Sales Tax Instructions

Sales Tax Instructions, 2009
C. NO.3(46)SS(CR)/78 DATED 30 TH JANUARY, 1991
SUBJECT:- NOTIFICATION NO. S.R.O. 1073(I)\90, DATED 14 TH JANUARY,
1990.
I am directed to refer to the subject SRO and to say that the garments should be
classified at S.Nos.1 and 4 of the S.R.O.1073(I)/90, dated the 14 th January, 1990.
[Issued by the CBR., Islamabad, under the signature of Mr.Ahad Nawaz, Second
Secretary (ISR-IV), addressed to the Collector of Customs, Custom House,Lahore.]
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SALES TAX CIRCULAR NO.1/1991 DATED 27 TH FEBRUARY, 1991
SUBJECT:- LEVY OF SALES TAX ON TUBULAR PLASTIC PACKING
FILM- CLARIFICATION REGARDING.
A question regarding chargeability of sales tax on tubular plastic packing film
used in the manufacture of polyethylene bags has been raised by the Plastic Manufac
-turers Association, Lahore. The Association is of the view that since the end product is
exempt from sales tax, levy of tax on tubular plastic film, which is a processed raw
material of polyethylene bags is not justified.
2. The issue in question is :--
(i)
(ii)
whether the manufacture of polyethylene bags from plastic
granules to the finished stage is a continuous process;
where such intermediary items used in the manufacture of
exempt goods are chargeable to sales tax.
3. Tubular plastic packing film is manufactured from plastic granules and
the same is further used in the production of polyethylene bags. Inquiry made in this
matter has revealed that tubular packing film is manufactured and is then subjected to
other processes to produce bags. Further there are judicial pronouncement to the effect
that if intermediary items are ―capable of being weighed, scaled, packed and shifted to
independent section for storage and sale these retard the continuity of the manufacturing
process of the end product‖. Tubular packing film is not only capable of being weighed,
packed and sold but is being sold by a number of manufacturers on payment of sales tax.
The process of manufacture of plastic bags thus cannot be treated as a continuous
process.
4. Tubular plastic film has not been exempted from sales tax. It is being
produced and marketed by a number of manufacturers on payment of sales tax. Its use in
the manufacture of plastic bags within the same business premises falls within the ambit
of supply as defined in section 2(22) of the Sales Tax (Amendment) Act, 1990 and the
same is accordingly chargeable to sales tax under the law.
[Issued by the CBR, Islamabad under the signature of Mr. Muhammad Yahya, Second
Secretary (S.T. Tar-I) addressed to all the Collectors.]
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