Sales Tax Instructions

Sales Tax Instructions, 2009
No.7(26)-Sol.I dated 20 th July, 1997 (copy enclosed). While the aforesaid u.o. notes may
be studied for the sake of clarity, these or its copies should not (Repeat) not be given in
the custody of any lawyer, taxpayer or unauthorized person and should also not be
cited/quoted in any communication or order or decision. These u.o. notes and Law
Division‘s advice may be treated as CONFIDENTIAL.
3. In the light of the above clarification you are advised to take further
necessary action for compliance of sales tax laws.
[Issued by the CBR, Islamabad under the signature of Mr. Muhammad Tahir, Secretary
(STP) addressed to Collector, Sales Tax, Lahore. Copy to all the Collectors/Mirpur (AJK) and
Secretary (ST-Edu), CBR.]
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U.O. No.3(62)STP/97.Pt.I Dated 5 th January, 1999.
SUBJECT:- SALES TAX ON ―ALCOHOLIC LIQUORS‖.
Items No.44 and 49 of Part I of the Fourth Schedule (Federal Legislative List) of the
Constitution of Pakistan provide as hereunder:-
―44. Duties of excise, including duties on salt, but not including duties on alcoholic
liquors, opium and other narcotics.‖
―49. Taxes on the sales and pruchases of goods imported, exported,
produced, manufactured or consumed.‖
2. Accordingly, while no central excise duty is levied on the production and manufacture of
alcoholic liquors, sales tax, under the Sales Tax Act, 1990, is levied and collected on the import,
production and manufacture of alcoholic liquors.
3. In the budget 1998-99, the scope of sales tax was expanded and ―supplies made in
Pakistan by retailers whose annual turnover from supplies, whether taxable or otherwise, made in
any tax period during the last twelve months ending any tax period‖ exceeding Rs.5 million was
made liable to sales tax in terms of Sl.No.42(b) of the Sixth Schedule to the Sales Tax Act, 1990,
read with sections 3AA and 14(1)(ii) thereof.
4. The business of alcoholic liquors in Pakistan is also regulated by the Provincial Excise &
Taxation Departments. In the province of Sindh, the E&T Department licences ―Wine Shops‖
which sell alcoholic liquors in retail. However, in Punjab, the E&T Department issues license to
Hotels & Restaurants under the Punjab Liquor License Rules, 1932 (Notification No.5556-E&S
dated 21 st October, 1932 issued under section 59 of the Punjab Excise Act, 1914) for the retail
vending of alcoholic liquors to the Permit Hoders (adult non-muslims). The premises for storage
and retail vending in Hotels & Restaurants are called ―Permit rooms‖ and are duly authorized by
the Punjab E&T Department under rule 5 of the Punjab Excise Manual. The foreigner guests or
the hotel and local non-muslims (permit holders) can purchase their quota of alcoholic liquors
from such Permit Room and can consume the same in their hotel room and private residence,
respectively. Almost 99% of the alcoholic liquors is sold by these permit rooms to the local nonmuslim
permit holders. Even to foreigner guests of the hotels, alcoholic liquors are not served in
their hotel rooms but they can purchase the packed liquor for self-consumption in their hotel
rooms. The Hotel/Restaurant, however, pay central excise duty on sale of such alcoholic liquors
on the margin i.e. difference between the cost price and sale price fixed by the Provincial E&T
Department in terms of the Honourable Supreme Court of Pakistan judgement C.A. No.101-K
107-K etc. (1993 SCMR 1342).
5. Now that sales tax has been extended to the retail stage from 1 st July, 1998, the ―Wine
Shops‖ in Sindh have been registered under the Sales Tax Act, 1990, if their annual turn-over
exceeded Rs.5 million and they are charging and paying sales tax on their retail sales of alcoholic