Sales Tax Instructions

Sales Tax Instructions, 2009
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C. NO. 3(54)STP/99/2653 DATED 14 TH SEPTEMBER, 2001
SUBJECT:-
LEVY OF SALES TAX ON DISPOSAL OF ASSETS
I am directed to refer to the subject cited above and to say that it has come to the
notice of the Board that in some cases sales tax is not being charged on the disposal of
assets, including old and used plant and machinery, vehicles and scrap, by the registered
persons, on the ground that such disposal is ‗not part of the regular and continuous
business activity‘ of that registered person, and that it is not a frequent and constant‘
taxable supply by such person.
2. It is clarified that sales tax is to be charged, levied and paid on all taxable
supplies made by a registered person under section 3 of the Sales Tax Act, 1990 read
with subsections (33), (35), (39) and (41) of section 2 ibid. There is no legal provision
excluding the sale of old plant and machinery, vehicles or scrap, etc. from the purview of
taxable supply. The Sales Tax Act, 1990 makes no distinction between goods supplied by
a registered person ‗in the normal and continuous course of business activity‘ as a
‗frequent and constant supply‘ or otherwise, and there can be no exemption on
presumptions.
3. The Collectorates are therefore advised to recover sales tax on all such
supplies, and to immediately file appeals in case any orders to the contrary have been
passed by adjudicating / appellate fora. A list of such cases decided so far against the
above view point may be furnished to the Board urgently, giving following particulars:
(xi)
(xii)
(xiii)
(xiv)
(xv)
Name, address and registration No. of the unit.
Particulars of goods their value and amount of sales tax involved.
Order No. & date.
Name & designation of adjudicating officer.
Whether any appeal has been filed by the Collectorate, if so is present
status.
4. In case the matter is in a Superior Court, the Collectorate should engage
a good counsel, properly briefed, to defend the department. Collector of Sales Tax &
Central Excise (East/West), Karachi is especially advised to strongly pursue the appeals
presently pending in the Sindh High Court. A brief, which gives some points supporting
Board‘s view is enclosed for information. Further points / arguments may be developed
and presented by the Collectorates. The Collectorates are advised to keep the Board
posted of the developments in the matter.