Can an unregistered shop add sales tax to my bill?

A sales tax invoice is not something any shop can issue. The Sales Tax Act, 1990 limits the right to issue one, penalises unauthorised invoices that show tax, and says tax collected when it was not payable belongs to the Government, not the shop.

What does the law say?

Three provisions work together.

Who may issue an invoice. Section 23(2) says no person other than a registered person or a person paying retail tax shall issue an invoice under section 23. Section 23(1) then requires the invoice to carry the supplier’s registration number among its particulars. A shop with no registration has no number to print.

Tax wrongly collected. Section 3B(1) covers any person who has collected any tax or charge that was not payable, or was more than what was payable, and passed it on to the consumer. That person “shall pay the amount of tax or charge so collected to the Federal Government”. Section 3B(2) treats the amount as an arrear of tax and bars any refund claim for it, notwithstanding any court judgement. Section 3B(3) puts the burden of proving whether the tax was passed on to the consumer on the person who collected it.

Penalty. Serial 3 of the table in section 33 covers “any person who un-authorizedly issues an invoice in which an amount of tax is specified”. The penalty is Rs. 50,000 or 10 percent of the amount of tax involved, whichever is higher.

How does it work in practice?

For a shopper, the key question is whether the shop is registered. A registered supplier’s invoice under section 23(1) must show the supplier’s name, address and registration number, the value exclusive of tax, the tax, and the value inclusive of tax. A bill that shows a tax line but no registration number is missing a particular the Act requires.

For a Tier-1 retailer integrated with the Board’s system, rule 150ZEL of the Sales Tax Rules, 2006 lets the customer check the invoice through the Tax Asaan application or a WhatsApp number the Board announces. The app reports the invoice as “Verified” or “unverified”, and an unverified invoice can be reported for a prize under the same rule.

For a shopkeeper, section 3B means that adding a “sales tax” line without being entitled to does not leave the money with the shop. It is recoverable by the Government as an arrear, and the serial 3 penalty can be added on top.

Worked example (illustrative figures)

A shop in Faisalabad that is not registered sells a customer goods worth Rs. 10,000 and writes “GST 18% Rs. 1,800” on the bill, total Rs. 11,800.

1. Tax shown on the unauthorised invoice: Rs. 1,800.
2. Section 3B: the Rs. 1,800 collected from the customer is payable to the Federal Government.
3. Serial 3 penalty: 10 percent of Rs. 1,800 = Rs. 180. Rs. 180 is lower than Rs. 50,000, so the penalty is Rs. 50,000.

If the same shop had shown a total of Rs. 900,000 as “tax” across all its bills, 10 percent would be Rs. 90,000. That is higher than Rs. 50,000, so the penalty would be Rs. 90,000, and the Rs. 900,000 would be payable under section 3B.

What if the shop is liable to register but has not?

Section 2(25) defines “registered person” to include a person who is liable to be registered. Its proviso says such a person, if not actually registered, is not entitled to any benefit available to a registered person. The Act does not say in terms whether this lets an unregistered but liable shop issue invoices under section 23. That point is not resolved in the text.

What if a small shop pays sales tax through its electricity bill?

Retailers other than Tier-1 pay sales tax through their monthly electricity bills under section 3(9), and they are carved out of the retailer limb of the registration rule. Section 23(2) also allows “a person paying retail tax” to issue an invoice, but the Act does not define “retail tax” in section 2. Whether an electricity-bill retailer counts as a person paying retail tax is not stated.

Common mistakes

• Assuming any bill with “GST” on it is a tax invoice. Section 23(1) lists the particulars, including the supplier’s registration number.
• Assuming the shop keeps tax it wrongly charged. Section 3B says it must be paid to the Federal Government.
• Confusing the printed price with an added tax. On Third Schedule goods, the tax is worked out on the printed retail price and printed on the pack, under section 3(2)(a).

What to check in the official text

Read sections 3B and 23 and serial 3 of the section 33 table in the Sales Tax Act as amended to 30 June 2026, together with the definition of “registered person” in section 2(25). For invoice verification, read rule 150ZEL of the Sales Tax Rules, 2006, and check the WhatsApp number or app details the Board has announced, which are not held here.