The changing nature of Internet technology and the concept of jurisdiction law has taken new dimensions, which has make it imperative that we should introduce new legislation for defining our tax jurisdiction in internet, and with these amendments. I recommend followings amendments in tax statutes for the purposes of defining territorial jurisdiction for e-businesses.
Amending Sale Tax Act 1990The clause (a) of subsection (1) of section 3 of Sale Tax Act, 1990 be constructed as to insert the phrase like that ‘having permanent establishment and minimum connect with Pakistani jurisdiction? will broadened the definition for interpretation for adjudication.
Inserting textual clauses as mentioned above can enhance the scope of Sale Tax of 1990 to fulfill the statutory requirement for creating jurisdiction for imposition and collection of sale tax on e-commerce transaction. Unless the intrinsic aid is not provided to the statute, the interpretation of statutes will establish different precedents that exhibit weakness of the intrinsic construction of statute.
The proposed draft for legislative reconstruction for section 3 of Sale Tax Act of 1990;
"...taxable supplies made in Pakistan by a registered person, having permanent establishment, in the course or furtherance of any taxable activity carried on by him".
There could be many textual phrase can be added for the purpose of meeting statutory deficiency for widening the horizon of the power to exercise jurisdiction to impose taxation.
Amending Central Excise Duties Act 1944
The similar structure inadequacy is prevailing in grammatical interpretation of section 3 of central excise act 1944 which also be constructed keeping in view the excisable services performed and rendered in Pakistan, no additional words, phrase and clause are not available as the subsection (1)of section (11) of Income tax ordinance,2001 provides.
I suggest similar insertion of words to add the scope the jurisdiction without taking precedent to subdue the principle strength in adjudication.I recommend here the extensive legislation reconstruction as like of income tax ordinance 2001 to define in strict construct where the jurisdiction to impose central excise duties on services, in coming chapters I shall discuss at length the special procedure for collection of central excise duties on services under rule 96 of Central Excise Duties Rule of 1945.
"...as on all excisable services, provided or rendered in Pakistan as and at the rates, set forth in first schedule. "
The words ‘provided or rendered in Pakistan?is textual foundation for defining jurisdiction for levying central excise, that construct is not sufficient where the owner or browser of e-commerce pages either one or both are located within the territorial jurisdiction of Pakistan. Here we can add additional clause applicable to e-commerce services for separating the criterion for services that have already been placed under ambit of Central Excise Duties, and that of e-commerce services.
The construction which I propose for bring the e-services under Central excise jurisdiction; it could be an additional clause or insertion of words.
"...as on all excisable services, provided or rendered or browsed in Pakistan as and at the rates, set forth in first schedule".
The ‘browsed?is a very smart word for confirming jurisdiction for imposition of duties to e-commerce, and if, we make add new section it can take more appropriate statutory construction.
Amending Income tax ordinance 2001
There is liberal definition of the statute is available in Income Tax Ordinance 2001, let look at the definition which has been enunciated in the income tax ordinance.
I must appreciate the statutory clause of Income Tax legislatures for providing extensive and strict definition for levying of taxation on subject falling in Pakistan jurisdiction in the subsection (1)of section (11) of Income tax ordinance,2001 and in addition to that it has dealt the special chapter on Geographical income to clearly demarcate the income sources as to avoid imposition of dual but there are no specific provisions in ordinance to distinguish sources of income derived from e-commerce.
We can, with other cooperative nations, so-called 'Internet paradises' can be used as e-commerce domiciles, where the enforceability of Pakistani laws and judgments is likely to be possible.
The writer is an advocate of High Court and practicing immigration and corporate laws in Pakistan since September 2001. He is a self employed and pioneer in research on electronic commerce taxation in Pakistan. His articles were published widely in the critical areas of cyber crimes, electronic commerce, e-taxation and various other topics. He wrote LL.M thesis on titled “Legislation of electronic commerce taxation in Pakistan?in which he provided comprehensive legal proposals for statutory reconstruction of tax laws for purpose of imposition of taxation on e-business in Pakistan. Currently he is conducting is research on topic ‘Electronic commerce taxation: emerging legal issues of digital evidence?Author can be contacted by adil.waseem@lawyer.com.