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Sales Tax Instructions

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<strong>Sales</strong> <strong>Tax</strong> <strong>Instructions</strong>, 2009<br />

to register separately, becomes a ―registered persons‖ in its own right and sales tax<br />

should be charged on the transfer of goods from one registered person to another<br />

registered/non-registered person.<br />

4. This clarification is being issued at your request is not binding on you in<br />

terms of proviso to section 72 of the <strong>Sales</strong> <strong>Tax</strong> Act, 1990. The appeal, pending (if any)<br />

before you, may be decided on merits.<br />

[Issued by the C.B.R., Islamabad, under the signature of Mr.Muhammad Tahir, Secretary<br />

(STP), addressed to Collector of Customs, Central Excise and <strong>Sales</strong> <strong>Tax</strong> (Appeals Zone), south<br />

Zone, 6 th Floor, New Custom House, Karachi.] Copy of letter C. No. 1(12)/ST/App/S.Z./98/1186,<br />

dated 11.07.98 is reproduced below: --<br />

C. NO. 1(12)ST/APP/S.Z./98/1186, DATED 11 TH JULY, 1998<br />

The Secretary,<br />

<strong>Sales</strong> <strong>Tax</strong> Policy (STP),<br />

CBR. Islamabad.<br />

SUBJECT: CLARIFICATION REGARDING INTER-UNIT TRANSFERS OF<br />

GOODS BY A REGISTERED PERSON WITH SEPARATE BRANCH<br />

REGISTRATION.<br />

Inter-unit transfer of taxable goods by a registered person with single registration from<br />

one unit to the other for the purpose of further manufacture of taxable goods, is not considered to<br />

be a taxable activity or taxable supply in the meaning of clause (33),(35) and (41) of the <strong>Sales</strong> tax<br />

Act, 1990. Although no specific exemption on the aforesaid goods is provided under the Sixth<br />

Schedule, such goods falls outside the scope of under section 3, on account of the definition of<br />

―taxable activity‖ provided under clause (35) of section 2 ibid, which reads as follows: --<br />

―(35) ―<strong>Tax</strong>able activity‖ means any activity which is carried on by any person, whether or not<br />

for a pecuniary profit, and involves in whole or in part, the supply of goods to any other person,<br />

whether for any consideration or otherwise, and includes any activity carried on in the form of a<br />

business, trade or manufacture;‖<br />

2. A question has been arisen as to whether inter-unit transfer of taxable goods by a<br />

registered person, from one unit to the other with separate registration as provided under section<br />

16 of the Act, (dealing with registration of branches, divisions etc.); would constitute ―taxable<br />

activity‖ or not. The case in point is that of Suraj Textile Mills Limited, whose spinning unit at<br />

Nooriabad (office at Karachi) was registered with Collectorate of <strong>Sales</strong> <strong>Tax</strong> (East), Karachi and a<br />

weaving unit at shahkot (District shahkpura) was registered with the Collectorate of <strong>Sales</strong> <strong>Tax</strong>,<br />

Lahore, in accordance with section 16 and rule (4) of Registration; Voluntary Registration and<br />

De-registration Rules, 1996. The company/registered person during, the period between<br />

November, 1996 and September, 1997, transferred 13,94,700 lbs of cotton and blended yarn from

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