After withdrawal of 'Carry Forward Scheme' in the budget 2005-06), the Central Board of Revenue (CBR) has announced a new procedure, whereby the taxpayers having excess input tax have been authorised to utilise the excess input tax credit in the subsequently three tax periods to ensure hassle-free sales tax refund. The CBR on Friday issued SRO 666(I)/2005 to notify Sales Tax (Refund of Excess Input Tax to the Manufacturers) Rules 2005.
Official sources told Business Recorder on Friday that the much-awaited notification has been issued to facilitate the business community, whereas the new scheme has been drafted taking into account the recommendations of chambers and federation.
They said that a simplified procedure has been notified through SRO 666(I)/2005 to ensure that the taxpayers should not be subjected to refund related hassle due to abolishing the carry forward scheme. Under the scheme, the taxpayer having excess input tax has been authorised to utilise the excess input tax credit in the subsequently three tax periods. The newly notified procedure does not envisage any authorisation or approvals from the department nor does it require any additional information or documents from the claimants.
Under the rules, only such input goods shall 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 of purchase and sale invoices filed by the manufacture under SRO 525(I)/2005.
The manufacturer shall at the time of furnishing summary of purchase and sale invoices, intimate to 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 the tax period to which the relevant monthly return relates.
The manufacturer shall certify in the adjustment note that the fulfilled the conditions of section 73 of the Sales Tax Act.
The collectorate shall maintain separate database of each manufacturer 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 output tax liabilities within the time specified in the note and the computer will generate an Adjustment advice which shall be conveyed to the registered person within ten days.
The Adjustment advice shall be treated as an authorisation of refund of the specified amount and the concerned manufacturer shall be entitled to utilise the admissible amount as specified in the advice for adjustment against this 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 manufacturer 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 manufacturer.
Provided that no claim for adjustment of any amount under these rules shall be refused unless a show-cause notice and an opportunity of being heard has been given to the concerned manufacturer.
Pending adjudication or decision of the case, the Collector or any officer duly authorised by him in this behalf may direct the registered manufacturer not to utilise the claimed amount or any such amount in such manner and subject to such conditions as may be specified by the Collector, or as the case may be, by such officer.
These rules shall also apply in case of public sector electric power and gas companies irrespective of the nature and composition of their input tax.
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