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Simplified sales tax refund rules issued

ISLAMABAD (August 14 2005): The Central Board of Revenue (CBR) has issued a new simplified procedure for payment of sales tax refund to dealers, distributors and wholesalers.

The CBR has issued 'Sales Tax (Refund of Excess Input Tax to the Dealers, Distributors and Wholesalers) Rules 2005' on Saturday through SRO(I)/2005.

Official sources told this corespondent that the new rules have been issued on the persistent demand of the dealers/wholesalers to make the procedure business-friendly for issuance of sales tax refund.

These rules will be applicable to all those registered persons who meet the criteria of dealers, distributors and wholesalers.

ACCORDING TO THE NEW PROCEDURE: 'Adjustment Advice' means the automated advice generated by the computer system authorising the registered dealer, distributor or wholesaler to utilise the admissible amount specified therein for adjustment against his future output tax liabilities.

'Adjustment note' means the intimation given by the dealer, distributor or wholesaler, in the laid down form to the collector about his intention to utilise the amount of excess input tax against his output tax liabilities during the three tax periods subsequent to the tax period to which the monthly return containing declaration of such excess input relates. The adjustment note shall be serially numbered on financial yearly basis with dates mentioned therein.

The 'dealer, distributor or wholesaler' means such registered person who is operating whether exclusively or otherwise as dealer/distributor/wholesaler of the goods mentioned in the Third Schedule of the Sales Tax Act, 1990.

Only such input goods will be taken into account for the purpose of availing refund which have been acquired on payment of sales tax during the relevant tax period.

The bona fides of the claim shall be determined on the basis of 'summary statement' of purchase and sale invoices filed by the dealer, distributor or wholesaler under SRO 525(I)/2005.

The dealer, distributor or wholesalers shall, at the time of furnishing summary of purchases and sale invoices, intimate the collector that he intends to utilise the amount claimed in refund for the purpose of adjustment against his output tax liabilities during the three tax periods subsequent to tax period to which the relevant monthly return relates.

The dealer, distributor or wholesaler shall mention in the adjustment note about the closing inventory pertaining to each item he is dealing in as well as the location where such unconsummated stocks are kept. Moreover, the dealer, distributor and wholesaler shall certify in the 'Adjustment Note' that he has fulfilled the condition of section 73 of the Sales Tax Act, 1990.

The procedure has specified that the collectorate will maintain separate database of each dealer, distributor or wholesaler wherein every adjustment note shall be entered along with summary of invoices so as to ensure that the amount claimed in refund is adjusted against the output tax liabilities within the specific time period and the computer will generate an adjustment advice, which shall be conveyed to the registered person within 10 days.

The adjustment advice shall be treated as an authorisation of refund of the specific amount and the concerned dealer, distributor and wholesaler shall be entitled to utilise the admissible amount as specified in advice for adjustment against his future output tax liabilities as provided under these rules.

The reference number and the date of adjustment note and particulars of the relevant adjustment advice shall be mentioned by the dealer, distributor and wholesaler on the monthly return on which adjustment of excess amount of input tax is made.

The collector or any officer duly authorised by him in this behalf may refuse adjustment of any amount claimed by a registered dealer, distributor or wholesaler provided that no claim for adjustment of any amount shall be refused unless a show-cause notice and an opportunity of being heard has been given to the concerned dealer, distributor and wholesaler.

The collector or any authorised officer may order verification of stocks prior to allowing adjustment of any amount claimed by a registered dealer, distributor and wholesaler.

Pending adjudication or decision of the case, the collector or any authorised officer may direct the registered dealer, distributor and wholesaler not to utilise the claimed amount or any such amount in such manner and subject to the conditions as may be specified by the collector, or the case may be, by such officer.

NEW RETURN FORM FOR DEALERS OF THIRD SCHEDULE ITEMS The Central Board of Revenue (CBR) has issued new 'sales tax return form' for the distributors and wholesalers, dealing with the items specified in the Third Schedule of the Sales Tax Act, 1990. The CBR has amended Sales Tax Rules 2005 through SRO (I)/2005, issued on Saturday.

The return-cum-payment challan (for distributors and wholesalers dealing in Third Schedule items) contains different columns like opening balance/inventory, purchases made during the tax period, supplies made during the tax period and closing balance/inventory, sales tax arrears and total sales tax payable.

The sales tax, if payable, shall be deposited under the head of account “0220000-SALES TAX”.

FOLLOWING IS THE TEXT OF THE NOTIFICATION ISSUED ON SATURDAY: In exercise of the powers conferred by section 40 of the Federal Excise Act, 2005, section 219 of the Customs Act, 1969 (IV of 1969), section 50 of the Sales Tax Act, 1990, read with sub-section (2) of section 8, section 9, 10, 14,21 and 28, clause (c) of sub-section (1) of section 22, section 26, sub-section (6) of section 47A, sections 48, 52 and 66 thereof, the Central Board of Revenue is pleased to direct that the following amendment shall be made in the Sales Tax Rules, 2005 namely:

In rule 15, after sub-rule (3) the following new sub-rule shall be added namely:

“(4) Notwithstanding anything in sub-rule (1), a registered person operating, whether exclusively or otherwise, as dealer, distributor or wholesaler of the goods mentioned in the Third Schedule of the Act, shall file the return in triplicate in the format set out in respect of such goods, and in case of other goods, if any, he shall file a separate return for those goods, in the form mentioned in sub-rule (1).”

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