Anomaly in sales tax law pointed out

The Karachi Sales Tax Bar Association (KSTBA) has said that commercial importers paying input tax on value-addition have been debarred from carrying forward the tax and are seeking refund in the new budget. The KSTBA President, Khushnood A Khan, in his paper on sales tax anomalies dispatched to the Central Board of Revenue (CBR), pointed out that in the new format of sales tax return no columns are prescribed for 'carried forward' and 'refund claim'.
It means that from July 1, 2005, the commercial importers can not 'carry forward' their input tax paid on value-addition at import stage in cases where the goods are to be sold in the next tax period.
Similarly, the commercial importers would not get adjustment or refund of the tax paid on utility bills because 'carrying forward' of input tax and 'seeking refund' has been abolished in the new budget.
He said that under the proposed special rules 14(2), if a commercial importer had not discharged his liability, the Collector of Sales Tax could order audit of his records. The new rule is duplication of a system already in place to deal with short-filers and wrong filers.
It has been pointed out that under special procedures' rule 19, for payment of retail tax on value addition, the word 'purchases' has not been explained whether these are taxable purchases only or not.
It said that payment of value-addition on goods, which are not taxable, would ultimately result in increase in prices of essential commodities.
The KSTBA said that due to amendment in section 10(1) of the Sales Tax Act 1990 the term 'carried forward' has been replaced with 'refund'. However, no period for payment of refund has been fixed. It is feared that in the light of past experience the registered persons would not get their refund before six months.
The association pointed out that the present centralised system of sales tax registration has proved to be cost-enhancing and time-consuming. The applicants face problem in contacting the responsible persons in Islamabad because of lack of sufficient telephone lines.
It said that in order to facilitate the taxpayers and reduce their cost the process of registration should be shifted to the local collectorates on the pattern of National Tax Number (NTN) centres set up by the Income Tax Department in major cities.