has been increased immediately. They said already imposed GST on steel iron industry was being charged at Rs 4/unit through electricity bills, but now with the new notification, the GST has gone up by Rs 7/unit immediately.
It must be noted that the Supreme Court of Pakistan, in its judgement passed last year, had bound the government to get parliament’s approval before increasing the taxes, and the government was to withdraw its decision of hike in taxes. Meanwhile, the FBR has issued a clarification on the issue, saying the government has delegated powers to issue and withdraw notifications under the relevant provisions of the Sales Tax Act, 1990 and the Federal Excise Act, 2005. A statement issued by the Federal Board of Revenue added that the notifications in question could have been issued at any time during the financial year. 
“In its order dated 21.03.2014 in CMA No. 3821/2013 in constitutional petitions No. 33 & 34/2005, the honourable Supreme Court had rightly held that there can be no taxation without approval or parliament,” the statement noted. It says that as such, the Provisional Collection of Taxes Act, 1931 had been struck down as unconstitutional. Accordingly, the provisions of the Act were not pressed into service to alter the rate of duties and taxes at the time of presenting Finance Bill 2014-15 before parliament. The FBR says the present notifications do not impose any new taxation. “The exercise of powers by the federal government to make the above adjustments is an entirely valid exercise of the powers conferred by the Legislature.” 

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