Sales Tax Instructions

Sales Tax Instructions, 2009
A question has been raised whether or not the provisions of section 73 of the
Sales Tax Act, 1990 as substituted in the Finance Act, 2004 are applicable in cases where
taxable supplies are made by a registered seller to a buyer not required to be registered
for the purposes of the said Act. The question has been examined in the Board and it is
observed that section 73 involves the following four procedural aspects/conditions:-
(i)
(ii)
(iii)
(iv)
under sub-section (1), the crossed cheque, bank draft or any other
banking instrument should invariably show the transfer of the amount
from the business bank account of the buyer;
where buyer is not required to be registered for the purposes of the
aforesaid Act, no tax credit, adjustment, deduction, refund repayment or
drawback or zero-rating of tax is involved in respect of the purchase
made by such buyer and the restriction imposed under sub-section (2) is
not required to be adhered to and hence, rendered irrelevant;
under sub-section (3), in order to avail the facility of input tax credit,
adjustment or deduction, refund, repayment, drawback or zero-rating of
tax, the registered supplier is required to deposit the amount received in
his business bank account; and
as per explanation footnoted to section 73, only a registered person is
required to maintain a business bank account and declare such account to
the Collector.
2. It may be appreciated that the conditions enshrined in section 73 as
explained above are primarily binding and can be practically met only in situations where
besides the seller, the buyer is a person duly registered as required under the Act.
However, in cases where buyers are not required to be so registered, none of the aforesaid
conditions remain binding.
3. It is therefore, clarified that in case where buyers are not required to be
registered and are, therefore, not registered, the provisions of section 73 shall not as such
apply. Nevertheless the registered seller will be required to show the deposit of all
amounts received in respect of supplies made including those to the unregistered buyers
in his declared business bank account in order to avail the benefit of input tax credit or
similar facilities under the Act and rules made there under.
4. All the Collectors are requested to inform the Sales Tax audit staff
accordingly.
[Issued by the CBR., Islamabad, under the signature of Dr. Fareed Iqbal Qureshi,
Secretary (STB), addressed to the Director General, Large Taxpayer Unit, Karachi; the Collector,
Collectorate of Sales Tax & Central Excise, Peshawar/ Rawalpindi/ Gujranwala/ Faisalabad/
Lahore; the Collector, Collectorate of Customs, Sales Tax & Central Excise, Multan/ Hyderabad/
Quetta & the Collector, Collectorate of Sales Tax & Central Excise (Headquarters /Enforcement/