Sales Tax Instructions

Sales Tax Instructions, 2009
The undersigned is directed to refer to representation dated 27.8.2000 received
from M/s. Afghan Carpet and your telephonic discussion with the Chief (Sales Tax-II) on
the subject cited above and to state that the said petitioners have been served with a show
cause notice to pay sales tax @15% aggregating to Rs.17.22 million on their local
supplies from 1 st July, 1998 to 30 th June, 2000. The petitioners are of the view that they
are the first one to pay turnover tax @2% during July 2000, whereas no one else in
Pakistan has paid any sales tax or turnover tax on carpets. M/s. Afghan Carpet have
further stated that they are engaged in the business of export and retail selling of carpets.
Demand of sales tax from them as manufacturer is unlawful. The said firm has, therefore,
requested for withdrawal of show cause notice issued by the Collectorate of Customs,
Sales tax & Central Excise Adjudication, Karachi-III (Annex-I).
2. On receipt of the representation, Collectorate of Sales Tax (East) Karachi
was requested to send a report in he matter. The Collector after examining the issue has
reported that:-
(a)
(b)
(c)
(d)
Year
―M/s. Afghan Carpets, Karachi applied for sales tax registration for the
following categories:-
(i) Exporter (ii) Retailer
They had shown their business address as Hotel Holiday-Inn, Karachi
Pakistan and branch office at Hotel Sheraton, Club Road, Karachi. They
were allocated registration No.02-04-5702-020-28 and registration
certificate was issued on 30.11.1992. Their main activity is shown as
manufacture in the computer record of the Collectorate.
Audit of M/s. Afghan Carpets was carried out in June, 2000. It was found
out that M/s. Afghan Carpets were making local supplies of carpets but
were not paying sales tax which become payable from 1.7.1998. They
were requested to supply the record of their local supplies. They supplied
the same and on the basis of their record, their liability was worked out
by the audit team. As per their report, an amount of Rs.17,210,842/- as
principal amount of sales tax was not paid by M/s. Afghan Carpets from
July, 1998 to May, 2000. Collector of Sales Tax & Central Excise
(Adjudication-III), Karachi has issued Show Cause Notice on 16.8.2000.
First hearing was held on 26.8.2000 and the next date of hearing was
fixed for 07.09.2000.
It is pertinent to mention here that a total number of 739 retailers are
registered in this Collectorate and collection of sales tax from retailers is
given below:-
Amount in Rs.
1998-99 8.536 million
1999-2000 28.422 million
July-August, 2000
7.421 million