The upturn in taxation proceeds has always been recognized to be a paramount challenge for any Government of Pakistan. The sluggishness of our tax to gross domestic product ratio has widely been attributed to a range of intertwined factors which include fragmented revenue administrations, generous and distortionary exemptions/subsidies, constricted tax bases and the most important of all; weak enforcement by the authorities coupled with low compliance by tax payers.

One of the primary agendas of this Government was to improvise tax collection so one has to give them credit that due to the pronounced emphasis on this; citizens of Pakistan have started talking about taxation, worrying about their liabilities and inquiring about their rights.

One area where certain corrective measures can be undertaken to increase the revenue of the Government is the collection of sales tax from eateries and other services which fall within the scope of taxed services. The state of the economy has generally not affected the class of citizens who dine out frequently as the foodies will always keep the restaurant business afloat. In the recent past, we observed a wave of social media users and influencers question the sales tax charged on the services by the restaurants, which is approximately 7.5-16% of the entire bill, depending on the province.

Sales tax is categorized as an indirect tax, meaning thereby, any entity which collects the sales tax acts as an agent of the Government and withholds the stipulated percentage of the total amount of the bill for the Government. There was a debate which eventually faded like any other trend but left the public with opposing interpretations on how you can determine whether the restaurant is rightfully paying your sales tax to the govt.

Top tier eateries are charging sales tax without having themselves registered

Post the 18th Amendment, one of the consequences of fiscal decentralisation was that the sales tax on services becoming a provincial object; therefore, falling under the jurisdiction of Sindh Revenue Board, Balochistan Revenue Authority, Khyber Pakhtunkhwa Revenue Authority and the Punjab Revenue Authority (PRA) respectively. For the purposes of this article, I shall explain the anomalies using the example of PRA. A restaurant is considered as a “service provider” and is governed under the Punjab Sales Tax on Services Act 2012 (the “PSTSA 2012”), a law which broadly deals with the levy of taxes on services provided, rendered, initiated, received, originated, executed or consumed in the province of Punjab.

A plethora of medium to top tier eateries are charging sales tax without having themselves registered or showing the same on their invoices to evade mandatory record keeping requirement. This amounts to a clear theft as they are collecting the sales tax on behalf of the Government from the consumer and keeping it for themselves. Therefore, from the Government’s perspective; a huge segment of the services industry is fraudulently depriving it of its due.

As a consumer, one should be aware as to the quantum and the verification of the chargeable sales tax on restaurant bills. It is pertinent to mention that under section 30 of the PSTSA 2012, a registered person shall issue a numbered and dated tax invoice containing name, address and registration number of the service provider and under Rule 69(2) of the Punjab Sales Tax On Services (Specific Provisions)

Rules 2012, Chapter XIII addresses “invoicing” which clearly states that: “every tax invoice, bill, voucher or cash memo shall contain the tax registration number of the restaurant.”

The confusion still remained as to what exactly should a vigilant consumer be looking at an invoice to be sure, was it the NTN (National Tax Number), STRN (Sales Tax Registration Number) or PST (Punjab Sales Tax)? In this regard, the Punjab Revenue Authority was gracious enough to issue a clarification on August 05th 2019, which basically said that the registered persons are issued with a unique PNTN number which is used for their identification. The restaurant owners are mandated to issue an invoice containing; name, address, registration number and the amount of tax.

Furthermore, one can also verify the registration of taxpayer through their website and file a complaint at

Every person providing restaurant services in the province of Punjab whether through a single or a multiple outlet are mandated to obtain registration for Punjab Revenue Authority. Where a restaurant is already registered with the Federal Board of Revenue, it shall not be required to take separate registration for the purpose of Punjab sales tax on services and shall obtain only e-enrolment from the Authority through its website/e-portal where the registration number issued by the FBR shall be automatically prefixed with the capital “P” as per procedure in vogue.

Furthermore, if a restaurant owner fails to make an application for registration before providing any taxable services under PSTSA 2012; they may expose themselves to civil and criminal liability and shall be liable to pay a penalty of ten thousand rupees or five per cent of the amount of the tax he would have been liable to pay had he been registered, whichever is higher. In the case of non-compliance of compulsory registration, the minimum penalty shall be ten thousand rupees: If such person who is required to get himself registered under this PSTSA 2012, fails to get registered within ninety days of providing taxable services, he shall be further liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to one year, or with fine which may extend to the amount of the tax he would have been liable to pay had he been registered, or with both. It is high time that in furtherance of enhancing the economy of our country, we as citizens, as consumers and as business owners should take collective responsibility to eradicate this malady and contribute to extract ourselves from this financial crunch.

The writer is partner at Munir & Munir Advocates and Legal Advisers, Lecturer for Taxation and Labour Laws at Kinnaird College, Lahore and can be reached at