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Sales Tax Special Procedures Rules, 2004


CONTENTS

Preamble and Rule 1

CHAPTER I SPECIAL PROCEDURE FOR FILING OF NIL RETURNS

CHAPTER II SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX BY COMMERCIAL IMPORTERS ON VALUE ADDITION

CHAPTER III SPECIAL PROCEDURE FOR PAYMENT OF RETAIL TAX

CHAPTER IV SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX BY JEWELLERS

CHAPTER V SPECIAL PROCEDURE FOR COLLECTION AND PAYMENT OF SALES TAX ON ELECTRIC POWER

CHAPTER VI SPECIAL PROCEDURE FOR COLLECTION AND PAYMENT OF SALES TAX ON NATURAL GAS

CHAPTER VII SPECIAL PROCEDURE FOR SUPPLY OF GINNED COTTON

CHAPTER VIII SPECIAL PROCEDURE FOR THE SPINNING INDUSTRY

CHAPTER IX SPECIAL PROCEDURE FOR SUPPLY OF SUGAR TO TRADING CORPORATION OF PAKISTAN

CHAPTER X SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX ON SUPPLY OF FOOD

CHAPTER XI SPECIAL PROCEDURE FOR PERSONS PROVIDING OR RENDERING TAXABLE SERVICES

CHAPTER XII SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX BY STEEL MELTERS AND RE-ROLLERS

CHAPTER XIII SPECIAL PROCEDURE FOR THE SHIP-BREAKING INDUSTRY

CHAPTER XIV SPECIAL PROCEDURE FOR ZERO-RATING OF HAND-KNOTTED CARPETS

Preamble and Rule 1

THE

SALES TAX SPECIAL PROCEDURES RULES, 2004

12th June, 2004

In exercise of the powers conferred by section 71 of the Sales Tax Act, 1990, read with clause (9) of section 2, sections 3, 3AA and 4, sub-section (2) of section 6, section 7A, clause (b) of sub-section (1) of section 8, clause (a) of sub-section (2) of section 13, sections 26AA and 34A, and the first and second provisos to section 45 thereof, the Federal Government is pleased to make the following rules, namely:—

1. Short title, application and commencement.¾(1) These rules may be called the Sales Tax Special Procedures Rules, 2004.

(2) They shall apply to such persons as are specified in the respective Chapter.

(3) These shall come into force on and from the 1st July, 2004, except Chapter VII, which shall come into force with immediate effect.

CHAPTER I SPECIAL PROCEDURE FOR FILING OF NIL RETURNS

1. Application : —The provisions of this Chapter shall apply to every registered person who files a nil return for any tax period.

2. Definitions : —(1) In this Chapter, unless there is anything repugnant in the subject or context,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “Computer Section” means Computer Section of the Collectorate;

(c) “Collectorate” means the office of the Collector having jurisdiction;

(d) “nil return” means a return indicating that no sales tax is payable by the registered person in respect of the tax period to which the return relates, and includes a null return and a return where carry-forward or refund is claimed;

(e) “Nil Return Receipt Counter” means a counter set up in the Collectorate for the purpose of receiving nil returns; and

(f) “null return” means a return which indicates that no transaction was made by the registered person during the tax period and no amount of tax is to be paid, refunded or carried forward.

(2) The words and expressions used, but not defined herein, shall have the same meaning as assigned to them in the Act.

3. Setting up of Nil Return Receipt Counters : —(1) The Collector of Sales Tax may set up one or more Nil Return Receipt Counters, in such offices of the Collectorate as he may deem necessary, to receive nil returns from registered persons which come under the jurisdiction of that Collectorate.

(2) The Collector of Sales Tax shall ensure that the location and timings of the Nil Return Receipt Counters are publicized in newspapers and displayed at a prominent place in the Collectorate.

4. Filing of nil returns in the Collectorate : —Every registered person intending to file a nil return under section 26 of the Act may, in lieu of filing a nil return under Chapter II of the Sales Tax Rules, 2004, file the nil return, in duplicate, in the form as set out in the Annexure to this Chapter, not later than the due date, at a Nil Return Receipt Counter in the Collectorate where he is registered.

5. Receipt of Nil Returns by the Collectorate : —(1) Before receiving a nil return at the Nil Return Receipt Counter, it shall be ensured by the person receiving the nil return that all the particulars entered in both of the copies of the nil return are identical and shall thereafter sign and stamp both copies of the nil return indicating the date of submission of the nil return.

(2) The person receiving a nil return shall immediately forward the original copy of the nil return to the Computer Section and give the duplicate copy thereof, duly signed, stamped and indicating the date of submission, to the registered person as a receipt of filing of the return.

6. Computer feeding : —All nil returns received in the Computer Section will be entered into the computer without delay, provided that priority shall be given to feeding of returns of refund claimants.

CHAPTER II SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX BY COMMERCIAL IMPORTERS ON VALUE ADDITION

1. Application : —The provisions of this Chapter shall apply to persons registered exclusively as commercial importers under the Act.

2. Definitions.¾(1) In this Chapter, unless there is anything repugnant in the subject or context,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “Annex” means an Annex to this Chapter;

(c) “challan” means the payment challan specified in Annex ‘A’ to this Chapter;

(d) “commercial importer” means a person registered as a commercial importer under the Act;

(e) “assessed import value” means the value of imported goods determined under section 25 or 25B of the Customs Act, 1969 (IV of 1969), including the amount of customs duties and central excise duty, if any, levied thereon;

(f) “return” means the return-cum-payment challan specified in Annex ‘B’ to this Chapter;

(g) “statement” means the summary statement in the form specified in Annex ‘C’ to this Chapter;

(h) “value addition” means the difference between the assessed import value and the value of supply for which the goods, in the same state, are supplied, expressed as a percentage over the assessed import value, and calculated in the manner specified in rule 10; and

(i) “year” means a period of twelve continuous months.

(2) The words and expressions used but not defined herein shall have the same meaning as assigned to them in the Act.

3. Payment of Sales Tax on value addition : —(1) A commercial importer shall pay sales tax on supplies of imported goods, at the rate specified in sub-section (1) of section 3 of the Act, on a value addition of not less than fourteen per cent, through a challan in triplicate, at the same time as making payment of customs duty and sales tax in the bill of entry for such imported goods, calculated as shown in the Example.

Provided that in case the value addition of such commercial importer during any period in the preceding year was higher than fourteen per cent, he shall pay sales tax on supplies of imported goods on such higher value addition, in the manner specified in this sub-rule.

EXAMPLE

(a)

Value of imported goods determined under

section 25 or 25B of the Customs Act, 1969

= Rs. 100.00

(b)

Customs duty ( @20% )

= Rs. 20.00

(c)

Assessed import value ( = a + b )

= Rs. 120.00

(d)

Sales tax ( @15% ) payable on bill of entry

= Rs. 18.00

(e)

Value of supplies, with value addition of 14%

[ = c + ( c x 14 ¸100) ]

= Rs. 136.80

(f)

Value addition on which sales tax is payable

( = e – c )

= Rs. 16.80

(g)

Sales tax on value addition ( = f x 15 ¸100 )

(payable on treasury challan)

= Rs. 2.52

(2) The Bank shall send the original copy of the challan to the Collector of Sales Tax having jurisdiction, retain the duplicate copy for its record, and return the triplicate copy to the commercial importer, duly signed and stamped as acknowledgment of payment of the amount indicated.

4. Invoices and records.¾ A commercial importer shall issue a tax invoice for every supply made by him in the manner prescribed in section 23 of the Act and shall maintain records as prescribed under the Act.

5. Filing of Return.¾ A commercial importer shall file sales tax return for a tax period in the form prescribed in Annex ‘B’.

6. Statement of value addition.¾A commercial importer shall furnish to the Collector, by the 15th day of the month following the completion of every year of working under these rules, a statement in the form at Annex ’C’, after payment of the balance amount of tax, if any, payable on value addition for the year, calculated in manner specified in the statement.

7. Exemption from audit.¾A commercial importer who pays sales tax on value addition basis as prescribed under these rules for a year shall not be subjected to any audit for that year, and detailed audit shall be conducted of a commercial importer who pays sales tax in any manner other than prescribed in these rules.

Annex ‘A’

[See rule 10(1)]

CHALLAN FOR PAYMENT OF SALES TAX ON

VALUE ADDITION BY A COMMERCIAL IMPORTER

Sales Tax Registration No.:__________________________________________

Name:___________________________________________________________

Bill of Entry/Goods Declaration No. and date:____________________________

IGM No. and date:__________________________________________________

Index No.:________________________________________________________

Assessed import value

(value for sales tax purposes): Rs. ____________________________________

Sales tax paid on bill of entry: Rs. _____________________________________

Value addition (minimum 14%): Rs. ____________________________________

Sales tax payable on value addition, and deposited in bank:

Rs.______________________________________________________________

Signature:__________________________________

Name:_____________________________________

NIC No.:____________________________________

Date:______________________________________

FOR BANK USE: S. No. ________________

Received an amount of Rs.:__________________________________________

In words: Rupees:__________________________________________________

(Head of account: ‘020000-Sales Tax’)

Bank officer’s signature:_____________________________________________

Date:____________________________________________________________

Bank stamp:______________________________________________________



Annex ‘C’

[See rule 13]

STATEMENT OF VALUE ADDITION

OF A COMMERCIAL IMPORTER

Sales Tax Registration No.:__________________________________________

Name:___________________________________________________________

Address:_________________________________________________________

Telephone No.:______________________ Fax:__________________________

For the year from ______________(month/year) to ____________ (month/year)

1. Opening stock Rs. _______________________

2. Total imports during the year Rs. _______________________

3. Total purchases during the year Rs. _______________________

4. Closing stock Rs. _______________________

5. Total sales during the year Rs. _______________________

6. Cost of sales ( = 1 + 2 + 3 – 4 ) Rs. _______________________

7. Value addition ( = 5 – 6) / 6 ) x 100 ) Rs. _______________________

8. Tax payable on value addition

( = 7 x 0.14 x 0.15 ) Rs. _______________________

9. Sale tax paid during the year Rs. _______________________

10. Tax payable ( = 8 – 9 ) Rs. _______________________

11. Balance amount paid vide challan No. and date _____________________

Signature:__________________________________

Name:_____________________________________

Designation:_________________________________

NIC Card No.:_______________________________

Date:______________________________________

CHAPTER III SPECIAL PROCEDURE FOR PAYMENT OF RETAIL TAX

1. Application : –The provisions of this Chapter shall apply to persons registered exclusively as retailers under the Act.

2. Definitions : —(1) In this Chapter, unless there is anything repugnant in the subject or context,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “Annex” means an Annex appended to these rules;

(c) “application” means application for registration as a taxpayer for retail tax as specified in Form S.T.-1 annexed to Chapter I of the Sales Tax Rules, 2004;

(d) “return” means retail tax return-cum-payment challan as specified in Annex ‘A’; and

(e) “value addition” means difference between the value of supply for which the goods are acquired and the value of supply for which the goods are supplied, where for a particular tax period –

(i) the value of supply for which the goods are supplied shall be the sum of the values of all the sales made by the retailer during the tax period; and

(ii) the value of supply for which the goods are acquired shall be the sum of the values indicated in all the invoices, bills, vouchers, cash payment slips and cash memos of goods purchased by the retailer in the tax period.

(2) All other terms and expressions used but not defined herein shall have the same meaning as assigned to them in the Act.

3. Registration of retailer : —(1) Every person liable to be registered as a retailer shall, if not already registered, make an application for registration to the Collector having jurisdiction in the area where his business premises are located, in the manner prescribed in Chapter I of the Sales Tax Rules, 2004.

(2) In case a retailer operates different branches, divisions or retail outlets at more than one place, he shall apply for registration to the Collector having jurisdiction over the place where the head office is located.

(3) The Collector shall, having satisfied himself with the requisite information provided in the application for registration, register the applicant as retailer and issue registration certificate accordingly.

4. Furnishing of returns and payment of retail tax : —(1) A retailer shall deposit the return for a tax period in a designated branch of the National Bank of Pakistan for the tax period in the manner specified in section 26AA of the Act and Chapter II of the Sales Tax Rules, 2004 made thereunder.

5. Determination of sales tax liability : —Supplies made during a tax period by a retailer shall be charged to tax at the rate specified under sub-section (1) of section 3 of the Act on the basis of the value addition:

Provided that the value addition, in percentage terms, shall not be less than fifteen per cent of the total value of purchases made during the said tax period.

6. Record keeping and invoicing : —(1) A retailer shall issue cash memo for each supply in the form as set out at Annex ‘B’ and shall maintain the following records, namely:—

(a) record of purchases indicating description, quantity and value of goods purchased and the name and address of the seller; and

(b) record of sales indicating description, quantity and value of goods sold.

7. Audit : —(1) Audit of the records for verification of minimum value addition and correct payment of sales tax on monthly basis shall be conducted once in a year.

(2) Notwithstanding the provisions of sub-rule (1), a retailer who declares a minimum increase of six per cent in his total sales in a year over the sales declared in the preceding year, shall not be subjected to routine audit.

(3) Notwithstanding the provisions of sub-rule (2), if the Collector has reasons to believe that the retailer has committed a tax fraud or violated any of the provisions of these rules, he may order for audit of the retailer.



ANNEX ‘B’

[See rule 20(1)]

CASH MEMO / INVOICE

Serial No._______

Sales Tax Registration No._______________

M/s. …….(Sellers’ Name)……

(……Seller’s’ Address……)

Tel:

Fax:

Buyer’s Name & :________________________________________________

Address ________________________________________________

________________________________________________

S.No.

Description

Unit

Price

Quantity / No./

Weight / Volume

Amount

TOTAL

Signature of authorized person

CHAPTER IV SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX BY JEWELLERS
1. Application : —The provisions of this Chapter shall apply to the jewellers, goldsmiths and other persons engaged in the manufacture or supply of jewellery whether on ownership basis or on labour or service charges basis, and to persons engaged in the supply of ready-made jewellery.

2. Definitions : —(1) In this Chapter, unless there is anything repugnant in the subject or context,—

(a) ”Act” means the Sales Tax Act, 1990;

(b) “Annex” means an Annex to this Chapter;

(c) “jeweller” means any person engaged in the supply of jewellery as a manufacturer, wholesaler or retailer, but does not include a zargar;

(d) “jewellery” includes ornaments and articles of adornment made of gold, silver, precious and semi-precious metals, precious or semi-precious stones, gems or any other such materials;

(e) “manufacture” means the process of making of jewellery or the carrying out of any process in the making or in connection with making of jewellery and includes repair of jewellery; and

(f) “zargar” means any person who is engaged in the making of jewellery or carrying out any related process on labour charge basis and is not involved in the sale of jewellery to ordinary consumers.

(2) All other expressions and words used but not defined in this Chapter shall have the same meanings as are assigned to them under the Act.

3. Registration : —(1) Every jeweller engaged in the business of manufacturing or supplying jewellery shall, if not already registered, apply to the Collector of Sales Tax having jurisdiction for registration under section 14 of the Act read with Chapter 1 of the Sales Tax Rules, 2004.

(2) The exemption available to manufacturers and retailers having annual turnover less than that specified in item No. 42 of the Sixth Schedule to the Act, shall be available to jewellers.

(3) A zargar shall not be required to be registered if he is not engaged in the sale of jewellery to ordinary consumers.

4. Exemption : —In respect of his output tax liabilities, a registered jeweller shall be entitled to exemption equal to the amount of sales tax as is in excess of sales tax chargeable on the difference between sale price of jewellery, excluding amount of sales tax, and the value of exempt gold or silver used therein provided that,—

(a) such difference is in no case less than ten per cent of the sale price excluding the amount of tax; and

(b) the labour charges incurred in the making of the jewellery and the price of precious or semi-precious stones and gems, if used, is included in the sale price for the purpose of assessment of tax.

5. Payment of tax : —(1) A jeweller shall pay sales tax at the rate specified in sub-section (1) of section 3 of the Act on the following basis, namely:-

(i) in case of a jeweller working on labour (making) charges basis, on the amount of labour (making) charges received by him:

Example : — A jeweller receives material from a customer for manufacturing jewellery, on which he charges ten thousand rupees as labour (making) charges. Sales tax payable on this amount shall be Rs. 10,000 x 15/100 = Rs. 1500; and

(ii) in case a jeweller making or supplying jewellery wholly or partly from exempt unworked gold or silver purchased or owned by him, sales tax shall be paid on the differential amount determined in accordance with the provisions of rule 25.

Example : — A jeweller purchases exempt unworked gold for eight thousand rupees and after manufacturing jewellery sells the same at value of ten thousand rupees. Difference between sale value and value of exempt gold used is Rs. 10,000 – Rs. 8,000 = Rs. 2,000. Sales tax shall be payable on this differential amount, i.e., Rs. 2000 x 15/100 = Rs. 300.

(2) A registered jeweller shall not be entitled to take adjustment of any input tax or claim any refund of sales tax.

6. Invoices and returns : —(1) A registered jeweller shall issue in English or in Urdu language tax invoices in the form as set out at Annex ‘A’.

(2) A registered jeweller shall file monthly returns in the form as set out in Annex ‘B’.

7. Record keeping : — A registered jeweller shall keep the following record, namely:—

(a) register in the form as set out in Annex ‘C’ to this Chapter in English or in Urdu language;

(b) copies of sales tax invoices issued under sub-rule (1) of rule 27;

(c) electricity bills, telephone bills, rent receipts, wage payment receipts and proof, if any, of all such other expenditures as relate to business activity;

(d) copies of monthly returns filed in the Bank; and

(e) purchase invoices, purchase memos or receipts in any form, if any, received on purchase of raw materials and other inputs.

8. Audit : —Audit of a person registered under this Chapter shall be conducted in usual manner under the Act, but the auditors shall not require the registered jewellers to furnish any document or record other than the ones specified in this Chapter.

9. Responsibility of Jewellers’ Association : —The concerned Jewellers Association or Trade Body shall be responsible to ensure that all its member jewellers having turnover above the threshold for exemption are registered, and the concerned office bearer shall be personally responsible if, at any later stage, it is found that the turnover of any jeweller certified by him as less than the aforesaid threshold was actually above such threshold.

10. Miscellaneous : —All provisions of the Act and the rules made thereunder, insofar as these are not inconsistent with this Chapter shall, mutatis mutandis, apply to the jewellers registered under this Chapter.


ANNEX ‘A’

[See rule 27(1)]

SALES TAX INVOICE

S. No. _________ Date: ________

( Jeweller’s Name )

( ….Address ….)

( ….Tel. No. / Fax No. …..)

Sales Tax Registration No.: __________________

Buyer’s name and address: __________________________________________

________________________________________________________________

S. No.

Description

Quantity / Weight

Price

(per gm)

Price

(1)

(2)

(3)

(4)

(5)

Grams

Milligrams

Total

Less:

Exempt Gold/Silver used

Value for sales tax purposes

Sales Tax @ 15%

Total sale price

Signature of authorised person

ANNEX ‘C’

[See rule 28(a)]

FORM OF REGISTER

TO BE MAINTAINED BY A REGISTERED JEWELLER

GOODS DISPATCHED/SOLD

S. No.

Date.

Tax invoice No.

Brief particulars of goods sold.

Name of buyer.

(1)

(2)

(3)

(4)

(5)

Weight.

Total sale price.

Value of exempt gold/silver.

Value for sales tax purpose.

Amount of sales tax @15%.

(6)

(7)

(8)

(9)

(10)

CHAPTER V SPECIAL PROCEDURE FOR COLLECTION AND PAYMENT OF SALES TAX ON ELECTRIC POWER

1. Application : —The provisions of this Chapter shall apply for collection and payment of sales tax on electric power imported, generated, produced, transmitted and supplied by electricity generation, transmission and distribution companies licensed under the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (XL of 1997), including their distributors, dealers and agents, or by any other person dealing in importation, generation, production, transmission, distribution and supply of electric power.

2. Definitions : —(1) In this Chapter unless there is anything repugnant in the subject or context,

(a) “Act” means the Sales Tax Act, 1990;

(b) Authority” means the National Electric Power Regulatory Authority established under section 3 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (XL of 1997);

(c) “consumer” means a person or his successor-in-interest who purchases or receives electric power for consumption and not for delivery or re-sale to others and includes a person who owns or occupies a premises where electric power is supplied;

(d) “registered consumer” means a consumer registered under the Act;

(e) “distribution” means the ownership, operation, management or control of distribution facilities for the movement or delivery or sale to consumers of electric power but shall not include the ownership, operation, management and control of distribution facilities located on private property and used solely to move or deliver electric power to the person, owning, operating, managing and controlling those facilities or to tenants thereof shall not constitute distribution;

(f) “distribution company” means a person engaged in the distribution of electric power;

(g) “electric power” means electrical power supplied by a person to a consumer;

(h) “generation” includes the ownership, operation, management or control of generation facilities for delivery or sale of electric power and not solely for consumption by the person owning, operating, managing and controlling those facilities;

(i) “HUBCO” means the Hub Power Company Limited;

(j) “KAPCO” means the Kot Addu Power Company Limited;

(k) “KESC” means the Karachi Electric Supply Corporation;

(l) “IPP” means an Independent Power Producer established in private sector operating under a license issued by the Authority for the purpose of generation, transmission, distribution and sale of electric power, and governed by various Implementation Agreements executed between the Islamic Republic of Pakistan and such Independent Power Producer and includes HUBCO and KAPCO;

(m) “person” means an electricity generation, transmission and distribution company licensed by the Authority and includes a distributor, dealer and agent of such a company, an Independent Power Producer, a Public Sector Project, Private Sector Project, or any other person dealing in importation, generation, production, transmission, distribution and supply of electric power;

(n) “Private Sector Project” means a facility for generation, transmission or distribution of electric power constructed, owned, managed or controlled by any one or more organizations or companies incorporated under the Companies Ordinance, 1984 (XLVIII of 1984);

(o) “Public Sector Project” means a facility for generation, transmission or distribution of electric power constructed, owned, managed or controlled by the Federal Government, a Provincial Government, a local authority or any body owned or controlled by any such Government or authority;

(p) “transmission” means the ownership, operation, management or control of transmission facilities; and

(q) “WAPDA” means the Pakistan Water and Power Development Authority established under the Pakistan Water and Power Development Authority Act, 1958 (W. P. Act XXXI of 1958).

(2) All other words and expressions used, but not defined herein shall have the meanings assigned to them in the Act.

3. Registration : —Every person who supplies electric power, if not already registered, shall get registration under section 14 of the Act read with Chapter I of the Sales Tax Rules, 2004.

4. Levy and collection of sales tax : —(1) Every person who supplies electric power shall collect sales tax at the rate specified in sub-section (1) of section 3 of the Act.

(2) Subject to sub-rule (3), sales tax on electric power shall be levied and collected at the following stages, namely :—

(a) in case of its importation, the responsibility to pay sales tax shall be of the importer, and the value thereof shall be the value as determined under section 25 or, as the case may be, section 25B of the Customs Act, 1969 (IV of 1969), including the amount of customs duties and central excise duties levied thereon; and

(b) in case of generation, transmission, distribution and supply of electric power by a public sector project (for example WAPDA, KESC, etc.), a private sector project including an IPP, a Captive Power Unit or any other person, the responsibility to collect sales tax shall be of the person making the supply, and the value shall be the price of electric power including all charges, surcharges, rents, commissions and all duties and taxes whether local, Provincial or Federal, but excluding the amount of sales tax, as provided in clause (46) of section 2 of the Act.

(3) In case of an IPP, HUBCO or KAPCO, the value of supply shall be the amount received by such IPP or, as the case may be, HUBCO or KAPCO, on account of Energy Purchase Price only and any amount in excess of Energy Purchase Price received on account of Capacity Purchase Price, Energy Price Premium, Excess Bonus, Supplemental Charges, etc., shall not be deemed as a component of the value of supply, notwithstanding anything contained in clause (46) of section 2 of the Act:

Provided that in case WAPDA or KESC disputes any amount, WAPDA or, as the case may be, KESC, shall issue a certificate showing such amount and the tax involved therein and such certificate shall be deemed to be a Credit Note for the IPP for the purposes of section 9 of the Act, and shall be accounted for in the return for the tax period in which such Credit Note is issued.

Provided further that in case an IPP, for the like reasons, receives any amount from WAPDA or KESC in respect of supply made during any pervious tax period, tax on such amount shall be accounted for in the return for the period in which it is received.

5. Filing of returns and deposit of sales tax : — (1) In case of WAPDA and KESC, sales tax levied and collected under rule 35 during a tax period shall be deposited on cash-collection basis.

(2) WAPDA and KESC shall submit the monthly return as prescribed under section 26 of the Act, by the 21st day of the month following the month in which sales tax has been collected. The tax due shall be deposited in the Government Treasury under the relevant head “0220000-Sales Tax” along with the prescribed return in a designated branch of National Bank of Pakistan.

(3) In case of an IPP, the due date for the purpose of filing monthly sales tax return and for payment of sales tax shall be the 25th day of the month following the month to which the sales tax invoice relates.

(4) Any person other than an IPP, WAPDA or KESC, who supplies electric power shall file a monthly sales tax return under section 26 of the Act and Chapter II of the Sales Tax Rules, 2004 and deposit the amount of sales tax payable for the tax period by the due date.

6. Determination of sales tax liability in respect of WAPDA and KESC : —(1) Any person, except WAPDA and KESC, who supplies electric power shall be entitled to claim admissible input tax adjustment in the manner specified in section 7 of the Act, read with section 8 thereof.

(2) WAPDA and KESC shall be entitled to claim admissible input tax adjustment against sales tax paid on their taxable purchases made in the month immediately preceding the tax period:

Provided that no input tax adjustment shall be admissible to WAPDA and KESC on account of the sales tax paid on the taxable purchases made before the 1st January, 2000.

7. Input tax adjustment : —(1) In case of registered consumers the electric power bill issued by distribution company shall be treated as a tax invoice as defined in clause (40) of section 2 of the Act.

(2) Subject to sub-rule (3), registered consumers shall be entitled to claim input tax adjustment against such invoice in the tax period in which the bill is paid as per the provisions of section 7 and 8 of the Act provided the bill contains registration number and address of the business premises declared to the Collector of the such consumer.

(3) In case a registered consumer is consuming electric power for both the taxable as well as non-taxable activity, he shall ascertain the correct amount of electric power consumed in taxable activity and adjust the input tax in accordance with the Chapter IV of the Sales Tax Rules, 2004.

8. Record keeping and invoicing : —(1) Every person who supplies electric power shall maintain records as prescribed under section 22 of the Act or any notification issued thereunder.

(2) Every person who supplies or distributes electric power shall print in his bill or invoice, as the case may be, registration number of the consumer and rate and amount of sales tax required to be charged by him under sub-section (1) of section 3 of the Act.

(3) Every person who supplies electric power and uses computerized accounting system may issue a computer generated sales tax invoice and keep their record on the computer in the prescribed format.

9. Penalty : —(1) Non-issuance of electric power bill for a tax period or any inordinate delay in the issuance of such bill by the electric power transmission and distribution companies or by any registered person engaged in the supply of electric power shall attract penalties under the relevant provisions of the Act.

(2) If the tax is not paid within the date due as provided under rule 36, the registered person shall be liable to pay additional tax and any other penalty prescribed in the Act.

CHAPTER VI SPECIAL PROCEDURE FOR COLLECTION AND PAYMENT OF SALES TAX ON NATURAL GAS

1. Application : —The provisions of this Chapter shall apply for collection and payment of Sales Tax on Natural Gas including Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) imported, produced, transmitted and supplied by gas well-head companies and gas transmission and distribution companies licensed under the Natural Gas Rules, 1960, including their distributors, dealers, sales agents, retailers or by any other person hereinafter called the “person” for the purposes of this Chapter and dealing in importation, production or distribution and supply of Natural Gas including Compressed Natural Gas and Liquefied Petroleum Gas.

2. Definitions : —(1) In this Chapter unless there is anything repugnant in the subject or context,—

(a) ”Act” means the Sales Tax Act, 1990;

(b) “CNG station” means any place or premises from where CNG is supplied to or filled in cylinders or tankers;

(c) ”gas bill” means the bill of charges issued by the gas transmission and distribution companies to their consumers pertaining to a tax period for natural gas supplied by them;

(d) “natural gas” means the gas obtained from bore-holes and wells whether unmixed or mixed with artificial gas consisting primarily of hydrocarbons whether gaseous or liquid in form, which are not oils and includes liquefied petroleum gas (LPG) and compressed natural gas (CNG);

(e) “LPG dealer” means any person authorized by the gas transmission and distribution company or by any other person to be a distributor or supplier who deals in the sales of LPG to any consumer whether in containers or otherwise; and

(f) “transmission and distribution company” means a person holding a licence for the transmission and distribution of natural gas whether imported or from various bore-holes or wells situated in Pakistan (e.g. Sui Southern Gas Pipelines Limited and Sui Northern Gas Pipelines Limited).

(2) All other words and expressions used, but not herein defined shall have the meanings assigned to them in the Act.

3. Levy and collection : —(1) Every person who supplies natural gas shall be liable to registration and shall charge and pay sales tax at the rate specified in sub-section (1) of section 3 of the Act.

(2) Sales tax on natural gas shall be levied and collected at the following stages and in the following manners, namely:—

(a) in case of its importation, the responsibility to pay sales tax shall be of the importer, who shall pay in the manner prescribed in sub-section (1) of section 6 of the Act, and the value thereof shall be the value as determined under section 25 or 25B of the Customs Act, 1969 (IV of 1969), read with section 31A thereof, including the amount of customs duties and central excise duties levied thereon;

(b) in case of production and supply from the bore-holes and wells, the person responsible to charge and pay sales tax shall be the person making the supply at the bore-holes or the well-heads. The value for the purposes of levy of sales tax shall include price of natural gas, charges, rents, commissions and all duties and taxes, local Provincial and Federal, but excluding the amount of sales tax, as provided in clause (46) of section 2 of the Act;

(c) in case of supply of natural gas by a gas transmission and distribution company, the person responsible to charge, collect and deposit sales tax shall be the gas transmission and distribution company and the value for the purpose of tax shall be the total amount billed including price of natural gas, charges, rents, commissions and all duties and taxes, local, Provincial and Federal, but excluding the amount of sales tax as provided in clause (46) of section 2 of the Act;

(d) in case of supply of CNG, the person responsible to charge, collect and pay sales tax shall be the person supplying the gas to its customers and consumers, and the value of supply in case of CNG shall include the price of CNG, charges, rents, commissions and all duties and taxes, local, Provincial and Federal, but excluding the amount of sales tax as provided in clause (46) of section 2 of the Act;

(e) in case of supply of LPG, the person responsible to charge, collect and deposit sales tax shall be the person who is a manufacturer, dealer, distributor or a retailer of LPG and the value of LPG for the purposes of levy of sales tax shall include price of LPG, charges, rents, commissions and all duties and taxes, local, Provincial and Federal, but excluding the amount of sales tax as provided in clause (46) of section 2 of the Act.

4. Record keeping and invoicing : —(1) Every person supplying or distributing natural gas , shall print in his bill or invoice, as the case may be, the rate and amount of sales tax required to be charged by him under sub-section (1) of section 3 of the Act.

(2) The registered person shall submit monthly return as prescribed in the Act. The tax due shall be deposited in the Government Treasury under the relevant head “0220000-Sales Tax” by the 15th day of the month following the month in which the gas has been supplied, provided that in case of gas supplied by gas companies to its consumers directly, and charges are billed on a monthly basis, the date shall be the 15th day of the second month following the month in which supplies were made.

(3) If the supplies are made free of charge or for some other consideration or a consideration which is lower than the billed or invoiced prices, the sales tax shall be charged as if it were supplied at open market price in terms of sub-clause (a) of clause (46) of section 2 of the Act.

(4) The registered person shall be entitled for input tax credit for tax paid on his purchases for making taxable supplies against output tax payable subject to the limitations and restrictions imposed under section 8 of the Act and the notifications issued thereunder:

Provided that the input tax credit shall be admissible for the amount of tax which was paid on the purchases made during that tax period for which return is being submitted:

Provided further that the registered consumers shall be entitled to claim input tax adjustment against such bill in the tax period in which the bill is paid as per the provisions of sections 7 and 8 of the Act, subject to the condition that the bill contains registration number and address of the business premises declared to the Collector by such consumer.

(5) Where the said person is engaged in making taxable supplies as well as exempt supplies, the input tax credit shall be allowed as per Chapter IV of the Sales Tax Rules, 2004.

(6) The registered person shall issue a serially numbered sales tax invoice for every supply made by him, provided that in respect of supplies made by gas transmission and distribution companies, the monthly gas bills issued shall be deemed to be tax invoices in terms of section 23 of the Act. The monthly gas bill issued to a registered person shall contain the registration number of that consumer.

(7) The registered persons supplying natural gas using computerized accounting system may, issue computer-generated sales tax invoices and keep their record on computer in the prescribed format.

(8) The registered person supplying natural gas shall maintain records as prescribed under section 22 of the Act, including record of daily stocks and sales, stating therein quantity and value of the gas supplied and amount of sales tax charged thereon, provided that gas transmission and distribution companies shall not be required to maintain records of daily stocks and sales.

CHAPTER VII SPECIAL PROCEDURE FOR SUPPLY OF GINNED COTTON

1. Application : —The provisions of this Chapter shall apply to cotton ginners, ginning units, and persons involved in the purchase, supply and export of ginned cotton.

2. Definitions.¾For the purposes of this Chapter,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “ginning” means the process of manufacture of ginned cotton;

(c) “ginning unit” means any factory or manufacturing unit engaged in ginning and pressing of cotton; and

(d) “ginner” means a person who is engaged in the manufacture and supply of ginned cotton.

3. Registration.¾(1) A ginner shall, if not already registered under the Act, apply for registration under section 14 of Act read with Chapter I of the Sales Tax Rules, 2004, to the Collector having jurisdiction in the area where the ginning unit is situated.

(2) Where a ginner is operating more than one ginning units or a composite unit dealing in ginning and spinning together or is engaged in any other taxable activity, whether ginning or other taxable activities are carried out in the same premises or not, such ginner shall apply for registration separately in accordance with sub-rule (1) for each ginning unit and separately for other taxable activity.

4. Notice to be given by ginner.¾A ginner shall notify the Collector in writing about the commencement and cessation of ginning, one day prior to such commencement, or as the case may be, cessation.

5. Tax rate.¾Supply of ginned cotton shall be zero-rated subject to the procedure specified in rules 50 and 51 of these rules.

6. Tax invoice and returns.¾Subject to the procedure specified in these rules, a ginner or any other person making supply of ginned cotton shall issue a tax invoice under section 23 of the Act for each supply of taxable goods, indicating all the particulars specified in the said section, including the full name and complete address of the buyer, registration number of the buyer, if any, the quantity and value of supply, and the rate and amount of tax involved, if any, on such supply.

7. Manner of supply of ginned cotton.¾(1) The ginner shall deliver ginned cotton against a serially numbered delivery note or gate pass to the buyer, indicating the quantity of ginned cotton sold, the full name and complete address of the buyer and his registration number.

(2) The buyer shall, after receipt of the ginned cotton, settle the terms about the quantity and value of ginned cotton with the ginner within six days of the date of dispatch of ginned cotton from the ginning unit, and indicate the changes in the quantity and value (if any) on the reverse side of copies of the delivery note or gate pass issued by the ginner.

(3) The ginner shall then, within seven days, issue the prescribed zero-rated sales tax invoice for the quantity and value of the ginned cotton agreed between the ginner and the buyer, which shall be issued bearing the date on which the ginned cotton was dispatched against the delivery note or gate pass and shall bear a cross reference to the said delivery note or gate pass.

(4) The ginner shall maintain proper record of all such supplies made and shall furnish the details of all supplies of cotton made by him during a month to the Collector, in the format given below, by the 15th day of the month succeeding the month in which the supplies were made:-

STATEMENT OF SUPPLY OF GINNED COTTON

Name of Ginner___________­­_________________________________________

Address__________________________________________________________

Registration No.___________________________________________________

Month___________________________________________________________

S. No.

Invoice number and date

Name of buyer and his registration No. (if any)

Complete address of buyer

Quantity of supply

Value of supply

(1)

(2)

(3)

(4)

(5)

(6)

(5) Supply of ginned cotton made by a person other than a ginner shall be made in the same manner as specified in sub-rule (1) to (4), and all the provisions of this Chapter shall be applicable to such person mutatis mutandis.

8. Maintenance of records.¾A ginner shall maintain the records specified in the Act and the Rules made thereunder.

9. Adjustment of input tax.¾A person making zero-rated supplies of ginned cotton may claim adjustment of input tax on his taxable purchases in accordance with provisions of sections 7 and 8 of the Act, and in case the input tax exceeds the output tax, he may claim refund in terms of section 10 of the Act and Chapter V of the Sales Tax Rules, 2004.

10. Effect of failure to observe this special procedure.¾(1) In case any supply of ginned cotton is made in a manner other than as specified in this Chapter, sales tax shall be chargeable thereon at the rate specified in sub-section (1) of section 3 of the Act.

(2) In case any goods are not accounted for by a person making supplies of ginned cotton, he shall be liable to pay sales tax thereon at the rate specified in sub-section (1) of section 3 of the Act, along with additional tax and penalty under the Act.

CHAPTER VIII SPECIAL PROCEDURE FOR THE SPINNING INDUSTRY

1. Application.¾The provisions of this Chapter shall apply to the spinners and spinning units manufacturing and producing cotton yarns and blended yarns falling under Chapters 52 and 55 of the First Schedule to the Customs Act, 1969 (IV of 1969).

2. Definitions.¾(1) In this Chapter unless there is anything repugnant in the subject or context,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “spinning” means the process of manufacture or production of cotton or blended yarns;

(c) “spinning unit” means a factory or manufacturing or production unit engaged in spinning; and

(d) “spinner” means a person who is engaged in the manufacture and supply of cotton yarns or blended yarns.

(2) The words and expressions used, but not defined herein, shall have the meaning assigned to them in the Act.

3. Registration : — (1) A spinner shall apply and obtain registration, if not already registered, in accordance with the provisions of section 14 of the Act read with Chapter I of the Sales Tax Rules, 2004 made thereunder.

(2) Where a spinner conducts taxable activity through distinct or different branches, divisions, storage places, sales depots or manufacturing units, he shall inform the Collector of Sales Tax having jurisdiction about the address, nature of taxable activity, phone number and fax number of every such premises of his branches, divisions, storage places, sales depots and manufacturing units, and the details so furnished shall be mentioned in the registration certificate and also entered in the computer profile of the spinner.

(3) In case of a registration certificate issued prior to issuance of these Rules, the spinner shall give the information specified in sub-rule (2) to the Collector within ten days, and shall get the same entered in his registration certificate.

4. Maintenance of records : — The registered spinner shall, in addition to the records prescribed under the Act, maintain the following records, namely:-

(a) raw material register in the format prescribed in Annex ‘A’;

(b) daily production register and finished goods register in the format prescribed in Annex ‘B’;

(c) transit note in the format prescribed in Annex ‘C’; and

(d) delivery note in the format prescribed in Annex ‘D’.

5. Movement of goods : —(1) Yarn shall be removed from the registered spinning unit—

(a) to the branches, divisions, storage places, sales depots and other manufacturing units of the spinner or amongst the aforesaid of the same registered spinner or to any other person for further processing against a “Transit Note” as prescribed at Annex ‘C’; and

(b) from its branches, divisions, storage places, sales depots or other manufacturing units to any other person against a “Delivery Note” as prescribed at Annex ‘D’.

(2) The Transit Note or the Delivery Note shall be in duplicate, serially-numbered and in bound book form. The movement and disposal of the Transit Note and the Delivery Note shall be as hereunder:-

(a) the original copy shall accompany the consignment from consignor’s premises to consignee’s premises;

(b) the duplicate copy shall form part of the bound book and shall be kept in record;

(c) a separate Transit Note or Delivery Note shall be issued in respect of each vehicle or other means of conveyance. If a single vehicle is carrying goods for more than one consignee, separate Notes shall be prepared for each consignee; and

(d) the Transit Note and Delivery Note shall be prepared immediately before commencement of loading on the vehicle or the conveyance.

6. Tax invoice : —(1) The spinner or its branches, divisions, sales depots, storage places shall issue a tax invoice on the supply of taxable goods in accordance with section 23 of the Act.

(2) The spinner shall give delivery of yarn to the buyer after issue of tax invoice and the tax invoice number and date shall be duly entered on the Delivery Note.

7. Tax returns : —The spinner shall file his tax returns on the prescribed forms in the prescribed manner and by the prescribed date under the Act.

8. Provisions of Act to apply : —All provisions of the Act and the rules made thereunder, in so far as these are not inconsistent with this Chapter shall, mutatis mutandis, apply to the spinners under this Chapter.

Annex ‘A’

[See rule 58(a)]

FORM OF RAW MATERIAL REGISTER

NAME OF REGISTERED PERSON:__________________________________

ADDRESS: ______________________________________________________

REGISTRATION NUMBER:__________________________________________

TYPE OF MATERIAL: ___________

(1)

(2)

(3)

Date

Receipt of Raw Material

Total in Hand

From whom received

(2a)

Quantity

No. of Packages

(3a)

Quantity

(Kgs.)

(3b)

No. of Packages

(2b)

Quantity

(Kgs.)

(2c)

(4)

(5)

(6)

Issue of Raw Material

Closing Balance

Remarks

For Removal out of Factory

For the process of Manufacture

No. of Packages

(5a)

Quantity (Kgs.)

(5b)

No. of Packages

(4a)

Quantity (Kgs.)

(4b)

No. of Packages

(4c)

Quantity (Kgs.)

(4d)


Annex ‘B’

[See rule 58(b)]

FORM OF DAILY PRODUCTION AND FINISHED GOODS REGISTER

NAME OF REGISTERED PERSON:__________________________________

ADDRESS: ______________________________________________________

REGISTRATION NUMBER:__________________________________________

TYPE OF MATERIAL: ___________

(1)

(2)

(3)

(4)

(5)

Date

Opening Stock of Taxable Goods

Goods Received From Production

Goods Received from Outside Manufacturing Unit

Total Available

No. of Packages

(2a)

Quantity (Kgs.)

(2b)

No. of Packages

(3a)

Quantity (Kgs.)

(3b)

No. of Packages

(4a)

Quantity (Kgs.)

(4b)

No. of Packages

(5a)

Quantity (Kgs.)

(5b)

(6)

(7)

(8)

Goods Removed

Closing Balance

Remarks

Against Delivery Note

Against Transit Note

Date

(6a)

Delivery Note No.

(6b)

No. of Pkgs.

(6c)

Qty. (Kgs.)

(6d)

Date

(6e)

Transit Note No.

(6f)

No. of Pkgs.

(6g)

Qty.

(Kgs.)

(6h)

No. of Pkgs.

(7a)

Qty.

(Kgs.)

(7b)


Annex ‘C’

[See rule 58(c)]

FORM OF TRANSIT NOTE

Name:___________________________________________________________

Address:_________________________________________________________

Sales Tax Registration No.:__________________________________________

Original / Duplicate

TRANSIT NOTE

Serial No. _____________ Date _________________

1. Address of the consignee: ______________________________________

2. Description of goods being removed:______________________________

(Give counts and other details)

3. Quantity/Weight (net) of the goods:_______________________________

4. No. of packages:_____________________________________________

5. Marks and numbers, if any:_____________________________________

6. Purpose of removal of goods:___________________________________

7. Mode of transport:____________________________________________

(wherever applicable)

8. Registration No. of vehicle:_____________________________________

9. Time when the vehicle or conveyance leaves the premises:___________________________________________________

Signature of Authorized Person

Name, Designation and Stamp

Annex ‘D’

[See rule 58(d)]

FORM OF DELIVERY NOTE

Name:___________________________________________________________

Address:_________________________________________________________

Sales Tax Registration No.:__________________________________________

Original / Duplicate

DELIVERY NOTE

Serial No. _________________ Date _________________

1. Name & address of the consignee:_______________________________

2. Sales Tax Registration No. of consignee:__________________________

(wherever applicable)

3. Description of goods being removed:______________________________

(Give counts and other details)

4. Quantity / Weight (net) of the goods:______________________________

5. No. of Packages:_____________________________________________

6. Marks and numbers, if any:_____________________________________

7. Mode of Transport:____________________________________________

8. Registration No. of vehicle:_____________________________________

(wherever applicable)

9. Time when the vehicle or conveyance leaves the premises:

___________________________________________________________

10. Sales Tax Invoice No. and date:_________________________________

Signature of Authorized Person

Name, Designation and Stamp

CHAPTER IX SPECIAL PROCEDURE FOR SUPPLY OF SUGAR TO TRADING CORPORATION OF PAKISTAN

1. Application : —The provisions of this Chapter shall apply to the supply of sugar by the registered manufacturers of sugar to the Trading Corporation of Pakistan (TCP) for further supply or export thereof.

2. Definitions : —(1) In this Chapter, unless there is anything repugnant in the subject or context,—

(a) “TCP” means the Trading Corporation of Pakistan; and

(b) “mill” means the registered manufacturer of sugar from whom sugar is purchased by TCP as buffer stock.

(2) The words and expressions used, but not defined herein, shall have the same meaning as assigned to them in the Act.

3. Manner of payment of tax : —(1) Upon successful grant of tender for purchase of sugar, TCP will only pay the value of supply of sugar to the mills excluding the amount of sales tax against a ‘Commercial Invoice’ issued by the mills.

(2) At the time of removal of sugar from the mill premises, the mill will issue a sales tax invoice in favour of TCP who will accordingly pay to the mill the amount of sales tax due on the quantity being removed from the mill.

(3) In the event of removal of sugar by TCP for export purposes, the mill will issue a zero-rated tax invoice, against which no sales tax shall be payable.

4. Relevant tax period : —The mill will show the value of sugar sold to TCP and the tax chargeable thereon in the monthly tax return as well as in its supply register relating to the tax period in which the sales tax invoice has been issued by the mill in favour of TCP.

5. Monthly statement by TCP : —TCP shall submit a monthly statement to the Board as well as to the Collectorate of Sales Tax concerned in the format set out at Annex ‘A’.


ANNEX ‘A’

[See rule 67 ]

S. No.

Name of sugar mill

Total Qty purchased

(Kgs.)

Total value

(excluding sales tax)

(Rs.)

Sugar exported

Qty

(Kgs.)

Value

(Rs.)

(1)

(2)

(3)

(4)

(5)

(6)

Sugar supplied in local market

Sales tax involved

(Rs)

Date of payment of

Qty

(Kgs.)

Value

(Rs.)

Price/Value

(Rs.)

Sales tax

(Rs.)

(7)

(8)

(9)

(10)

(11)

CHAPTER X SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX ON SUPPLY OF FOOD

1. Application : —The provisions of this Chapter shall apply for collection and payment of sales tax on food, drinks, and other eatables supplied by hotels, restaurants, clubs, caterers, parlours, kitchens and other such similar establishments, whether for consumption inside the premises of such establishments or for supply for outside consumption or use.

2. Definitions : —(1) In this Chapter, unless there is anything repugnant in the subject or context, —

(a) “Act” means the Sales Tax Act, 1990;

(b) “caterer” means a person or establishment, by whatever name called, which in ordinary course of business supplies foods, drinks and other eatables in any mode or manner or on any occasion, whether or not it provides entertainment or supplies furniture or crockery and cutlery, or ornamental or decorative accessories or lighting for illumination, on hire, lease or for any other consideration;

(c) “club” means an establishment, organization or place, other than a hotel or restaurant, the membership of which is restricted to a particular class of people or which is run on the basis of mutuality and supplies foods, drinks or other eatables, whether or not it has any arrangement for boarding, lodging or games;

(d) “Daily Gross Take” or “DGT” means the total value of supply received during each day and includes the amount of tax;

(e) “Fiscal Electronic Cash Register” or “FECR” means an electronic cash register with fiscal memory (black box), fiscal screw and seal and capability to simultaneously print second copy (record copy) containing all information in addition to that on the first paper roll (customer copy) and having two displays, one for operator and the other for customer;

(f) “food” includes baked, cooked, prepared or fresh food, ice-cream, beverages or drinks, whether alcoholic or otherwise, and other eatables, whether prepared by the person supplying the same or otherwise procured from others;

(g) “hotel” means an establishment, organization or place where rooms, suites of rooms, or hall or any other such premises are let out on rent, and it also supplies food;

(h) “kitchen” includes a flight kitchen and means an establishment, organization or place where food is prepared and supplied on board any aircraft, ship, bus, wagon, railway train or any other means of transportation irrespective of the fact whether the kitchen is owned by the person operating the conveyance or not;

(i) “person” includes a caterer, hotel, restaurant, club, parlour, kitchen, kiosk or such other establishment or organization making supplies of food; and

(j) “restaurant” means an establishment, organization or place, by whatever name called, supplying food consumed in that premises or catered outside or supplied as take-aways, whether or not it provides any other services, facilities or utilities and includes a club, marriage hall or establishment meant for holding ceremonies where food is supplied on such ceremonies.

(2) All other words and expressions used, but not defined herein shall have the meanings assigned to them in the Act.

3. Levy and collection : —(1) Every person supplying food, in or from the premises of clubs, caterers, kitchens, hotels or restaurants shall be liable to charge and pay sales tax at the rate specified in sub-section (1) of section 3 of the Act irrespective of the fact whether food is consumed in that premise or supplied or catered outside or supplied as take-aways.

(2) Every such person, whose total annual turnover exceeds rupees five million during the last twelve months, shall be liable to registration and shall get himself registered under the Act, if not already registered.

(3) The sales tax on food served in a tax period shall be calculated in accordance with the following formula, namely:—

Amount of = Total value of supply due from X Rate of sales tax

sales tax consumer or recipient of food

100 + rate of sales tax

(4) Every such person shall submit the monthly return as prescribed in the Act. The tax due along with monthly return shall be deposited in the Government Treasury under the relevant head “0220000-Sales Tax” by the 15th day of the month following the month in which supplies were made:

Provided that in respect of supplies made by clubs, the date shall be 15th day of the second month following the month in which supplies were made by the club.

(5) If the supplies are made free of charge or for some other consideration or a consideration which is lower than the listed prices, the sales tax shall be charged as if it were supplied at the price listed in the menu card in terms of sub-clause (a) of clause (46) of section 2 of the Act.

(6) Such person shall be entitled for input tax credit for the tax paid on his purchases or utilities consumed for preparation or supply of food against output tax payable subject to the limitations and restrictions imposed under section 8 of the Act and the notifications issued thereunder, provided that the input tax credit shall only be admissible for amount of tax which was paid on the purchases made during that tax period for which return is being submitted.

(7) Where the said person is engaged in making taxable supplies as well as exempt supplies, the input tax credit shall be allowed as per Chapter IV of the Sales Tax Rules, 2004.

4. Record keeping and invoicing : —(1) Every person shall print, in his menu card or list of food items to be supplied, the price of each item or combination of food, as the case may be, intended to be supplied or sold by him which shall include price of the food and all duties and indirect taxes, local Provincial and Federal, also including the sales tax. The recipient or consumer of food shall be invoiced or billed to pay only the price shown in the menu card or the price list.

(2) The food supplied by flight-kitchens to the conveyances leaving for a destination outside Pakistan shall be zero-rated in accordance with clause (b) of section 4 of the Act. The Collector of Sales Tax, may through a general or a special order, prescribe a special procedure for issuance of invoice or bills by flight kitchens whether for consumption on domestic flights or for foreign bound flights.

(3) The registered persons shall issue a serially numbered Sales Tax Invoice or bill starting with 0001 on first day of every financial year or commencement of business, in the format given in the Annex to this Chapter. The persons using in their business a Fiscal Electronic Cash Register (FECR) or a computerized accounting system may issue the FECR-generated or the computer-generated sales tax invoice and computerized Cash Memo in the prescribed format.

(4) The persons opting for generation and issuance of Sales Tax Invoices or bills on FECR or a computer shall retain their record electronically as required under sub-section (3) of section 22 of the Sales Tax Act, 1990.

(5) At the end of each business day the hotel, restaurant, club, caterer, kitchen, parlour or any other person registered under this Chapter shall keep a record of their Daily Gross Take (DGT) showing, where applicable, any zero-rated or exempt supplies separately.

(6) All records prescribed under section 22 of the Act shall be maintained by such persons.

(7) The amount of sales tax payable by the registered person shall be calculated as under:—

EXAMPLE

If the price of any food item printed in the menu card or the price list is Rs.1000 and the rate of sales tax is 15%, then,

(i) Amount of sales = 1000 x 15 = Rs. 130.43.

tax payable 100 + 15

(ii) Amount of = Total amount due – Amount of

Provincial or local Amount of sales tax X Provincial or

duty, if applicable, 100 + rate of Provincial local duty.

say @ 10% or local duty

1000 – 130.43 x 10 = Rs. 79.05.

110

(iii) Price to be retained = Total price – Amount of sales tax

by the supplier received and amount of

Provincial or local duty.

1000 – (130.43 + 79.05) = Rs. 790.52.


ANNEX

[See rule 71(3)]

SALES TAX INVOICE (BILL)

Sales Tax Registration No._______________

M/s. ————————————————————————————————— (NAME & ADDRESS OF SUPPLIER OF FOOD)

Book No.________________ Invoice No. ______________________

Table/Room No.__________ Date__________ Time _________

PARTICULARS OF FOOD SUPPLIED/SOLD

S. No.

Item

Quantity

Rate (Rs.)

Amount charged (Rs.)

TOTAL :

(NB: This invoice / bill includes amount of sales tax).

Signature of Authorised Person

CHAPTER XI SPECIAL PROCEDURE FOR PERSONS PROVIDING OR RENDERING TAXABLE SERVICES
1. Application : —The provisions of this Chapter shall apply for collection and payment of sales tax by persons providing or rendering services on which sales tax has been levied.

2. Definitions : –(1) In this Chapter, unless there is anything repugnant in the subject or context,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “advertisement” means a set of visual and audio messages for the projection of a product, service or idea with the object of propagating sale, purchase or hire of the product, service or idea for creating other related effects;

(c) “Annex” means an Annex to this Chapter

(d) “beauty parlor” or “beauty clinic” means a place where one or more of the processes like manicuring, washing, application of cosmetics, body massage and other beauty treatments are carried out professionally;

(e) “caterer” means a person or an establishment, not being a restaurant, by whatever name called, which in ordinary course of business and in relation to functions provides food, beverage and entertainment, or supplies furniture or ornamental or decorative accessories or lighting for illumination, on hire;

(f) “club” means an establishment, organization or place, other than a hotel or restaurant, the membership of which is restricted to a particular class of people or which is run on the basis of mutuality and provides outdoor games, food or drinks, whether or not it has any arrangement for boarding and lodging;

(g) “courier company” means a commercial concern engaged in providing or rendering courier services to its customers;

(h) “courier service” means delivery of documents, goods or articles utilizing the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles for any consideration received in Pakistan;

(i) “Custom-house Agent” means a person licensed, temporarily or otherwise, under section 207 or 208 of the Customs Act, 1969 (IV of 1969), read with the Custom-house Agents (Licensing) Rules, 1971, for the transaction of any business relating to the entrance or departure of any conveyance or the import or export (including transit & transshipment) of goods or baggage, at any customs station including a Custom-house, a Land Customs Station, a Customs sea-port or a Customs Airport;

(j) “hotel” means an establishment, organization or place where rooms or suites of rooms are let out on rent, whether or not it has any arrangement of catering or provides any other services, facilities or utilities, by whatever name called;

(k) “laundry or dry-cleaner” means an establishment engaged in cleaning of clothes and fabrics through a recognized method of cleaning, whether the traditional method of washing and ironing of clothes and fabrics or by using an organic solvent for cleaning the clothes and fabrics;

(l) “marriage halls and lawns” means a premises or a portion thereof, not being part of a sales tax paying hotel, restaurant or club or the premises or precincts thereof, where parties and social functions, more particularly, relating to matrimonial ceremonies and other related functions are held;

(m) “return” means the monthly sales tax return-cum-payment challan required to be furnished under section 26 of the Act;

(n) “service provider” means a person, firm, company, organization or establishment, engaged in providing or rendering sales taxable services;

(o) “ship-chandler” means an agent or a person authorized or licensed under the Customs Ship-chandlers (Licensing) Rules, 1980 for transacting business relating to the supply of provisions and stores on any conveyance proceeding to any foreign port, airport or station;

(p) “slimming clinic” means a place where certain services and facilities are provided to make a person slim or to shape up the body, by way of dieting or using medicaments or through exercising;

(q) “stevedore” means a person, company or commercial concern engaged in loading and unloading of cargo, including bulk cargo, from ships, whether mechanically or otherwise, and whether or not licensed by the respective port authorities;

(r) “taxable service” means all services, utilities or facilities, by whatever name called, which are provided or rendered by a service provider to his clients or customers or members;

(s) “value of taxable services” in relation to caterers, hotels, marriage halls and lawns, stevedores, beauty parlors or beauty clinics and slimming clinics, laundries and dry-cleaners and courier services, shall be the gross amount charged or the consideration in money including all Federal and Provincial levies, if any, which a service provider receives from the clients or customers or members for providing or rendering taxable services, but excluding the amount of sales tax:

Provided that in case the consideration for providing a taxable service is in kind or is partly in kind and partly in money, the value of taxable service shall mean the open market value for providing the taxable service, excluding the amount of tax:

Provided further that In case the service provider and recipient or client are associated persons and the service is provided for no consideration or for a consideration which is lower than the open market value, the value of taxable service shall mean the open market value for providing the taxable service, excluding the amount of tax.

(2) All other words and expressions used, but not defined herein shall have the same meaning as assigned to them in the Act.

3. Registration : —(1) Every service provider, providing or rendering taxable services to customers or clients or members, is required to be registered under section 14 of the Act, read with Chapter I of the Sales Tax Rules, 2004.

(2) A service provider having its establishments, offices or branches located in different cities may obtain a single registration in the jurisdiction of the Collectorate of Sales Tax where he is assessed for income tax purposes.

4. Levy and collection of sales tax : —A service provider, providing or rendering taxable services to customers, clients or members shall charge, collect and pay sales tax at the rate of fifteen per cent of the value of taxable services.

5. Filing of return and deposit of sales tax : —(1) A service provider, providing or rendering taxable services shall file return in accordance with the procedure laid down in section 26 of the Act read with Chapter II of the Sales Tax Rules, 2004, by the 15th day of the month following the month in which the services were provided or rendered, or such other date as may be specified by the Federal Government through a notification in the official Gazette in terms of sub-section (9) of section 2 of the Act.

(2) The tax due along with the return shall be deposited in the designated branch of National Bank of Pakistan under the relevant head “022500-Sales Tax on Services collected on behalf of Provincial Government”, within the stipulated date.

(3) In case a service is provided or rendered over a period of time and bill is to be issued on completion of service, time of supply shall be the time when service is completed or the payment, or consideration in money, in respect thereof is received, whichever is earlier.

6. Determination of tax liability : —(1) While determining his tax liability, a service provider shall be entitled to claim input tax credit for the tax paid on account of taxable purchases or imports made and utilities like telephone (excluding mobile telephone), gas and electricity consumed for furtherance of taxable activity, against its output tax liability, subject to the conditions, limitations and restrictions prescribed under section 7 and 8 of the Act and the rules or notifications issued thereunder; and subject to fulfillment of the conditions laid down under section 73 of the Act:

Provided that no input tax adjustment shall be allowed against the purchase invoice or the bill of entry or utility bill, which is not in the name of the service provider and/or does not contain his registration number. However, in case the utility bill is not in the name of service provider, input tax against the same may be allowed only if the bill contains its registration number and shows the same business address as has been declared for sales tax purposes:

Provided further that the input tax credit shall be admissible only for the amount of tax that has been paid on the purchases or imports made or utilities consumed during the tax period for which return is being submitted.

(2) A service provider who is providing or rendering taxable as well as non-taxable services, can claim only such proportion of input tax as is attributable to the taxable services, in accordance with sub-section (2) of section 8 of the Act read with the Chapter IV of the Sales Tax Rules, 2004.

(3) In case of new registrants, the provisions of section 59 of the Act shall be applicable for the purposes of input tax adjustment.

7. Record-keeping and invoicing : —(1) A service provider, providing or rendering taxable services shall issue serially numbered sales tax invoices to its customers or clients or members, for the services provided or rendered, containing all the particulars as prescribed under section 23 of the Act;

Provided that the customers or clients or members who have been extended credit facility by a service provider, may for the taxable services provided or rendered during the month, be issued serially numbered sales tax invoices at the end of each month.

(2) A service provider using computerized accounting system may issue computer generated sales tax invoice containing all the prescribed entries.

(3) A service provider, providing or rendering taxable services shall maintain the records prescribed under section 22 of the Act. These records shall be retained for a minimum period of five years after the end of tax period to which such record or documents relate.

8. Audit : —Audit of the records of service providers for verification of correct payment of sales tax on monthly basis shall be conducted once in a year, except for the Custom-house agents whose records shall be audited in accordance with the criteria laid down in part two of this Chapter:

Provided that in case the Collector has information or sufficient evidence that such service provider is involved in tax fraud or evasion of tax, he may authorize an officer of sales tax, not below the rank of Assistant Collector to conduct an inquiry or investigation under section 38 of the Act:

9. Specific provisions : —The specific provisions relating to particular categories of service providers are contained in Part One to Five of this Chapter.

10. Repeal : —All previous rulings, clarifications and instructions issued on the subject shall stand repealed and withdrawn.

PART ONE

HOTELS, CLUBS, CATERERS, MARRIAGE HALLS AND LAWNS

11. Value : —In relation to clubs, the value of taxable services for the purposes of levy of sales tax shall be the gross amount charged or the consideration in money including all Federal and Provincial levies, if any, which a club receives from its members or clients for providing or rendering taxable services, excluding the amount of sales tax. It shall not include consideration received on account of membership fees, refundable deposit or security unless the same is deducted or adjusted in full or in part as settlement or recovery of dues for services.

PART TWO

CUSTOM-HOUSE AGENTS, STEVEDORES AND SHIP-CHANDLERS.

12. Custom-house agents : —(1) In relation to Custom-house agents, value of taxable service for the purposes of levy of sales tax shall be the total consideration or charges received by a Custom-house agent on account of providing and rendering the service, excluding the amount of sales tax. It shall not include considerations received on account of transportation charges, demurrage, wharfage, customs duties, central excise duties, sales tax, provincial duties or taxes, toll taxes, municipal charges, port charges, handling charges, packing charges, labour payment and other reimbursable expenses, which a Custom-house agent pays on behalf of his clients against a proper receipt or invoice or bill.

Provided that the value of taxable services shall not be less than the minimum benchmark level per document indicated in the TABLE below.


TABLE

S. No.

Document

Minimum value of taxable service

01.

Bill of entry or Pakistan Goods Declaration for home consumption or into-bond filed

Rs. 2500

02.

Ex-bond bill of entry or Pakistan Goods Declaration filed

Rs. 500

03.

Shipping bill or bill of export or Pakistan Goods declaration for export filed

Rs. 1000

04.

Rebate claims filed

0.25% of the amount of rebate claim.

05.

Bill of entry or Pakistan Goods Declaration filed at airport (AFU) including baggage declaration.

Rs. 500

06.

Transit or transshipment permit

Rs. 500

(2) The Custom-house agents shall be audited under the following audit criteria, namely:—

(a) Custom-house agents who deposit sales tax less than the minimum benchmark level per document indicated in the TABLE in sub-rule (1) shall be invariably audited once in a year;

(b) ten per cent of the Custom-house agents who deposit sales tax in accordance with the minimum benchmark level per document, would be selected for audit;

(c) Custom-house agents who deposit sales tax twice or more than the prescribed minimum benchmark level per document would be audited once in three years.

(3) The sales tax registration number along with license number of the Custom-house agent shall be quoted on the ‘Pakistan Goods Declaration’ or the rebate or refund or duty drawback claim, as the case may be.

(4) A photocopy of the last month’s Bank receipted return of the Custom-house agent shall be appended with the ‘Pakistan Goods Declaration’ filed by him.

(5) The sales tax levied and charged on taxable services provided by a Custom-house agent is adjustable against the output tax liability of a registered person, provided the registered person holds a valid sales tax invoice issued by a registered Custom-house agent and subject to fulfillment of conditions and restrictions prescribed under sections 7, 8 and 73 of the Act and the rules or notifications issued thereunder.

13. Ship-chandlers : —In relation to ship-chandlers, value of taxable services for the purposes of levy of sales tax, shall be total consideration received or the gross amount charged by a ship-chandler for providing or rendering the taxable services, including all Federal and Provincial levies, but excluding the amount of sales tax. It shall not include consideration received on other accounts such as transportation charges, toll taxes, municipal charges, port charges, handling charges, packing charges and labour charges, which a ship-chandler pays on behalf of his clients against a proper receipt or bill.

PART THREE

COURIER SERVICES

14. Scope : —(1) With regard to a courier company, taxable service means any service provided to a customer by a courier company in relation to delivery of documents, goods or articles; and

(2) Sales tax shall not be payable in respect of a shipment whose booking was either cancelled or returned to the client, subject to the condition that the relevant invoice is cancelled and the courier company issues a Credit Note, as required under section 9 of the Act read with Chapter III of the Sales Tax Rules, 2004.

(3) No sales tax shall be levied on the office mail of which both the consignee and the consignor are the same person.

(4) Courier services shall be zero-rated in respect of goods or articles leaving for a destination outside Pakistan, for which a combined or separate ‘Pakistan Goods Declaration’, as the case may be, has been filed under the Customs Act, 1969 (IV of 1969).

(5) Registered exporters shall be entitled to claim refund of sales tax paid on courier services related to the exported goods, which shall be treated as zero-rated supplies in terms of section 4 of the Act.

PART FOUR

ADVERTISEMENTS ON TELEVISION AND RADIO

15. Scope and value : —(1) In relation to advertisements, the term “taxable services” means the broadcasting or telecasting of any advertisement on radio or television.

(2) “Value of taxable service” for the purposes of levy of sales tax shall be the total consideration in money received or the gross amount charged by a service provider from its clients for broadcasting or telecasting of any advertisement on radio or television, including all Federal and Provincial levies, but excluding the amount of sales tax.

(3) A registered person (client) whose advertisement is released on radio or television, and to whom the sales tax invoice is issued and routed through the advertising agency, can claim input tax adjustment for the amount of tax paid on account of release of advertisement on radio or television subject to the observance and fulfillment of following conditions, namely:-

(a) payments for all such advertisements are made by such registered person through Banking channels in such manner that payment against a particular invoice could be easily verified;

(b) all invoices issued by the service provider are in accordance with the specimen invoice appended as Annex ‘A’; and

(c) while claiming input tax adjustment, the provisions of Chapter IV of the Sales Tax Rules, 2004 are observed.

(4) A person or firm, station, corporation or institution, engaged in broadcasting or telecasting of any advertisement on radio or television, shall issue serially numbered sales tax invoices as per specimen appended as Annex ‘A’, for the taxable services provided or rendered to the clients.


ANNEX ‘A’

[See rule 86(3)]

NAME OF THE COMPANY

Address:_________________________________________________________

Phone No.:___________________Fax No.:_____________________________

Sales Tax Registration No.___________________________________________

Invoice No.:_____________

Date of Issue:___________

M/s._____________________________________________________________

________________________________________________________________

(Name & address of client)

Through M/s.______________________________________________________

________________________________________________________________

(Name & address of advertising agency)

Agency Code:___________

[TV Channel]

Advertiser: M/s.____________________________________________________

(Name of client)

Client’s Sales Tax Reg. No.__________________________________________

Consumer Product_________________________________________________

CENTRE

POSITION

QTY

DURATION

RATE

AMOUNT

GROSS AMOUNT: Rs._____________

ADD 15% Sales Tax Rs._________ Total: Rs._____________

LESS 15% Agency Commission (Rs._________________)

Net Payable Rs.__________________

1. Kindly make payment of this invoice by crossed cheque [Payee’s Account only] in favour of M/s.__________________________________________

2. __% late payment surcharge will be levied if the invoice is not paid by____

FOR M/s ———————————————.

(Name of telecasting company)

CHAPTER XII SPECIAL PROCEDURE FOR PAYMENT OF SALES TAX BY STEEL MELTERS AND RE-ROLLERS

1. Application : —The provisions of this Chapter shall apply to steel melting and steel re-rolling units, except Pakistan Steel Mills, Karachi.

2. Definitions : —(1) In this Chapter, unless there is anything repugnant in the subject or context,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “Annex” means an Annex appended to these rules;

(c) “steel melter” means any person engaged in the process of manufacture of steel ingots or billets;

(d) “steel re-roller” means any person engaged in the process of manufacture of MS Products from steel ingots or billets;

(e) “MS Products” means bars, reinforced bars or structural sections made of mild steel; and

(f) “value addition” means the difference between the value of supply for which the goods are acquired and the value of supply for which the goods, either in the same state or after further manufacture, are supplied.

(2) All other expressions and words used but not defined in these rules shall have the same meanings as are assigned to them under the Act.

3. Payment of tax : —(1) A steel melter shall pay sales tax at the rate specified in sub-section (1) of section 3 of the Act on the following basis, namely:-

(a) For the purpose of determination of his tax liability, the production of a steel melter shall be calculated at the rate of eight hundred units of electricity consumed for production of one metric ton ingots or billets;

(b) where a steel melter, melts and casts ingots or billets from locally generated scrap for which a sales tax invoice is not available, he shall pay sales tax on value addition, subject to the condition that the minimum value addition shall be Rs. 2667 per metric ton;

(c) where a steel melter, melts and casts ingots or billets from imported scrap against which he holds a valid bill of entry in his name, or from scrap purchased from Pakistan Steel Mills, Karachi against a valid sales tax invoice in his name, he shall pay sales tax as determined under section 7 of the Sales Tax Act, 1990, subject to the condition that the minimum value addition shall be two thousand rupees per metric ton;

(d) where a steel melter, melts and casts ingots or billets from imported scrap as well as from scrap purchased from Pakistan Steel Mills, Karachi and local scrap, he shall determine his liability proportionately as under clause (a) and (b) above:

Provided that in case a steel melter, in a tax period, issues sales tax invoices resulting in value addition greater than the value addition specified in clauses (a) to (d), he shall pay sales tax on the basis of such greater value addition.

(2) For the purpose of determination of tax liability, the production of a manual steel re-roller shall be calculated at one hundred and thirty units of electricity consumed for the manufacture of one metric ton MS products subject to the condition that his minimum value addition shall be Rs. 1335 per metric ton.

Provided that in case a steel re-roller, in a tax period, issues sales tax invoices resulting in value addition greater than the value addition specified in this sub-rule, he shall pay sales tax on the basis of such greater value addition.

4. Invoices and Returns : —(1) A registered steel melter and a registered steel re-roller shall issue tax invoices as provided under section 23 of the Act and file monthly sales tax return under section 26 of the Act, along with details of his production in the format given at Annex ‘A’.

(2) The tax invoice issued on supply of ingots or billets by a steel melter working under these rules shall be a valid tax invoice for claiming input tax credit by a steel re-rolling unit under section 7 of the Act.

5. Records : —(1) A steel melter shall be required to maintain records specified under section 22 of the Act.

6. Responsibility of All Pakistan Steel Melters Association : —(1) The All Pakistan Steel Melters Association shall be responsible to ensure that all their members pay sales tax in the manner specified in these rules, and in case of non-compliance by any steel melter, the Association shall actively assist the concerned Collectorate of Sales Tax for enforcement and recovery of sales tax due and in any proceedings under the Act.


Annex ‘A’

[See rule 90(1)]

Name of Steel Melter/Re-roller:_______________________________________

Address:_________________________________________________________

Sales Tax Registration No.:__________________________________________

Month:___________________________________________________________

DETAILS OF PRODUCTION

S. No.

Details

Amount (in Rs.)

1.

Electricity units consumed for production of ingots or billets

2.

Production of ingots or billets in metric tons

[Total electricity units / 800]

3.

Tax payable on production of ingots or billets

( = Rs. 2667 x 15% = Rs. 400 PMT and / or

Rs 2000 x 15% = Rs. 300 PMT )

Total Tax

4.

Purchase of Scrap (in metric tons):

Imported scrap

Scrap purchased from Pakistan Steel

Scrap purchased locally (no invoice)

Total

Purchased

Used

5.

Electricity units consumed for production of MS products and Production (Units/130 = Production)

Units

Production

6.

Tax payable on production of MS Products

[ =Production X 1300 x 15% = Rs. 200 PMT]

7.

Purchase & Consumption of Ingots or Billets (in MT)

Purchase

Used

CHAPTER XIII SPECIAL PROCEDURE FOR THE SHIP-BREAKING INDUSTRY

1. Application : —The provisions of this Chapter shall apply to ship-breakers.

2. Definitions : —(1) In this Chapter, unless there is anything repugnant in the subject or context,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “Bank” means the designated branch of the National Bank of Pakistan;

(c) “ship” means all kinds of vessels and floating structures including launch boat and tug boat, whether self propelled or otherwise;

(d) ”ship-breaker” means a registered person engaged in any process or operation of breaking, dismantling, cutting of ship or retrieving or separating any article, accessory or part of ship for supply whether by the owner of the ship himself or his agent;

(e) “ship-breaking” means and includes—

(i) any process or operation by which ship or part of a ship is broken or dismantled or is cut into ship scrap;

(ii) the process or operation of retrieval or separation of any article, accessory or part of a ship; and

(iii) converting a ship into ship scrap by any other method or manner; and

(f) “quantity of goods” means quantity or the weight of ship scrap in metric tonnes.

(2) All other words and expressions used but not defined in this Chapter shall have the same meanings as are assigned to them in the Act.

3. Registration : —(1) A ship-breaker, who is not already registered, shall apply for registration to the Collector of Sales Tax having jurisdiction over the area where the ship-breaking is to be carried out.

(2) The application for registration shall be processed, and a certificate of registration shall be issued to the applicant in accordance with Chapter I of the Sales Tax Rules, 2004.

4. Tax invoice : —(1) The ship-breaker shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, namely : —

(a) name, address and registration number of the ship-breaker;

(b) name, address and registration number (if any) of the recipient;

(c) date of issue of invoice;

(d) item-wise complete description and quantity of goods;

(e) unit value and total value of goods supplied, excluding sales tax;

(f) amount of sales tax charged; and

(g) value of goods supplied inclusive of sales tax.

(2) The minimum sales values of supply of goods shall not be less than the values fixed by the Board by notification in the official Gazette.

5. Determination of input tax : —(1) The input tax for a tax period shall be determined in the following manner, namely:—

(a) Input tax = quantity of goods x input tax per metric tonne of ship.

(b) input tax per metric

tonne of ship = sales tax paid at import stage

weight of ship in metric tonnes

(c) 1 LDT = 1.016 metric tonne.

(2) Sales tax paid at import stage shall be the amount of sales tax paid as per bill of entry duly cleared by the customs authorities under section 79 or 104 of the Customs Act, 1969 (IV of 1969).

(3) If the ship-breaker does not hold a bill of entry, or holds a bill of entry which does not mention the amount of sales tax paid at import stage, the sales tax shall be the amount paid in treasury through treasury challan.

(4) Where any credit of input tax is claimed on domestic purchases, the ship-breaker shall submit the requisite documents as specified in Chapter V of the Sales Tax Rules, 2004, within a period of ten days of submission of the Sales Tax Return-cum-Payment Challan.

(5) In case of deferment of payment of sales tax under the relevant rules, no refund or adjustment of input tax shall be allowed until the installment has been paid and the refund or adjustment shall be restricted to the extent of the amount of installment paid.

6. Payment of output tax : —(1) The ship-breaker shall deposit the output tax along with Sales Tax Return-cum-Payment Challan in the form set out in Annex ‘A’ to this Chapter in the Bank, on or before the due date, after deduction through adjustment or carry-forward of input tax credit involved and paid on the quantities of ship-scrap supplied.

(2) Without prejudice to the other entries or requirement of filing of returns and deposit of sales tax payable every month by the due date, a ship-breaker will not show any amount in any return in the columns relating to “SALES TAX PAID (Input Tax)” in respect of “Purchases” unless,—

(i) the installment of import-related sales tax due is actually deposited;

(ii) the return relates to the tax period in which the aforesaid installment of import related sales tax due is deposited; and

(iii) the amount shown in the column “SALES TAX PAID (Input Tax)” is the same as is actually deposited in that tax period.

(3) The ship-breaker may deposit sales tax in advance, before the time of supply, which will be treated as carry-forward amount provided that all formalities i.e. issuance of sales tax invoices, maintenance of proper record, filing of monthly returns etc. are complied with.

(4) Subject to a maximum aggregated wastage of seven per cent, the following shall normally be percentage or proportion of scrap and other products obtained from the breaking of oil tankers, bulkers, cargo ships, drilling ships, war ships, passenger ships and cattle carriers, namely:-

(i) ship plate and profiles of ½” thickness and above. 40%

(ii) ship plate and profiles of 3/8” thickness and

above but below ½”. 20%

(iii) second quality re-rollable scrap of short lengths. 15%

(iv) small irregular pieces and re-meltable scrap. 15%

(v) cast iron, pipes or cast steel. 7.5%

(vi) non-ferrous metals. 0.5%

(vii) stores or machinery. 2.0%

(5) In case of ships other than those specified in sub-rule (4), the percentage of scrap and products shall be determined by local sales tax office in consultation with Pakistan Ship-breaker’s Association.

7. Records : —In addition to records specified under the Act, the ship-breakers shall maintain additional ship-wise records in the form set out in Annex ‘B’ to this Chapter.

8. Time limit for input adjustment : —(1) The ship-breakers shall clear their sales tax liabilities in respect of ships weighing up to ten thousand LDT within four months and in case of ships weighing more than ten thousand LDT within eight months from the date of filing of bill of entry:

Provided that the sales tax liability shall have to be cleared by the ship-breaker either on completion of clearance of goods of the vessel or within the maximum time period allowed, whichever is earlier:

Provided further that the sales tax liability on value addition on goods cleared during the month shall be paid along with the monthly return.

(2) In case a ship-breaker fails to clear his stocks by the time limit specified in sub-rule (1), he shall pay the balance output tax on whole of the remaining stocks by the 20th day of the following month after adjustment of remaining input tax:

Provided that as and where applicable, and notwithstanding anything contained in any notification issued for the purpose of valuation under this Chapter, the liabilities of sales tax in respect of a ship, including a ship in respect of which bill of entry is filed in future, shall be deemed to have been discharged only when the tax is paid on the basis of minimum value addition of fourteen per cent over and above the value assessed on the bill of entry for the sales tax purposes:

Provided further that the maximum aggregate wastage permissible under sub-rule (4) of rule 98 shall not affect the minimum value addition of fourteen per cent as aforesaid while discharging the total liabilities of sales tax in respect of a ship.

(3) Commencement of audit of records may start within two weeks of expiry of final date of deposit of the Sales Tax Return-cum-Payment Challan or the expiry of time limit specified in sub-rule (1), whichever is earlier, along with sales tax on balance stock as provided in sub-rule (2) and, if nothing contrary to this Chapter is found, the Assistant Collector Incharge Audit shall issue a certificate to the ship-breaker, in such format as the concerned Collector may specify, to the effect that the total sales tax liabilities on ship have been discharged.



ANNEX ‘B’

[See rule 99]

FORM OF REGISTER OF PURCHASE / INPUT TAX

FOR SHIP-BREAKERS

S. No.

Date

Bill of entry / sales tax invoice No. and date

Description of raw material

Quantity

(MT)

Value (Rs.)

(1)

(2)

(3)

(4)

(5)

(6)

Sales tax paid

(Rs.)

Quantity of taxable supplies

(MT)

Sales tax (input tax) on quantity in column 8

(Rs.)

Sales tax adjusted

(Rs.)

Closing balance of input tax (columns 7 – 10)

(Rs.)

(6)

(7)

(8)

(9)

(10)

CHAPTER XIV SPECIAL PROCEDURE FOR ZERO-RATING OF HAND-KNOTTED CARPETS

1. Application : —The provisions of this Chapter shall apply to supplies of hand-knotted carpets by registered persons to foreign nationals against payment in foreign exchange through a foreign credit card for subsequent export as personal baggage of the foreign nationals.

2. Definitions : —In this Chapter, unless there is anything repugnant in the subject or context,—

(a) “Act” means the Sales Tax Act, 1990;

(b) “carpet” means a hand-knotted carpet of Pakistan origin;

(c) “foreign currency” means foreign currency as defined in clause (c) of section 2 of the Foreign Exchange Regulation Act, 1947 (VII of 1947);

(d) “foreign credit card” means a credit card issued outside Pakistan by a foreign Bank or foreign credit card company, payment of which is made in foreign exchange;

(e) “foreign national” means a person who has nationality other than of Pakistan, and holds a valid foreign passport at the time of visit to Pakistan;

(f) “foreign passport” means a valid passport of a country other than Pakistan;

(g) “Import and Export Procedure Order” means the Import and Export Procedure Order for the time being in force, issued by the Ministry of Commerce, Government of Pakistan;

(h) “registered supplier” means a person registered under the Act, making supplies of hand-knotted carpets of Pakistan origin;

(i) “valid identification” means an officially issued document or card such as an identity, a driving license or service card, bearing a photograph by which the holder thereof can be positively identified; and

(j) “zero-rated invoice” means a zero-rated invoice issued under sub-rule (2) of rule 104.

3. Supply deemed to be export : —A supply of carpets under this Chapter shall be deemed to be an export for the purposes of section 4 of the Act, provided the procedure prescribed in this Chapter is observed and foreign currency against the supply is received in terms of rule 106.

4. Issuance of zero-rated tax invoice : —(1) Any foreign national desirous of taking a zero-rated supply of carpets from a registered supplier shall make payment in foreign currency through a foreign credit card and present his foreign passport or valid identification to the supplier for noting the particulars in the invoice.

(2) The supplier shall issue a zero-rated tax invoice, mentioning therein the name, address and passport number of the foreign buyer, price of each carpet in foreign currency, the number of the foreign credit card and name of its issuing authority besides the particulars required under section 23 of the Act.

(3) The foreign national shall sign a receipt-cum-undertaking in the form as set out in the Annexure to this Chapter.

5. Export of carpets as personal baggage : —(1) The export of carpets as personal baggage by foreign nationals shall be allowed by the customs authorities on production of a zero-rated invoice and subject to the conditions of the Import and Export Procedure Order.

(2) If a foreign national is unable to produce a zero-rated invoice but fulfills the conditions of the Import and Export Procedure Order, export shall be allowed by the customs authorities after obtaining the name and address of the supplier which shall be communicated to the concerned sales tax authorities for appropriate action under the Act.

6. Remittance of payment : —(1) The export of carpets shall not be deemed to have been completed unless payment thereof is received in foreign currency and goods are actually taken out of Pakistan.

(2) The foreign currency shall be surrendered to the State Bank of Pakistan and the supplier shall receive the payment in Pak. rupees as per the prevailing State Bank of Pakistan’s procedures and foreign exchange regulations.

(3) In case goods supplied under this Chapter are not exported or remittance is not made in the prescribed manner or within thirty days, sales tax involved on such goods shall be recoverable from the supplier, besides legal or penal action under the relevant provisions of the Act.

7. Maintenance of records and audit : —(1) The supplier shall maintain separate records showing supply of zero-rated carpets and receipt and encashment of foreign currency received under this Chapter, besides the records prescribed under the Act and rules made thereunder.

(2) At the time of audit, the auditors shall also confirm that the records prescribed under this Chapter have been maintained and that foreign currency has been remitted in accordance with the prescribed procedure.


Annexure

[See rule 104(3)]

RECEIPT-CUM-UNDERTAKING

FOR ZERO-RATED SUPPLY OF HAND-KNOTTED CARPETS

TO FOREIGN NATIONALS

1. NAME:_________________________________________________________

2. ADDRESS:_____________________________________________________

3. TELEPHONE No.: _______________________________________________

4. NATIONALITY: _________________________________________________

5. PASSPORT No. OR OTHER IDENTIFICATION No.:_____________________

6. CREDIT CARD No: ______________________________________________

7. APPROX. DATE OF DEPARTURE FROM PAKISTAN:___________________

I hereby confirm receipt of _______________ hand-knotted carpet(s) from M/s __________________________________________________against zero-rated invoice No.__________________________ dated _________________, against payment in foreign currency through my credit card and undertake to take it/them out of Pakistan on my departure.

SIGNATURE____________________

Date:__________________________


8. Repeal : —The following Special Procedure Rules shall stand rescinded on the date these Special Procedure Rules come into effect,—

(a) The Special Procedure for Ginning Industry Rules, 1996;

(b) The Ship-breaking Industry (Special Procedure) Rules, 1997;

(c) The Special Procedure for Spinning Industry Rules, 1999.

(d) The Special Procedure for Supply of Food Rules, 1999;

(e) The Collection and Payment of Sales Tax on Natural Gas Rules, 1999;

(f) The Special Procedure for Collection and Payment of Sales Tax (Electric Power) Rules, 2000;

(g) The Special Procedure for Payment of Sales Tax Rules, 2000;

(h) The Special Procedure for Jewellers Rules, 2001;

(i) The Zero-rating of Hand-Knotted Carpets Rules, 2001; and

(j) The Special Procedure for Payment of Sales Tax On Sugar (Purchase by Trading Corporation of Pakistan) Rules, 2003.

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