Sales Tax Instructions

Sales Tax Instructions, 2009
Sales Tax at Hub initially pointed out the taxability of their goods in February, 1997 and
then issued show cause notice on 24.03.1997. The case was adjudicated by the Assistant
Collector of Sales Tax, Hub vide his order-in-Original No. 7 of 1997, dated 20.9.1997.
The appeals filed by M/s. Mandviwalla Mauser Plastic Industries Limited before the
Collector of Sales Tax (Appeals), Karachi and Appellate Tribunal, Karachi were rejected.
2. In May, 1999, M/s. Mandviwalla Mauser Plastic Industries Limited
approached the Finance Minister offering to pay Rs. 4 million upto 30.6.1999 and the
balance of Rs. 12 million is six equal installments with the request for waiver of
additional tax and penalties. In response, they were informed to avail the amnesty of
additional tax in terms of SRO 679(I)/99, dated 12.06.1999 provided they paid the dues
upto 30.06.1999. They did not avail the amnesty and again approached the Finance
Minister in September, 1999 for 30 equal installments, which request was accepted to the
extent that they were allowed to pay principal amount in six installments with 1/3 rd of
such amount as first installment. This facility was also not availed by them.
3. Meanwhile, M/s. Mandviwalla Mauser Plastic Industries Limited first
approached the Central Board of Revenue and then the Finance Minister for grant of
exemption of sales tax under section 65 of Sales Tax Act, 1990. On receipt of Collect
rate‘s report in terms of Sales Tax Circular No. 2 of 1991, dated 20.10.1991 that Show
Cause Notice was issued on 24.3.1997, M/s. Mandviwalla Mauser Plastic Industries
Limited commenced payment of sales tax on 15.11.1997, the request for allowing the
benefit of section 65 was declined by the Federal Government. However, M/s.
Mandviwalla Mauser Plastic Industries Limited filed two Writ Petitions in Lahore High
Court bearing No. 18029/2000 and 18030/2000, which were allowed by the Court
declaring Board‘s letter of even number dated 3.4.2000 (in which the request of
exemption under section 65 was rejected) without lawful authority and with no legal
effect. Accordingly, the two applications of M/s. Mandviwalla Mauser Plastic Industries
Limited, dated 1.12.1998 and 16.12.1999 seeking exemption of section 65 re-emerged as
pending.
4. Hearing in the case was granted on 13.10.2000 when Mr.Masood Aziz,
consultant of M/s. Mandviwalla Mauser Plastic Industries Limited submitted written
submissions dated 13 th October, 2000. The consultant did not however add anything
verbally to the written arguments. The arguments are summarized below:--
(i)
(ii)
(iii)
M/s. Mandviwalla Mauser Plastic Industries Limited misunderstood and
misinterpreted the provisions of SRO 529(I)/88, dated 26.6.1988 treating
them entitled to exemption for a period of eight years calculable from the
date of setting up of their unit on the analogy of provisions of another
matching SRO 580(I)/91, dated 27.6.1991;
Being not clear on the issue, the Collectorate of Sales Tax, Quetta at Hub
vide their letter No.1-Misc/Corr/STHub/96/3037, dated 4.2.1997, had sought
clarification from the Board for the calculation of the exemption period of 8
years under SRO 529(I)/88, dated 26.6.1988, which means the interpretation
of the exemption period under the said notification was a moot issue;
M/s. Mandviwalla Mauser Plastic Industries Limited did not charge sales tax
on their supplies from any buyer and immediately after receiving judgment