Dairy items, stationery, bikes: ST zero-rating facility restored
The Federal Board of Revenue has restored sales tax zero-rating facility for dairy products, stationery items and bicycles along with their raw material, packing material, sub-components, components, sub-assemblies and assemblies, imported or purchased locally for manufacture of above mentioned goods. The Board has issued an S.R.O.670(I)/2013 on Thursday in this regard.
Copyright Business Recorder, 2013
According to the notification, the FBR has directed that import and supply of the following goods and their raw materials, packing materials, sub-components, components, sub-assemblies and assemblies imported or purchased locally for the manufacture of the said goods shall be charged to sales tax at the rate of zero percent: Colors in sets, writing, drawing and marking inks, erasers, exercise books, pencil sharpeners, geometry boxes, pens, ball pens, markers and porous tipped pens, pencils including color pencils, milk including flavoured milk, yogurt, cheese, butter, cream, desi ghee, milk and cream, concentrated and added sugar or other sweetening materials, preparations for infant use put up for retail sale, fat filled milk and bicycles.
This is subject to the condition that the zero-rating under this notification shall be available subject to determination of input/output ratios by the Input Output Co-efficient Organisation (IOCO), if not already determined under an earlier concessionary notification issued for such goods. Provided that this condition shall not be applicable in case of import of finished goods and their supply in same state and for import and local procurement of raw materials, packing materials sub-components, components, sub-assemblies and assemblies for the manufacture of the goods specified conditions and procedures shall be followed.
The FBR said that a sales tax registered manufacturer of the goods specified having suitable in-house facilities shall submit, in the format prescribed in Annex-A to this notification, the complete list of his annual requirement of the inputs he intends to import or purchase locally for the manufacture of goods specified to the Commissioner Inland Revenue having jurisdiction.
The Commissioner shall approve the declaration of input-output ratio of the manufacturer without physical verification in case the declared input-output ratio and input requirement is in accordance with the prevailing industrial average or the input consumption pattern of the applicant manufacturer or as already determined by IOCO under an earlier notification issued for such goods, in the format of approval prescribed as Annex-B to this notification.
In case the Commissioner is not satisfied with the declared input-output ratios of the goods to be manufactured because of their being prima facie not in accordance with the prevalent average of the relevant industry or in case the input-output ratios are not already determined by IOCO, he may, after allowing a six months provisional quantity, make a reference to the IOCO for final determination. On receipt of report from IOCO the Commissioner shall then determine the final annual quantitative entitlement of inputs and grant final approval for zero-rated purchases or imports. In case of non-receipt of report from IOCO within four months of the application made by the manufacturer, the Commissioner shall provisionally allow another six months quantity to the applicant manufacturer, notification said.
In case of goods to be imported by the registered manufacturer, the authorised officer of Inland Revenue shall furnish all relevant information online to Customs Computerised System as per Annex-C to this notification against a specific user ID and password obtained under section 155D of the Customs Act, 1969 (IV of 1969). The FBR further said that where a registered person supplies goods to a registered manufacturer of goods specified in the said Table, he shall issue a zero-rated invoice under section 23 of the Sales Tax Act, 1990 mentioning the name, sales tax registration and approval number of the buyer.
The registered manufacturer of goods specified in the said Table will be entitled to claim refund of input tax paid on utilities and such inputs, which are purchased by him after payment of sales tax, in terms of section 10 of the Sales Tax Act, 1990 read with the relevant provision of the sales tax rules, 2006.
The FBR stated that the registered manufacturer shall maintain complete records of the inputs imported or locally purchased and the goods manufactured there from. The input goods allowed under clause (ii) shall be consumed within twelve months of purchase or import thereof, where the consumption period shall start from the date of purchase or import of input goods. However, the input goods shall be purchased or imported before the expiry date of the approval. However, the manufacturer shall communicate to the concerned Commissioner of Inland Revenue in writing about the consumption of imported or locally procured inputs within 90 days of their consumption. The indemnity bond shall be released on receipt of written confirmation regarding consumption of goods by the manufacturer.
In case the input goods are not consumed within the period allowed in the approval, the manufacturer shall pay the amount of sales tax involved or obtain extension from the Commissioner of Inland Revenue under intimation to the Collector of Customs.
The concerned Commissioner Inland Revenue, whenever he deems necessary but not more than once in a calendar year, may get the records of the manufacturer audit. In case it is found that the inputs have not been properly accounted for or consumed in the manufacture and supply of goods as prescribed, the Commissioner may initiate proceedings for recovery of the sales tax involved on the unaccounted inputs besides penal action under the relevant provisions of the Sales Tax Act, 1990 and (l) under circumstances of exceptional nature and for reasons to be recorded in writing, the concerned Commissioner may relax any of the conditions, if he is satisfied that such condition is detrimental to the bona fide purposes of manufacturer''''s business, subject to such surety or guarantee he may deem appropriate to secure the sales tax and to ensure proper and utilisation of the imported or locally procured goods, the notification added.