Sales Tax Instructions

Sales Tax Instructions, 2009
C. No. 5(147)ST-Int.Audit/2002 DATED 18 TH DECEMBER, 2003
SUBJECT:-
ADDITIONAL CHECKS FOR REFUND CLAIMS PERTAINING
TO EXPORTS TO UAS, SAUDI ARABIA AND OTHER LOW
TARIFF MIDDLE EASTERN, AFRICAN AND SOUTH EAST
ASIAN COUNTRIES.
I am directed to refer to the subject cited above and to say that it has come to the
notice of the Board that irregularities have been committed by certain refund claimants
(commercial exporters) who exported goods to countries like UAE and Saudi Arabia. On
further investigation some of these commercial exporters and their suppliers were not
found available at their given addresses, failed to produce relevant sales tax records and
over-invoiced their supplies / exports. Thus, there is reason to believe that such persons
have been involved in issuing fake/ flying invoices and claiming inadmissible refunds. To
avoid the possibility of sanctioning inadmissible refunds, the Collectorate of Sales Tax
(Enforcement), Karachi issued Standing Order NO.02/2003 dated 18.11.2003 (copy
enclosed) prescribing additional checks for such refund claims.
(i)
(ii)
(iii)
(iv)
Copies of dispatch note, receipt note, transport documents and
subsequent entries in the books of the claimant / supplier that verify the
physical movement of the goods; and copies of the account books of the
claimant that verify that goods were deposited in and taken out of their
warehouse and physically exported. However, in case of commercial
exporters, who do not have their own warehouse, documents showing
transportation of goods into or out of their warehouse shall nor be
insisted upon, and in case of claimants who are not required to maintain
books of account under section 143B of the Income Tax Ordinance, 1989
such books of account shall not be required;
In case of doubt/ suspicion, the aforementioned documents will be
physically verified by the processing / sanctioning staff;
To ensure that no refund is sanctioned against fake invoices or invoices
issued by blacklisted or suspended suppliers, the processing and
sanctioning staff shall maintain updated lists of blacklisted / suspended
persons and cross-check from the same, besides verification through the
STARR system.
The claims shall be processed and sanctioned on the basis of values of
export goods determined by Collectorate of Exports, Customs House,
Karachi through the Price Check Committee (PCC), or on export value
indicators developed on the basis of input-output ratios determined by
the Input-Output Coefficient Organization (IOCO). The Additional
Collector (Incharge Refund) will liaise with the Collectorate of Exports
to obtain the latest updated PCC decisions / value indicators to ensure
that refund claims are processed and sanctioned on correct values;