Sales Tax Instructions

Sales Tax Instructions, 2009
C. NO.1(1)STAS/2004 DATED 16 TH FEBRUARY, 2004
SUBJECT:- SALES TAX ACT, 1990 SECTION 10 – CLARIFICATION.
I am directed to refer to your letter dated 15.01.2004 & 09.02.2004 on the above
subject.
2. The case has been examined and it is hereby clarified that as from the
claim for refund, as per proviso to section 10(1) of the Sales Tax Act, 1990 if the excess
amount of input tax is not fully covered by the tax payable during a period of one year
following the tax period in which the credit first arose, the balance outstanding at the end
of that period shall be refunded.
3. It appears an impression is being gathered that if a registered person
carried forward an amount accumulated after 12 months that is clarified at the end of that
period as a refund.
4. This is not the case. The excess amount balance has to be calculated on
the principle of FIFO (first in first out). Thus, if an excess amount arises in (say) January,
but is covered in the next two months, that chapter ends. Excess input arising in
subsequent tax periods is a new chapter. Only if an excess amount arising in a particular
tax period is not covered for a continuous 12 month period, then it will become
refundable.
[Issued by the CBR., Islamabad, under the signature of Dr. Ashfaq Ahmed Tunio,
Secretary (ST-L&P), addressed to Syed Afzal Hussain, Consultant, H. No.86, Younas St # 1,
Younaspura Baghbanpura, Lahore.]
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C. NO.2(1)STP/2000(Vol.II) DATED 24 TH FEBRUARY, 2004
SUBJECT:- REFUND OF EXCESS AMOUNT CARRIED FORWARD
I am directed to refer to the subject cited above and to say that it has come to the
notice of Board that some registered persons have started claiming refund on excess
amount carried forward on the ground that their raw materials are chargeable to sales tax
@ 20% while the finished goods manufactured by them are chargeable @ 15%. While
examining some such cases, it was noticed that these units show nominal value addition
and low turnover, which does not justify the financial feasibility. The figures furnished
do not explain the expenditure on labour, transport, overheads, marketing, etc. and profit
margin.
2. As for the claim for refund, the proviso to section 10(I) of the Sales Tax
Act, 1990 is quite clear that if the excess amount of input tax is not fully covered by the
tax payable during a period of one year following the tax period in which the credit first
arose, the balance outstanding at the end of that period shall be refunded. The claimants