Calculation of sales tax: steel melters, re-rollers brought under fixed value-addition regime

The Central Board of Revenue (CBR) has brought all steel-melters and re-rollers, whether operating automatic machines or manual rolling machines, under the regime of fixed value-addition for calculation of sales tax.
Previously, special procedure for payment of sales tax by steel-melters and re-rollers was only applicable on the units using manual machines. Now, the formula of calculating sales tax would be applicable on all the steel melting and steel re-rolling units.
According to SRO 678(I)/2006 issued on Saturday, every steel-melter or steel re-roller, if not already registered, shall obtain registration under the Sales Tax Rules, 2006.
The all Pakistan Steel Melters' Association and all Pakistan Steel Re-rollers' Association shall be responsible to ensure that their respective members pay sales tax in the manner specified in these rules, and in case of non-compliance, the Association shall actively assist the concerned Collectorate for enforcement and recovery of sales tax due along with default surcharge calculated thereon, besides any other proceedings that may be initiated against the defaulting steel-melter or steel re-roller under the Sales Tax Act.
For the purpose of determination of his tax liability, the production of a steel-melter shall be calculated at the rate of 800 units of electricity consumed for production of one metric ton of ingots or billets.
Where a steel-melter melts and casts ingots or billets from locally generated scrap for which a sales tax invoice is not available, he shall pay sales tax on a fixed value-addition of three thousand and six hundred rupees (Rs 3600) per metric ton.
Where a steel-melter melts and casts ingots or billets from imported scrap against which he holds a valid GD in his name, from scrap purchased from Pakistan Steel Mills, Karachi against a valid sales tax invoice in his name, he shall pay sales tax on fixed value-addition of Rs 2470 per metric ton.
In cases where a steel-melter, melts and casts ingots or billets from imported scrap as well as from the scrap purchased from Pakistan Steel Mills, Karachi or uses local scrap, he shall determine his liability proportionately. Pakistan Steel Mills, Karachi shall pay sales tax on billets produced by it as determined under section 7 of the Act.
For the purpose of determination of tax liability, the production of all steel re-rollers shall be calculated at 130 units of electricity consumed for the manufacture of one metric ton of long mild steel products (bars, reinforced bars, rods, wire rods and structural sections made of mild steel) and the re-rollers shall pay sales tax on long MS products on fixed value addition of Rs 1800 per metric ton.
Provided that steel melters and re-rollers paying sales tax on fixed value addition shall not be entitled to any input tax adjustment.
The new procedure has specified that a registered steel-melter and a registered steel re-roller shall issue tax invoices showing the amount of sales tax charged on fixed value-addition and file details of his production in addition to a monthly sales tax return.