Sales Tax Instructions

Sales Tax Instructions, 2009
2. Some amendments, additions and substitutions have been made in
different sections/provisions of the Sales Tax Act, 1990 and in some of the
rules/notifications issued thereunder, the most important of which are as follows:-
(xxiii) The definitions of ‗input tax‘ and ‗output tax‘ given in sections 2(14) and
2(20) have been amended to include duties of excise chargeable on such
excisable services as are notified by the Federal Government under the
third proviso to sub-section (1) of section 3 of the Central Excises Act,
1944 and on which excise duty is charged, levied and paid as if it were a
tax payable under section 3 of the Sales Tax Act, 1990. Because of these
new provisions together with the corresponding amendments in the
Central Excise law, central excise duty paid on the aforesaid services will
be adjustable against sales tax and vice versa;
(xxiv) An amendment has been made in section 2(25) to disallow the persons
liable to be registered but not actually registered, any immunity from
further tax payable under sub-section (1A) of section 3 or any other
benefit available to a registered person under the Sales Tax Act, 1990;
(xxv)
Operating leases have also been excluded from the definition of supply
given in section 2(33);
(xxvi) Section 2(46) has been amended to exclude the component of ‗mark up‘
or ‗surcharge‘ from the value of goods supplied on installment basis.
Now such goods shall be charged to sales tax on the basis of open market
price excluding the amount of tax;
(xxvii) Besides increasing the rate of further tax as mentioned earlier, new
provisions have been added in section 3 empowering the Federal
Government to charge sales tax at rates higher or lower than the standard
rate and empowering both the Federal Government and the Central
Board of Revenue to charge and collect on any goods or supplies any
amount of tax in any mode or manner etc;
(xxviii) Amendments have been made in section 7 and section 73 to resolve the
problem of adjustment and refund of tax in case of credit transactions.
The registered persons will be entitled to take input tax adjustment or
refund during the tax period in which tax invoice in respect of such
transactions has been issued. They will however, be required to make
payment in the manner prescribed in section 73 in case of such credit
transactions within 120 days. The Collectors may therefore, advise their
audit staff to keep this amendment in view while auditing the input tax
adjustments/refunds (post payment stage) of the registered persons. It is,
however, clarified that these amendments of sections 7 and 73 shall not
be misunderstood or misconstrued to mean that a registered person can
take input tax adjustment or refund of tax only after he has made
payment in the manner prescribed in section 73;