SRB clarifies supply chain management, distribution services

KARACHI: The Sindh Revenue Board (SRB) has clarified that supply chain management and distribution (including delivery) services fall under the purview of Sindh Sales Tax and are subject to 13 percent ad valorem under the Sindh Sales Tax on Services Act, 2011.

In a letter to the Pakistan Business Council, the SRB referred to the tariff heading 9845.0000 of the Second Schedule of the Act, which covers such services. It informed that SRB officers adjudicated cases and registered distributors working under contracts with principals for providing these services.

Such distributors had earlier filed appeals claiming they were engaged only in the purchase and sale of goods. However, their appeals were dismissed by the SRB Commissioner Appeals and the Appellate Tribunal, which held them to be providing intermediary services between manufacturers and customers.

The Sindh High Court, in its September 10, 2021 order, also upheld the applicability of sales tax on such distributors and supply chain service providers. The Supreme Court also dismissed civil petitions challenging the High Court's order on January 26, 2024.

In light of these orders by appellate forums and superior courts, the SRB has requested all members providing supply chain management and distribution services to comply with relevant provisions, register themselves, charge, collect and deposit due sales tax as per prescribed timelines and procedures under the Sindh Sales Tax on Services Act, 2011.

Copyright Business Recorder, 2024