Sales Tax Instructions

Sales Tax Instructions, 2009
No.1(88)STP/98.Pt.I DATED 26 TH JANUARY, 1999
SUBJECT:-
CALCULATION OF ADDITIONAL TAX PAYABLE UNDER
SECTION 34 OF THE SALES TAX ACT, 1990.
I am directed to refer to your letter No.SML/1015/CBR, dated 5 th December,
1998 on the subject cited above and to say that the word ―tax‖ is defined under section
2(34) of the Sales Tax Act, 1990, as inclusive of additional tax or any other sum payable
under the said Act or the rules made thereunder. Section 34 of the Act prescribes and
imposes additional tax at rate of five percent of the ―tax‖ due per month or any part
thereof. Therefore, the additional tax is payable @ 5% per month on the cumulative
amount (principal amount + additional tax + other sums as may be due) added monthly in
a compounding manner. Therefore, even if the principal amount has been paid and the
additional tax is not paid, the additional tax @ 5% per month would continue to be added
on the balance liability till such time as whole of the additional tax being defined under
the term ―Tax‖ has been deposited.
2. In view of the foregoing legal position, the formula, as given in your letter
referred to above, is not legally tenable.
[Changed to simple rate (non-compound) in Finance Ordinance, 2000]
[Issued by the CBR, Islamabad under the signature of Mr. Muhammad Tahir, Secretary
(STP) addressed to M/s S.M. Law Associates, Karachi. Copy to all the Collectors of Sales
Tax/Mirpur(AJ&K) and S(ST.Ed.) CBR.]
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C. NO.1/15-STT/99 DATED 26 TH JANUARY, 1999
SUBJECT:- CLARIFICATION REGARDING SRO 836(I)/94, DATED 5.9.1994
AND SRO 608(I)/95, DATED 2-7-1995.
I am directed to refer to your letter No. Nil dated Nil on the subject cited above
and to say that there is no fixed sales tax scheme on Fasteners (Nuts, Bolts, Screws or
Washers). M/s. A. F. Industries (Pvt.) Ltd., manufacturing Washers for fasteners should
pay sales tax at standard rate under the normal invoice-based system.
[Issued by the CBR., Islamabad, under the signature of Mr. Nisar Muhammad, Secretary (STT),
addressed to Ch. Abdul Razzaq, Advocate, Lahore & M/s. A.F. Industries (Pvt.) Ltd. Lahore &
copy to the Collector of Sales Tax, Custom House, Lahore.] copy of letter is reproduced below:-
The Chairman,
Central Board of Revenue, Islamabad.
SUBJECT: CLARIFICATION REGARDING SRO 836(I)/94, DATED 5.9.1994 AND SRO
608(I)/95, DATED 2-7-1995.
It has been noticed that the SRO cited in the subject impose fixed amount of sales tax to
be paid on machines meant for the manufacturer of ‗Fasteners‘ (Nuts, Bolts and Screws). These
notifications do not include ―Washers‖ which are used with nuts and bolts to complete a
‗fastener‘.
M/s. A. F. Industries are a manufacturer of ‗Fastener‘ (Nuts, Bolts and Washers) and have been
issued a certificate by the Chief Survey & Rebate, Islamabad vide C. No. 2(72) Sand R-I/93, dated
25-3-1996 (copy enclosed) for the import of raw material on concessionary rate for the
manufacture of said items i.e. Nuts, Bolts and Washers, ‗Washers‘ being integral part of Nuts and