The Central Board of Revenue (CBR) is likely to issue a sales tax ruling to ascertain payment of sales tax on supplies made by the manufacturers of ghee/cooking oil to producers of commodities like biscuits and other confectionery items.
Sources said on Thursday that certain collectors have been engaged in carrying out investigative audit of the ghee/cooking oil units. They have raised queries for correct interpretation of a CBR ruling issued on April 20, 2006 on the request of Pakistan Biscuits and Confectionery Manufacturers Association.
Referring to the ruling, collectors of sales tax have informed the board that in case where cooking oil/ghee is supplied to the registered manufacturers of other items in which the said commodity is used as an input, the manufacturer/supplier of cooking oil/ghee shall issue sales tax invoice, indicating the total value of supply (inclusive of duty) and mention the component of excise duty (paid at import stage as well as one rupee per kg paid in lieu of duty payable on value addition) by using the tax fraction formula.
In case where supply of cooking oil/ghee is made to a person other than registered manufacturers invoice indicating total value of supply shall be issued, sources said.
Collectors said that in view of the ruling, the manufacturers would issue invoice without charging sales tax. It has been observed that few manufacturers of cooking oil/ghee within the jurisdiction of certain collectorates are charging sales tax at the rate of 15 percent in violation of a CBR ruling. They are, therefore, liable to make payment of sales tax on supplies made to persons other than the registered manufacturer since they passed on the burden of 15 percent of sales tax to the consumers as governed by the provisions of section 3B of the Sales Tax Act, 1990.
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