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10.5 percent sales tax refund allowed to solvent extractors

ISLAMABAD (May 26 2004): Giving a major relief to oil extraction industry, the Central Board of Revenue (CBR) has allowed 10.5 percent sales tax refund on the amount of tax (per metric ton of oilseeds) paid at the import stage to solvent extractors.

The CBR has shared the burden of sales tax with the industry through an SRO 335 (I)/2004 issued here on Tuesday.

In the Budget 2003-04, imported oilseeds were subjected to sales tax at the rate of 20 percent, the oil extracted therefrom was liable to sales tax at the rate of 15 percent on local supply, while the meal extracted from oilseed remained exempted from the payment of sales tax under the Sixth Schedule to the Sales Tax Act, 1990. Hence, the refund or adjustment of input tax was admissible to the extent of taxable supplies (oil) only under Section 7 and clause (a) of sub-section (1) of Section 8 of the Sales Tax Act read with the apportionment of Input Tax Rules, 1996.

The solvent extractors raised the issue that owing to higher inputs and lesser outputs, they could not adjust the entire amount of sales tax paid by them at import stage. It was, therefore, decided that the CBR would share burden of sales tax on meal to the extent of half of the increased impact of sales tax on meal.

This is worked out to be equivalent to 10.5 percent of the average amount of sales tax paid at import stage.

The CBR has also notified that the relief would be in addition to any sales tax refund or carry forward that may accrue due to 20 percent sales tax chargeable on imported oilseeds and 15 percent on the local supply of oil extracted therefrom.

In exercise of the powers conferred by Section 61 of the Sales Tax Act, 1990, the CBR has allowed re-payment or refund of sales tax to the extent of 10.5 percent of the amount of tax per metric ton of oilseeds paid at the import stage to solvent extractors.

Under the new procedure, the refund would be paid after fulfilment of conditions laid down by the board.

First, the refund or relief under this notification would only be extended to the imported oilseeds, for which bill of entry has been filed on or after June 7, 2003.

Secondly, the claimant would file a refund claim with the concerned Collectorate where he is registered for sales tax purposes along with the copy of sales tax return for the relevant tax period to which the claim is related.

Moreover, the claimant or importer should produce documentary evidence, ie, bill of entry duly verified from the concerned Customs station, in support of his claim.

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