Sales Tax Instructions

Sales Tax Instructions, 2009
C.No.3(9)STP/99 DATED 28 TH APRIL, 2000
SUBJECT:-
FINANCING ARRANGEMENT FOR SALE AND LEASEBACK
OF ASSETS.
I am directed to refer to your letter No.DST 054 dated 20.09.1999 and
subsequent letter No.DST 335 dated 1.4.2000 on the subject cited above and to state that
words ‗sale‘, ‗purchase‘ and ‗lease‘ etc. can not be given different meanings for different
purposes. They will carry the same meanings for the purposes of Law. They cannot be
defined or interpreted in one way for the purpose of ‗Sale and Lease Back‘ arrangements
and in another way for the purposes of Sales Tax Act, 1990. They will carry the same
definitions for all purposes.
2. Under the ‗Sale and Lease Back‘ arrangements, sale and purchase of the
machinery and equipment between the two persons do take place with mutual agreement.
There is in fact a lease arrangement between the two parties (even if they are same as in
case of seller and buyer) and their owner gives it on lease and the recipient pays ‗rent‘ for
the same. Such type of lease is definitely covered under the definition of ‗supply‘ given
under section 2(33) of the Sales Tax Act, 1990. The companies engaged in such leasing
business are, therefore, liable to be registered for the purposes of Sales Tax Act, 1990 and
to fulfil all the obligations prescribed therein. Your contention as contained in your above
quoted letters is not correct.
[Issued by the CBR, Islamabad under the signature of Mr. Iftikhar Qutab, Secretary
(STP) addressed to M/s A.F. Ferguson & Co., Karachi. Copy endorsed to all the Collectors of
Sales Tax/Mirpur (AJ&K) alongwith copies of the above-quoted two letters.]
********