Sales Tax Instructions

Sales Tax Instructions, 2009
[Issued by the CBR, Islamabad under the signature of Dr. Ashfaq Ahmed Tunio,
Secretary (ST-L&P) addressed to M/s Muhammad Amin Muhammad Moqeem Clearing and
Forwarding Agents, Karachi. Copy endorsed to all the Collectors of Sales Tax.]
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C. NO. 2(65)STP/95 DATED 22 ND SEPTEMBER, 2001
SUBJECT:- CLARIFICATION REGARDING DISTRIBUTION OF
COSMETICS MANUFACTURED IN MINGORA
I am directed to refer your letter C.No.8-ST/Audit & Rec/Forvil/2001/2241,
dated 15.08.2001 on the subject cited above and to say that in compliance of the order
dated 24.7.2001 of the Federal Tax Ombudsman in compliant No.829/2001 the issue has
been examined in the Board. It is observed that the Collectorate‘s action is based on to
premise that M/s. Forvil Cosmetics, though manufacturing goods in non-tariff area of
FATA are required to be registered as wholesaler in Lahore under section 2(47) of the
Sales Tax Act, 1990 on the ground that they have been making supplies from Lahore. On
the other hand, the complainant claims that the said Lahore office was merely a liaison
office and no supply of goods was being made there from, its purpose being to have a
place for meetings, arranging publicity, making purchases of raw materials, monitoring
the market and responding to complaints about defective goods, etc.
2. The controversy thus involves legal as well as factual dimensions. As
regard the factual aspects, the question of charging of tax on goods manufactured in nontariff
area is already a controversial one involving legal and constitutional considerations
the Peshawar High Court has already given some judgments against the department
against which appeals are pending in the Supreme Court. However, CBR has been
clarified that the provisions of the Sales Tax Act, 1990 have not been extended to
FATA/PATA, persons making supplies of taxable goods manufactured in FATA / PATA
in tariff areas are required to be registered and pay tax on such supplies. This means that
a manufacturer located in FATA/PATA, who is not making taxable supplies in tariff area
but is exclusively selling his goods to buyers in non-tariff area, is not liable to be
registered or pay sales tax on such supplies as liability to tax arises only when taxable
goods are supplied in tariff area.
3. There is no provision under the Sales Tax Act, 1990 to restrict any
person having his manufacturing premises in non-tariff area from maintaining an office in
tariff-area, and tax liability will arise only if taxable supplies are made from such office.
In a similar case of M/s. Siddiqsons Tin Plate Limited, Board issued ruling vide C.
No.3(5)STP/99, dated 2.5.2001 that a person having manufacturing premises in exempt
area and maintaining an office and ware house in Karachi, was not required to be
registered.