Import stage: OMCs not to pay ST on minimum value-addition

The Federal Board of Revenue (FBR) has informed the oil marketing companies (OMCs) that they are not required to pay sales tax on minimum value-addition at import stage under the Sales Tax Special Procedure Rules, 2007. In this connection, the FBR issued instructions to the Director General Directorate General of Post Clearance Audit FBR House here on Friday.
According to the Board instructions, the FBR''s clarification letter of July 9, 2005 is still applicable in case of OMCs. It is further clarified that since OMCs are primarily registered as manufacturers of lubricants and other products etc and the prices of POL products imported by them for sale in the country are administered under a special pricing arrangement agreed with the government, they are not required to pay the value-addition sales tax at import stage under Chapter X of the Sales Tax Special Procedure Rules, 2007.
The FBR further said that the Head Office of the oil marketing companies receive advances from their customers on continuous chain basis, whereas the invoices are issued and supplies of POL products are made subsequently from the local supply depots. Since the OMCs apprehend chances of duplication in the recording of advances, the Board, in order to remove any difficulty that may arise, in terms of section 55 of the Sales Tax Act, 1990, had waived the requirement of issuance of an advance payment receipt, provided that the OMCs shall pay sales tax on advances in the same tax period in which the balances of advance payments accrue and shall supply necessary reconciliation''s as and when requested by sales tax authorities.
Board has further clarified that since OMCs are primarily registered as manufacturers of lubricants and other products etc and the prices of POL products imported by them for sale in the country are administered under a special pricing arrangement agreed with the government, they are not required to be treated as commercial importers for the purpose of Chapter II of the Sales Tax Special Procedure Rules, 2005.