Sales Tax Instructions

Sales Tax Instructions, 2009
(c)
(d)
certificate was issued on 30.11.1992. Their main activity is shown as
manufacture in the computer record of the Collectorate.
Audit of M/s. Afghan Carpets was carried out in June, 2000. It was found
out that M/s. Afghan Carpets were making local supplies of carpets but
were not paying sales tax which become payable from 1.7.1998. They
were requested to supply the record of their local supplies. They supplied
the same and on the basis of their record, their liability was worked out
by the audit team. As per their report, an amount of Rs.17,210,842/- as
principal amount of sales tax was not paid by M/s. Afghan Carpets from
July, 1998 to May, 2000. Collector of Sales Tax & Central Excise
(Adjudication-III), Karachi has issued Show Cause Notice on 16.8.2000.
First hearing was held on 26.8.2000 and the next date of hearing was
fixed for 07.09.2000.
It is pertinent to mention here that a total number of 739 retailers are
registered in this Collectorate and collection of sales tax from retailers is
given below:-
Year
Amount in Rs.
1998-99 8.536 million
1999-2000 28.422 million
July-August, 2000
7.421 million
(j)
It is also important to mention here that M/s. Afghan Carpets have paid
Rs.135,933/- as sales tax under the above referred sales tax registration
number for the tax period of July, 2000 on 15.08.2000. However, they
have not so far applied, as per the record of this Collectorate, for
registration as retailer under turnover tax scheme.‖
3. After going through the facts of the case it is observed that M/s. Afghan
Carpets were registered with the Collectorate of Sales tax (East), Karachi on 26.12.1992
(Annex-II). The record obtained from Karachi (East), indicates that the said registered
person applied for registration by ticking his business as exporter and retailer [photocopy
of registration application is enclosed (Annex-III)]. This however, does not appear to be
correct as in the year 1992 sales tax had not been extended to retailers and registrations
were done only for the manufacturer. The Sales Tax computer database shows their status
as manufacturer. The supplies by the retailers and distributors were brought under sales
tax net through the Finance Act, 1997.
4. Notwithstanding the business category of the petitioner, tax history of the
firm indicates that they had never paid any tax during all this period [copy of their
computer profile is enclosed (Annex-IV)]. However, during July, 2000 they had filed
return for retailers and deposited Rs.135,933 on account of turnover tax, on the basis of
audit of record of the said registered person, the said Collectorate has determined local
sales amounting to Rs.114,738 million during the period 1998-99 and 1999-2000. The
demand of sales tax on the local supplies made by the petitioner appears to be correct.