Sales Tax Instructions

Sales Tax Instructions, 2009
C.NO.1(242)AuditG-III/Misc./STH/03/Pt
DATED 29 TH NOVEMBER,2005
SUBJECT:
SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX BY
COMMERCIAL IMPORTERS ON 10% VALUE ADDITION
It may kindly be recalled on the instructions of the Board an exercise was conducted in
order to verify the payment of sales tax by commercial importers on 10% value addition at import
stage. The initial exercise had pertained to the clearances through CARE only. As had been
appreciated, barring a few, importers generally had not paid sales tax on 10% value addition. This
was attributed to the absence of appropriate provision in the CARE software.
02. Necessary data were collected from CARE for May & June, 2005 and after conducting
desk audit, liabilities were determined which were communicated to the Federation of Pakistan
Chamber of Commerce and Industry Karachi, respective Trade Associations and Customs
Clearing Agents Association. The effort has proved ineffectual.
03. This Collectorate has now taken up the issue afresh. Data of CARE System for the
months of July, August, September and October 2005 have been collected for desk audit. The
liabilities are being determined and in case the importers do not respond, the clearance of their
imports through Karachi ports shall have to be blocked pending payment of the tax.
04. In order to workout an immediate and long term solution of the process, the Additional
Collector (Audit) held a meeting with the Model Customs Collectorate. The following issues have
emerged during the discussion:
i) The prime issue is the definition of Commercial Importer and its implications.
Currently only Commercial Importers are required to pay upfront sales tax on
10% value addition but the term ‗Commercial Importer‘ has not been defined in
the Sales tax Special Procedure Rules, 2005. In registration certificate, there is
no category of ‗ Commercial Importer‘.
ii)
iii)
iv)
In the Appraisement as well as Port Qasim Collectorate (PRAL operated), those
importers who have numbers ―9999‖ appearing in their sales tax registration
number are treated as commercial importers and are required to make the
upfront payment of the tax. The Board in the past had issued a number of
registration certificates to commercial importers where the registration number
contained the component of ―9999‖. This does not seem to be the practice any
more.
The CARE is a system based operation. There is no contact between customs
officer and importer, Duties and taxes are paid online. Accordingly to the
present procedure, a Commercial Importer is required to pay sales tax on 10%
value addition on a separate Challan. There is no provision in the Special
Procedure Rules, 2005 to make payment on Goods Declaration.
The CARE clearance system identifies a registered person through NTN only
regardless of his / her commercial activity whereas, under sales tax regime, the
identification of a registered person for a value addition purpose is made on the
basis of sales tax registration number. Therefore, the sales tax registration