Sales Tax Instructions

Sales Tax Instructions, 2009
JUNE 1998 EFFECTIVE W.E.F. 1 ST JULY 1998.
I am directed to refer to your letter C. No. Nil dated 26 th August, 1998 on the
above subject and say that for availing of the benefits (on imported plant and machinery)
under clause (a) of SRO No.582 (I)/98 dated 12 th June, 1998 at the important stage, the
following conditions have to be satisfied: --
(i) The importer should be a person registered under the Sales Tax Act, 1990,
and he should also be a manufacturer of a sales taxable commodity; and
(ii)
The plant and machinery should be operated by power of any description.
2. Commercial importers of the plant and machinery and also such
importers-cum-manufacturers who are not registered for manufacture of a sales taxable
commodity have to pay the sales tax due at the import stage.
3. However, when such machinery, imported by a commercial importer, is
sold to a person registered for the manufacture of a taxable commodity, the seller shall
issue a proper tax invoice and the buyer shall be allowed the benefit of input tax
adjustment under the provisions of the Sales Tax Act, 1990.
[Issued by the C.B.R., Islamabad, under the signature of Mr. Muhammad Tahir,
Secretary (STP), g addressed to M/S. Muhammad Iqbal & Co., Karachi.] Copy of letter No. Nil
dated 26 th August, 1998 is reproduced below: -
LETTER NO.NIL DATED 26 TH AUGUST, 1998
Mr. M. Kazimi, Additional Secretary,
Islamabad.
SUB: LEVY OF SALES TAX UNDER SRO. 582(I)/98, DATED 12 TH JUNE, 1998
EFFECTIVE W.E.F. 1 ST JULY, 1998
Our different clients have imported numbers of consignments of Second hand looms
failing under heading 84.46 from Japan/China/UK under NRI Scheme for which bills of entries
have been filed directly in the name of importers and through the attorney (attached). The
concerned group VI/Customs House has assessed the Bills of entries by charging the Sales Tax at
statutory rate mentioning the following reasons in group‘s file:-
(a) That Under SRO 582(I)/98 dated 12 th June, 1998 only plant and machinery which is
imported directly by the manufacturers of taxable supply or supplied to the
manufacturer of taxable supply is entitled for availing exemption of sale tax.
(b) That the commercial importer are not entitled for the exemption of sale tax under
above SRO.
(c) That the Customs House has made the above interpretation for implementation of SRO
582(I)/98 on the basis of a Board‘s letter C. No.1/10/STB/98 dated 12 th June, 1998
para (15) thereof which is reproduced below:-
Para-15 Notification SRO 582(I)/98 dated 12 th June, 19998 supersedes SRO
230(I)/97, dated 29 th March, 1997 and defines plant and machinery. This may be
read carefully. Plant and machinery imported by or supplied to manufacturers of
taxable goods shall be exempt. However, plant & machinery imported by or supplied
to persons other than those manufacturing taxable shall be liable to sale tax, except
in cases covered by approved. Agreement under S. No.41 of the Sixth Schedule to the
Sales Tax Act, 1990 and in cases covered by clause (b) of SRO. 582(I)/98 dated 12 th
June, 1998.