Can FBR register me and assess sales tax from my 236G purchase data if I have not registered?

Every time a manufacturer or commercial importer sells to a distributor, dealer or wholesaler, section 236G of the Income Tax Ordinance, 2001 requires it to collect advance income tax from the buyer. That collection leaves a record of who bought what, and for how much. Since the Finance Act, 2025, the Sales Tax Act, 1990 expressly lets an officer use that record against a trader who is liable to register for sales tax but has not done so.

What does the law say?

Four provisions work together.

Section 236G of the Income Tax Ordinance. Sub-section (1) says every manufacturer or commercial importer, at the time of sale to distributors, dealers and wholesalers, shall collect advance tax at the rate in Division XIV of Part IV of the First Schedule. Sub-section (2) allows credit for that tax against the buyer’s income tax for the tax year in which it was collected. It is an income tax, not a sales tax payment.

Section 14 of the Sales Tax Act. Section 14(1)(e) lists “a wholesaler, dealer or distributor” among the persons required to register if they make taxable supplies. Section 14(2A), added by the Finance Act, 2025, says that if such a person does not apply, the Commissioner or an authorised officer, after inquiry, “shall compulsorily register such person after providing an opportunity of being heard.”

Section 26(2A) of the Sales Tax Act. An officer may, by written notice, require a person who has failed to file a return to file it within fifteen days of service of the notice, or a longer or shorter period the notice specifies or the officer allows.

Section 11D(5) of the Sales Tax Act. Also added by the Finance Act, 2025, it applies to a person “who is liable to be registered under clause (25) of section 2 based on tax withheld under section 236G” and who does not furnish a return upon notice. For that person, an officer “may assess sales tax liability on the value addition on reasonable grounds including information obtained from the purchase data under section 236G”.

How does it work in practice?

Read in order, the Act describes this path:

1. Liability exists already. Clause (25) of section 2 defines a registered person as one who is registered “or is liable to be registered”. A wholesaler making taxable supplies is inside that definition whether or not it has applied.
2. Compulsory registration. Under section 14(2A), the Commissioner or an authorised officer makes an inquiry, gives the person an opportunity of being heard, and then registers the person. Section 14(3) leaves the detailed procedure to what the Board prescribes.
3. Return notice. An officer can issue a notice under section 26(2A) to file the missing returns.
4. Assessment. If no return is furnished upon notice, section 11D(5) allows an assessment of sales tax on value addition. Section 11D(1) also allows penalty and default surcharge to be charged with a best judgment assessment.

Section 11D(5) opens with “Notwithstanding anything contained in this section”, so it operates alongside the general best judgment rules in the same section rather than depending on them.

Worked example (illustrative figures)

Adeel runs an unregistered wholesale business in Faisalabad supplying packaged edible goods to shops. The figures below are invented.

1. Manufacturers’ records under section 236G show Adeel bought goods worth Rs. 48,000,000 in a year.
2. The Commissioner registers him compulsorily under section 14(2A) after a hearing he does not attend.
3. An officer issues a notice under section 26(2A). Adeel files nothing within fifteen days.
4. The officer, on the grounds recorded in the order, takes Adeel’s resale value as Rs. 52,800,000. The value addition is Rs. 52,800,000 minus Rs. 48,000,000 = Rs. 4,800,000.
5. Applying the rate of eighteen per cent in section 3(1): Rs. 4,800,000 x 18% = Rs. 864,000.
6. Penalty and default surcharge may be added under section 11D(1).

The Act does not set a margin or formula for value addition. The Rs. 52,800,000 figure in step 4 is an assumption for this example only.

What if I was never actually a wholesaler?

Section 14(2A) requires an inquiry and an opportunity of being heard before compulsory registration, and that hearing is where the person can contest liability. Section 236G itself applies only to sales to distributors, dealers and wholesalers, so the purchase data reflects how the seller classified the buyer. Clause (47) of section 2 defines a wholesaler as a person who carries on, “whether regularly or otherwise”, the business of buying and selling goods by wholesale. Whether a particular buyer meets that definition is a question of fact the Act leaves to the proceedings.

What if I file after the assessment?

Section 11D(3) says that where a best judgment assessment was made because of a default under clause (a) of sub-section (1), and the person files the return within sixty days of the order and pays the tax with default surcharge and penalty, the show cause notice and the assessment “shall abate”. Sub-section (3) names only clause (a) of sub-section (1). The Act does not say in terms whether it also covers an assessment made under sub-section (5).

Common mistakes

• Treating 236G tax as a substitute for sales tax. Section 236G(2) gives credit against income tax only. It does not discharge a sales tax liability.
• Assuming no registration means no liability. Clause (25) of section 2 already treats a person liable to register as a registered person, while its proviso denies that person every benefit of registration, including input tax.
• Overlooking the tax fraud definition. Clause (37) of section 2 defines tax fraud as knowingly, intentionally or dishonestly causing loss of tax, and lists “making of taxable supplies without getting registration under this Act” as one example. Section 26(2A) allows a return notice within fifteen years in cases of tax fraud and five years in other cases.

What to check in the official text

Read sections 3(1), 11D, 14 and 26 and clauses (25), (37) and (47) of section 2 of the Sales Tax Act as amended to 30 June 2026, and section 236G and Division XIV of Part IV of the First Schedule to the Income Tax Ordinance as amended to 30 June 2026. The Act also leaves the procedure for registration and any conditions for determining a minimum liability to the Board. Board notifications and general orders on those points are not in this corpus, so confirm them separately.