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15% GST imposed on ribbons used in Computer Printers

ISLAMABAD (November 05 2002) : The Central Board of Revenue (CBR) has imposed 15 percent general sales tax (GST) on the ribbons used in the computer printers with immediate effect, says a sales tax ruling 66/2002 issued on Monday.

Previously, the tax authorities benefiting the computer companies waived the sales tax on computer printer ribbons under the Sales Tax Act, 1990. Now, the authorities have levied GST supporting the viewpoint of the local manufacturers.

It seems that the CBR had not full apprehension of the issue as on one hand it exempted such item of GST causing substantial loss to the national kitty and on the other again levied sales tax on the argument of local industry. Both these decisions were based on the separate arguments submitted by the computer industry at different stages.

According to the CBR's ruling, the tax authorities have revised its earlier opinion and directed the collectors of sales tax that any ruling/clarification issued in respect of ribbons even if usable with computer printers stands modified to the extent that computer printer ribbons are not entitled to sales tax exemption under S. No. 45 of the 6th Schedule of the Sales Tax Act, 1990.

The CBR was of the view that GST exemption available under S. No. 45 of the Sixth Schedule of the Sales Tax Act, 1990 is restricted to “computer hardware including lap tops, note books, PCs, main frame and their peripheral units and parts thereof”.

The computer hardware is classified under PCT heading 84.71. Printers useable with computers are also classified under this heading. Parts suitable for use solely or principally with machines at PCT heading 84.71 are classified under PCT heading 84.73.

The CBR further stated that the word “accessory” has not been used in S.No.45 of the said Schedule, nor any PCT heading carry this entry. Rather the phrase “respective headings” have been used.

Typewriter ribbons and similar other ribbons are classifiable under PCT heading 96.12. Computer printer ribbons are also classifiable in this heading. Under clause (q) of Note 1 of Section XVI of H. S. Code, typewriters or similar ribbons have been excluded. Under Note 2 of the said Section, ribbons have also been excluded from the category of parts falling under PCT heading 84.73. Thus, ribbons, even if they are exclusively usable with computer printers, are not parts of computer printers.

The CBR observed that Sixth Schedule is a substantive part of the statute. Hence the PCT headings mentioned in column (3) of the Schedule also carry statutory value. The words “respective headings” are, therefore, to be interpreted strictly in accordance with the classification principles of H. S. Code. The expression “parts” used in S.No.45 of the Sixth Schedule is to be interpreted with reference to Note 2 to Section XVI of Pakistan Customs Tariff and ribbons are not parts of the printers useable with computers because such ribbons are not classifiable under PCT heading 84.73, CBR added.

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