Sales Tax Instructions

Sales Tax Instructions, 2009
2. The controversy thus involves legal as well as factual dimensions. As
regard the factual aspects, the question of charging of tax on goods manufactured in nontariff
area is already a controversial one involving legal and constitutional considerations
the Peshawar High Court has already given some judgments against the department
against which appeals are pending in the Supreme Court. However, CBR has been
clarified that the provisions of the Sales Tax Act, 1990 have not been extended to
FATA/PATA, persons making supplies of taxable goods manufactured in FATA / PATA
in tariff areas are required to be registered and pay tax on such supplies. This means that
a manufacturer located in FATA/PATA, who is not making taxable supplies in tariff area
but is exclusively selling his goods to buyers in non-tariff area, is not liable to be
registered or pay sales tax on such supplies as liability to tax arises only when taxable
goods are supplied in tariff area.
3. There is no provision under the Sales Tax Act, 1990 to restrict any
person having his manufacturing premises in non-tariff area from maintaining an office in
tariff-area, and tax liability will arise only if taxable supplies are made from such office.
In a similar case of M/s. Siddiqsons Tin Plate Limited, Board issued ruling vide C.
No.3(5)STP/99, dated 2.5.2001 that a person having manufacturing premises in exempt
area and maintaining an office and ware house in Karachi, was not required to be
registered.
4. As regards the factual aspect. The crucial question is whether M/s. Forvil
Cosmetics were making any taxable supplies from their Lahore Office i.e. making
delivery of goods and receiving payments for such supplies in that office. M/s. Forvil
Cosmetics have claimed that all their deliveries were made form their manufacturing unit
to buyers in Mingora and all payments were also received in Mingora. During the hearing
in the Board, copies of the documents furnished by the Collectorate were shown to the
representatives of the unit, who rebutted the same as follows:-
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
The truck bilties showing dispatches to M/s. Forvil Cosmetics are not
taxable supplies at all. They may be consignments of purchased raw
material, returns of defective goods, or purchases office equipment /
supplies.
The bilties showing dispatches in names other than M/s. Forvil Cosmetics
and the warehouse stock statements do not relate to them at all.
They have no warehouse or any other sort of storage place either in Lahore
or any other place in tariff area.
The bilties showing dispatches form M/.s Forvil Cosmetics Lahore to
various places did not contain cosmetics, but contained publicity material,
return of defective purchased goods, empty containers to vendors, etc. This
is evident from the small quantities involved.
All their sales, deliveries and dispatches were made from Mingora to
buyers in the non-tariff area.
They had no reason to make table supplies from Lahore to Peshawar, when
the manufacturing premises are located near Peshawar.
As M/s. Forvil Cosmetics possess their own manufacturing unit in