Sales Tax Instructions

Sales Tax Instructions, 2009
(a) taxable supplies made in Pakistan by a registered person in the course of furtherance of
any taxable activity carried on by him; and
(b)
goods imported into Pakistan.
(1A) Where taxable supplies are made in Pakistan to a person other than a registered person
there shall be charged, levied and paid a further tax at the rate of one percent of the value in
addition to the rate specified in sub-section (1);
Provided that the aforesaid one percent further tax shall not be charged, levied and paid if the
said taxable supplies are made:-
by a person registered as a retailer; or
…………………..
(2) Notwithstanding the provisions of sub-section (1):-
(c) Taxable supplies specified in the Third Schedule shall be charged to tax at the rate of
twelve and a half percent of the retail price which along with the amount of sales tax shall be
legibly, prominently and indelibly printed or embossed by the manufacturer on each article,
packet, container, packages, cover or label, as the case may be;
6. The petitioner‘s product of aerated waters are chargeable to sales tax under section
3(2)(c) of the Act as aerated waters or beverages are included in the 3 rd Schedule to the Act. The
reading of Section 3(1) and 3(2)(c) shows that under the former provision, sales tax is levied at
12% of the value of the taxable supplies whereas under section 3(2)(c) the tax levied at the same
rate on the retail price if the goods manufactured are those specified in the 3 rd Schedule. Now
section 3(1-A) provides for further one percent tax on the value of taxable supplies and not on
the retail process. Furthermore, at the end of Section 3(1-A) it is expressly provided that the one
percent is not addition to the rate specified in sub-section (1). Thus the further tax of one percent
under section 3(1-A) is confined to taxable supplies charged to sales tax under section 3(1), even
the framers of the law must have been alive to the fact that the further tax was not leviable on
taxable supplies under section 3(2)(c) and that is why an amendment was brought about by
Section 16 of the Finance Act, 1999 in sub-section (1-A) of section 3 whereby at the end of the
sub-section for the expression ―sub-section (1) Clause C of Sub-section 3(2), and sub-section 4
and 5‖ was substituted, thus subjecting the taxable supplies under section 3(2) to further tax
under section 3(1-A) of the Act. We thus hold that the petitioners were not, during the relevant
period, subject to further tax under section 3(1-A).
7. In view of the above finding, it is not necessary to give findings on the other two issues
raised by the learned counsel for the petitioners regarding non-issuance of show cause notice and
incompetence of respondent No.3 to determine the petitioner liability to further tax. Consequently
the writ petitioner is allowed and the impugned order dated 27-10-1998 is declared as illegal and
therefore, set aside. The parties shall bear their own costs.
(Sd-)
(Nasir-ul-Malik)
Judge
********