ISLAMABAD: Exporters have challenged notices of the Federal Board of Revenue’s field formations for submission of annex-F (carry forward summary) of the sales tax return for obtaining refunds under the FASTER system.
A tax expert based in Karachi told Business Recorder that the sales tax circular number 4 of 2019 of the FBR has not stopped processing of sales tax refund payments to the exporters under the FASTER system merely on the basis that Annexure-F (carry forward summary) and Annexure-H (stock statement) of the sales tax return form do not match.
The refund claimants were also advised not to revise the returns on the ground that entries in Annexure-F do not match with those in Annexure-H.
One of such notices issued to the exporter revealed that upon examination of monthly sales tax return it has been observed that opening value of stocks between annex-F and annex-H has differences.
Accordingly, it was requested to clarify the position within seven days of the receipt of the notice.
The tax expert responded that the export supplies are zero-rated in terms of section 4 of the sales tax Act for the category of manufacturers cum exporters for textile goods.
The sales tax paid on goods purchased for zero-rated supplies are refundable in terms of section 10 of the Sales Tax Act, 1990 read with rule 39 and 39-D chapter 5-A of the Sale Tax Rules, 2006 inserted vide SRO 918(I)/2019 date 07-08-2019 and 1172(I)/2019 dated 04-11-2020, upon the filing of Annex-H of the sales tax return.
On the other hand, annex-F of the sales tax return is related to calculation of minimum value addition sales tax applies only to importers who are liable to pay advance sales tax along with value addition sales tax in terms of sales tax special procedure rules 2007 read with Section 7A of the Sales Tax Act, 1990.
Upon plain reading of both the provisions, it is evident that import and exports are two different streams under the STA, 1990 and there are different rules and procedures for levy, collection, payment, and reporting under a different provision of the law.
This position is further being strengthened and confirmed by the query raised to the Board by the exporters relating to the difference in valuation and its filing modalities in between annex-F and annex-H. The board vides its Circular No 04 of 2019 dated 21-10-2019 has clarified that there is no relevance of Annex-F with Annex-H.
The relevant part of the circular revealed, In the above circular, it is abundantly clear that we being an exporter and refund claimant are required to file annex-H and there is no bearing on entry related to annex-F on exporters.
The issuance of the notice above in this back ground is against the settled principle of interpretation.
In order to substantiate the matter discussed, exporters submitted that the taxation officers are required to interpret and apply the law as it exists and not on the basis of law as it ought to be or ought to have been. The language of a law cannot be stretched beyond its clear meaning. The tax officers must restrain from taking any adverse inference in accordance with the directions of the policy wing of the board, the tax expert added.
Copyright Business Recorder, 2022
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