Audio and video cassettes: sales tax audit to be conducted in 22 units

ISLAMABAD (March 15 2004): The Central Board of Revenue (CBR) has decided to conduct sales tax audit of 22 units engaged in manufacture of audio/video cassettes in Karachi, showing wide variation in the value-addition.

The audit will ascertain whether the units are paying less sales tax or not, said the CBR, adding that it has issued instructions to the collector, Audit Sales Tax House, Karachi, to forthwith start audit of these units.

The issue came to the limelight when the CBR was processing the “final certificate” of the Saif Electronics, Karachi, who applied for customs duty concession available under SRO.358(I)/2002 as the unit is engaged in the manufacture of audio cassettes used imported audio magnetic tape, audio hub with stopper, guide roller, liner and pressure pad.

Before the issuance of certificate to the unit, the CBR analysed the computer profiles of all the 22 units to calculate value addition, as these profiles were taken from the Sales Tax Computer Cell. The CBR analysed summary of value addition during 2003, which indicated a huge variation in value addition.

The CBR has given the details of the units, including taxable purchases, taxable sales, export sale, input/output, refund and value addition.

For this purpose, the collector audit should carryout audit of selected units of audio/video manufacturer keeping in view the value-addition, said the CBR, adding the result of the audit should be submitted to the Sales Tax Audit Wing on top priority basis.

The sales tax practitioners opined that the CBR would get nothing out of such exercises as carried out in the past, saying the auditors were usually unable to unearth any tax-evasion on the basis of input/output ratio of units.

The CBR has dispatched the names of the following units for carrying out audit:

Perfect Engineering Works Karachi (video); ANA International Karachi (audio); Auvitronics Limited, Hub (audio); Amins, Karachi (audio/video); B.S. Magnetic (Pvt) Limited, Karachi, (audio); Prime Industries, Karachi (audio); Myfib Video Industries (Pvt) Limited, Hub, (video); National Video Industries (Pvt) Limited, Hub, (video); Tops Plastic Limited, Karachi, (audio/video); Mehran Electronics (Pvt) Limited, Karachi, (video); Janjua Radios and Plastic Industries (video); Rhythm Recording (Pvt) Limited, Winder (audio).

Pakistan Music Corporation (Pvt) Limited, Winder (audio); Tawakkal Plastic Works, Karachi, (audio); Qurel Cassettes Limited, Mirpur, AJK, (audio); EMI Pakistan Limited, Karachi, (audio); Shalimar Recording Company Limited (audio/video); Mumksaz Associates, Karachi, (audio); Caspack Industries (Pvt) Limited, Karachi, (audio/video); and Saif Electronics Karachi (audio/video).

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